GameStop Corp. (NYSE:GME) Q3 2017 Earnings Conference Call Transcript

Nov 21, 2017 • 05:00 pm ET

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GameStop Corp. (NYSE:GME) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to GameStop Corp.'s Third Quarter 2017 Earnings Conference. A supplemental slide presentation is available at investor.gamestop.com. At the conclusion of the announcement, a question-and-answer session will be conducted electronically. (Operator Instructions)

I would like to remind you that this call is covered by the safe harbor disclosure contained by GameStop's public documents and is property of GameStop. It is not for rebroadcast or use by any other party without the prior written consent of GameStop.

At this time, I'd like to turn the call over to Dan DeMatteo, Executive Chairman and Interim CEO. Please go ahead, sir.

Executive
Dan DeMatteo

Good morning -- or good afternoon, everyone. Thank you for joining our third quarter earnings call. Joining me on the call today are Rob Lloyd, our CFO; Tony Bartel, our COO; and members of our senior leadership team.

I want to begin by updating everyone on the health of Paul Raines. For those of you who do not know, Paul had a recurrence of his previously disclosed medical issue and is seeking treatment. In his absence, the Board of Directors has asked me to assume the CEO role on an interim basis. Our thoughts and prayers are with Paul and his family during this time. From the entire GameStop family, we send him our best wishes and encouragement for a speedy recovery.

For those of you who do not know me, I have been part of the GameStop leadership team for the last 25 years. From 1996 until 2008, I served as CEO -- or COO, then as CEO until 2010. For the last 7 years, I have served as Executive Chairman and have been involved in all aspects of the business.

With all that said, let's start with an overview of our third quarter results, which were solid for our Gaming and Collectibles categories and more challenged for Technology Brands.

Total sales were $1.99 billion, up 1.5% compared to LY. Comps were positive 1.9%. The growth was driven by the video game business as new hardware grew nearly 9% and new software increased more than 5%. Collectibles were also strong, up 27% over last year. Results in Technology Brands lagged our expectations due to the later-than-expected release of Apple's iPhone X. Bottom line, adjusted operating earnings were $80.8 million and adjusted earnings per share were $0.54. Rob and Tony will share more details about our results.

As we enter the important holiday quarter, there are three main points I would like to highlight. In our Technology Brands segment, specifically our Spring Mobile AT&T stores, we will focus on maximizing iPhone X sales, managing cost and driving our other initiatives in order to maximize profitability. We will drive further growth in Collectibles by capturing more market share by offering exclusive products and a greater assortment of items that connect with and appeal to our customers. We have momentum in the video game segment and are focused on maintaining it through strong execution in the stores, competitive promotions and providing the