GameStop Corp. (NYSE:GME) Q2 2019 Earnings Conference Call - Final Transcript

Sep 10, 2019 • 05:00 pm ET


GameStop Corp. (NYSE:GME) Q2 2019 Earnings Conference Call - Final Transcript


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George Sherman

One, optimize core business by improving efficiency and effectiveness in everything we do.

Two, create a social and cultural hub of gaming within each GameStop store and online. Three, build compelling digital capabilities to reach our customers wherever they want to do business and give them the full spectrum of content and access to the products they are looking for. And four, transform our vendor and partner relationships, unlocking additional high-margin revenue streams and optimizing the lifetime value of every customer.

Let's take each of these one by one. First, we'll optimize the core business by driving efficiency and effectiveness across everything we do. There are several initiatives within this pillar, but broadly speaking, they include overhead cost restructuring, inventory management optimization, including streamlining SKU accounts and pricing and promotion optimization, and a full review of rationalization of the store footprint across the globe.

As I mentioned, we are moving with a sense of urgency and have already demonstrated our commitment to doing so with our recent efforts to rightsize the organization across our corporate infrastructure and our US store leadership organization.

Over the last couple of months, we implemented changes that require us to make tough, but necessary decisions for the benefit of our organization moving forward. These changes will drive efficiencies and serve as a catalyst to rightsizing our cost structure. That work is continuing, and we are further executing other ways to optimize operational cost, including restructuring or exiting unprofitable businesses or markets, and each and every aspect of our indirect procurement activities.

As we told you in June, we are exiting the Simply Mac business and continue to work towards that divestiture in the near term. We also embedded into the environment to leverage that existing platform, further streamlining the organization.

As you may know, in June, we hired Chris Homeister as our Chief Merchandising Officer. Chris has an extensive hardlines and specifically consumable electronics retail background and has already developed and implemented several initiatives to improve the overall productivity of our stores and products.

First, we are employing more effective merchandising practices, including among other things, few rationalization, which will declutter our stores and provide a better experience to our customers. The first store set with this evolving strategy begins next week.

Second, we believe that through a more comprehensive pricing architecture and end-to-end product and pricing life cycle management, we can drive higher overall product margins. And third, we are committed to adding and growing high-margin product categories, which not only work to offset market-driven declines and pre-owned software sales, but also add to our credibility with customers as the only retail outlet for the aggregation of all things video gaming and pop culture.

For example, we see further opportunity in expanding our double-digit growth collectibles category, creating more exclusive packages with our vendors, expanding our PC gaming offerings, and evolving our private label business by leveraging our significant scale and retail expertise.

Optimizing our store base for an increasingly digital world