GameStop Corp (NYSE:GME) Q2 2020 Earnings Conference Call - Final Transcript

Sep 09, 2020 • 05:00 pm ET


GameStop Corp (NYSE:GME) Q2 2020 Earnings Conference Call - Final Transcript


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Greetings, and welcome to GameStop's Second Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Eric Cerny, Investor Relations. Thank you. You may begin.

Eric Cerny

Thank you, and welcome to GameStop's Second Quarter Fiscal 2020 Earnings Conference Call. This call will include forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Any such statements should be considered in conjunction with the cautionary statements and the safe harbor statement in the earnings release and risk factors discussed in reports filed with the SEC. GameStop assumes no obligation to update any of these forward-looking statements or information.

A reconciliation and other information regarding non-GAAP financial measures discussed on this call can be found in the earnings release issued earlier today, as well as the Investors section of our website.

With me today are GameStop's Chief Executive Officer, George Sherman; and Chief Financial Officer, Jim Bell. On today's call, George will share insights into our second quarter performance and updates regarding GameStop's strategic framework for the future. Jim will then provide more detail on our financial results and expectations for fiscal 2020. Then, we'll open the call to take your questions.

Now, I would like to turn the call over to the company's Chief Executive Officer, George Sherman.

George E. Sherman

Thanks, Eric. Good afternoon everyone, and thank you for joining us today on our second quarter earnings call. I hope each of you are safe and well. Our second quarter results showed significant progress toward our strategic priorities as evidenced by our robust digital growth, meaningful expense reduction and strong free cash flow generation. These results serve as testament to GameStop's ability to navigate COVID-19 and bridge the period until the introduction of new consoles. I continue to be part of our team and their dedication to our mission, our strategy and importantly, safely serving our customers whenever and however they wish to shop during this unprecedented time.

Turning to some highlights for the second quarter. Our comparable store sales declined 12.7%, which was ahead of our expectations and driven by continued consumer demand for gaming and the success of our e-commerce channel. While total sales declined 26.7%, they were also ahead of our initial expectations at the start of the year. Results exceeded our own expectations even as temporary store closures related to COVID-19 resulted in 13% fewer store operating days in the quarter versus second quarter last year and year-over-year, we have 10% fewer stores worldwide. Our quarterly sales results were negatively impacted by both the global pandemic and as we've discussed before, the last few months of a seven-year long hardware cycle.

We began the quarter with a modest sales decline in May as we responded to continued shelter-in-place mandates by expanding our ability to deliver exceptional service and product to the omnichannel digital capabilities we developed over the last year. In June and July, limited new hardware availability constrained sales as the