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GameStop Reports Sales And Earnings For Fiscal 2012 And Provides 2013 Outlook

Stocks in this article: GME

Fiscal 2012 Results

For fiscal year 2012, total global sales were $8.89 billion, a 7.0% decrease compared to $9.55 billion in fiscal 2011. Full year consolidated comparable store sales declined 8.0% compared to fiscal 2011. Digital receipts and mobile sales drove a 21.2% increase in the Other category. New hardware, new software and pre-owned sales each declined year-over-year primarily due to the effect of the longevity of the current console cycle.

Excluding restructuring, impairment and debt retirement expenses, GameStop’s adjusted net earnings for fiscal year 2012 were $403.0 million compared to adjusted net earnings of $405.1 million in fiscal 2011. Adjusted diluted earnings per share were $3.17, exceeding consensus and increasing 10.5% compared to adjusted diluted earnings per share of $2.87 in fiscal 2011. The increase in EPS was primarily the result of share buybacks.

Including restructuring, impairment and debt retirement expenses of $680.7 million ($672.7 million, net of tax benefit) primarily related to goodwill impairment in the third quarter of 2012, GameStop’s fiscal 2012 net loss was $269.7 million compared to net earnings of $339.9 million in fiscal 2011. Diluted loss per share was $2.13 compared to diluted earnings per share of $2.41 in fiscal 2011. A reconciliation of non-GAAP adjusted net income to GAAP net income (loss) is included with this release (Schedule III).

The gross margin rate expanded 170 basis points during fiscal 2012 driven by margin improvements in new and pre-owned video game products as well as growth of digital receipts and advances in our mobile business. In the last four years, GameStop has expanded gross margins by 400 basis points.

Capital Allocation Update

Rob Lloyd, chief financial officer, said, “Using a combination of stock buybacks and dividends, GameStop returned more than 100% of its record free cash flow to shareholders in 2012. Going forward, we expect to maintain our commitment to use cash flow to increase shareholder value.”

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