GameStop Corp. Q1 FY2021 earnings call

• Added retail and technology talent to senior leadership team by appointing a Chief Operating Officer, Chief Growth Officer and Chief Technology Officer, along with other senior hires across various departments from companies like Amazon, Google and Chewy. • Strengthened balance sheet by raising over $550 million in net proceeds from April ATM program, and eliminated long-term debt via voluntary early redemption of 2023 senior notes. • Expanded fulfillment network by adding a 700,000 square foot facility in York, Pennsylvania, expected to be operational by fourth quarter of this year to enhance East Coast order fulfillment capabilities. • Expanded product offering by adding natural extensions such as PC gaming, computers, monitors, game tables and gaming TVs. • Announced new ATM offering for prospectus filing to offer up to 5 million shares of common stock, intending to use net proceeds for general corporate purposes, investing in growth initiatives and further strengthening balance sheet. • Introduced incoming CEO Matt Furlong from Amazon, with strong e-commerce leadership background, and incoming permanent CFO Mike Recupero from Amazon, with extensive Amazon finance experience. • Thanked Diana Jajeh for her guidance as interim CFO and noted she will return to role as Chief Accounting Officer. • Noted net sales growth of 25.1% for the quarter, with global store fleet reduced by approximately 12% due to strategic de-densification efforts and continued store closures in Europe during the quarter due to COVID-19. • Highlighted adjusted SG&A declined $29.5 million or 7.7% year-over-year with nearly 10 percentage points of sales leverage. • Mentioned balance sheet strength with cash and restricted cash increase, debt reduction, and no long-term debt at quarter end. • Stated capital expenditures for the quarter were $14.7 million, and operating cash flow outflow improved compared to prior year.

Net sales for the quarter increased 25.1% to $1.3 billion compared to $1 billion in the prior year period. Gross margins were 25.9%, down 180 basis points from 27.7% in the fiscal first quarter last year, primarily driven by an expected increase in mix of lower margin sales. Reported SG&A expenses were $370.3 million, reflecting a decline of $16.2 million or 4.2% versus reported SG&A in the first quarter last year and an 880 basis point improvement on a percent to sales basis. Adjusting for severance, transformation and other costs, adjusted SG&A declined $29.5 million or 7.7% year-over-year. Operating loss was $40.8 million compared to an operating loss of $108 million in the prior year first quarter. Adjusted operating loss was $21.6 million compared to a loss of $98.8 million in the prior year period. Net loss was $66.8 million or $1.01 per diluted share compared to a net loss of $165.7 million or a loss per diluted share of $2.57 in the prior year first quarter. Adjusted net loss was $29.4 million or $0.45 per diluted share compared to adjusted net loss of $157.6 million or a loss of $2.44 per diluted share in the fiscal 2020 first quarter. In the first quarter, 118 stores were closed net, and at quarter end, 4,698 stores were operated globally. Cash and restricted cash ended the quarter at $770.8 million, $186.9 million higher than the end of the first quarter last year. Debt levels were reduced by $504 million compared to the first quarter of last year, with no long-term debt and $48.1 million of short-term debt at quarter end. Capital expenditures for the quarter were $14.7 million.

• Remain optimistic about emerging console cycle and future but recognize business risks remain elevated due to pandemic and post-pandemic uncertainty, and not providing specific annual sales and earnings guidance. • Pleased with start to the year and strong sales in May, which were up approximately 27% year-over-year. • Focused on positioning GameStop for long-term growth, prioritizing delighting customers and providing a differentiated and superior customer experience.

• Business risk remain elevated due to the pandemic and post-pandemic uncertainty.

Q: None A: None