FinanceLooker

Excrept from filing document 2025-02-01

pproximately 8 2 billion based upon the closing market price of 21 07 per share of Class A Common Stock on the New York Stock Exchange For purposes of this calculation all of the registrant s directors and officers are deemed affiliates of the registrant
Portions of the definitive proxy statement of the registrant to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 as amended for the 2025 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10 K
This Annual Report on Form 10 K Form 10 K contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended the Securities Act and Section 21E of the Securities Exchange Act of 1934 as amended the Exchange Act In some cases forward looking statements can be identified by the use of terms such as anticipates believes continues could estimates expects intends may plans potential predicts pro forma seeks should will or similar expressions These statements are only predictions based on current expectations and assumptions and involve known and unknown risks uncertainties and other factors that may cause our or our industry s actual results levels of activity performance or achievements to be materially different from any future results levels of activity performance or achievements expressed or implied by such forward looking statements All forward looking statements included in this Form 10 K are based upon information available to us as of the filing date of this Form 10 K and we undertake no obligation to update or revise any of these forward looking statements for any reason whether as a result of new information future events or otherwise after the date of this Form 10 K except as required by law You should not place undue reliance on these forward looking statements The forward looking statements involve a number of risks and uncertainties Although we believe that the expectations reflected in our forward looking statements are reasonable we cannot guarantee future results levels of activity performance or achievements A number of factors could cause our actual results performance achievements or industry results to be materially different from any future results performance or achievements expressed or implied by these forward looking statements Factors that might cause such differences include but are not limited to those discussed in Part I Item 1A of this Form 10 K under the heading Risk Factors which are incorporated herein by reference You should carefully consider the risks and uncertainties described in this Form 10 K
Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January Fiscal year 2024 consisted of the 52 weeks ended on February 1 2025 fiscal 2024 Fiscal year 2023 consisted of the 53 weeks ended on February 3 2024 fiscal 2023 and fiscal year 2022 consisted of the 52 weeks ended on January 28 2023 fiscal 2022
We operate in four geographic segments United States Canada Australia and Europe We identified segments based on a combination of geographic areas which is the basis of how we manage the organization and analyze performance Our Australia geographic segment includes operations in New Zealand for reporting Our sales and profits are driven through both our physical stores and ecommerce platforms Each segment consists primarily of retail operations with the significant majority focused on games entertainment products and technology These products are substantially the same regardless of geographic location with the primary differences in merchandise carried being the timing of the release of new products in the various segments
As of February 1 2025 we had a total of 3 203 stores across all of our segments 2 325 in the United States 193 in Canada 374 in Australia and 311 in Europe Our stores and ecommerce sites operate primarily under the names GameStop
lture themed stores selling collectibles apparel gadgets electronics toys and other retail products for technology enthusiasts and general consumers in international markets operating under the Zing Pop Culture
Financial information about our segments is included in Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations and Part II Item 8 Notes to the Consolidated Financial Statements
We offer new and pre owned gaming platforms from the major console manufacturers The current generation of consoles include the Sony PlayStation 5 Microsoft Xbox Series X and Nintendo Switch Accessories consist primarily of controllers and gaming headsets
We offer new and pre owned gaming software for current and certain prior generation consoles We also sell a wide variety of in game digital currency digital downloadable content and full game downloads
Collectibles consist of apparel toys trading cards gadgets and other retail products for pop culture and technology enthusiasts Collectibles also included our digital asset wallet and NFT marketplace activities in fiscal 2023 however both activities were wound down in the fourth quarter of 2023
We provide our customers with an opportunity to trade in their pre owned gaming mobility and other products at our stores in exchange for cash or credit which can be applied towards the purchase of other products This process drives higher market share and offers a broader range of price points for our customers Our trade in program provides customers a means to unlock value and recycle used product which enables us to offer previous generation platforms and related games We operate refurbishment centers in the United States Canada Australia and Europe where used gaming mobility and other products can be tested repaired sanitized repackaged and redistributed for sale
Our retail stores are generally located in strip centers shopping malls and pedestrian areas These locations provide easy access and high frequency of visits and in the case of strip centers and high traffic pedestrian stores high visibility We target strip centers that are conveniently located have a mass merchant or supermarket anchor tenant and have a high volume of customers As of February 1 2025 we offered games and entertainment products in
Our strategy involves i using our cash and other sources of liquidity to maximize shareholder value including through potential investment and or acquisition opportunities and ii optimizing our retail business to achieve profitability
On March 18 2025 the Board of Directors of the Company the Board unanimously authorized a revised investment policy the Investment Policy In accordance with the revised Investment Policy the Board has delegated authority to manage the Company s portfolio of securities investments to an Investment Committee of the Board the Investment Committee consisting of the Company s Chairman of the Board and Chief Executive Officer Ryan Cohen and two independent members of the Board together with such personnel and advisors as the Investment Committee may choose The Investment Committee regularly reviews risks related to the Company s investment portfolio including concentration risk When allocating cash to various investment opportunities and considering related investment risk the Investment Committee considers market based factors including risk adjusted after tax yields When reviewing concentration risk the Investment Committee considers the liquidity needs of the Company among other things
The overall goals of the Investment Policy are to provide sufficient liquidity to meet the day to day financial obligations of the Company and to optimize investment returns within the guidelines of the Investment Policy Permissible investment instruments include cash and cash equivalents e g bank obligations money market funds and commercial paper fixed income securities e g obligations of the U S Treasury and U S Government tax exempt obligations of states and municipalities and corporate bonds notes equity securities limited to those listed on the New York Stock Exchange NYSE NYSE American NYSE Arca or the Nasdaq Stock Market and in compliance with the listing standards of the applicable exchange and certain crypto currencies including Bitcoin Individual exceptions to the Investment Policy may only be made by the unanimous agreement of the Investment Committee or if the Investment Committee is unable to reach unanimous agreement on such exception by the Board
On March 25 2025 we announced that as part of our revisions to the Investment Policy the Board approved the addition of Bitcoin as a treasury reserve asset whereby a portion of our cash or future debt and equity issuances may be invested in Bitcoin We have not set a maximum amount of Bitcoin we may accumulate and may sell any Bitcoin we may acquire
The Investment Committee will direct the investment activity of the Company in public and private markets pursuant to authority granted by the Board Depending on certain market conditions and various risk factors Mr Cohen or other members of the Investment Committee each in their personal capacity or through affiliated investment vehicles may at times invest in the same securities in which the Company invests The Board anticipates that such investments will align the interests of the Company with the interests of related parties because it places the personal resources of such directors at risk in substantially the same manner as resources of the Company in connection with investment decisions made by the Investment Committee on behalf of the Company
During fiscal 2024 we continued to optimize our cost structure to align with our current and anticipated future needs We will continue to focus on cost containment as we look to operate with increased efficiency
We continue to explore ways to increase the size of our addressable market through new product and service offerings including offerings in the graded collectibles category Expansion of these categories provides the Company with margin accretive opportunities that can assist the Company in achieving its profitability goals
We purchase our new products worldwide from a broad number of manufacturers software publishers and distributors Our largest vendors are Sony Nintendo and Microsoft which collectively accounted for a majority of our new product purchases in fiscal 2024 We have established certain rights with our primary gaming product vendors that reduce our risk of inventory obsolescence including in some circumstances unsold product return policies and protections against price
reductions In addition we generally conduct business on an order by order basis a practice that is typical throughout the industry We believe that maintaining and strengthening our long term relationships with our vendors is essential to our operations
Our operating strategy involves providing a convenient and broad merchandise selection for our customers We use our distribution facilities store locations and inventory management systems to optimize the efficiency of the flow of products to our stores and customers enhance fulfillment efficiency and optimize in stock and overall investment in inventory
The gaming industry is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions We compete with mass merchants and regional chains computer product and consumer electronics stores other gaming and related specialty stores toy retail chains direct sales by software publishers the online environments operated by Sony PlayStation Network Microsoft XBox Live Nintendo Nintendo Switch Online as well as other online retailers and game rental companies Gaming products are also distributed through other methods such as digital delivery We also compete with sellers of pre owned and value gaming products and other forms of entertainment activities including casual and mobile games movies television theater sporting events and family entertainment centers
In the United States we compete with Walmart Stores Inc Walmart Target Corporation Target Best Buy Co Inc Best Buy and Amazon com Inc Amazon com among others Throughout Europe we compete with major consumer electronics retailers such as FNAC Darty major hypermarket chains like Leclerc and online retailer Amazon com Competitors in Canada include Walmart and Best Buy In Australia competitors include JB HiFi stores Big W Target and Amazon com Globally we also compete with certain vendors including Sony Nintendo and Microsoft among others for direct to consumer offerings
Our business like that of many retailers is seasonal with the major portion of sales and operating profit realized during the fourth quarter of the fiscal year which includes the holiday selling season Results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year Quarterly results may fluctuate materially depending upon among other factors the timing of new product introductions adverse weather conditions shifts in the timing of certain holidays or promotions and changes in our merchandise mix We generated approximately 34 of our sales during the fourth quarter of each of fiscal 2024 and 2023
we also have registered or have registrations pending with the trademark authorities throughout the world We maintain a policy of pursuing registration of our principal marks and opposing any infringement of our marks
At GameStop we strive to attract retain and develop talent at all levels of our organization We have approximately 6 000 full time salaried and hourly associates and between 10 000 and 13 000 part time
Collaboration We advocate working actively to build understanding and collaboration across functions We believe a more collaborative workforce provides many benefits in drawing upon a greater richness of resources experiences ideas and talents
Benefits We have designed our compensation and benefits programs to meet the unique needs of employees in our various business segments These programs are intended to attract reward and retain talent while instilling an ownership mentality in our work
The SEC maintains a website that contains reports proxy statements and other information about issuers like GameStop who file electronically with the Securities and Exchange Commission the SEC The address of that site is http www sec gov Our annual reports on Form 10 K quarterly reports on Form 10 Q current reports on Form 8 K and amendments to those reports can be accessed through that website and also indirectly through our corporate website http news gamestop com In addition our Code of Standards Ethics and Conduct is available on our website under Corporate Governance and is available to our stockholders in print free of charge upon written request to the Investor Relations Department at GameStop Corp 625 Westport Parkway Grapevine Texas 76051 Any amendments to or waivers of our Code of Standards Ethics and Conduct or our Code of Ethics for Senior Financial and Executive Officers that apply to our principal executive officer principal financial officer principal accounting officer controllers and persons performing similar functions and that relate to any matter enumerated in Item 406 b of Regulation S K promulgated by the SEC will be disclosed on our website The contents of our corporate website are not part of this Annual Report on Form 10 K or any other report we file with or furnish to the SEC
An investment in our Company involves a high degree of risk You should carefully consider the risks below together with the other information contained in this report and other filings we make with the SEC before you make an investment decision with respect to our Company The risks described below are not the only ones facing us Additional risks not presently known to us or that we consider immaterial may also impair our business operations Any of the following risks could materially adversely affect our business operating results or financial condition and could cause a decline in the trading price of our Class A Common Stock and the value of your investment
The Company s Investment Policy permits the Company to invest from time to time in securities and certain crypto currencies including Bitcoin and U S Dollar denominated stablecoins and the Company is and will be exposed to market volatility in connection with these investments The Company s financial position and financial performance could be adversely affected by worsening market conditions or poor performance of such investments Bitcoin for example is a highly volatile asset and has experienced significant price fluctuations over time Our Bitcoin strategy has not been tested and may prove unsuccessful U S Dollar denominated stablecoins may also suffer from value loss due to various issues underlying the product including bank or issuer failure or underlying blockchain problems The Company may also invest from time to time in nonmarketable securities and may need to hold such instruments for a long period of time and may not be able to realize a return of its cash investment should there be a need to liquidate to obtain cash at any given time The Company may also invest from time to time in securities that are interest bearing securities and if there are changes in interest rates those changes would affect the interest income the Company earns on these investments and therefore impact its cash flows and results of operations
The Company s investment portfolio is overseen in accordance with the guidelines approved by the Investment Committee pursuant to the Investment Policy The Company s investment portfolio may be concentrated in just one or a few holdings Accordingly a significant decline in the market value of one or more of such holdings may not be offset by hypothetically better performance of the other holdings if any This concentration of risk may result in a more pronounced effect on net income and stockholders equity and may result in greater volatility in the fair market value of the Company s investment portfolio from one period to another
The Bitcoin markets have historically experienced significant volatility in price limited liquidity and trading volumes relative anonymity potential susceptibility to market abuse and manipulation compliance and internal control failures at exchanges and other risks inherent in its entirely electronic virtual form and decentralized network Our Bitcoin holdings could significantly impact our financial results and the market price of our listed securities Our Bitcoin strategy has not been tested over an extended period of time or under different market conditions We are continually examining the risks and rewards of our strategy to acquire and hold Bitcoin
By investing in Bitcoin we may become subject to counterparty risk such as with our Bitcoin custodians and those with whom we transact in Bitcoin or other crypto currencies The broader digital assets industry may also be subject to counterparty risks which could adversely impact the adoption rate price and use of Bitcoin
Bitcoin and other crypto currencies are subject to regulatory and legal uncertainty and governments and regulators may enact new laws and regulations or pursue regulatory legislative enforcement or judicial actions that could impact the price of Bitcoin or our ability to acquire hold or transfer Bitcoin and may subject us to increased regulatory scrutiny If federal or state tax authorities change Bitcoin s classification from property which allows for capital gains treatment but also imposes certain tax reporting requirements to another category such as to currency or a financial asset the resulting tax implications could negatively affect us and our stockholders Additionally changes in the accounting treatment of our Bitcoin holdings could have significant accounting impacts including increasing the volatility of our results Bitcoin does not pay interest or other returns and we can only generate cash from our Bitcoin holdings if we sell our Bitcoin or implement strategies to create income streams or otherwise generate cash by using our Bitcoin holdings Even if we pursue any such strategies we may be unable to create income streams or otherwise generate cash from our Bitcoin holdings and any such strategies may subject us to additional risks If we are unable to sell Bitcoin we acquire or otherwise generate funds using our Bitcoin holdings or if we are forced to sell our Bitcoin at a significant loss our business and financial condition could be negatively impacted In addition Bitcoin and other blockchain based cryptocurrencies and the entities that provide services to participants in the Bitcoin ecosystem as well as the Bitcoin and blockchain ledger digital wallets and other digital assets and blockchain technologies have been and may in the future be subject to security breaches cyberattacks or other malicious activities If we or our third party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our Bitcoin or other similar
circumstances or events occur we may lose some or all of our Bitcoin and our financial condition and results of operations could be materially adversely affected Further to the extent the private keys for a digital wallet are lost destroyed or otherwise compromised and no backup of the private keys is accessible neither we nor our custodians would be able to access the Bitcoin held in the related digital wallet
U S Dollar denominated stablecoins are digital assets designed to have a stable value over time as compared to typically volatile digital assets and are backed by the U S Dollar Volatility in stablecoins operational issues with stablecoins for example technical issues that prevent settlement or redemption concerns about the sufficiency of any reserves that support stablecoins or regulatory concerns about stablecoin issuers or intermediaries or the stablecoins themselves could all impair the value of such stablecoins and result in losses By investing in U S Dollar denominated stablecoins we may become subject to counterparty risk such as with the issuers of the stablecoins custodians and those with whom we transact in U S Dollar denominated stablecoins U S Dollar denominated stablecoins are subject to regulatory and legal uncertainty and governments and regulators may enact new laws and regulations or pursue regulatory legislative enforcement or judicial actions that could impact our ability to acquire hold or transfer U S Dollar denominated stablecoins and may subject us to increased regulatory scrutiny
Under accounting rules changes in the unrealized gains and losses on certain of our investments may be included in the Company s reported net income loss even though the Company has not actually realized any gain or loss by selling such securities Accordingly changes in the market prices of such securities can have a significant impact on the Company s reported results for a particular period even though those changes do not bear on the performance of the Company s operating businesses
Certain of our executive officers members of our Investment Committee and members of the Board of Directors engage in personal investment activities These personal investments done in their individual capacities or through affiliated investment vehicles may give rise to potential conflicts or perceived conflicts between the personal financial interests of the executive officers members of our Investment Committee or members of the Board of Directors and the interests of us any of our subsidiaries or any stockholder other than such executive officers members of our Investment Committee or members of the Board of Directors
In order not to be regulated as an investment company under the Investment Company Act of 1940 as amended the Investment Company Act unless we can qualify for an exclusion or exemption therefrom we must ensure that we are engaged primarily in a business other than investing reinvesting or trading of securities and that our activities do not include investing reinvesting owning holding or trading in securities and owning investment securities having a value constituting more than 40 of our total assets exclusive of U S government securities and cash items on an unconsolidated basis If we are deemed to be an investment company under the Investment Company Act our activities may be restricted including restrictions on the nature of our investments and restrictions on our issuance of securities In addition burdensome requirements may be imposed on us including registration as an investment company under the Investment Company Act adoption of a specific form of corporate structure and reporting record keeping voting proxy and disclosure requirements and other rules and regulations that could have a material adverse effect on our business and financial condition and may also require us to substantially change the manner in which we conduct our business Further a determination by regulators that Bitcoin or certain other cryptocurrencies constitute
securities or investment securities under the Investment Company Act or other Federal Securities laws could lead to our classification as an investment company under the Investment Company Act and could negatively impact the market price or liquidity of Bitcoin or such other cryptocurrencies that we may hold and the market value of our Class A Common Stock
Sales of our products involve discretionary spending by consumers making our results highly dependent on the health of the economies and consumer confidence in the markets in which we operate Consumers are typically more likely to make
discretionary purchases including purchasing gaming and technology products when there are favorable economic conditions Our business may be affected by many economic social and political factors outside our control Some of these factors include consumer disposable income levels consumer confidence in current and future economic conditions levels of employment consumer credit availability consumer debt levels interest rates tax rates housing market conditions inflation tariffs socio political factors such as civil unrest or political uncertainty and the effect of weather natural disasters and public health crises Adverse economic social and political changes in any of the regions in which we sell our products could adversely affect our business in many ways including reduced sales and margins
The retail environment is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions We compete with mass merchants and regional chains including Walmart and Target computer product and consumer electronics stores including Best Buy other United States and international gaming and PC software specialty stores such as FNAC Darty and Media Markt Saturn major hypermarket chains like Leclerc toy retail chains internet based retailers such as Amazon com other internet marketplaces including those operated by game publishers and console manufacturers online retailers of digital software game rental companies and collectibles and trading card retailers Competition may also result from new entrants into the markets we serve offering products and or services that compete with us If we lose customers to our competitors or if we reduce our prices or increase our spending to maintain our customers such actions may negatively impact our business and our financial performance
Multi channel retailers and ecommerce companies continue to focus on delivery services with customers increasingly seeking faster guaranteed delivery times and low cost or free shipping Our ability to be competitive on delivery times and delivery costs depends on many factors and our failure to successfully manage these factors and offer competitive delivery options could negatively impact the demand for our products
The gaming industry has historically been cyclical in nature in response to the introduction and maturation of new technology Following the introduction of new gaming platforms sales of these platforms and related software and accessories generally increase due to initial demand while sales of older platforms and related products generally decrease as customers migrate toward the new platforms A new console cycle began with the launch of the Sony PlayStation 5 in November 2020 the Microsoft Xbox Series X in November 2020 and the Nintendo Switch in March 2017 In January 2025 Nintendo announced that Nintendo Switch 2 the successor to the Nintendo Switch system will be released in 2025
We depend on manufacturers and publishers to deliver video game hardware software collectibles including trading cards and consumer electronics in quantities sufficient to meet customer demand Some of the products we sell may be in short supply and highly allocated among us and our competitors and we compete for product inventory If we fail to obtain products in sufficient quantities our sales may be negatively impacted
We also depend on these manufacturers and publishers to regularly introduce new and innovative products and software titles to drive industry sales In recent years the number of new software titles available for sale has decreased Separately our collectibles category including trading cards has been driven in part by demand for new releases Any material delay in the introduction or delivery or limited allocations of hardware platforms collectibles or software titles could result in reduced sales In addition some publishers that have historically published games compatible with multiple gaming platforms have been acquired by console manufacturers This consolidation could lead to a further reduction in the number of new software titles available for sale
Technological advances in the delivery and types of video games and PC entertainment software available to consumers as well as changes in consumer behavior related to these new technologies have lowered and may continue to lower our sales
The current consoles from Sony Nintendo and Microsoft have facilitated download technology Downloading of video game content to the current generation video game systems continues to grow and take an increasing percentage of new video game sales If consumers preference for downloading video game content in lieu of physical software continues to increase our business and financial performance may be adversely impacted
In addition both Sony and Microsoft currently offer consoles that only allow for the purchase of digital games and content and do not work with physical software Sales of those types of consoles eliminate the ability of customers to purchase physical software which may also adversely affect our sales of both new and pre owned physical software
Our suppliers rely on foreign sources primarily in Asia to manufacture a portion of the products we purchase from them As a result any event causing a disruption of imports including labor shortages natural disasters public health crises or the imposition of import or trade restrictions in the form of tariffs or quotas could increase the cost and reduce the supply of products available to us which may negatively impact our business and results of operations
Our business like that of many retailers is seasonal with a major portion of our sales and operating profit realized during the fourth quarter of each year which includes the holiday selling season During fiscal 2024 and 2023 we generated approximately 34 and 34 respectively of our sales during the fourth quarter Any adverse trend in sales during the holiday selling season could lower our results of operations for the fourth quarter and the entire fiscal year
Our financial results depend significantly upon the business terms we can obtain from our suppliers and service providers including competitive prices unsold product return policies advertising and market development allowances freight charges and payment terms We purchase substantially all of our products directly from manufacturers software publishers and in some cases distributors If our suppliers and service providers do not provide us with favorable business terms or allocate reduced volumes of their products to us we may not be able to offer products to our customers in sufficient volumes or at competitive prices Vendors may request credit support which could require us to either use cash on hand or collateralize letters of credit with restricted cash or other credit support mechanisms which would reduce our liquidity available for other purposes
Our sales of collectibles are heavily dependent upon the continued demand by our customers for collectibles apparel toys trading cards gadgets electronics and other retail products for pop culture and technology enthusiasts The popularity of such products is often driven by movies television shows music fashion and other pop culture influences Our failure to anticipate identify and react appropriately to changing trends and preferences of customers could lead to among other things excess inventories and higher markdowns
A significant portion of the products we offer are purchased from foreign vendors or manufactured in foreign countries In recent months trade tensions between the United States and other countries have escalated The imposition of additional new or different actions with respect to international trade agreements the imposition of tariffs on goods imported into the U S the erection of barriers to trade tax policy related to international commerce or other trade matters could impact the cost or availability of the merchandise we offer which may have an adverse impact on our business
Our business has become increasingly dependent on multiple sales channels as we strive to deliver a seamless shopping experience to our customers through both online and in store shopping experiences Operating an ecommerce platform is a complex undertaking and exposes us to risks and difficulties frequently experienced by internet based businesses including risks related to our ability to attract and retain customers on a cost effective basis and our ability to operate and support our internet operations website mobile applications and other related operational systems If we are not able to successfully operate our ecommerce platform we may not be able to provide a positive shopping experience or maintain customer traffic sales or margins and our business and financial condition could be adversely affected
In store and ecommerce retail are competitive and evolving environments Insufficient untimely or inadequately prioritized or ineffectively implemented investments could significantly impact our profitability and growth and affect our ability to attract new customers as well as maintain our existing ones
The interactive entertainment industry is characterized by swiftly changing technology evolving industry standards frequent new and enhanced product introductions rapidly changing consumer preferences and product obsolescence Video games are now played on a wide variety of mediums including video game consoles personal computers mobile phones tablets social networking websites and other devices Browser mobile and social gaming is accessed through hardware other than the consoles and traditional hand held video game devices we currently sell In addition augmented reality virtual reality and blockchain technology continue to rapidly evolve and may result in changes in both customer preferences and the types of hardware and software that are used by customers
To continue to compete effectively in the gaming and interactive entertainment industry we must respond effectively to market and technological changes and understand their impact on our customers preferences It may take significant time and resources to respond to these technological changes and changes in consumer preferences Our business and results of operations may be negatively impacted if we fail to keep pace with these changes
As part of our strategic plan we have undertaken cost reduction measures and other initiatives to improve the efficiency of our operations including initiatives to reduce headcount These initiatives could strain our existing resources and we could experience operating difficulties in managing our business including difficulties in hiring managing and retaining employees If we do not adapt we may experience erosion to our brand the quality of our products and services may suffer and our operating results may be negatively impacted
An important element of our profitability initiative is to reduce our global store base Failure to successfully transfer customers and sales from closed stores to nearby stores could adversely impact our financial results
As a part of our profitability initiative we are reducing our global store base which includes closing stores that are not meeting performance standards or stores at the end of their lease terms with the intent of transferring sales to other nearby locations If we are unsuccessful in marketing to customers of the stores that we plan to close or in transferring sales to nearby stores our results of operations could be negatively impacted
Our success depends in part on the continuing services and contributions of our leadership team to execute on our strategic plan Turnover in key leadership positions in the Company or our failure to timely or successfully implement leadership transitions could adversely affect our ability to manage the Company efficiently and effectively could be disruptive and distracting to management and may lead to additional departures of current personnel any of which could have a material adverse effect on our business and results of operations
Our success also depends in part upon our ability to attract motivate and retain a highly trained and engaged workforce including key executives management for our stores and skilled merchandising marketing financial and administrative personnel The turnover rate in the retail and fulfillment industries is relatively high and there is an ongoing need to recruit and train new store and fulfillment associates Factors that affect our ability to maintain sufficient numbers of qualified associates include associate morale our reputation unemployment rates competition from other employers and our ability to offer appropriate compensation and benefits packages
Our continued success depends upon customers perception of our Company Any negative publicity relating to our vendors products associates and members of our Board or practices could damage our reputation and adversely impact our ability to attract and retain customers and employees Failure to detect prevent or mitigate issues that might give rise to reputational risk or failure to adequately address negative publicity or perceptions could adversely impact our reputation business results of operations and financial condition
technology systems or data including customer associate or Company information such failure could negatively impact our operations damage our reputation cause us to incur substantial additional costs lead us to become subject to litigation or cause us to experience other adverse consequences
An important part of our business involves the receipt collection storage transfer disposal disclosure security use and other processing collectively process or processing of personal information of our customers and associates including in the case of customers payment information and other sensitive information including without limitation proprietary and confidential business data trade secrets intellectual property and financial data We have systems and processes in place that are designed to protect against security and data breaches compromise of confidential and other sensitive information and other interruptions Despite these efforts we have been the target of cybersecurity attacks in the past and there is no guarantee that the procedures we have implemented to protect against such security breaches compromises and other interruptions are adequate or will be effective Our data and information systems including those of third parties with whom we work are subject to a variety of evolving threats e g phishing attacks software bugs ransomware and others These threats come from a wide variety of actors e g hackers personnel nation states and state sponsored actors Our data and information systems may also be compromised for reasons other than a cyberattack e g information system malfunctions loss telecommunications failures earthquakes fire or flood We rely on certain third parties and their technologies to operate critical business systems to process sensitive data including personal information in a variety of contexts Our ability to monitor these third parties information security practices is limited and these third parties may not have adequate information security measures in place If the third parties with whom we work experience a security breach compromise or other interruption we could experience adverse consequences
A successful cybersecurity attack or other compromise of our data or information systems could lead to significant disruptions in the operations of our systems and business including our ability to accept payment from customers unauthorized release of sensitive information including customer payment information and corruption of data If we or a third party with whom we work experience a security breach or other compromise or are perceived to have experienced a security breach or other compromise we may experience material adverse consequences such as significant investment and resources to identify and remediate such breach or other compromise notification obligations costly litigation government investigations government enforcement actions fines penalties and or lawsuits significant harm to our reputation with our customers and other similar harms
We are subject to stringent and evolving laws and other obligations related to data privacy and security Compliance with such obligations and our actual or perceived failure to comply with such obligations could lead to increased costs and liabilities e g government investigations litigation fines and penalties reputational harm loss of revenue loss of customers and other adverse business consequences
Given our processing of personal information we are subject to laws and other obligations including industry standards such as those related to payment cards policies statements and contracts relating to personal information Laws governing personal information continue to evolve as federal state and foreign governments continue to adopt new or different measures relating to data privacy and security as well as the processing of personal information The interpretation and application of many existing privacy and data protection laws and regulations in the U S including the California Consumer Privacy Act as amended CCPA Europe including the European Union s General Data Protection Regulation and elsewhere impose stringent obligations on processing personal information and create the risk of significant fines and other adverse consequences for noncompliance Such laws and regulations may be interpreted or applied in a manner that is inconsistent with each other and may complicate our existing data management practices Evolving compliance and operational requirements under applicable data protection obligations have become increasingly burdensome and complex Additionally under various data protection laws and other obligations we may be required to provide specific notices and obtain certain consents to process personal information For example some of our data processing practices have been and may in the future continue to be subject to challenges or lawsuits under data privacy data security and communications laws including for example challenges based on anti wiretapping or eavesdropping laws We are or may become subject to obligations that limit the manner in which we transfer personal information across national borders Our insurance coverage may be inadequate to protect us from privacy and security liabilities such coverage may not continue to be available on commercially reasonable terms or at all or such coverage may not pay claims
Compliance with such obligations increases our costs Our failure or perceived failure to comply with these obligations could result in adverse consequences including but not limited to privacy or security related claims including class actions government investigations and enforcement actions penalties and fines require us to change our business practices and may lead to administrative civil or criminal liability
The risk or actual occurrence of various unexpected events could have a material adverse effect on our financial condition Such events may be caused by for example natural disasters or extreme weather events diseases or pandemics including COVID 19 that have affected and may continue to affect our employees customers or partners floods fires or other catastrophes affecting our properties employees or customers cybersecurity attacks power outages and telecommunications failures affecting our systems or terrorism civil unrest mass violence or violent acts or other conflicts
Such events can adversely affect our workforce and prevent employees and customers from reaching our stores logistics facilities and other properties and can disrupt or disable portions of our supply chain distribution network and refurbishment operations They can also affect our information technology systems resulting in disruption to various aspects of our operations including our ability to transact with customers and fulfill orders As a consequence of these or other events we may endure interruption to our operations or losses of property equipment or inventory which could adversely affect our operations and financial condition
Our U S support fulfillment and refurbishment operations are concentrated in large part in a single facility in Grapevine Texas A casualty or other event that impacts this facility or its employees could significantly disrupt our support fulfillment and refurbishment operations and as a result could adversely affect our operations and financial condition
We seek to mitigate our exposure to disruptions in several ways For example where feasible we design the configuration of our logistics operations to reduce the consequences of disasters and other disruptions We also maintain insurance for these facilities against casualties and we evaluate our risks and develop contingency plans for dealing with them Although we have reviewed and analyzed a broad range of disruption risks applicable to our logistics operations the ones that actually affect us may not be those that we have concluded are most likely to occur Furthermore our plans may not be adequate at the time of occurrence for the magnitude of any particular disruption event that we may encounter
Although some level of inventory shrinkage is an unavoidable cost of doing business higher rates of inventory shrinkage or increased security or other costs to combat inventory theft could adversely affect our results of operations and financial condition There can be no assurance that we will be successful in our efforts to contain or reduce inventory shrinkage
We rely on computerized systems to coordinate and manage the activities in our operations including our ecommerce store and fulfillment operations If any of these systems fail to adequately perform their functions including our point of sale inventory management information technology or enterprise management systems our business could be adversely affected
We depend on third party delivery services to deliver products to our retail locations fulfillment centers and customers on a timely and consistent basis and changes in the terms we have with these service providers could adversely affect our business and financial position
We rely on third parties for the transportation of products and we cannot be sure that these services will continue to be provided on terms favorable to us or at all Delivery and shipping costs may increase from time to time and we may not be able to pass these costs directly to our customers Any increased delivery and shipping costs could harm our business and financial performance by increasing our costs of doing business and reducing our margins
If our relationships with these third parties are terminated or impaired if we are unable to negotiate acceptable terms with these third parties or if these third parties are unable to deliver products for us whether due to a labor shortage slow down or stoppage or for any other reason we would be required to use alternative carriers for the shipment of products to our retail locations fulfillment centers and customers Changing carriers could have a negative effect on our business and operating results due to the negative impact on customer experience including reduced visibility of order status and package tracking and delays in order processing and product delivery and we may be unable to engage alternative carriers on a timely basis upon terms favorable to us or at all In addition these third parties have increasingly had demand for their services exceed capacity in particular during the holiday selling season and we may be unable to obtain sufficient services to meet our demand or to timely meet our customers expectations
The manufacturers of gaming products have typically provided retailers with significant marketing and merchandising support for their products As part of this support we receive cooperative advertising and market development payments from these vendors which enable us to actively promote and merchandise the products we sell and drive sales at our stores and on our websites If our vendors fail to continue to provide this support at historical levels our business and financial condition may be negatively impacted
Our financial results depend on our ability to purchase and sell pre owned products Actions by manufacturers or publishers of products or governmental authorities to prohibit or limit our ability to purchase or sell pre owned products or to limit the ability of consumers to use pre owned products could have a negative impact on our business and financial condition
All of our retail stores are located in leased premises If the cost of leasing existing stores increases we cannot ensure that we will be able to maintain our existing store locations as leases expire In addition we may not be able to enter into new leases on favorable terms or at all or we may not be able to locate suitable alternative sites in a timely manner Our revenues and earnings may decline if we fail to maintain existing store locations enter into new leases or locate alternative sites
As a result of our operations in foreign countries our global tax rate is derived from a combination of applicable tax rates in the various jurisdictions in which we operate Depending upon the sources of our income any agreements we may have with taxing authorities in various jurisdictions and the tax filing positions we take in various jurisdictions our overall tax rate may be higher than other companies or higher than our tax rates have been in the past We base our estimate of an annual effective tax rate at any given point in time on a calculated mix of the tax rates applicable to our business and to estimates of the amount of income to be derived in any given jurisdiction A change in the mix of our business from year to year and from country to country changes in rules related to accounting for income taxes changes in tax laws in any of the jurisdictions in which we operate or adverse outcomes from the tax audits that regularly are in process in any jurisdiction in which we operate could result in an unfavorable change in our overall tax rate which could have a material adverse impact on our business and results of our operations
We also continue to monitor developments related to tax legislation and government policy The impact of these potential changes to our business and consolidated financial results cannot be determined until the relevant legislation and policies are finalized
To comply with laws adopted by the U S government or other U S or foreign regulatory bodies we may be required to increase our expenditures and hire additional personnel and additional outside legal accounting and advisory services all of which may cause our general and administrative and compliance costs to increase Significant workforce related legislative changes could increase our expenses and adversely affect our operations Examples of possible workforce related legislative changes include changes to an employer s obligation to recognize collective bargaining units the process by which collective bargaining agreements are negotiated or imposed minimum wage requirements and health care mandates In addition changes in the regulatory environment affecting Medicare reimbursements workplace safety product safety privacy and security of customer data responsible sourcing environmental protection supply chain transparency and increased compliance costs related to wage and hour statutes limitations on arbitration class action waiver agreements and overtime regulations among others could cause our expenses to increase without an ability to pass through any increased expenses through higher prices
As a seller of consumer products we are also subject to various federal state local and international laws regulations and statutes including laws relating to product safety and consumer protection and privacy While we take steps to comply with these laws there can be no assurance that we will be in compliance and failure to comply with these laws
could result in litigation regulatory action and penalties which could have a negative impact on our business and financial condition In addition our suppliers might not adhere to product safety requirements and the Company and those suppliers may therefore be subject to involuntary or voluntary product recalls or product liability lawsuits Direct costs lost sales and reputational damage associated with product recalls government enforcement actions or product liability lawsuits individually or in the aggregate could have a negative impact on future revenues and results of operations
Our international operations are also subject to compliance with the U S Foreign Corrupt Practices Act and other anti bribery laws applicable to our operations While we have policies and procedures to ensure compliance with these laws our associates contractors representatives and agents may take actions that violate our policies Any violations of these laws by any of these persons could have a negative impact on our business
In the ordinary course of our business we are from time to time subject to various litigation and legal proceedings including matters involving wage and hour associate class actions stockholder and consumer class actions tax audits and unclaimed property audits by states The outcome of litigation and other legal proceedings and the magnitude of potential losses therefrom particularly class action lawsuits and regulatory actions is difficult to assess or quantify
Certain of these legal proceedings if decided adversely to us or settled by us may require changes to our business operations that negatively impact our operating results or involve significant liability awards that impact our financial condition The cost to defend litigation may be significant As a result legal proceedings may adversely affect our business financial condition results of operations or liquidity
Stock markets in general and our stock price in particular have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies and our Company These broad market fluctuations may adversely affect the trading price of our Class A Common Stock In particular a large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which has put and may continue to put pressure on the supply and demand for our Class A Common Stock further influencing volatility in its
market price These and other external factors have caused and may continue to cause the market price and demand for our Class A Common Stock to fluctuate substantially which may limit or prevent our stockholders from readily selling their shares of our Class A Common Stock and may otherwise negatively affect the liquidity of our Class A Common Stock
A short squeeze due to a sudden increase in demand for shares of our Class A Common Stock that largely exceeds supply has led to and may continue to lead to extreme price volatility in shares of our Class A Common Stock
Investors may purchase shares of our Class A Common Stock to hedge existing exposure or to speculate on the price of our Class A Common Stock Speculation on the price of our Class A Common Stock may involve long and short exposures To the extent aggregate short exposure exceeds the number of shares of our Class A Common Stock available for purchase on the open market investors with short exposure may have to pay a premium to repurchase shares of our Class A Common Stock for delivery to lenders of our Class A Common Stock Those repurchases may in turn dramatically increase the price of shares of our Class A Common Stock until additional shares of our Class A Common Stock are available for trading or borrowing This is often referred to as a short squeeze
A large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which may increase the likelihood that our Class A Common Stock will be the target of a short squeeze A short squeeze has previously led and could continue to lead to volatile price movements in shares of our Class A Common Stock that are unrelated or disproportionate to our operating performance or prospects and once investors purchase the shares of our Class A Common Stock necessary to cover their short positions the price of our Class A Common Stock may rapidly decline Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment
Information available in public media that is published by third parties including blogs articles message boards and social and other media may include statements not attributable to the Company and may not be reliable or accurate
We have received and may continue to receive a high degree of media coverage that is published or otherwise disseminated by third parties including blogs articles message boards and social and other media This includes coverage that is not attributable to statements made by our officers or associates Information provided by third parties may not be reliable or accurate and could materially impact the trading price of our Class A Common Stock which could cause stockholders to lose their investments
The sales of a substantial number of shares of our Class A Common Stock or the perception that such sales could occur could adversely affect the price for our Class A Common Stock Our Board of Directors may authorize the issuance of additional authorized but unissued Class A Common Stock or other authorized but unissued securities at any time including pursuant to equity incentive plans In addition we may file a registration statement with the SEC allowing us to offer from time to time and at any time equity securities including common or preferred stock subject to market conditions and other factors Accordingly we may from time to time and at any time seek to offer and sell our equity securities including sales of our Class A Common Stock pursuant to an at the market program based upon market conditions and other factors
Future sales of a substantial amount of our Class A Common Stock in the public markets by our insiders or the perception that these sales may occur may cause the market price of our Class A Common Stock to decline
Our employees directors and officers and their affiliates hold substantial amounts of shares of our Class A Common Stock Sales of a substantial number of such shares by these stockholders or the perception that such sales will occur may cause the market price of our Class A Common Stock to decline Other than restrictions on trading that arise under securities laws or pursuant to our securities trading policy that is intended to facilitate compliance with securities laws including the prohibition on trading in securities by or on behalf of a person who is aware of material nonpublic information we have no restrictions on the right of our employees directors and officers and their affiliates to sell their unrestricted shares of Class A Common Stock
to the extent we acquire and hold significant amounts of Bitcoin or U S Dollar denominated stablecoins fluctuations in the price of Bitcoin or such stablecoins changes to our Bitcoin or stablecoin strategy and regulatory commercial and technical developments relating to Bitcoin or such stablecoins
These and other factors could affect our business financial condition and results of operations and this makes the prediction of our financial results on a quarterly basis difficult Also it is possible that our quarterly financial results may be below the expectations of public market analysts
Debt financing if obtained may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt and could increase our expenses and require that our assets secure such debt These restrictions and expenses could in turn negatively impact our financial condition and liquidity
If our internal control over financial reporting is ineffective our business may be adversely affected and we may lose market confidence in our reported financial information which could adversely impact our business and stock price
Effective internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of consolidated financial statements and may not prevent or detect misstatements because of inherent limitations These limitations include among others the possibility of human error inadequacy or circumvention of controls and fraud
If we are unable to maintain effective internal control over financial reporting our ability to report financial information timely and accurately could be adversely affected As a result we could lose investor confidence and become subject to litigation or investigations which could adversely affect our business operations financial condition and our stock price
An important part of our business involves the receipt storage and other processing of personal information of our customers and associates including in the case of our customers payment information Security of this information and our other proprietary or sensitive data is imperative to ensure the trust of our customers vendors and associates We assess identify and manage material risks related to potential cybersecurity attacks on or through our electronic information systems that could adversely affect the confidentiality integrity or availability of our information systems or the information residing on those systems through various processes These processes include a wide variety of controls technologies methods systems and other processes that are designed to prevent detect or mitigate data loss theft and misuse and unauthorized access to or other cybersecurity attacks or vulnerabilities affecting our data and information technology systems
The assessment of cybersecurity risk is integrated into our overall risk management processes and cybersecurity is identified as a key risk within our Enterprise Risk Management ERM program The Company strives to implement cybersecurity policies standards processes and controls for assessing identifying and managing material risks from
We have an information technology IT security team led by our chief information security officer that is responsible for implementing and maintaining cybersecurity and data protection practices at the Company in close coordination with senior leadership and other teams across GameStop We seek to address cybersecurity risks through a cross functional approach including relevant training for applicable associates and regular reviews and tests of our cybersecurity program that leverage audits performed by our internal audit team In addition to our in house cybersecurity capabilities at times we also engage consultants or other third parties to assist with assessing identifying and managing cybersecurity risks
We use processes to oversee and identify material risks from cybersecurity threats associated with our use of third party technology and systems We maintain processes designed to reduce the impact of a cybersecurity attack or other compromise at a third party vendor
We maintain a cybersecurity incident response plan which details the incident response procedures and points of contact related to the response processes The response plan includes a decision tree based playbook which is a supplement to the plan and focuses on specific types of incidents and the appropriate response steps
As of the date of this report we are not aware of any recent cybersecurity attacks that have materially affected or are reasonably likely to materially affect the Company including our business strategy results of operations or financial condition
As indicated above we have an IT security team led by our chief information security officer that is responsible for implementing and maintaining centralized cybersecurity and data protection practices at the Company in close coordination with senior leadership and other teams across GameStop The security team s leadership has an average of 13 years of prior work experience in various roles including monitoring response compliance and privacy These individuals are informed about and monitor the prevention mitigation detection and remediation of cybersecurity incidents through their management of and participation in the cybersecurity risk management and strategy processes described above including the operation of our incident response plan and report to the Audit Committee on any appropriate items
The Audit Committee of the Board of Directors with input from management assesses the measures implemented by us to mitigate and prevent cybersecurity attacks or other compromise The Company s IT team consults with and provides regular updates to our Audit Committee as well as members of our senior management team as appropriate on technology and cybersecurity matters the status of projects to strengthen our information security systems assessments of our cybersecurity program and timely reports regarding any cybersecurity attack that meets established reporting thresholds Our Audit Committee has oversight responsibility for our cybersecurity program
All of our retail stores are leased Store leases typically provide for a lease term of one to five years plus renewal options This arrangement gives us the flexibility to pursue extension or relocation opportunities that arise from changing market conditions We believe that as current leases expire we will be able to obtain either renewals at present locations or leases for similar locations in the same area
s of February 1 2025 we owned zero and leased 11 distribution facilities totaling approximately 1 8 million square feet The lease expiration dates for the leased facilities range from 2025 to 2032 with an
In fiscal 2024 we closed our York Pennsylvania distribution facility to consolidate U S fulfillment activities to our Grapevine Texas facility In fiscal 2024 we divested our operations in Italy which included our facility in Milan Italy In fiscal 2024 we relocated our U S refurbishment operations into our distribution and administration facility in Grapevine Texas Previously these refurbishment operations were performed in a separate facility also located in Grapevine Texas
Our Class A Common Stock is traded on the NYSE under the symbol GME As of March 19 2025 there were 447 083 981 shares of our Class A Common Stock outstanding Of those outstanding shares approximately 377 6 million were held by Cede Co on behalf of the Depository Trust Clearing Corporation or approximately 84 of our outstanding shares and approximately 69 5 million shares of our Class A Common Stock were held by registered holders with our transfer agent or approximately 16 of our outstanding shares As of March 19 2025 there were 190 074 record holders of our Class A Common Stock
On June 3 2019 our Board of Directors elected to eliminate our quarterly dividend in an effort to strengthen our balance sheet and provide increased financial flexibility During the past five fiscal years we have not declared and do not anticipate declaring in the near term dividends on shares of our Class A Common Stock We currently use and will continue to use all available funds and any future earnings for working capital and general corporate purposes maintaining a strong balance sheet potential strategic initiatives and capital expenditures Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations financial condition contractual restrictions including those under the agreements governing our existing indebtedness and other factors our Board of Directors deems relevant
The following graph compares the cumulative total stockholder return on our Class A Common Stock for the period commencing January 28 2019 through January 31 2025 the last trading date of fiscal 2024 with the cumulative total return on the Standard Poor s 500 Stock Index the S P 500 and the Dow Jones Retailers Other Specialty Industry Group Index the Dow Jones Specialty Retailers Index over the same period Total return values were calculated based on cumulative total return assuming i the investment of 100 in our Class A Common Stock the S P 500 and the Dow Jones Specialty Retailers Index on January 28 2019 and ii reinvestment of dividends
The following stock performance graph and related information shall not be deemed soliciting material or filed with the SEC nor should such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act except to the extent that we specifically incorporate it by reference in such filing
As noted above under the heading Risk Factors Risk Related to Our Class A Common Stock the market price of our Class A Common Stock has been extremely volatile due to circumstances outside of our control including a short squeeze in 2021 that led to volatile price movements that were unrelated or disproportionate to our operating performance
On March 4 2019 our Board of Directors approved a share repurchase authorization allowing us to repurchase up to 300 0 million of our Class A Common Stock The authorization has no expiration date We did not repurchase shares during fiscal 2024 or fiscal 2023 As of February 1 2025 we have 101 3 million remaining under the repurchase authorization Refer to Item 7 Management s Discussion and Analysis Share Repurchases for additional information
The following discussion should be read in conjunction with the information contained in our consolidated financial statements including the notes thereto Statements regarding future economic performance management s plans and objectives and any statements concerning assumptions related to the foregoing contained in Management s Discussion and Analysis of Financial Condition and Results of Operations constitute forward looking statements Certain factors which may cause actual results to vary materially from these forward looking statements accompany such statements or appear elsewhere in this Form 10 K including the disclosures under Part I Item 1A Risk Factors
In Management s Discussion and Analysis of Financial Condition and Results of Operations we provide a detailed analysis for fiscal 2024 compared to fiscal 2023 For a comparison of our results of operations for fiscal 2023 compared to fiscal 2022 see Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of our annual report on Form 10 K for the fiscal year ended February 3 2024 as filed with the SEC on
GameStop Corp GameStop we us our or the Company a Delaware corporation established in 1996 is a leading specialty retailer offering games and entertainment products through its thousands of stores and ecommerce platforms
Our strategy involves i using our cash and other sources of liquidity to maximize shareholder value including through potential investment and or acquisition opportunities and ii optimizing our retail business to achieve profitability
On March 18 2025 the Board of Directors of the Company the Board unanimously authorized a revised investment policy the Investment Policy In accordance with the revised Investment Policy the Board has delegated authority to manage the Company s portfolio of securities investments to an Investment Committee of the Board the Investment Committee consisting of the Company s Chairman of the Board and Chief Executive Officer Ryan Cohen and two independent members of the Board together with such personnel and advisors as the Investment Committee may choose The Investment Committee regularly reviews risks related to the Company s investment portfolio including concentration risk When allocating cash to various investment opportunities and considering related investment risk the Investment Committee considers market based factors including risk adjusted after tax yields When reviewing concentration risk the Investment Committee considers the liquidity needs of the Company among other things
The overall goals of the Investment Policy are to provide sufficient liquidity to meet the day to day financial obligations of the Company and to optimize investment returns within the guidelines of the Investment Policy Permissible investment instruments include cash and cash equivalents e g bank obligations money market funds and commercial paper fixed income securities e g obligations of the U S Treasury and U S Government tax exempt obligations of states and municipalities and corporate bonds notes equity securities limited to those listed on the New York Stock Exchange NYSE NYSE American NYSE Arca or the Nasdaq Stock Market and in compliance with the listing standards of the applicable exchange and certain crypto currencies including Bitcoin Individual exceptions to the Investment Policy may only be made by the unanimous agreement of the Investment Committee or if the Investment Committee is unable to reach unanimous agreement on such exception by the Board
On March 25 2025 we announced that as part of our revisions to the Investment Policy the Board approved the addition of Bitcoin as a treasury reserve asset whereby a portion of our cash or future debt and equity issuances may be invested in Bitcoin We have not set a maximum amount of Bitcoin we may accumulate and may sell any Bitcoin we may acquire
The Investment Committee will direct the investment activity of the Company in public and private markets pursuant to authority granted by the Board Depending on certain market conditions and various risk factors Mr Cohen or other members of the Investment Committee each in their personal capacity or through affiliated investment vehicles may at times invest in the same securities in which the Company invests The Board anticipates that such investments will align the interests of the Company with the interests of related parties because it places the personal resources of such directors at risk in substantially the same manner as resources of the Company in connection with investment decisions made by the Investment Committee on behalf of the Company
During fiscal 2024 we continued to optimize our cost structure to align with our current and anticipated future needs We will continue to focus on cost containment as we look to operate with increased efficiency
We continue to explore ways to increase the size of our addressable market through new product and service offerings including offerings in the graded collectibles category Expansion of these categories provides the Company with margin accretive opportunities that can assist the Company in achieving its profitability goals
In connection with our efforts to achieve sustained profitability we continue to evaluate our international assets and operations to determine their strategic and financial fit and to eliminate redundancies and underperforming assets To date we have taken the following steps as part of this ongoing effort
During the fourth quarter of fiscal 2024 we sold our Italian subsidiary GameStop Italy S r l which operated our Italian stores and e commerce business The stores in Italy will continue to operate under the GameStop brand for a transition period of up to six months We recognized impairment expense of 7 6 million on the assets and a loss of 0 5 million during fiscal 2024 in connection with the sale The proceeds and loss on the sale were immaterial to our financial results
We have also initiated a comprehensive store portfolio optimization review which involves identifying stores for closure based on many factors including an evaluation of current market conditions and individual store performance This review among other things resulted in the closure of 590 stores in the United States in fiscal 2024 While this review is ongoing and a specific set of stores has not been identified for closure we anticipate closing a significant number of additional stores in fiscal 2025
While we expect our cost containment efforts to yield reductions in selling general and administrative SG A expenses in the long term we have incurred and may continue to incur non recurring costs related to these efforts in the short term
We also continue to explore ways to increase the size of our addressable market through new product and service offerings including offerings in the graded collectibles category On October 15 2024 GameStop announced that it had entered into a collaboration with Collectors Holdings Inc through its Professional Sports Authenticator division PSA As part of this collaboration GameStop became an authorized PSA dealer and PSA provides autograph authentication and grading services for trading cards through select GameStop stores across the United States
During fiscal 2024 total net sales decreased 27 5 compared to the prior year with net sales in our Europe Canada United States and Australia segments decreasing by 38 0 30 2 24 9 and 22 5 respectively compared to the prior year The decrease in consolidated net sales in fiscal 2024 compared to the prior year was primarily attributable to a 516 6 million or 33 9 decline in the sales of software a 897 1 million or 29 9 decline in the sale of hardware and accessories and a 36 1 million or 4 8 decline in the sales of collectibles
The decrease in gross profit in fiscal 2024 compared to the prior year is primarily attributable to the decrease in net sales as further outlined in the net sales commentary The increase in gross profit as a percentage of net sales is primarily due to a shift to higher margin product categories specifically collectibles and preowned hardware and accessories as well as improvements in inventory management Sales of c
ollectibles as a percentage of total net sales increased to 18 8 in the current year compared to 14 3 in the prior year Sales of pre owned hardware and accessories as a percentage of total net sales increased to
The decrease in SG A expenses in fiscal 2024 compared to the prior year is primarily attributable to a 157 2 million reduction in labor related costs consulting services costs and marketing expenses driven by our continued focus on cost reduction efforts Store related costs decreased 30 7 million in the current year in connection with store closures primarily in our European segment The increase in SG A as a percentage of net sales is primarily attributable to the decrease in net sales relative to the decrease in SG A expenses as further outlined in the net sales commentary
Interest income net increased 113 9 million to 163 4 million in fiscal 2024 compared to 49 5 million in the prior year The increase is primarily attributable to an increase in cash and cash equivalents resulting from the issuance and sale of shares of our Class A Common Stock under the ATM Transactions as well as higher interest rates in the current year compared to the prior year
Income tax expense net decreased 0 5 million to 5 9 million in fiscal 2024 compared to 6 4 million in the prior year The company reported an effective tax rate of 4 3 in fiscal 2024 down from 48 9 in the prior year This decrease in effective tax rate is primarily attributable to a 113 9 million increase in interest income and a corresponding 24 million increase in statutory tax expense offset by tax benefits recognized in the current year See Item 8 Notes to the Consolidated Financial Statements
Our principal sources of liquidity are cash on hand and cash from operations As of February 1 2025 we had total unrestricted cash and cash equivalents on hand of 4 756 9 million and marketable securities of 18 0 million
Our cash and cash equivalents are carried at fair value and consist primarily of cash money market funds cash deposits with commercial banks U S government bonds and notes and highly rated direct short term instruments with original maturities of 90 days or less
Our marketable securities are also carried at fair value and include investments in certain highly rated short term government notes government bills and time deposits As of February 1 2025 the investment portfolios aggregate balance was 18 0 million all of which have an original maturity in excess of 90 days and less than one year and are classified as marketable securities on our Consolidated Balance Sheets
On an ongoing basis we evaluate and consider certain strategic operating alternatives including divestitures restructuring or dissolution of unprofitable business segments uses for our excess cash as well as equity and debt financing alternatives that we believe may enhance stockholder value The nature amount and timing of any strategic operational change or financing transactions that we might pursue will depend on a variety of factors including as of the applicable time our available cash and liquidity and operating performance our commitments and obligations our capital requirements limitations imposed under our credit arrangements and overall market conditions
On March 18 2025 the Board approved a revised Investment Policy See Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations Investments for more information Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company s results of operations However the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value
In fiscal 2021 six separate unsecured term loans held by our French subsidiary Micromania SAS for a total of 40 0 million were extended for five years As of February 1 2025 16 9 million remains outstanding
In November 2021 we entered into a credit agreement for a secured asset based credit facility comprised of a 500 million revolving line of credit maturing in November 2026 2026 Revolver The 2026 Revolver included a 50 million swing loan revolving sub facility a 50 million Canadian revolving sub facility and a 250 million letter of credit sublimit On March 22 2024 we delivered an irrevocable notice pursuant to the 2026 Revolver that reduced the 500 million revolving line of credit to 250 million The 2026 Revolver continued to include a 50 million swing loan sub facility a 50 million Canadian sub facility and a 250 million letter of credit sublimit On August 27 2024 we voluntarily terminated the 2026 Revolver including all commitments and obligations thereunder
Some of our vendors have requested and may continue to request credit support collateral for our inventory purchase obligations and the levels of such collateral will depend on a variety of factors including our inventory purchase levels available payment terms for inventories favorable credit terms and costs of providing collateral
We maintain uncommitted facilities with certain lenders that provide for the issuance of letters of credit and bank guarantees at times supported by cash collateral As of February 1 2025 we had letters of credit and other bank guarantees outstanding in the amount of 7 3 million
with Jefferies LLC the Sales Agent providing for the sale by the Company of shares of our Class A Common Stock par value 0 001 per share Common Shares from time to time through the Sales Agent in connection with an at the market offering program the ATM Offerings
Pursuant to the prospectus supplement relating to the ATM Offerings filed with the SEC on May 17 2024 we sold an aggregate of 45 0 million Common Shares for aggregate gross proceeds before commissions and offering expenses of approximately 933 4 million
Pursuant to the prospectus supplement relating to the ATM Offerings filed with the SEC on June 7 2024 we sold an aggregate of 75 0 million additional Common Shares for aggregate gross proceeds before commissions and offering expenses of approximately 2 137 0 million
Pursuant to the prospectus supplement relating to the ATM Offerings filed with the SEC on September 10 2024 we sold an aggregate of 20 0 million additional Common Shares for aggregate gross proceeds before commissions and offering expenses of approximately 400 0 million
Cash provided by operating activities during fiscal 2024 was primarily due to the impact of our net income a decrease in merchandise inventories and a decrease in receivables partially offset by a decrease in accounts payable and accrued liabilities
Cash used in operating activities during fiscal 2023 was primarily due to a decrease in accounts payable and accrued liabilities partially offset by a decrease in accounts receivable and the impact of our net income The decrease in accounts payable and accrued liabilities was primarily due to the timing of payments for merchandise inventory as a result of an additional week in fiscal 2023 compared to fiscal 2022
Cash provided by investing activities during fiscal 2024 was primarily attributable to proceeds from the maturity of marketable securities and proceeds from the sale of property and equipment in our Europe segment partially offset by purchases of marketable securities and routine capital expenditures
Cash used in investing activities during fiscal 2023 was primarily due to purchases of marketable securities ongoing technological investments and store related capital expenditures partially offset by proceeds from sales and maturities of marketable securities and proceeds from the sale of property and equipment in our Europe segment
Cash provided by financing activities during fiscal 2024 was primarily due to net proceeds of 3 453 8 million received from the issuance and sale of shares of our Class A Common Stock in connection with the ATM Offerings partially offset by repayments on our government guaranteed low interest French term loans due October 2022 through October 2026
Cash used in financing activities during fiscal 2023 was attributable to the repayments on our government guaranteed low interest French term loans due October 2022 through October 2026 and the settlement of stock based awards
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period In preparing these financial statements we have made our best estimates and judgments of certain amounts included in the financial statements giving due consideration to materiality Changes in the estimates and assumptions used by us could have a significant impact on our financial results and actual results could differ from those estimates Our senior management has discussed the development and selection of these critical accounting policies as well as the significant accounting policies disclosed in Item 8 Notes to the Consolidated Financial Statements
Summary of Significant Accounting Policies with the Audit Committee of our Board of Directors We believe the following accounting policies are the most critical to aid in fully understanding and evaluating our reporting of transactions and events and the estimates these policies involve our most difficult subjective or complex judgments
Our merchandise inventories are carried at the lower of cost or market generally using the average cost method Under the average cost method as new product is received from vendors its current cost is added to the existing cost of product on hand and this amount is re averaged over the cumulative units Pre owned gaming systems traded in by customers are recorded as inventory at the amount of the store credit given to the customer In valuing inventory we are required to make assumptions regarding the necessity of reserves required to value potentially obsolete or over valued items at the lower of cost or market We consider quantities on hand recent sales potential price protections and returns to vendors among other factors when making these assumptions
Our ability to gauge these factors is dependent upon our ability to forecast customer demand and to provide a well balanced merchandise assortment Any inability to forecast customer demand properly could lead to increased costs associated with write downs of inventory to reflect volumes or pricing of inventory which we believe represents the net realizable value A 10 change in our obsolescence reserve percentage at February 1 2025 would have affected net earnings by approxi
rewards program allows paid members to earn points on purchases that can be redeemed for rewards that include discounts or coupons We allocate the transaction price between the product and loyalty points earned based on the relative stand alone selling prices and expected point redemption The portion allocated to the loyalty points is initially recorded as deferred revenue and subsequently recognized as revenue upon redemption or expiration The two primary estimates utilized to record the deferred revenue for loyalty points earned by members are the estimated retail price per point and estimated amount of points that will never be redeemed which is a concept known in the retail industry as breakage Additionally we sell gift cards to our customers in our retail stores through our website and through selected third parties At the point of sale a liability is established for the value of the gift card We recognize revenue from gift cards when the card is redeemed by the customer and recognize estimated breakage on gift cards in proportion to historical redemption patterns
The two primary estimates utilized to record the balance sheet liability for loyalty points earned by members are the estimated redemption rate and the estimated weighted average retail price per point redeemed We use historical redemption rates experienced under our loyalty program as a basis for estimating the ultimate redemption rate of points earned We estimate breakage of loyalty points and unredeemed gift cards based on historical redemption rates The
weighted average retail price per point redeemed is based on our most recent actual loyalty point redemptions and is adjusted as appropriate for recent changes in redemption values including the mix of rewards redeemed Our estimate of the amount and timing of gift card redemptions is based primarily on historical transaction experience
We continually evaluate our methodology and assumptions based on developments in redemption patterns retail price per point redeemed and other factors Changes in the ultimate redemption rate and weighted average retail price per point redeemed have the effect of either increasing or decreasing the deferred revenue balance through current period revenue by an amount estimated to cover the retail value of all points previously earned but not yet redeemed by loyalty program members as of the end of the reporting period A 10 change in our customer loyalty program redemption rate or a 10 change in our weighted average retail value per point redeemed at February 1 2025 in each case would have affected net earnings by approxima
We account for income taxes utilizing an asset and liability approach and deferred taxes are determined based on the estimated future tax effect of differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates As a result of our operations in many foreign countries our global tax rate is derived from a combination of applicable tax rates in the various jurisdictions in which we operate
The Organization for Economic Co operation and Development OECD supported by 140 of their member countries have agreed to implement a minimum 15 tax rate on certain multinational enterprises and have released model guidance This global minimum tax known as the Pillar Two framework became effective across various countries in 2024 as each country works to enact legislation influenced by the OECD Pillar Two rules In 2024 the Company had no impact on its effective tax rate after the adoption of the Pillar Two framework The Company will continue to evaluate additional guidance released by the OECD along with the pending and adopted legislation in each of the countries in which we operate
Additionally a valuation allowance is recorded against a deferred tax asset if it is not more likely than not that the asset will be realized We assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets Several factors are considered in evaluating the realizability of our deferred tax assets including the remaining years available for carry forward the tax laws for the applicable jurisdictions the future profitability of the specific business units and tax planning strategies Based on our analysis we have determined that it is more likely than not that some portion of our deferred tax assets will not be realized Our valuation allowances decrease
We maintain accruals for uncertain tax positions until examination of the tax year is completed by the taxing authority available review periods expire or additional facts and circumstances cause us to change our assessment of the appropriate accrual amount Our liability for uncertain tax positions was
as of February 1 2025 Considerable management judgment is necessary to assess the inherent uncertainties related to the interpretations of complex tax laws regulations and taxing authority rulings as well as to the expiration of statutes of limitations in the jurisdictions in which we operate We base our estimate of an annual effective tax rate at any given point in time on a calculated mix of the tax rates applicable to our operations and to estimates of the amount of income to be derived in any given jurisdiction We file our tax returns based on our understanding of the appropriate tax rules and regulations However complexities in the tax rules and our operations as well as positions taken publicly by the taxing authorities may lead us to conclude that accruals for uncertain tax positions are required
Our judgments and estimates concerning uncertain tax positions may change as a result of evaluation of new information such as the outcome of tax audits or changes to or further interpretations of tax laws and regulations Our judgments and estimates concerning realizability of deferred tax assets could change if any of the evaluation factors change If such changes take place there is a risk that our effective tax rate could increase or decrease in any period impacting our net earnings
We use forward exchange contracts to manage currency risk primarily related to intercompany loans denominated in non functional currencies The forward exchange contracts are not designated as hedges and therefore changes in the fair values of these derivatives are recognized in earnings thereby offsetting the current earnings effect of the re measurement of related intercompany loans We recognized a gain of 0 9 million and a gain of 2 0 million in SG A expenses in our Consolidated Statement of Operations related to derivative instruments for the fiscal years ended February 1 2025 and February 3 2024 respectively The aggregate fair value of the forward exchange contracts as of February 1 2025 and February 3 2024 was a net liability of zero respectively as measured by observable inputs obtained from market news reporting services such as
and industry standard models that consider various assumptions including quoted forward prices time value volatility factors and contractual prices for the underlying instruments as well as other relevant economic measures As of February 1 2025 we do not have any outstanding derivatives or contracts and we do not have foreign exchange risk exposures due to foreign exchange derivatives or contracts
We do not use derivative financial instruments for trading or speculative purposes We are exposed to counterparty credit risk on all of our derivative financial instruments and cash equivalent investments We manage counterparty risk according to the guidelines and controls established under comprehensive risk management and investment policies We continuously monitor our counterparty credit risk and utilize a number of different counterparties to minimize our exposure to potential defaults We do not require collateral under derivative or investment agreements
We have audited the accompanying consolidated balance sheets of GameStop Corp and subsidiaries the Company as of February 1 2025 and February 3 2024 the related consolidated statements of operations comprehensive loss stockholders equity and cash flows for the 52 weeks ended February 1 2025 the 53 weeks ended February 3 2024 and the 52 weeks ended January 28 2023 and the related notes and the schedule listed in the Index at Item 15 collectively referred to as the financial statements In our opinion the financial statements present fairly in all material respects the financial position of the Company as of February 1 2025 and February 3 2024 and the results of its operations and its cash flows for the 52 weeks ended February 1 2025 the 53 weeks ended February 3 2024 and the 52 weeks ended and January 28 2023 in conformity with accounting principles generally accepted in the United States of America
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of February 1 2025 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 25 2025 expressed an unqualified opinion on the Company s internal control over financial reporting
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of the critical audit matter does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter below providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate
he Company carries merchandise inventories at the lower of cost or net realizable value generally using the average cost method Under the average cost method as new product is received from vendors its current cost is added to the existing cost of product on hand and this amount is re averaged over the cumulative units The Company is required to make adjustments to inventory to reflect potential obsolescence or over valuation as a result of cost exceeding market In valuing inventory the Company considers quantities on hand recent sales potential price protections returns to vendors and other factors The Company s ability to assess these factors is dependent upon their ability to forecast customer demand and to provide a well balanced merchandise assortment
We identified the reserve for merchandise inventory in certain geographies as a critical audit matter because of the significant estimates and assumptions management uses to estimate potential obsolescence The estimates and assumptions used by management include consideration of quantities on hand recent sales prices and key customer
demand product metrics such as inventory turnover and product margins Evaluation of this estimate required a high degree of auditor judgment and an increased extent of effort when 1 performing audit procedures to evaluate the reasonableness of the estimates and assumptions used by management and 2 performing audit testing of the key inputs to the related calculations to evaluate whether the reserve for merchandise inventory in certain geographies was appropriately recorded as of February 1 2025
We evaluated the appropriateness and consistency of management s methods and assumptions used in developing their estimate of the excess slow moving and obsolete inventory reserve which included consideration of reserve trends and performance of sensitivity analyses of key assumptions
We performed testing on the underlying data used in management s obsolescence analysis by validating the application of management s key assumptions to the overall determination of the excess slow moving and obsolete inventory reserve
GameStop Corp GameStop we us our or the Company a Delaware corporation established in 1996 is a leading specialty retailer offering games and entertainment products through its thousands of stores and ecommerce platforms
with Jefferies LLC the Sales Agent providing for the sale by the Company of shares of our Class A Common Stock par value 001 per share Common Shares from time to time through the Sales Agent in connection with an at the market equity offering program ATM Offerings
Pursuant to the prospectus supplement relating to the ATM Offerings filed with the SEC on May 17 2024 we sold an aggregate of 45 0 million Common Shares for aggregate gross proceeds before commissions and offering expenses of approx
Pursuant to the prospectus supplement relating to the ATM Offerings filed with the SEC on June 7 2024 we sold an additional aggregate of 75 0 million Common Shares for aggregate gross proceeds before commissions and offering expenses of approximate
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period In preparing these financial statements we have made our best estimates and judgments of certain amounts included in the financial statements giving due consideration to materiality Changes in the estimates and assumptions used by us could have a significant impact on our financial results Actual results could differ from those estimates
Our cash and cash equivalents on our Consolidated Balance Sheets are carried at fair value and consist primarily of cash money market funds cash deposits with commercial banks and highly rated direct short term instruments with an original maturity of 90 days or less Restricted cash consists primarily of bank deposits that collateralize our obligations to vendors and landlords
The following table presents a reconciliation of cash cash equivalents and restricted cash in our Consolidated Balance Sheets to total cash cash equivalents and restricted cash in our Consolidated Statements of Cash Flows
We have invested some of our excess cash in investment grade short term fixed income securities which consist of U S government and agency securities and time deposits Such investments with an original maturity in excess of 90 days and less than one year are classified as marketable securities on our Consolidated Balance Sheets The Company classifies these investments as available for sale debt securities and records them at fair value
Unrealized holding gains and losses are recognized in accumulated other comprehensive loss on our Consolidated Balance Sheets Realized gains and losses upon sale or extinguishment are reported in other expense net in our Consolidated Statements of Operations Each reporting period we evaluate whether declines in fair value below carrying value are due to expected credit losses as well as our ability and intent to hold the investment until a forecasted recovery occurs
On March 18 2025 the Board of Directors of the Company the Board unanimously authorized a revised investment policy the Investment Policy In accordance with the revised Investment Policy the Board has delegated authority to manage the Company s portfolio of securities investments to an Investment Committee of the Board the Investment Committee consisting of the Company s Chairman of the Board and Chief Executive Officer Ryan Cohen and two independent members of the Board together with such personnel and advisors as the Investment Committee may choose
Our merchandise inventories are carried at the lower of cost or net realizable value generally using the average cost method Under the average cost method as new product is received from vendors its current cost is added to the existing cost of product on hand and this amount is re averaged over the cumulative units Pre owned gaming systems and other products traded in by customers are recorded as inventory at the amount of cash or store credit given to the customer We are required to make adjustments to inventory to reflect potential obsolescence or over valuation as a result of cost exceeding market In valuing inventory we consider quantities on hand recent sales potential price protections returns to vendors and other factors Our ability to assess these factors is dependent upon our ability to forecast customer demand and to provide a well balanced merchandise assortment Inventory is adjusted based on anticipated physical inventory losses or shrinkage and actual losses resulting from periodic physical inventory counts Inventory reserves as of February 1 2025 and February 3 2024
Property and equipment are carried at cost less accumulated depreciation and amortization Depreciation on fixtures and equipment is computed using the straight line method over their estimated useful lives Maintenance and repairs are expensed as incurred while improvements and major remodeling costs are capitalized Leasehold improvements are capitalized and amortized over the shorter of their estimated useful lives or the terms of the respective leases which includes reasonably certain renewal options Costs incurred in purchasing or developing management information systems are capitalized and included in fixtures and equipment These costs are amortized over their estimated useful lives from the date the technology becomes operational We periodically review our property and equipment when events or changes in circumstances indicate that its carrying amounts may not be recoverable or its depreciation or amortization periods should be accelerated We assess recoverability based on several factors including our intention with respect to our stores and those stores projected undiscounted cash flows An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its fair value determined based on an estimate of discounted future cash flows or readily available market information for similar assets
During fiscal 2024 we relocated our U S refurbishment operations into our distribution and administration facility in Grapevine Texas Previously these refurbishment operations were performed in a separate facility also located in Grapevine Texas
We consider assets to be held for sale when management with appropriate authority approves and commits to a formal plan to actively market the assets for sale at a price reasonable in relation to their estimated fair value the assets are available for immediate sale in their present condition an active program to locate a buyer has been initiated the sale of the assets is probable and expected to be completed within one year and it is unlikely that significant changes will be made to the plan Upon designation as held for sale we record the assets at the lower of their carrying value or their estimated fair value reduced for the cost to dispose the assets
During fiscal 2024 we sold certain properties in our Europe segment consisting of buildings land and other property and equipment During fiscal 2024 we also divested our operations in Italy There were no remaining assets held for sale as of February 1 2025
Indefinite lived intangible assets are expected to contribute to cash flows indefinitely and therefore are not subject to amortization but are required to be evaluated at least annually for impairment If the carrying value of an individual indefinite lived intangible asset exceeds its fair value such individual indefinite lived intangible asset is impaired by the amount of the excess We test our indefinite lived intangible assets on an annual basis during the fourth quarter or when circumstances indicate the carrying value might be impaired Our indefinite lived intangible assets consist of digital assets and trade names
The fair value of our trade names are estimated by using a relief from royalty approach which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company We recognized no impairment charges during fiscal 2024 2023 and 2022 See
Our definite lived intangible assets consist primarily of leasehold rights The estimated useful life and amortization methodology of intangible assets are determined based on the period in which they are expected to contribute directly to cash flows Intangible assets that are determined to have a definite life are amortized over the life of the asset
We recognize revenue when performance obligations are satisfied by transferring goods or services to the customer in an amount that we expect to collect in exchange for those goods or services The satisfaction of a performance obligation with a single customer may occur at a point in time or may occur over time The significant majority of our revenue is recognized at a point in time generally when a customer purchases and takes possession of merchandise through our stores or when merchandise purchased through our ecommerce platforms is delivered to a customer
Revenue is recognized net of sales discounts sales returns and estimated sales return reserves Our sales return policy is generally limited to 15 days or less and as such our sales returns are and historically have been immaterial Revenues do not include sales taxes or other taxes collected from customers
We also sell a variety of digital products which generally allow consumers to download software or play games on the internet The significant majority of the digital products we sell are unbundled and do not require us to purchase inventory or take physical possession of or take title to inventory When purchasing these products from us consumers pay a retail price and we earn a commission based on a percentage of the retail sale as negotiated with the digital product publisher We recognize the sale of these digital products on a net basis whereby the commissions earned are recorded as revenue
rewards program allows paid members to earn points on purchases that can be redeemed for rewards that include discounts or coupons When rewards program members purchase our product we allocate the transaction price between the product and loyalty points earned based on the relative stand alone selling prices and expected point redemption The portion allocated to the loyalty points is initially recorded as deferred revenue and subsequently recognized as revenue upon redemption or expiration
The two primary estimates utilized to record the deferred revenue for loyalty points earned by members are the estimated retail price per point and estimated breakage The estimated retail price per point is based on the actual historical retail prices of product purchased through the redemption of loyalty points We estimate breakage of loyalty points based on historical redemption rates We continually evaluate our methodology and assumptions based on developments in retail price per point redeemed redemption patterns and other factors Changes in the retail price per point and redemption rates have the effect of either increasing or decreasing the deferred revenue liability through current period revenue by an amount estimated to represent the retail value of all points previously earned but not yet redeemed by loyalty program members as of the end of the reporting period The cost of administering the loyalty program including program administration fees program communications and cost of loyalty cards is recognized in SG A expenses in our Consolidated Statement of Operations
We establish a liability upon the issuance of merchandise credits and the sale of gift cards Revenue is subsequently recognized when the credits and gift cards are redeemed In addition we recognize breakage in revenue upon redemption and in proportion to historical redemption patterns regardless of the age of the unused gift cards and merchandise credit liabilities To the extent that future redemption patterns differ from those historically experienced there will be variations in the recorded breakage
We participate in vendor cooperative advertising programs and other vendor marketing programs in which vendors provide us with cash consideration in exchange for marketing and advertising the vendors products Our accounting for cooperative advertising arrangements and other vendor marketing programs results in a significant portion of the consideration received from our vendors reducing the product costs in inventory rather than as an offset to our marketing and advertising costs The consideration serving as a reduction in inventory is recognized in cost of sales as inventory is sold The amount of vendor allowances to be recorded as a reduction of inventory is determined based on the nature of the consideration received and the merchandise inventory to which the consideration relates We apply a sell through rate to determine the timing in which the consideration should be recognized in cost of sales Consideration received that relates to gaming products that have not yet been released to the public is deferred as a reduction of inventory
The cooperative advertising programs and other vendor marketing programs generally cover a period from a few days up to a few weeks and include items such as product catalog advertising in store display promotions internet advertising co op print advertising and other programs The allowance for each event is negotiated with the vendor and requires specific performance by us to be earned Vendor allowanc
The classification of cost of sales and SG A expenses varies across the retail industry We include certain purchasing receiving and distribution costs in SG A in the Consolidated Statements of Operations We include processing fees associated with purchases made by credit cards and other payment methods in cost of sales in our Consolidated Statements of Operations
Income tax expense includes federal state local and international income taxes Income taxes are accounted for utilizing an asset and liability approach and deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial reporting basis and the tax basis of existing assets and liabilities using enacted tax rates Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized In accordance with GAAP we maintain liabilities for uncertain tax positions until examination of the tax year is completed by the applicable taxing authority available review periods expire or additional facts and circumstances cause us to change our assessment of the appropriate accrual amount See
We do not assert indefinite reinvestment on the undistributed earnings of our foreign subsidiaries Income tax and or withholding tax associated with any amounts available for distribution as of February 1 2025 is not expected to be material to our financial statements
We conduct the substantial majority of our business with leased real estate properties including retail stores warehouse facilities and office space We also lease certain equipment and vehicles These are generally leased under non cancelable agreements and include various renewal options for additional periods These agreements generally provide for minimum and in some cases percentage rentals and require us to pay insurance taxes and other maintenance costs Percentage rentals are based on sales performance in excess of specified minimums at various stores and are accounted for in the period in which the amount of percentage rentals can be accurately estimated All of our lease agreements are classified as operating leases
We determine if an arrangement is considered a lease at inception We recognize right of use ROU assets on the commencement date based on the present value of future minimum lease payments over the lease term including reasonably certain renewal options As the rate implicit in the lease is not readily determinable for most leases we utilize our incremental borrowing rate IBR to determine the present value of future payments The incremental borrowing rate represents a significant judgment that is based on an analysis of our credit rating country risk corporate bond yields and the effect of collateralization For our real estate leases we do not separate the components of a contract thus our future payments include minimum rent payments and fixed executory costs For our non real estate leases future payments include only fixed minimum rent payments We record the amortization of our ROU assets and the accretion of our lease liabilities as a single lease cost on a straight line basis over the lease term which includes option terms we are reasonably certain to exercise We recognize our cash or lease incentives as a reduction to the ROU asset We assess ROU assets for impairment in accordance with our long lived asset impairment policy which is performed periodically or when events or changes in circumstances indicate that the carrying amount may not be recoverable
Generally we have determined that the functional currencies of our foreign subsidiaries are the subsidiaries local currencies The assets and liabilities of the subsidiaries are translated into U S dollars at the applicable exchange rate as of the end of the balance sheet date and revenue and expenses are translated into U S dollars at an average rate over the period Currency translation adjustments are recorded as a component of other comprehensive income in our Consolidated Statement of Comprehensive Loss Currency translation adjustments related to divested foreign businesses are reclassified into earnings as a component of SG A in our Consolidated Statements of Operations once the liquidation of the respective foreign businesses is substantially complete
We have historically used forward exchange contracts to manage currency risk primarily related to foreign currency denominated intercompany assets and liabilities The forward exchange contracts are not designated as hedges and therefore changes in the fair values of these derivatives are recognized in earnings thereby offsetting the current earnings effect of the re measurement of related intercompany loans See
In November 2023 the FASB issued ASU No 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures This standard requires disclosure of significant segment expenses and other segment items by reportable segment We adopted ASU 2023 07 during fiscal 2024
In December 2023 the FASB issued ASU No 2023 08 Intangibles Goodwill and Other Crypto Assets Subtopic 350 60 Accounting for and Disclosure of Crypto Assets This standard provides accounting and disclosure guidance for crypto assets that meet the definition of an intangible asset and certain other criteria In scope assets are subsequently measured at fair value with changes recorded in the income statement The standard requires separate presentation of 1 in scope crypto assets from other intangible assets and 2 changes in the fair value of those crypto assets Disclosure of significant crypto asset holdings and an annual reconciliation of the beginning and ending balances of crypto assets are also required This ASU becomes effective for annual periods beginning in 2025 including interim periods with early adoption permitted The Company does not anticipate a material impact of this standard on its consolidated financial statements
In December 2023 the FASB issued ASU No 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures This standard enhances disclosures related to income taxes including the rate reconciliation and information on income taxes paid This ASU is effective for annual periods beginning after December 15 2024 The Company is assessing the impact of this ASU and upon adoption expects to include certain additional disclosures in the footnotes to its consolidated financial statements
In November 2024 the FASB issued ASU 2024 03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Disaggregation of Income Statement Expenses The guidance includes amendments to require public companies to provide additional disclosure about certain costs and expenses The ASU is effective for annual periods beginning after December 15 2026 and interim periods beginning after December 15 2027 Early adoption is permitted The Company is currently evaluating the impact that the adoption of this standard will have on the Company s consolidated financial statements
In January 2025 the FASB issued ASU 2025 01 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Clarifying the Effective Date This update revises the effective date of ASU 2024 03 to clarify that the guidance is to be adopted by all public entities for annual reporting periods beginning after December 15 2026 and for interim periods within annual reporting periods beginning after December 15 2027 The intent of this update is to prevent non calendar year end entities from concluding that the initial adoption is required to be in an interim reporting period rather than an annual reporting period
1 Includes sales of new and pre owned hardware accessories hardware bundles in which hardware and digital or physical software are sold together in a single SKU interactive game figures strategy guides mobile and consumer electronics
We expect to recognize revenue in future periods for remaining performance obligations we have associated with unredeemed gift cards trade in credits reservation deposits and loyalty points earned as part of our GameStop Pro
Performance obligations associated with unredeemed customer liabilities are primarily satisfied at the time customers redeem gift cards trade in credits customer deposits or loyalty program points for products that we offer Unredeemed customer liabilities are generally redeemed within one year of issuance
We offer extended warranties on certain new and pre owned products with terms generally ranging from 12 to 24 months depending on the product Revenues for extended warranties sold are recognized on a straight line basis over the life of the contract
rewards program at the estimated retail price per point net of estimated breakage which can be redeemed by loyalty program members for products we offer The estimated retail price per point is based on the actual historical retail prices of products purchased through the redemption of loyalty points We estimate breakage of loyalty points and unredeemed gift cards based on historical redemption rates
2 Consists of redemptions and breakage of gift cards and trade in credits redemptions and breakage of reservation deposits and expirations of loyalty points Additionally this includes revenues recognized for our GameStop Pro rewards program and extended warranties During fiscal 2024 there we
We identified segments based on a combination of geographic areas and management responsibility Segment results for the United States include retail operations in 50 states our ecommerce website www gamestop com and our GameStop Pro
loyalty program The United States segment also includes general and administrative expenses related to our corporate offices in Grapevine Texas Segment results for Canada include retail and ecommerce operations in Canada Segment results for Australia include retail and ecommerce operations in Australia and New Zealand Segment results for Europe include retail and ecommerce operations in France Italy and Germany During fiscal 2024 we divested our operations in Italy and ended store operations in Germany Our segment results for Europe previously also included retail operations in Austria Switzerland and Ireland
Our chief operating decision makers CODM are the Chief Executive Officer and the Principal Financial and Accounting Officer who have responsibility for allocating resources and assessing performance for the operating segments Our CODM measures segment profit using operating income loss which is defined as net income loss from operations before net interest income expense and income taxes
Transactions between our reportable segments consist primarily of royalties management fees intersegment loans and related interest There were no material intersegment sales during fiscal 2024 2023 and 2022 Information on total assets by segment is not disclosed as such information is not used by our CODM to evaluate segment performance or to allocate resources and capital
We sponsor a defined contribution plan the Savings Plan for the benefit of substantially all of our U S associates who meet certain eligibility requirements primarily age and length of service The Savings Plan allows associates to invest up to 60 subject to IRS limitations of their eligible gross cash compensation on a pre tax basis Historically the Company provided matching contributions to the Savings Plan based upon a certain percentage of the associates contributions Our contributions to the Savings Plan during fiscal 2024 2023 and 2022 were
Basic net income loss per common share is computed by dividing the net income loss available to Class A Common Stockholders by the weighted average number of common shares outstanding during the period Diluted net income loss per common share is computed by dividing the net income loss available to Class A Common Stockholders by the weighted average number of common shares outstanding and potentially dilutive securities outstanding during the period Potentially dilutive securities include unvested restricted stock and unvested restricted stock units outstanding during the period using the treasury stock method Potentially dilutive securities are excluded from the computations of diluted earnings per share if their effect would be antidilutive A net loss from continuing operations causes all potentially dilutive securities to be antidilutive
was 38 4 million 55 3 million and 60 3 million for fiscal 2024 2023 and 2022 respectively and is recorded in SG A expenses in our Consolidated Statements of Operations During fiscal 2024 we closed our York Pennsylvania distribution facility to consolidate U S fulfillment activities to our Grapevine Texas facility
During fiscal 2024 we relocated our U S refurbishment operations into our distribution and administration facility in Grapevine Texas Previously these refurbishment operations were performed in a separate facility also located in Grapevine Texas
The following table presents the weighted average remaining lease term which includes reasonably certain renewal options and the weighted average discount rate for operating leases included in the measurement of our lease liabilities
In January 2022 we entered into contractual agreements with Immutable X Pty Limited IMX and Digital Worlds NFTs Ltd pursuant to which the Company was entitled to receive up to 150 million in digital assets in the form of IMX tokens once certain contractual milestones had been achieved Upon announcement we achieved our first milestone under the agreement with IMX and recognized a 79 0 million noncurrent receivable and corresponding deferred income liability related to our entitlement to IMX tokens as of January 29 2022 During fiscal 2022 we achieved our second and third milestones under our agreement with IMX and recognized an additional 33 8 million of deferred income liability on our Consolidated Balance Sheets The deferred income was recognized over the term of the contractual agreement We liquidated all tokens received under our agreements with IMX in fiscal 2022 and have no IMX token assets recorded on the Consolidated Balance Sheets as of February 1 2025
During fiscal 2022 we recognized a loss of 7 2 million on the noncurrent receivable impairment of 33 7 million on the digital assets gain of 6 9 million on the sale of digital assets and deferred income of 56 0 million in SG A expenses in our Consolidated Statements of Operations During fiscal 2023 we recognized previously deferred income of 57 2 million in SG A expenses in our Consolidated Statements of Operations As of February 1 2025 there was no remaining deferred income liability related to our agreements with IMX
During 2022 we also launched beta versions of a non custodial digital asset wallet and a peer to peer non fungible token NFT marketplace that enabled the purchase sale and trade of NFTs Revenues earned related to our NFT digital asset wallet and marketplace are recognized in net sales in our Consolidated Statement of Operations Revenues earned from our digital asset wallet and NFT marketplace were not material to the consolidated financial statements in fiscal 2023 and 2022 In the fourth quarter of 2023 we began the process of winding down our digital asset wallet and NFT marketplace and wind down was completed in 2024
Our trade name relates to SFMI Micromania SAS Micromania our retail operations business in France which we acquired in 2008 There were no impairment charges recognized during fiscal 2024 2023 and 2021 related to our trade name
Leasehold rights the majority of which were recorded as a result of the purchase of Micromania in 2008 represent the value of rights of tenancy under commercial property leases for properties located in France Rights pertaining to individual leases can be sold by us to a new tenant or recovered by us from the landlord if the exercise of the automatic right of renewal is refused Leasehold rights are amortized on a straight line basis over the expected lease term not to excee
Other intangible assets include design portfolio interests The design portfolio reflects the collection of product designs and ideas that were created by Geeknet and recorded as a result of the Geeknet acquisition which have been fully amortized as of February 1 2025
Intangible asset amortization expense during fiscal 2024 2023 and 2022 was 0 5 million 0 9 million and 1 4 million respectively The following table presents the estimated aggregate intangible asset amortization expense for the next five fiscal years
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date Applicable accounting standards require disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement Each fair value measurement is reported in one of the following three levels
Assets and liabilities that are measured at fair value on a recurring basis include our cash equivalents marketable securities foreign currency contracts company owned life insurance policies with a cash surrender value and certain nonqualified deferred compensation liabilities
We measure the fair value of cash equivalents and certain marketable securities based on quoted prices in active markets for identical assets Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data
Our investments in U S government treasury notes and bills are classified as available for sale debt securities are reported at fair value on a recurring basis and utilize Level 1 inputs for measurement Our investments in time deposits are reported at fair value and utilize Level 1 inputs for measurement
We measure the fair value of our foreign currency contracts life insurance policies with cash surrender values and certain nonqualified deferred compensation liabilities based on Level 2 inputs using quotations provided by major market news services such as Bloomberg and industry standard models that consider various assumptions including quoted forward prices time value volatility factors contractual prices for the underlying instruments and other relevant economic measures all of which are observable in active markets When appropriate valuations are adjusted to reflect credit considerations generally based on available market evidence
Assets that are measured at fair value on a nonrecurring basis relate primarily to property and equipment operating lease ROU assets and other intangible assets including digital assets which are remeasured when the estimated fair value is below its carrying value When we determine that impairment has occurred the carrying value of the asset is reduced to its fair value Fair value of digital assets held are based on Level 1 inputs as described above and impairment losses for digital assets cannot be recovered for any subsequent increase in fair value until the sale or disposal of the asset
The fair value estimates of trade name intangibles and store level property and equipment are based on significant unobservable inputs Level 3 developed using company specific information These assets were valued using variations of the discounted cash flow method which require assumptions associated with among others projected sales and cost estimates capital expenditures royalty rates discount rates terminal values and remaining useful lives
The fair values of our French Term Loans were estimated based on a model that discounted future principal and interest payments at interest rates available to us at the end of the period for similar debt of the same maturity which is a Level 2 input as defined by the fair value hierarchy
During fiscal 2021 our French subsidiary Micromania SAS entered into six separate unsecured term loans for a total of 40 0 million In the second quarter of 2021 at the request of Micromania SAS these term loans were extended for five years with an amortization plan for the principal starting in October 2022 In connection with the extension the interest rate increased from zero to 0 7 for three of the term loans totaling 20 0 million and 1 for the remaining three term loans totaling 20 0 million The French government has guaranteed 90 of the term loans pursuant to a state guaranteed loan program instituted in connection with the COVID 19 pandemic
Each of Micromania SAS s term loans as described above restrict the ability of Micromania SAS to make distributions and loans to its affiliates and include various events that would result in the automatic acceleration of the loans thereunder including failure to pay any principal or interest when due acceleration of other indebtedness a change of control and certain bankruptcy insolvency or receivership events
On August 27 2024 we voluntarily terminated our 250 million revolving credit facility which would have matured in November 2026 including all commitments and obligations thereunder In connection with the termination we cancelled all letter of credit issued thereunder and replaced them with letters of credit issued under our uncommitted letter of credit facilities supported by cash collateral
The following is a reconciliation of income tax expense benefit from continuing operations computed at the U S Federal statutory tax rate to income tax benefit expense reported in our Consolidated Statements of Operations
Differences between financial accounting principles and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes The tax effects of these differences to the extent they are temporary are recorded as deferred tax assets and liabilities which are presented in the table below
During fiscal 2024 we decreased our valuation allowances by 63 9 million in various jurisdictions where it was determined that it was more likely than not that some of the existing gross and or net deferred tax assets will be recognized primarily due to income being generated in jurisdictions with cumulative losses As of February 1 2025 we maintain full valuation allowances on our deferred tax assets in all jurisdictions except for Australia We will continue to assess the realizability of our gross and net deferred tax assets in all tax jurisdictions in which we do business in future periods
With respect to state and local jurisdictions and countries outside of the United States we and our subsidiaries are typically subject to examination for 3 to 6 years after the income tax returns have been filed Although the outcome of tax audits is always uncertain we believe that adequate amounts of tax interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to state local or foreign audits
As of February 1 2025 we have approximately 465 5 million of U S federal net operating loss carryforwards of which 416 0 million have no expiration date and 29 4 million acquired through the ThinkGeek acquisition will expire in years 2031 through 2035 We also have 324 3 million of state net operating loss carryforwards of which 275 7 million will expire in years 2025 to 2044 39 1 million have no expiration date and 9 4 million acquired through the ThinkGeek acquisition will expire in years 2028 through 2035 Section 382 under the Internal Revenue Code imposes limits on the amount of tax attributes that can be utilized where there has been an ownership change The federal and state net operating loss carryovers acquired through the ThinkGeek acquisition experienced an ownership change on July 17 2015 and we have determined that these net operating loss carryforwards will be subject to future limitation
We have approximately 26 1 million of net operating loss carryforwards in Canada that expire in years 2043 through 2045 as well as 370 4 million of foreign net operating loss carryforwards in various jurisdictions that have no expiration date
As of February 1 2025 the gross amount of unrecognized tax benefits was approximately 7 5 million If we were to prevail on all uncertain tax positions the net effect would be a benefit to our effective tax rate of approximately 7 5 million exclusive of any benefits related to interest and penalties
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense in our Consolidated Statement of Operations As of February 1 2025 February 3 2024 and January 28 2023 we had approximately 2 2 million 1 6 million and 3 7 million respectively in interest and penalties related to unrecognized tax benefit accrued of which approximately 0 6 million of expense 2 1 million of benefit and 0 1 million of benefit were recognized through income tax expense in fiscal 2024 2023 and 2022 respectively If we were to prevail on all uncertain tax positions the reversal of these accruals related to interest and penalties would also be a benefit to our effective tax rate
It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions could significantly increase or decrease within the next 12 months as a result of settling ongoing audits However as audit outcomes and the timing of audit resolutions are subject to significant uncertainty and given the nature and complexity of the issues involved we are unable to reasonably estimate the possible amount of change in the unrecognized tax benefits if any that may occur within the next 12 months as a result of ongoing examinations Nevertheless we believe we are adequately reserved for our uncertain tax positions as of February 1 2025
We do not assert indefinite reinvestment on the undistributed earnings of our foreign subsidiaries Income tax and or withholding tax associated with any amounts available for distribution as of February 1 2025 is not expected to be material to our financial statements
The Organization for Economic Co operation and Development OECD supported by 140 of their member countries have agreed to implement a minimum 15 tax rate on certain multinational enterprises and have released model guidance This global
minimum tax known as the Pillar Two framework became effective across various countries in 2024 as each country works to enact legislation influenced by the OECD Pillar Two rules In 2024 the Company had no impact on its effective tax rate after the adoption of the Pillar Two framework The Company will continue to evaluate additional guidance released by the OECD along with the pending and adopted legislation in each of the countries in which we operate
In the ordinary course of business we are from time to time subject to various legal proceedings including matters involving wage and hour employee class actions stockholder actions consumer class actions violent acts and other conflicts We may enter into discussions regarding settlement of these and other types of lawsuits and may enter into settlement agreements if we believe settlement is in the best interest of our stockholders We do not believe that any such existing legal proceedings or settlements individually or in the aggregate will have a material effect on our financial condition results of operations or liquidity
The holders of Class A Common Stock are entitled to one vote per share on all matters to be voted on by stockholders Holders of Class A Common Stock will share in any dividend declared by our Board of Directors In the event of our liquidation dissolution or winding up all holders of Class A Common Stock are entitled to share ratably in any assets available for distribution to holders of shares of Class A Common Stock
During fiscal 2024 we sold an aggregate of 140 000 000 shares of our Class A Common Stock under three at the market equity offering programs the ATM Transactions We generated 3 470 1 million in aggregate gross proceeds from sales under the ATM Transactions All associated commissions and administrative fees were recognized in additional paid in capital on our Consolidated Balance Sheets and SG A expenses in our Consolidated Statements of Operations
In June 2022 we adopted the GameStop Corp 2022 Incentive Plan the 2022 Plan which provides for the grant of equity awards to our officers associates consultants advisors and directors and which replaced the GameStop Corp 2019 Incentive Plan the 2019 Incentive Plan and the Amended and Restated GameStop Corp 2011 Incentive Plan the 2011 Plan Awards under the 2022 Plan may take the form of stock options stock appreciation rights restricted stock awards restricted stock units performance awards and other share based awards or any combination of the foregoing The 2022 Plan allows for 32 000 000 shares of Class A Common Stock plus any shares subject to 2019 Plan awards that expire are forfeited canceled or terminated after the adoption of the 2019 Plan No awards were granted under the 2019 or 2011 Plan after the adoption of the 2022 Plan
Restricted Stock Units RSUs represent a right to receive one share or the value of one share upon the terms and conditions set forth in the applicable plan and award agreement We grant RSUs to certain of our associates officers and non associate directors We used the stock price on the grant date to estimate the fair value of our RSUs The grant date fair value of RSUs is amortized to expense on a straight line basis over the vesting period RSUs granted in fiscal 2024 are not dividend eligible
The fair value of restricted stock awards RSAs is recognized as compensation expense on a straight line basis between the grant date and the date the RSAs become fully vested We have granted RSAs to certain associates officers and non associate directors We estimate the fair value of RSAs on the grant date based on the quoted market price of our Class A Common Stock
RSAs granted by us are considered to be legally issued and outstanding as of the date of grant notwithstanding that the shares remain subject to risk of forfeiture if the vesting conditions for such shares are not met and are included in the number of shares of Class A Common Stock outstanding disclosed on the cover page of this annual report on Form 10 K as of March 19 2025 The total number of shares presented on our consolidated financial statements represents shares of our Class A Common Stock that are legally issued and outstanding There are no remaining nonvested shares of RSAs as of February 1 2025
Time based RSAs and RSUs generally vest in installments subject to continued service with us and subject further to accelerated vesting in the case of retirement eligibility and certain termination events
In fiscal 2021 we granted 742 972 shares of time based RSAs with a weighted average grant date fair value of 29 42 There were no grants of time based RSAs in fiscal 2024 2023 and 2022 In fiscal 2024 2023 and 2022 we granted 1 926 225 2 425 236 and 5 536 250 shares respectively of time based RSUs with a weighted average grant date fair value of 23 56 17 27 and 31 43 respectively
During fiscal 2024 2023 and 2022 we included compensation expense inclusive of forfeitures relating to the grants of RSAs and RSUs in the amounts of 16 4 million 22 2 million and 40 1 million respectively in SG A expenses in our Consolidated Statements of Operations
There was no income tax expense inclusive of excess tax deficiencies and valuation allowances associated with stock based compensation for fiscal 2024 2023 and 2022 The total fair value of RSAs and RSUs vested as of their respective vesting dates was 33 4 million 43 2 million and 12 7 million during fiscal 2024 2023 and 2022 respectively
As of the end of the period covered by this report our management conducted an evaluation under the supervision and with the participation of our principal executive officer and principal financial officer of our disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Exchange Act Disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act has been appropriately recorded processed summarized and reported on a timely basis and are effective in ensuring that such information is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate to allow timely decisions regarding required disclosure Based on this evaluation our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report our disclosure controls and procedures are effective at the reasonable assurance level Notwithstanding the foregoing a control system no matter how well designed and operated can provide only reasonable not absolute assurance that it will detect or uncover failures to disclose material information otherwise required to be set forth in our periodic reports
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a 15 f and 15d 15 f Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP
A company s internal control over financial reporting includes policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with duly documented authorizations of management and directors of the Company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the Company s assets that could have a material effect on the financial statements
Due to inherent limitations internal control over financial reporting may not prevent or detect misstatements Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
Under the supervision and with the participation of our management including our principal executive officer and principal financial officer we conducted an evaluation of the effectiveness of our internal control over financial reporting as of February 1 2025 based on the Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission known as COSO Based on such evaluation the Company s management concluded that as of February 1 2025 the Company s internal control over financial reporting was effective at a reasonable assurance level
Deloitte Touche LLP our independent registered public accounting firm has audited the effectiveness of our internal control over financial reporting as of February 1 2025 Deloitte Touche LLP s opinion as stated in their report which appears on the following page is consistent with management s report on internal control over financial reporting as set forth above
There was no change in our internal control over financial reporting as such term is defined in Rules 13a 15 f and 15d 15 f under the Exchange Act during our most recently completed fiscal quarter that has materially affected or is reasonably likely to material affect our internal control over financial reporting
issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO In our opinion the Company maintained in all material respects effective internal control over financial reporting as of February 1 2025 based on criteria established in
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated financial statements as of and for the 52 weeks period ended February 1 2025 of the Company and our report dated March 25 2025 expressed an unqualified opinion on those financial statements
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Annual Report on Internal Control Over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
None of the Company s directors or executive officers adopted or terminated a Rule 10b5 1 trading arrangement or a non Rule 10b5 1 trading arrangement during the Company s fiscal quarter ended February 3 2024 as such terms are defined under Item 408 a or Regulation S K
On March 18 2025 the Nominating and Corporate Governance Committee of the Board determined to not nominate Ms Yang Xu for re election at the Company s upcoming 2025 Annual Meeting of Stockholders in order to permit Ms Xu to focus on her other business ventures Such determination was not a result of any disagreement with the Company on any matter relating to the Company s operations policies or practices The Company thanks Ms Xu for her dedicated service on the Board since 2021
On September 5 2024 the Compensation Committee of the Board approved performance awards pursuant to the GameStop Corp 2022 Incentive Plan for Mark Robinson our General Counsel and Secretary and Daniel Moore our Principal Financial and Accounting Officer for fiscal years 2024 and 2025 Such performance awards i will consist of restricted shares ii have intended grant values equal to 500 000 for each fiscal year iii are subject to vesting based on the achievement of 50 million in operating profit excluding royalties for the Company s United States geographic segment for each such fiscal year and each officer s continued employment and iv will be granted to the extent such performance criteria is satisfied for the applicable fiscal year on April 1 of the following year and will vest in equal quarterly parts on the grant date and the following July 1 October 1 and January 1 The performance criteria was not achieved for fiscal year 2024
On March 18 2025 the Company updated its pledging policy Pursuant to the updated policy executive officers and directors of the Company are permitted to pledge their Company securities exclusive of options warrants restricted stock units or other rights to purchase Company securities as collateral for a loan or an investment provided that the maximum aggregate loan or investment amount collateralized by such pledged securities does not exceed fifty percent 50 of the total value of the pledged securities as measured at the time of the initial loan or investment In order to safeguard the integrity and effectiveness of the Company s pledging policy such pledging is subject to certain limitations including requiring that such permitted pledges are treated as transactions under the Company s Insider Trading Policy that the pledgor adhere to certain ongoing reporting obligations and that the Audit Committee of the Board evaluate risks posed by pledge arrangements on an annual or as needed basis
In accordance with the independently assessed executive security program established by our Board the Company provides Mr Cohen with executive security services The aggregate incremental costs to the Company of providing these services was 268 553 for the fiscal year ended February 1 2025 We believe these arrangements and costs are reasonable appropriate necessary and in the best interests of the Company and its stockholders as they enable Mr Cohen to carry out his responsibilities and therefore mitigate risks to our business While we do not consider these security services to be a personal benefit for or compensation paid to Mr Cohen because they arise from and are necessary for the carrying out of his employment responsibilities this amount will be set forth in the definitive proxy statement relating to our 2025 Annual Meeting of Stockholders which is to be filed with the SEC pursuant to Regulation 14A under the Exchange Act in the All Other Compensation column of the Summary Compensation Table to be included therein
We have adopted a Code of Ethics for Senior Financial and Executive Officers that is applicable to our Chief Executive Officer Principal Financial Officer any Senior Vice President or Vice President employed in a finance or accounting role and any managing director or finance director of all our foreign subsidiaries We have also adopted a Code of Standards Ethics and Conduct applicable to all of our associates Each of the Code of Ethics and Code of Standards Ethics and Conduct are available on our website at www gamestop com
In accordance with SEC rules we intend to disclose any amendment other than any technical administrative or other non substantive amendment to either of the above Codes or any waiver of any provision thereof with respect to any of the executive officers listed in the paragraph above on our website www gamestop com within four business days following such amendment or waiver
The information not otherwise provided herein that is required by Items 10 11 12 13 and 14 will be set forth in the definitive proxy statement relating to our 2024 Annual Meeting of Stockholders to be held on or around
which is to be filed with the SEC pursuant to Regulation 14A under the Exchange Act This definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions therefrom required to be set forth in this Form 10 K by Items 10 11 12 13 and 14 are incorporated herein by reference pursuant to General Instruction G 3 to Form 10 K A copy of our insider trading policy is filed as Exhibit 19 1 to this Form 10 K
The following financial statement schedule for the 52 weeks ended February 1 2025 53 weeks ended February 3 2024 and the 52 weeks ended January 28 2023 is filed as part of this Form 10 K and should be read in conjunction with our consolidated financial statements appearing elsewhere in this Form 10 K Other schedules have been omitted because they are not applicable
Certification of Chief Executive Officer pursuant to Rule 13a 14 b under the Securities Exchange Act of 1934 and 18 U S C Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
Certification of Principal Financial Officer pursuant to Rule 13a 14 b under the Securities Exchange Act of 1934 and 18 U S C Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the registrant has duly caused this Form 10 K to be signed on its behalf by the undersigned thereunto duly authorized
Pursuant to the requirements of the Securities Exchange Act of 1934 this Form 10 K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated

Company Name	GameStop Corp. Vist SEC web-site
Category	RETAIL-COMPUTER & COMPUTER SOFTWARE STORES
Trading Symbol	GME