10q10k10q10k.net

What changed in GameStop Corp.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of GameStop Corp.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+159 added−241 removedSource: 10-K (2024-03-26) vs 10-K (2023-03-28)

Top changes in GameStop Corp.'s 2024 10-K

159 paragraphs added · 241 removed · 115 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

28 edited+1 added−9 removed17 unchanged
Biggest changeWe intend to use these assets to attract new partnership arrangements, expand product offerings and acquire new customers. We will simultaneously explore and pragmatically invest in strategic initiatives to support our growth. We believe these efforts are important aspects of our continued business to enable long-term value creation for our shareholders.
Biggest changeWe believe these efforts are important aspects of our continued business to enable long-term value creation for our shareholders. Vendors 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 2023.
Our Australia and Europe segments also include 52 pop culture 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 ® brand. Our brands also include our print and digital gaming publication, Game Informer ® magazine.
Our Australia and Europe segments also include 49 pop culture 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 ® brand. Our brands also include our print and digital gaming publication, Game Informer ® magazine.
Sustainability We are committed to sustainability and to operating our business in a manner that results in a positive impact to the environment and our communities. Through our trade-in program, we take gaming consoles, gaming software and consumer electronics that are otherwise destined for landfills and either refurbish them or recycle them.
Sustainability We are committed to sustainability and to operating our business in a manner that results in a positive impact to the environment and our communities. Through our trade-in program, we take pre-owned gaming consoles, gaming software and consumer electronics that are otherwise destined for landfills and either refurbish them or recycle them.
In 2022, we achieved a reduction in year over year carbon emissions in excess of 10% in the United States through both operational reductions and renewable sourcing. 2 Store Locations Our retail stores are generally located in strip centers, shopping malls and pedestrian areas.
In 2023, we achieved a reduction in year-over-year carbon emissions in excess of 10% in the United States through both operational reductions and renewable sourcing. 2 Store Locations Our retail stores are generally located in strip centers, shopping malls and pedestrian areas.
We believe a more diverse 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.
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.
Available Information We make available on our corporate website (http://news.gamestop.com), under “Investors — SEC Filings,” our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such material to the SEC.
Available Information We make available on our corporate website (http://news.gamestop.com), under “Investors — SEC Filings,” our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such material to the Securities and Exchange Commission ("SEC").
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. 6
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. 5
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, game rental companies, and Web 3.0 platforms.
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.
We offer new and pre-owned gaming platforms from the major console and PC manufacturers. The current generation of consoles include the Sony PlayStation 5, Microsoft Xbox Series X and the Nintendo Switch. Accessories consist primarily of controllers, gaming headsets, and virtual reality products. • Software. We offer new and pre-owned gaming software for current and certain prior generation consoles.
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. • Software. We offer new and pre-owned gaming software for current and certain prior generation consoles.
These programs are intended to attract, reward and retain talent that reflects local communities and customers, while instilling an ownership mentality in our work. We are also committed to taking care of our associates in times of need.
These programs are intended to attract, reward and retain talent, while instilling an ownership mentality in our work. We are also committed to taking care of our associates in times of need.
We also sell a wide variety of in-game digital currency, digital downloadable content and full-game downloads. • Collectibles. Collectibles consist of apparel, toys, trading cards, gadgets, and other retail products for pop culture and technology enthusiasts, and our digital asset wallet and NFT marketplace activities.
We also sell a wide variety of in-game digital currency, digital downloadable content and full-game downloads. • Collectibles. Collectibles consist of apparel, toys, trading cards, gadgets and other retail products for pop culture and technology enthusiasts.
Fiscal year 2022 consisted of the 52 weeks ended on January 28, 2023 ("fiscal 2022"). Fiscal year 2021 consisted of the 52 weeks ended on January 29, 2022 ("fiscal 2021") and fiscal year 2020 consisted of the 52 weeks ended on January 30, 2021 ("fiscal 2020"). Reportable Segments We operate in four geographic segments: United States, Canada, Australia and Europe.
Fiscal year 2023 consisted of the 53 weeks ended on February 3, 2024 ("fiscal 2023"). Fiscal year 2022 consisted of the 52 weeks ended on January 28, 2023 ("fiscal 2022") and fiscal year 2021 consisted of the 52 weeks ended on January 29, 2022 ("fiscal 2021"). Reportable Segments We operate in four geographic segments: United States, Canada, Australia and Europe.
Through our Gamer Fund employee assistance program, an employee sponsored 501(c)(3) organization, we have provided temporary assistance to more than 3,900 GameStop associates who have experienced unforeseen emergency or hardship, and more than $750,000 in scholarships.
Through our Gamer Fund employee assistance program, an employee sponsored 501(c)(3) organization, we have provided temporary assistance to approximately 4,000 GameStop associates who have experienced unforeseen emergency or hardship, and more than $0.8 million in scholarships.
As of January 28, 2023, we offered games and entertainment products in 4,413 stores worldwide as more specifically set forth below: Domestic Locations. The table below sets forth the number and locations of our domestic stores included in the United States segment.
As of February 3, 2024, we offered games and entertainment products in 4,169 stores worldwide as more specifically set forth below: Domestic Locations. The table below sets forth the number and locations of our domestic stores included in the United States segment.
Quarterly results may fluctuate materially depending upon, among other factors, the timing of new product introductions, sales impacts related to temporary store closures, increases or decreases in comparable store sales, the nature and timing of acquisitions, adverse weather conditions, shifts in the timing of certain holidays or promotions and changes in our merchandise mix.
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.
For many of our trademarks and service marks, including “Micromania ® ” and "Zing Pop Culture ® ," we also have registered or have registrations pending with the trademark authorities throughout the world.
Patent and Trademark Office. For many of our trademarks and service marks, including “Micromania ® ” and "Zing Pop Culture ® ," 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.
We are committed to providing our associates with opportunities to develop and grow their careers. We offer learning opportunities through our training programs and high-potential talent development programs as well as educational assistance programs. • Diversity and Inclusion. We advocate working actively to build understanding and collaboration across functions.
Our human resource philosophy is based on the following tenets: • Development. We are committed to providing our associates with opportunities to develop and grow their careers. We offer learning opportunities through our training programs, as well as educational assistance programs. • Collaboration. We advocate working actively to build understanding and collaboration across functions.
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. Distribution and Information Management Our operating strategy involves providing a convenient and broad merchandise selection for our customers.
We believe that maintaining and strengthening our long-term relationships with our vendors is essential to our operations. Distribution and Information Management Our operating strategy involves providing a convenient and broad merchandise selection for our customers.
As of January 28, 2023, we had a total of 4,413 stores across all of our segments; 2,949 in the United States, 216 in Canada, 419 in Australia and 829 in Europe. Our stores and ecommerce sites operate primarily under the names GameStop ® , EB Games ® and Micromania ® .
As of February 3, 2024, we had a total of 4,169 stores across all of our segments: 2,915 in the United States, 203 in Canada, 404 in Australia, and 647 in Europe. Our stores and ecommerce sites operate primarily under the names GameStop ® , EB Games ® and Micromania ® .
Alabama 47 Louisiana 53 Ohio 139 Alaska 5 Maine 7 Oklahoma 37 Arizona 60 Maryland 53 Oregon 30 Arkansas 24 Massachusetts 52 Pennsylvania 125 California 263 Michigan 83 Rhode Island 8 Colorado 47 Minnesota 35 South Carolina 62 Connecticut 29 Mississippi 38 South Dakota 5 Delaware 12 Missouri 53 Tennessee 78 Florida 190 Montana 9 Texas 300 Georgia 103 Nebraska 18 Utah 24 Hawaii 12 Nevada 33 Vermont 4 Idaho 15 New Hampshire 20 Virginia 95 Illinois 102 New Jersey 78 Washington 59 Indiana 72 New Mexico 22 West Virginia 23 Iowa 23 New York 143 Wisconsin 42 Kansas 27 North Carolina 117 Wyoming 5 Kentucky 61 North Dakota 7 Total Domestic Stores 2,949 3 International Locations.
Alabama 47 Louisiana 53 Ohio 137 Alaska 5 Maine 7 Oklahoma 36 Arizona 59 Maryland 52 Oregon 31 Arkansas 23 Massachusetts 49 Pennsylvania 124 California 262 Michigan 82 Rhode Island 8 Colorado 46 Minnesota 34 South Carolina 62 Connecticut 28 Mississippi 37 South Dakota 5 Delaware 12 Missouri 53 Tennessee 77 Florida 189 Montana 9 Texas 298 Georgia 102 Nebraska 17 Utah 23 Hawaii 11 Nevada 32 Vermont 4 Idaho 15 New Hampshire 20 Virginia 94 Illinois 99 New Jersey 73 Washington 62 Indiana 71 New Mexico 22 West Virginia 23 Iowa 23 New York 140 Wisconsin 42 Kansas 27 North Carolina 117 Wyoming 5 Kentucky 61 North Dakota 7 Total Domestic Stores 2,915 International Locations.
In 2022 alone, through our United States refurbishment center, we refurbished over 0.9 million pieces of software discs and over 2.8 million consumer electronic devices, and recycled over 0.7 million pounds of e-waste.
In 2023 alone, through our U.S. refurbishment center, we refurbished over 1.1 million software discs and over 3.0 million consumer electronic devices, and recycled over 0.6 million pounds of e-waste.
We will continue to focus on cost containment as we streamline parts of the organization where we can operate with increased efficiency. • Leverage Brand Equity to Support Growth. GameStop has many strengths and assets, including strong houshold brand recognition and a significant store network.
During fiscal 2023, 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. • Leverage Brand Equity to Support Growth. GameStop has many strengths and assets, including strong household brand recognition and a significant store network.
Number of Stores Canada 216 Total Stores - Canada 216 Australia 378 New Zealand 41 Total Stores - Australia 419 Austria 6 France 351 Germany 154 Ireland 36 Italy 268 Switzerland 14 Total Stores - Europe 829 Total International Stores 1,464 Business Strategy GameStop is on a strategic path to fully leverage its unique position and brand recognition in gaming through a new phase of transformation.
Number of Stores Canada 203 Total Stores - Canada 203 Australia 365 New Zealand 39 Total Stores - Australia 404 France 314 Germany 69 Italy 264 Total Stores - Europe 647 Total International Stores 1,254 3 Business Strategy GameStop is following a strategic plan to fully leverage its unique position and brand recognition in gaming through a new phase of transformation.
Trademarks We have a number of trademarks and service marks, including “GameStop ® ,” “Game Informer ® ,” “EB Games ® ,” “EB Electronics Boutique ® ,"” “Power to the Players ® ," and “PowerUp Rewards ® ,” and "PowerUp Rewards Pro ® ," which are registered with the U.S. Patent and Trademark Office.
During fiscal 2023 and 2022, we generated approximately 34% and 38%, respectively, of our sales during the fourth quarter. 4 Trademarks We have a number of trademarks and service marks, including “GameStop ® ,” “Game Informer ® ,” “EB Games ® ,” “EB Electronics Boutique ® ," and “GameStop Pro ® ," which are registered with the U.S.
We have approximately 11,000 full-time salaried and hourly associates and between 14,000 and 27,000 part-time hourly associates worldwide, depending on the time of year. The number of part-time hourly associates fluctuates primarily due to the seasonality of our business. Our human resource philosophy is based on the following tenets: • Development.
Human Capital At GameStop, we strive to attract, retain and develop talent at all levels of our organization. We have approximately 8,000 full-time salaried and hourly associates and between 13,000 and 18,000 part-time, hourly associates worldwide, depending on the time of year. The number of part-time hourly associates fluctuates primarily due to the seasonality of our business.
Our strategic plan is designed to optimize our core business and achieve profitability in the near term, while pursuing strategic initiatives to generate long-term sustainable growth in the gaming and entertainment industries. GameStop is actively focused on the below objectives: • Establish Omnichannel Retail Excellence.
Our strategic plan is designed to optimize our core business and achieve profitability. GameStop is actively focused on the below objectives: • Establish Omnichannel Retail Excellence. We aim to be the leading destination for games and entertainment products through our stores and ecommerce platforms.
This includes app & site redesigns, better product availability across all channels, improved fulfillment speed, partnerships and store concepts to attract new customers, and a further improved customer service experience. • Achieve Profitability.
To accomplish this, we are taking steps to ensure we are a fast and convenient solution for our customers. This includes increased product availability across all channels, faster fulfillment through ship from store offerings, and a further improved customer service experience. • Achieve Profitability.
Our largest vendors are Sony, Nintendo, and Microsoft, which collectively accounted for a majority of our new product purchases in fiscal 2022. We have established price protections and return rights with our primary gaming product vendors in order to reduce our risk of inventory obsolescence.
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.
Removed
We aim to be the leading destination for games and entertainment products through our stores and ecommerce platforms. To accomplish this, we are taking steps to ensure we are a fast and convenient solution for our customers.
Added
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.
Removed
During fiscal 2022, we optimized our corporate cost structure to align with our current and anticipated future needs following the completion of a majority of the necessary upgrades to our systems, fulfillment capabilities and overall foundation.
Removed
PowerUp Rewards Our U.S. loyalty program, called PowerUp Rewards ® ("PowerUp Rewards"), had approximately 56.7 million members as of January 28, 2023, of which approximately 15.0 million members have purchased or traded at GameStop ® in the past year. The PowerUp Rewards membership totals include 5.6 million paying pro members.
Removed
Our loyalty program generally offers our customers the ability to sign up for a free or paid membership, the latter of which gives our customers access to exclusive gaming related rewards.
Removed
The program's paid membership generally include a subscription to Game Informer ® magazine and additional discounts and benefits in our stores and ecommerce platforms. 4 Game Informer ® We publish Game Informer ® , a leading gaming publication featuring reviews of new releases, previews of the big titles on the horizon, and coverage of the latest developments in the gaming industry.
Removed
The magazine is available by subscription, in both digital and physical formats and is sold both online and in-store. Game Informer ® is a part of the PowerUp Rewards Pro loyalty program and is a key feature of each paid PowerUp Rewards Pro membership.
Removed
Operating results from the English version of Game Informer ® are included in the United States segment and other international version results from Game Informer ® operations are included in the segment in which the sales are generated. Vendors We purchase our new products worldwide from a broad number of manufacturers, software publishers and distributors.
Removed
During fiscal 2022 and 2021, we generated approximately 38% and 37%, respectively, of our sales during the fourth quarter.
Removed
We maintain a policy of pursuing registration of our principal marks and opposing any infringement of our marks. 5 Human Capital At GameStop, we strive to attract, retain and develop talent at all levels of our organization.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

34 edited+11 added−91 removed96 unchanged
Biggest changeThese 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.
Biggest changeIf 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. Changes in our senior management or our inability to attract and retain qualified personnel could have a material adverse impact on our business and results of operations.
These factors include, without limitation: • “short squeezes”; • comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media; • large stockholders exiting their position in our Class A Common Stock or an increase or decrease in the short interest in our Class A Common Stock; • actual or anticipated fluctuations in our financial and operating results; • the timing and allocations of new product releases including new console launches; • shifts in the timing or content of certain promotions or service offerings; • the effect of changes in tax rates in the jurisdictions in which we operate; • acquisition costs and the integration of companies we acquire or invest in; • the mix of earnings in the countries in which we operate; 16 • the costs associated with the exit of unprofitable markets, businesses or stores; • changes in foreign currency exchange rates; • negative public perception of us, our competitors, or industry; and • overall general market fluctuations.
These factors include, without limitation: • “short squeezes”; • comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media; • large stockholders exiting their position in our Class A Common Stock or an increase or decrease in the short interest in our Class A Common Stock; • actual or anticipated fluctuations in our financial and operating results; • the timing and allocations of new product releases including new console launches; • shifts in the timing or content of certain promotions or service offerings; • the effect of changes in tax rates in the jurisdictions in which we operate; • acquisition costs and the integration of companies we acquire or invest in; • the mix of earnings in the countries in which we operate; • the costs associated with the exit of unprofitable markets, businesses or stores; • changes in foreign currency exchange rates; • negative public perception of us, our competitors or industry; and • overall general market fluctuations.
In addition, changes in the regulatory environment affecting Medicare reimbursements, workplace safety, product safety, privacy and security of customer data, responsible sourcing, environmental protection, and 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.
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 10 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.
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.
Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment. 12 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.
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.
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 9 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.
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 hardware and 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.
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.
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. The agreement governing our revolving credit facility restricts our current and future operations.
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. 13 The agreement governing our revolving credit facility restricts our current and future operations.
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 13 bargaining units, the process by which collective bargaining agreements are negotiated or imposed, minimum wage requirements, and health care mandates.
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.
We cannot provide assurance that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales or, that additional capital could be raised. 18 We and our subsidiaries may incur additional debt. This could further increase the risks associated with our leverage.
We cannot provide assurance that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales or, that additional capital could be raised. We and our subsidiaries may incur additional debt. This could further increase the risks associated with our leverage.
Sales of a substantial number of such shares by these stockholders, or the perception that such sales will occur, 17 may cause the market price of our Class A Common Stock to decline.
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.
Any negative publicity relating to our vendors, products, associates and Board members, practices or our Company could damage our reputation and adversely impact our ability to attract and retain customers and employees.
Any negative publicity relating to our vendors, products, associates and Board members or practices could damage our reputation and adversely impact our ability to attract and retain customers and employees.
We have systems and processes in place that are designed to protect against security and data breaches and unauthorized access to confidential information, and are constantly working to upgrade these systems and processes.
We have systems and processes in place that 8 are designed to protect against security and data breaches and unauthorized access to confidential information, and are constantly working to upgrade these systems and processes.
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 have increased from time to time and may continue to increase, and we may not be able to pass these costs directly to our customers.
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.
If we fail to obtain products in sufficient quantities, our sales may be negatively impacted. We depend on these manufacturers and publishers to introduce new and innovative products and software titles to drive industry sales. The number of new software titles available for sale has decreased in recent years.
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.
Any material delay in the introduction or delivery, or limited allocations, of hardware platforms or software titles could result in reduced sales. In addition, some publishers that have historically published games compatible with multiple gaming platforms have recently 7 been acquired by console manufacturers.
Any material delay in the introduction or delivery, or limited allocations, of hardware platforms or software titles could result in reduced sales. In addition, some publishers that have historically published games compatible with multiple gaming 6 platforms have recently been acquired by console manufacturers.
An adverse trend in sales during the holiday selling season could impact our financial results. 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 fiscal 2022, which includes the holiday selling season.
An adverse trend in sales during the holiday selling season could impact our financial results. 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 fiscal 2023, which includes the holiday selling season.
ITEM 1A. RISK FACTORS 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 Securities and Exchange Commission ("SEC"), before you make an investment decision with respect to our Company.
ITEM 1A. RISK FACTORS 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.
We depend on manufacturers and publishers to deliver video game hardware, software and consumer electronics in quantities sufficient to meet customer demand. Some of the products we sell are in short supply and are highly allocated among us and our competitors and we compete for product inventory.
We depend on manufacturers and publishers to deliver video game hardware, software 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.
To comply with laws adopted by the United States government or other United States 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.
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.
If we are not able to successfully operate our ecommerce platform, we may not be able to provide a relevant shopping experience or improve customer traffic, sales or margins, and our business and financial condition could be adversely affected. 8 In-store and ecommerce retail are competitive and evolving environments.
If we are not able to successfully operate our ecommerce platform, we may not be able to provide a positive shopping experience or improve customer traffic, sales or margins, and our business and financial condition could be adversely affected. 7 In-store and ecommerce retail are competitive and evolving environments.
During fiscal 2022 and 2021, we generated approximately 38% and 37%, 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 and adversely impact our liquidity.
During fiscal 2023 and 2022, we generated approximately 34% and 38%, 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 and adversely impact our liquidity.
Our sales of collectibles depend on popularity and trends in pop culture, and if we are unable to anticipate, identify and react to them, our sales and business may be adversely affected.
Our sales of collectibles depend on trends in pop culture and, if we are unable to anticipate, identify and react to these trends, our sales and business may be adversely affected.
In addition, we have filed 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.
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.
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.
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. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Turnover in key leadership positions in the Company 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.
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.
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.
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.
Risks Related to Our Common Stock The market price of our Class A Common Stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control. The market price of our common stock has fluctuated, and may continue to fluctuate, widely, due to many factors, some of which may be beyond our control.
The market price of our common stock has fluctuated, and may continue to fluctuate, widely, due to many factors, some of which may be beyond our control.
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. Our new digital asset products and services may not achieve our desired results and may expose us to new risks.
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.
We also continue to monitor developments related to tax legislation and government policy, including corporate tax reform. The impact of these potential changes to our business and consolidated financial results cannot be determined until the relevant legislation and policies are finalized.
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. Legislative actions may cause our general and administrative and compliance costs to increase and impact our operations and financial condition.
Any of these consequences could have a material adverse effect on our results of operations and financial condition. 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.
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.
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.
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.
As part of our strategic plan to achieve profitability and considering the current challenging economic environment highlighted by high inflation, we have recently undertaken cost reduction measures and other initiatives to improve the efficiency of our operations, including initiatives to reduce headcount.
As part of our strategic plan to achieve profitability, we have recently 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.
Changes in our senior management or our inability to attract and retain qualified personnel could have a material adverse impact on our business and results of operations. Our success depends, in part, on the continuing services and contributions of our leadership team to execute on our strategic plan and to identify and pursue new opportunities.
Our success depends, in part, on the continuing services and contributions of our leadership team to execute on our strategic plan.
As a result, legal proceedings may adversely affect our business, financial condition, results of operations or liquidity. 14 Our digital asset products and services may expose us to legal, regulatory, and other risks that could adversely affect our business, operating results, and financial condition.
As a result, legal proceedings may adversely affect our business, financial condition, results of operations or liquidity. Risks Related to our Investment Policy and Securities The value of our securities may decline. The Company invests from time to time in securities and is exposed to market volatility in connection with these investments.
Removed
In late May 2022, we launched a beta browser extension version of a non-custodial digital asset wallet, which allows gamers and other users to manage, send, receive and use cryptocurrencies, non-fungible tokens (“NFTs”) and other digital assets across decentralized apps.
Added
Inventory shrinkage may negatively affect our results of operations and financial condition. 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.
Removed
In July 2022, we launched a beta version of our peer-to-peer NFT marketplace, 9 which allows gamers, creators, collectors and other users to publish, view, buy and sell NFTs, and allows creators selected by us to create NFTs on certain decentralized cryptographic protocols.
Added
There can be no assurance that we will be successful in our efforts to contain or reduce inventory shrinkage. If our systems fail to perform or are inadequate, our ability to manage our business could be disrupted. We rely on computerized systems to coordinate and manage the activities in our operations, including our ecommerce, store and fulfillment operations.
Removed
In November 2022, we launched a beta iOS version of the non-custodial digital asset wallet on the iOS App Store. We are also pursuing, and plan to continue to pursue, other business and strategic initiatives associated with digital assets and blockchain technology.
Added
The Company’s financial position and financial performance could be adversely affected by worsening market conditions or poor performance of such investments.
Removed
The digital asset economy is highly competitive and rapidly evolving with frequent launches of new or improved products and services, and frequent entries of new competitors in the United States and internationally.
Added
The Company may 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.
Removed
If and to the extent we are unable to successfully implement and operate these digital assets initiatives, we may incur unanticipated costs and losses, and face other adverse consequences, such as negative reputational effects.
Added
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.
Removed
In addition, the actual effects of pursuing these initiatives may differ, possibly materially, from the benefits that we expect to realize from them, such as the generation of additional revenues.
Added
Our portfolio of securities may be concentrated in one or a few holdings, which may result in a single holding significantly impacting the value of our investment portfolio. In addition, the Company’s holdings of securities may be concentrated in just one or a few holdings.
Removed
Our digital asset initiatives also subjects us to risks similar to those associated with any new product offerings, including, but not limited to, our ability to accurately anticipate market demand and acceptance, creator and buyer acceptance, technical issues with the operation of the products, and legal and regulatory risks as discussed herein.
Added
Accordingly, a significant decline in the market value of one or more of such holdings may not be offset by hypothetically better performance of other holdings.
Removed
Furthermore, our plans may not be adequate at the time of occurrence for the magnitude of any particular disruption event that we may encounter. 10 If our systems fail to perform or are inadequate, our ability to manage our business could be disrupted.
Added
This concentration of risk may result in a more pronounced effect on net income and shareholders’ equity, and may result in greater volatility in the fair market value of the Company’s holdings of securities from one period to another.
Removed
Digital assets are a novel asset class that carries unique risks, including extreme price volatility. Cryptocurrencies, digital currencies, coins, tokens, NFTs, stablecoins, and other digital or crypto assets or instruments that are issued and transferred using distributed ledger or blockchain technology (collectively referred to herein as “digital assets”) are a new and evolving asset class.
Added
The Company is required to recognize losses in a particular security for financial statement purposes even though the Company has not actually sold the security.
Removed
The characteristics of particular digital assets within this broad asset class may differ significantly. We receive payments in digital assets in connection with certain of our digital asset products and services. We also invest, and may invest in the future, directly or indirectly, in or through digital assets.
Added
Under accounting rules, changes in the unrealized gains and losses on certain of our securities 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.
Removed
There is no guarantee that these investments will maintain their value as measured against fiat currencies.
Added
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. 11 Risks Related to Our Common Stock The market price of our Class A Common Stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.
Removed
Digital assets continue to be an emerging asset 11 class based on emerging technologies, and investment in digital assets is subject to a number of factors relating to the capabilities and development of blockchain technologies, such as the infancy of their development, their dependence on the internet and other technologies, their dependence on the role played by miners, validators and developers and the potential for malicious activity, among other factors.
Removed
Further, there can be no assurance that the blockchain technology on which digital assets are transacted does not have undiscovered flaws that may allow for such digital assets to be compromised, resulting in the loss of some or all of our investments in such digital assets.
Removed
Finally, the intrinsic value of digital assets is particularly uncertain and difficult to determine due to the novel and rapidly changing nature of digital asset markets. There can be no assurance that digital assets will maintain their value in the future, or that acceptance of using digital assets as currency or to make payments will continue.
Removed
Moreover, due to the novelty of the asset class and the evolving patchwork of regulatory oversight of digital asset markets, fraud and market manipulation are not uncommon in such markets, all of which could negatively impact the value of our digital asset investments and have an adverse impact on the value of an investment in our business.
Removed
We use third parties to custody most of our digital asset investments. The financial institutions, exchanges or other third parties we select to custody our digital assets may become insolvent or subject to cybersecurity attacks, which may in turn cause us to lose all or a portion of our digital assets held by those custodians.
Removed
While we select custodians that do not rehypothecate or otherwise use our digital asset deposits, we cannot guarantee that these third parties securely maintain our deposits at all times.
Removed
If, despite our contractual agreements, our selected custodians do rehypothecate or otherwise use our digital asset deposits, they may be unable to accommodate our digital asset withdrawals depending on the nature of the rehypothecation.
Removed
Furthermore, in the event of bankruptcy of such a custodian, our digital assets held by that third party could, depending on the manner in which such assets are held, be considered the property of the bankruptcy estate and we could be treated as a general unsecured creditor in bankruptcy proceedings.
Removed
Even if the digital assets held by the custodian are not considered the property of the service provider’s bankruptcy estate, the return of our digital assets may be delayed or affected while the bankruptcy proceeding is pending. Such results may lead to losses for us and have an adverse impact on our business.
Removed
If we are unable to find, or maintain relationships with, banks or other financial institutions to support our digital asset initiatives, it may impact our ability to offer certain of our digital asset products and services. Some established banks and other financial institutions have been unwilling to provide banking services to digital asset companies.
Removed
Following several high-profile bankruptcies in the digital asset industry and recent bank failures, which involved banks that provided banking services to digital asset companies, there has been heightened regulatory scrutiny of the digital asset industry as a whole, and more banks may become reluctant to provide services to digital asset industry participants.
Removed
In addition, we rely on third party custodians to hold and regularly liquidate the digital assets we receive into U.S. dollars, and our digital asset custodians must have access to banking services to provide these services.
Removed
If we, or our custodial partners, are unable to maintain banking relationships on acceptable terms, it may negatively affect our ability to offer certain digital asset products and services. Digital assets may be subject to hacking, social engineering and other cyber attacks, which could subject us to monetary losses, user disputes, reputational harm, and regulatory scrutiny.
Removed
Digital products and services are inherently digital and therefore subject to a heightened risk of hacking, cyber attacks and other cybersecurity threats. We have taken certain steps to mitigate against those risks.
Removed
Despite these efforts, the safeguards we have implemented or may implement in the future to protect against cybersecurity threats may be insufficient to prevent malicious activities, and if our products and services are exploited and our digital assets are stolen, we could experience significant financial harm.
Removed
Actual or perceived breaches or cybersecurity attacks directed to other digital asset platforms or services could also create a general loss of customer confidence in the digital asset industry and the use of blockchain technologies, which could negatively impact the demand for our products and harm our reputation.
Removed
If our systems, the blockchain networks on which our digital asset products and services are offered, or our third party partners fail to perform or are inadequate, we may experience adverse consequences, including financial losses, customer dissatisfaction and reputational harm.
Removed
Similar to other aspects of our business, our digital asset products and services are reliant on certain third party partners, including, but not limited to, fiat-to-crypto onramp providers, cloud computing services and data centers. Because we rely on third parties to provide these services and to facilitate certain of our business activities, we face increased operational risks.
Removed
These third parties may be subject to legal, regulatory, financial, and labor issues, cybersecurity incidents, privacy breaches, interruptions, disruptions, and other similar issues. They are also vulnerable to damage or interruption from human error, fires, natural disasters (including, but not limited to, floods, earthquakes, hurricanes and tornados), power loss, telecommunications failures, terrorism, vandalism, pandemics and similar events.
Removed
Additionally, these third parties may breach their agreements with us or refuse to continue to renew their agreements on commercially reasonable terms, 12 or at all. There can be no assurances that third parties that provide products or services to us or our users will continue to do so on acceptable terms, or at all.
Removed
If any of these third parties do not adequately or appropriately provide their services or perform their responsibilities to us or our users, or if such third party partners decide to or are required by law to suspend or shut down products or services that we are relying on, we may be unable to procure alternatives in a timely and efficient manner and on acceptable terms, or at all, and we may be subject to business disruptions, losses or costs to remediate any of the deficiencies, customer dissatisfaction, reputational damage, legal or regulatory proceedings, or other adverse consequences which could harm our business.
Removed
In addition, we rely on one or more transaction protocols referred to as “smart contracts,” which include the cryptographic operations that verify and secure transactions, in connection with our digital asset products or services. A smart contract is software that digitally facilitates or enforces a rules-agreement or terms between transacting parties.
Removed
If the smart contracts fail to behave as expected, suffer cybersecurity attacks or security issues, become obsolete, or encounter other issues, certain transactions may not be completed or may be erroneously executed, and we and our users may experience significant harm, including irretrievable loss of digital assets.
Removed
Peer-to-peer NFT marketplaces create unique risks and challenges related to content moderation and control. If we are unable to navigate these issues, demand for the marketplace could be adversely impacted.

… 56 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+2 added−2 removed1 unchanged
Biggest changeLocation Segment Square Footage Owned or Leased Use Grapevine, Texas, USA United States 360,000 Leased Distribution and administration Grapevine, Texas, USA United States 182,000 Leased Manufacturing and distribution Shepherdsville, Kentucky, USA (1) United States 631,000 Leased Fulfillment and distribution York, Pennsylvania, USA United States 708,000 Leased Fulfillment and distribution Brampton, Ontario, Canada Canada 119,000 Leased Distribution and administration Eagle Farm, Queensland, Australia Australia 185,000 Leased Distribution and administration Milan, Italy Europe 123,000 Owned Distribution and administration ___________________ (1) In January of 2023, we announced plans to close the Shepherdsville, Kentucky distribution facility to consolidate our fulfillment activities to two domestic sites, York, Pennsylvania and Grapevine, Texas.
Biggest changeLocation Segment Square Footage Owned or Leased Use Grapevine, Texas, USA United States 360,000 Leased Distribution and administration Grapevine, Texas, USA United States 182,000 Leased Manufacturing and distribution York, Pennsylvania, USA (1) United States 708,000 Leased Fulfillment and distribution Brampton, Ontario, Canada Canada 119,000 Leased Distribution and administration Eagle Farm, Queensland, Australia Australia 185,000 Leased Distribution and administration Milan, Italy Europe 123,000 Owned Distribution and administration ___________________ (1) In January of 2023, we announced plans to close the Shepherdsville, Kentucky distribution facility to consolidate our fulfillment activities.
The lease expiration dates for the leased facilities range from 2023 to 2032, with an average remaining lease life, including reasonably certain options, of approximately seven years. 21 The following table presents our principal facilities. Additional information regarding our properties can be found in Item 1, “Business—Store Locations” in this Form 10-K.
The lease expiration dates for the leased facilities range from 2024 to 2032, with an average remaining lease life, including reasonably certain options, of approximately six years. The following table presents our principal facilities. Additional information regarding our properties can be found in Item 1, “Business—Store Locations” in this Form 10-K.
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. The terms of the store leases for the 4,413 leased stores open as of January 28, 2023 expire as follows.
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. The terms of the store leases for the 4,169 leased stores open as of February 3, 2024 expire as follows.
Removed
Lease Terms to Expire During Number of Stores Fiscal 2023 1,723 Fiscal 2024 891 Fiscal 2025 690 Fiscal 2026 395 Fiscal 2027 and later 714 Total 4,413 In July of 2020, we sold and leased-back, in separate unrelated transactions, to unaffiliated third parties: i) our corporate headquarters and ancillary office space in Grapevine, Texas and ii) a nearby refurbishment center.
Added
Lease Terms to Expire During Number of Stores Fiscal 2024 1,350 Fiscal 2025 928 Fiscal 2026 580 Fiscal 2027 481 Fiscal 2028 and later 830 Total 4,169 As of February 3, 2024, we owned two and leased 12 office and distribution facilities, totaling approximately 2.0 million square feet.
Removed
In August of 2020, we sold and leased-back our Australian headquarters in Eagle Farm, Queensland to an unaffiliated third party. In September of 2020, we sold and leased-backed our Canadian headquarters in Brampton, Ontario to an unaffiliated third party. As of January 28, 2023, we owned three and leased 14 office and distribution facilities, totaling approximately 2.7 million square feet.
Added
This was completed in fiscal 2023. In January of 2024, we announced plans to close the York, Pennsylvania distribution facility, which will consolidate U.S. fulfillment activities to our Grapevine, Texas facility during the first quarter of fiscal 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS The matters included in Part II, Item 8, Notes to the Consolidated Financial Statements, Note 16 , "Commitments and Contingencies - Legal Proceedings" included in this Form 10-K are incorporated by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 22 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS The matters included in Part II, Item 8, Notes to the Consolidated Financial Statements, Note 16 , "Commitments and Contingencies - Legal Proceedings" included in this Form 10-K are incorporated by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 16 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−2 removed2 unchanged
Biggest changeIssuer Purchases of Equity Securities 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 2022 or fiscal 2021.
Biggest change(2) 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 2023 or fiscal 2022. As of February 3, 2024, we have $101.3 million remaining under the repurchase authorization.
Dividends 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 three fiscal years, we have not declared, and do not anticipate declaring in the near term, dividends on shares of our 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 four fiscal years, we have not declared, and do not anticipate declaring in the near term, dividends on shares of our Class A Common Stock.
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 February 2, 2018 and (ii) reinvestment of dividends.
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 February 1, 2019 and (ii) reinvestment of dividends.
Stock Comparative Performance Graph The following graph compares the cumulative total stockholder return on our Class A Common Stock for the period commencing February 2, 2018 through January 27, 2023 (the last trading date of fiscal 2022) 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.
Stock Comparative Performance Graph The following graph compares the cumulative total stockholder return on our Class A Common Stock for the period commencing February 1, 2019 through February 2, 2024 (the last trading date of fiscal 2023) 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.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A Common Stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “GME”. As of March 22, 2023, there were 197,058 record holders of our Class A Common Stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A Common Stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “GME”. As of March 20, 2024, there were 305,873,200 shares of our Class A common stock outstanding.
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. 23 2/2/2018 2/1/2019 1/31/2020 1/29/2021 1/28/2022 1/27/2023 GME $ 100.00 $ 72.87 $ 25.76 $ 2,180.11 $ 656.78 $ 612.31 S&P 500 Index $ 100.00 $ 96.12 $ 116.83 $ 136.96 $ 165.70 $ 154.69 Dow Jones Specialty Retailers Index $ 100.00 $ 114.63 $ 125.83 $ 177.32 $ 170.06 $ 169.63 As noted above under the heading "Risk Factors — Risk Related to Our 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 that led to volatile price movements that were unrelated or disproportionate to our operating performance.
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. 17 2/1/2019 1/31/2020 1/29/2021 1/28/2022 1/27/2023 2/2/2024 GME $ 100.00 $ 25.63 $ 2,169.54 $ 653.60 $ 609.34 $ 393.32 S&P 500 Index $ 100.00 $ 124.48 $ 145.93 $ 176.56 $ 164.83 $ 204.08 Dow Jones Specialty Retailers Index $ 100.00 $ 110.92 $ 156.31 $ 149.90 $ 149.53 $ 178.51 As noted above under the heading "Risk Factors — Risk Related to Our 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 that led to volatile price movements that were unrelated or disproportionate to our operating performance.
Excluding the approximately 228.7 million shares of our Class A Common Stock held by Cede & Co on behalf of the Depository Trust & Clearing Corporation (or approximately 75% of our outstanding shares), approximately 76.0 million shares of our Class A Common Stock were held by record holders as of March 22, 2023 (or approximately 25% of our outstanding shares).
Of those outstanding shares, approximately 230.6 million were held by Cede & Co on behalf of the Depository Trust & Clearing Corporation (or approximately 75% of our outstanding shares) and approximately 75.3 million shares of our Class A common stock were held by registered holders with our transfer agent (or approximately 25% of our outstanding shares).
As of January 28, 2023, we have $101.3 million remaining under the repurchase authorization. Refer to Item 7. Management's Discussion and Analysis - "Share Repurchases" for additional information.
Refer to Item 7. Management's Discussion and Analysis - "Share Repurchases" for additional information. ITEM 6. RESERVED 18
Removed
Dividends paid in fiscal 2020 of $0.3 million represent dividends previously declared on unvested restricted stock awards granted under the Amended and Restated GameStop Corp. 2011 Incentive Plan. These dividends are paid upon vesting of the restricted stock awards.
Added
Issuer Purchases of Equity Securities Our purchases of our equity securities during the fourth quarter of fiscal 2023 were as follows: Fiscal Period Total Number of Shares Purchased (1) Weighted-Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) (In millions) October 29, 2023 through November 25, 2023 204 $ 13.03 — $ 101.3 November 26, 2023 through December 30, 2023 19 $ 15.30 — $ 101.3 December 31, 2023 through February 3, 2024 45,575 $ 17.53 — $ 101.3 Total 45,798 $ 17.51 — $ 101.3 (1) Under both our GameStop Corp. 2019 Incentive Plan and our GameStop Corp. 2022 Incentive Plan, approved by our Board of Directors and our stockholders, we withheld 45,798 shares of Class A Common Stock from certain employees to satisfy minimum tax withholding obligations relating to the vesting of their restricted stock units.
Removed
The Company did not purchase any of its equity securities during the fourth quarter of fiscal 2022, and did not withhold any shares of Class A Common Stock during the fourth quarter of fiscal 2022 from employees to satisfy minimum tax withholding obligations relating to the vesting of their restricted stock awards under our equity plans. ITEM 6. RESERVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

37 edited+29 added−22 removed23 unchanged
Biggest changeJanuary 29, 2022 Openings Disposals January 28, 2023 United States 3,018 — (69) 2,949 Canada 231 — (15) 216 Australia 417 6 (4) 419 Europe 907 2 (80) 829 Total Stores 4,573 8 (168) 4,413 25 CONSOLIDATED RESULTS OF OPERATIONS The following table presents certain statement of operations items (in millions) and as a percentage of net sales: Fiscal 2022 Fiscal 2021 Change Amount Percent of Net Sales Amount Percent of Net Sales $ % Net sales $ 5,927.2 100.0 % $ 6,010.7 100.0 % $ (83.5) (1.4) % Cost of sales 4,555.1 76.9 4,662.9 77.6 (107.8) (2.3) Gross profit 1,372.1 23.1 1,347.8 22.4 24.3 1.8 Selling, general, and administrative expenses 1,681.0 28.4 1,709.6 28.4 (28.6) (1.7) Asset impairments 2.7 — 6.7 0.1 (4.0) (59.7) Operating loss (311.6) (5.3) (368.5) (6.1) 56.9 15.4 Interest (income) expense and other, net (9.5) (0.2) 26.9 0.4 (36.4) 135.3 Loss before income taxes (302.1) (5.1) (395.4) (6.6) 93.3 23.6 Income tax expense (benefit) 11.0 0.2 (14.1) (0.2) 25.1 (178.0) Net loss $ (313.1) (5.3) % $ (381.3) (6.3) % $ 68.2 17.9 % Net Sales The following table presents net sales by significant product category: Fiscal 2022 Fiscal 2021 Change Net Sales Percent of Net Sales Net Sales Percent of Net Sales $ % Hardware and accessories $ 3,140.0 53.0 % $ 3,171.7 52.8 % $ (31.7) (1.0) % Software 1,822.6 30.7 2,014.8 33.5 (192.2) (9.5) Collectibles 964.6 16.3 824.2 13.7 140.4 17.0 Total $ 5,927.2 100.0 % $ 6,010.7 100.0 % $ (83.5) (1.4) % The following table presents net sales by reportable segment: Fiscal 2022 Fiscal 2021 Change Net Sales Percent of Net Sales Net Sales Percent of Net Sales $ % United States $ 4,093.0 69.1 % $ 4,186.5 69.7 % $ (93.5) (2.2) % Canada 344.1 5.8 332.3 5.5 11.8 3.6 Australia 588.7 9.9 591.8 9.8 (3.1) (0.5) Europe 901.4 15.2 900.1 15.0 1.3 0.1 Total $ 5,927.2 100.0 % $ 6,010.7 100.0 % $ (83.5) (1.4) % 26 Net sales decreased $83.5 million, or 1.4%, in fiscal 2022 compared to fiscal 2021.
Biggest changeJanuary 28, 2023 Openings Disposals February 3, 2024 United States 2,949 35 (69) 2,915 Canada 216 — (13) 203 Australia 419 4 (19) 404 Europe 829 4 (186) 647 Total Stores 4,413 43 (287) 4,169 CONSOLIDATED RESULTS OF OPERATIONS The following table presents certain statement of operations items (in millions) and as a percentage of net sales: Fiscal 2023 Fiscal 2022 Change Amount Percent of Net Sales Amount Percent of Net Sales $ % Net sales $ 5,272.8 100.0 % $ 5,927.2 100.0 % $ (654.4) (11.0) % Cost of sales 3,978.6 75.5 4,555.1 76.9 (576.5) (12.7) Gross profit 1,294.2 24.5 1,372.1 23.1 (77.9) (5.7) Selling, general, and administrative expenses 1,323.9 25.1 1,681.0 28.4 (357.1) (21.2) Asset impairments 4.8 0.1 2.7 — 2.1 77.8 Operating loss (34.5) (0.7) (311.6) (5.3) 277.1 88.9 Interest income, net (49.5) (0.9) (9.5) (0.2) (40.0) (421.1) Other loss, net 1.9 — — — 1.9 100.0 Income (loss) before income taxes 13.1 0.2 (302.1) (5.1) 315.2 NM (1) Income tax expense, net 6.4 0.1 11.0 0.2 (4.6) (41.8) Net income (loss) $ 6.7 0.1 % $ (313.1) (5.3) % $ 319.8 NM (1) (1) “NM” is data that is not meaningful.
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 2022 compared to fiscal 2021.
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 2023 compared to fiscal 2022.
The reduction in merchandise inventory was due to improved inventory management, including a more disciplined purchasing strategy, more advantageous product mix ahead of the fiscal 2022 holiday season, and an improvement in supply chain constraints.
The decrease in merchandise inventory was due to improved inventory management, including a more disciplined purchasing strategy, more advantageous product mix ahead of the fiscal 2022 holiday season, and an improvement in supply chain constraints.
The increase in cash provided by operating activities during fiscal 2022 was primarily due to a reduction in merchandise inventory levels and collection of $176.0 million in tax refunds, partially offset by the impact of our net loss.
Cash provided by operating activities during fiscal 2022 was primarily due to a decrease in merchandise inventory levels and the collection of $176.0 million in tax refunds, partially offset by the impact of our net loss.
STORE COUNT INFORMATION The following table presents the number of stores by segment as of the end of fiscal 2022 compared to the end of fiscal 2021.
STORE COUNT INFORMATION The following table presents the number of stores by segment as of the end of fiscal 2023 compared to the end of fiscal 2022.
For a comparison of our results of operations for fiscal 2021 compared to fiscal 2020, 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 January 29, 2022, as filed with the SEC on March 17, 2022. OVERVIEW GameStop Corp.
For a comparison of our results of operations for fiscal 2022 compared to fiscal 2021, 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 January 28, 2023, as filed with the SEC on March 28, 2023. OVERVIEW GameStop Corp.
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 in low-risk, short-term investments, as well as equity and debt financing alternatives that we believe may enhance stockholder value.
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.
See Item 8, Notes to the Consolidated Financial Statements, Note 15 , "Income Taxes," for additional information. 27 LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents and marketable securities January 28, 2023 January 29, 2022 Cash and cash equivalents $ 1,139.0 $ 1,271.4 Marketable securities 251.6 — Cash, cash equivalents and marketable securities $ 1,390.6 $ 1,271.4 Sources of Liquidity; Uses of Capital Our principal sources of liquidity are cash from operations, cash on hand, and borrowings from the capital markets, which include our revolving credit facilities.
See Item 8, Notes to the Consolidated Financial Statements, Note 15 , "Income Taxes," for additional information. 21 LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents and marketable securities February 3, 2024 January 28, 2023 Cash and cash equivalents $ 921.7 $ 1,139.0 Marketable securities 277.6 251.6 Cash, cash equivalents and marketable securities $ 1,199.3 $ 1,390.6 Sources of Liquidity; Uses of Capital Our principal sources of liquidity are cash from operations, cash on hand, and borrowings from the capital markets, which include our revolving credit facilities.
Our liability for uncertain tax positions was $13.2 million as of January 28, 2023. 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.
Our liability for uncertain tax positions was $6.8 million as of February 3, 2024. 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.
Also, in fiscal 2021, the 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 January 28, 2023, €36.3 million, or $39.5 million, remains outstanding.
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 3, 2024, $28.5 million remains outstanding.
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 facilities and overall market conditions. 28 Certain vendors have been impacted by volatility in the supply chain financing market.
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.
Investing activities In fiscal 2022, cash flows used in investing activities were an outflow of $222.7 million compared to an outflow of $64.8 million in fiscal 2021.
Investing activities In fiscal 2023, cash flows used in investing activities were an outflow of $33.2 million compared to an outflow of $222.7 million in fiscal 2022.
A 10% change in our customer loyalty program redemption rate or a 10% change in our weighted-average retail value per point redeemed at January 28, 2023, in each case, would have affected net earnings by approximately $2.8 million in fiscal 2022.
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 3, 2024, in each case, would have affected 24 net earnings by approximately $1.7 million in fiscal 2023.
Cash Flows The following table presents a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statements of Cash Flows: 2022 2021 Change Cash provided by (used in) operating activities $ 108.2 $ (434.3) $ 542.5 Cash used in investing activities (222.7) (64.8) (157.9) Cash (used in) provided by financing activities (7.9) 1,200.6 (1,208.5) Exchange rate effect on cash, cash equivalents and restricted cash (1.5) (16.6) 15.1 (Decrease) increase in cash, cash equivalents and restricted cash $ (123.9) $ 684.9 $ (808.8) Operating Activities In fiscal 2022, cash flows provided by operating activities were an inflow of $108.2 million, compared with an outflow of $434.3 million in fiscal 2021.
Cash Flows The following table presents a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statements of Cash Flows: Fiscal 2023 Fiscal 2022 Change Cash (used in) provided by operating activities $ (203.7) $ 108.2 $ (311.9) Cash used in investing activities (33.2) (222.7) 189.5 Cash used in financing activities (11.6) (7.9) (3.7) Exchange rate effect on cash, cash equivalents and restricted cash (8.6) (1.5) (7.1) Decrease in cash, cash equivalents and restricted cash $ (257.1) $ (123.9) $ (133.2) Operating Activities In fiscal 2023, cash flows provided by operating activities were an outflow of $203.7 million, compared with an inflow of $108.2 million in fiscal 2022.
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 which matures in November 2026 ("2026 Revolver").
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 which matures in November 2026 ("2026 Revolver"). The 2026 Revolver includes a $50 million swing loan revolving sub-facility, a $50 million Canadian revolving sub-facility, and a $250 million letter of credit sublimit.
Cash used in investing activities during fiscal 2022 was primarily attributable to purchases of marketable securities and ongoing technological investments, partially offset by proceeds from the sale of digital assets and proceeds from the maturity of marketable securities. Cash used in investing activities during fiscal 2021 was primarily attributable to technological investments, and investments in our fulfillment operations.
Cash used in investing activities during fiscal 2022 was primarily due to purchases of marketable securities and investments in technology and supply chain efficiencies, partially offset by proceeds from the sale of digital assets.
Income Tax We recognized an income tax expense of $11.0 million representing an effective tax rate of (3.6)% in fiscal 2022, compared to an income tax benefit of $14.1 million representing an effective tax rate of 3.6% in fiscal 2021.
Income Tax Expense, Net We recognized income tax expense of $6.4 million in fiscal 2023, compared to income tax expense of $11.0 million in fiscal 2022. We recognized an effective tax rate of 48.9% in fiscal 2023 compared to an effective tax rate of (3.6)% in fiscal 2022.
As of January 28, 2023, we had total unrestricted cash and cash equivalents on hand of $1,139.0 million, marketable securities of $251.6 million, and an additional $330.7 million of effective available borrowing capacity under our revolving credit facilities.
As of February 3, 2024, we had total unrestricted cash and cash equivalents on hand of $921.7 million, marketable securities of $277.6 million, and an additional $475.7 million of available borrowing capacity under our revolving credit facilities.
A 10% change in our obsolescence reserve percentage at January 28, 2023 would have affected net earnings by approximately $2.5 million in fiscal 2022. Customer Liabilities Our PowerUp Rewards ® loyalty program allows enrolled members to earn points on purchases in our stores and on some of our websites that can be redeemed for rewards and discounts.
A 10% change in our obsolescence reserve percentage at February 3, 2024 would have affected net earnings by approximately $2.9 million in fiscal 2023. Customer Liabilities Our GameStop Pro ® rewards program allows paid members to earn points on purchases that can be redeemed for rewards that include discounts or coupons.
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.
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.
OFF-BALANCE SHEET ARRANGEMENTS We had no material off-balance sheet arrangements as of January 28, 2023 other than those disclosed Item 8, Notes to the Consolidated Financial Statements, Note 16 , "Commitments and Contingencies". 29 CRITICAL ACCOUNTING ESTIMATES 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.
CRITICAL ACCOUNTING ESTIMATES 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.
We also repaid $25.0 million of outstanding borrowings under our then existing revolving credit facility in 2021. Share Repurchases 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.
Share Repurchases 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 2023, fiscal 2022 or fiscal 2021.
Separate from the 2026 Revolver, 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.
After giving effect to this notice, availability under the 2026 Revolver would have been $225.7 million as of February 3, 2024. 22 Separate from the 2026 Revolver, 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 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. 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.
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.
Selling, General, and Administrative Expenses SG&A expenses decreased $28.6 million, or 1.7%, in fiscal 2022 compared to fiscal 2021, and SG&A as a percentage of net sales for fiscal 2022 and 2021 remained constant at 28.4%.
Selling, General, and Administrative Expenses SG&A expenses decreased $357.1 million or 21.2%, in fiscal 2023 compared to the prior year, and SG&A as a percentage of net sales decreased to 25.1%, in fiscal 2023, compared to 28.4% the prior year.
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 increased to $408.5 million as of January 28, 2023, primarily due to cumulative losses in certain jurisdictions.
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.
(“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. 24 BUSINESS PRIORITIES The initial phase of GameStop's transformation largely occurred over the course of 2021 and the first half of 2022.
(“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. BUSINESS PRIORITIES GameStop is following a strategic plan to fully leverage its unique position and brand recognition in gaming through a new phase of transformation.
Gross Profit Gross profit increased $24.3 million, or 1.8%, in fiscal 2022 compared to fiscal 2021, and gross profit as a percentage of net sales increased to 23.1% in fiscal 2022 compared to 22.4% in fiscal 2021.
Gross Profit Gross profit decreased $77.9 million or 5.7%, in fiscal 2023 compared to the prior year, and gross profit as a percentage of net sales increased to 24.5% in fiscal 2023 compared to 23.1% in the prior year.
A 10% change in our gift card breakage rate at January 28, 2023 would have affected net earnings by approximately $11.9 million in fiscal 2022. 30 Income Taxes 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.
Income Taxes 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.
Our marketable securities are also carried at fair value and include investments in certain highly-rated short-term government bonds and notes that mature in less than one year. Our investment policy is designed to preserve principal and liquidity of our short-term investments.
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. Our marketable securities have a maturity date of greater than 90 days but less than one year.
Financing activities In fiscal 2022, cash flows from financing activities were an outflow of $7.9 million compared to an inflow of $1.2 billion in fiscal 2021. Cash used in financing activities in fiscal 2022 was primarily attributable to settlement of stock-based awards.
Financing activities In fiscal 2023, cash flows used in financing activities were an outflow of $11.6 million compared to an outflow of $7.9 million in fiscal 2022.
The change is primarily due to interest income increasing by $13.1 million in fiscal 2022 as a result of higher returns on invested cash, and interest expense decreasing in fiscal 2022 as a result of lower debt.
Interest Income, Net During fiscal 2023, we recognized net interest income of $49.5 million compared to net interest income of $9.5 million in fiscal 2022. The impact is primarily attributable to interest income increasing as a result of higher returns on invested cash, cash equivalents and marketable securities.
See Item 8, Notes to the Consolidated Financial Statements, Note 9 , "Asset Impairments," for additional information related to the impact on our segments. Interest (Income) Expense and Other, Net Interest (income) expense and other, net decreased by $36.4 million, or 135.3%, shifting from net interest expense in fiscal 2021 to net interest income in fiscal 2022.
During fiscal 2023, we recognized asset impairment charges of $4.8 million compared to asset impairment charges of $2.7 million in fiscal 2022. See Item 8, Notes to the Consolidated Financial Statements, Note 9 , "Asset Impairments," for additional information related to the impact of impairment charges by segment.
In August 2022, the Company opened investment portfolios consisting of U.S. government treasury notes and bills in an aggregate amount of $250.0 million. As of January 28, 2023, the investment portfolios aggregate balance was $252.6 million, of which $251.6 million are recognized in marketable securities and $1.0 million are recognized in cash and cash equivalents on our Consolidated Balance Sheets.
As of February 3, 2024, the investment portfolios' aggregate balance was $280.2 million, of which $277.6 million are recognized in marketable securities and $2.6 million are recognized in cash and cash equivalents on our Consolidated Balance Sheets.
The increase in gross profit is primarily attributable to a decrease in freight expense as a result of lower ecommerce volume and added cost optimizations, partially offset by the translation impact of a stronger U.S. dollar.
The decrease in gross profit is primarily attributable to the decrease in net sales, as further outlined in the net sales commentary, partially offset by a $83.5 million or 42.2%, decrease in freight expenses resulting from a decline in net sales and added cost optimizations.
The decrease in consolidated net sales in fiscal 2022 compared to fiscal 2021 was primarily attributable to the translation impact of a stronger U.S. dollar, a decline in sales from new software releases as a result of fewer significant title launches in fiscal 2022, and a decline in sales of video game accessories, partially offset by an increase in sales of new gaming hardware and an increase in sales of toys and collectibles.
The decrease in consolidated net sales in fiscal 2023 compared to the prior year was primarily attributable to a $300.6 million or 16.5%, decline in the sales of software, a $210.6 million or 21.8%, decline in the sales of collectibles, and a $191.1 million or 11.8%, decline in the sales of video game accessories, partially offset by a $47.9 million or 3.2%, increase in the sales of new hardware driven in part by decreased supply constraints in our Europe segment in the current year.
As of January 28, 2023, we had bank guarantees outstanding in the amount of $14.5 million outside of the 2026 Revolver, and $57.0 million of collateralized cash which is classified as restricted cash in prepaid expenses and other current assets and other noncurrent assets on our Consolidated Balance Sheets.
As of February 3, 2024, we had outstanding letters of credit and other bank guarantees in the amount of $10.1 million outside of the 2026 Revolver, of which $8.8 million were supported by cash collateral and are included in restricted cash.
Removed
This period was primarily focused on rebuilding the Company's decaying infrastructure and strengthening GameStop's value proposition, including investing in the Company's enterprise systems, technology capabilities, store leaders and store associates, and product catalog and offerings. GameStop entered a new phase of its transformation during the back half of 2022.
Added
Our strategic plan is designed to optimize our core business and achieve profitability. GameStop is actively focused on the below objectives: • Establish Omnichannel Retail Excellence. We aim to be the leading destination for games and entertainment products through our stores and ecommerce platforms.
Removed
As a result, GameStop is focused on three overarching goals: establishing omnichannel retail excellence, achieving profitability, and leveraging brand equity to support growth.
Added
To accomplish this, we are taking steps to ensure we are a fast and convenient solution for our customers. This includes increased product availability across all channels, faster fulfillment through ship from store offerings, and a further improved customer service experience. • Achieve Profitability.
Removed
We are taking the following steps, with a significant emphasis on cost containment: • Improving margins through operational discipline and increased emphasis on higher margin collectibles and pre-owned product categories; • Ensuring the Company's cost structure is sustainable relative to revenue, including taking steps to optimize our workforce to operate efficiently and nimbly; • Prudently increasing the size of our addressable market by growing our product catalog across PC gaming, collectibles, consumer electronics, toys, augmented reality, virtual reality and other categories that represent natural extensions of our business; and • Sustaining a favorable customer experience through seamless in-store and ecommerce platforms and speedy delivery to our customers.
Added
During fiscal 2023, 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. • Leverage Brand Equity to Support Growth. GameStop has many strengths and assets, including strong household brand recognition and a significant store network.
Removed
In connection with our cost reduction efforts, we expect to see favorable impacts to our selling, general, and administrative ("SG&A") expenses in the quarters to come as we pursue profitability. We also maintain and continue to strengthen our strong balance sheet. In our pursuit of profitability we seek to improve the efficiency and effectiveness of operations across the organization globally.
Added
We believe these efforts are important aspects of our continued business to enable long-term value creation for our shareholders. As part of our efforts to achieve sustained profitability, we continue to evaluate our portfolio of assets to validate their strategic and financial fit and to eliminate redundancies. During fiscal 2023, we exited our operations in Ireland, Switzerland, and Austria.
Removed
While we expect our intense focus on expense reductions to yield decreases in SG&A expenses we continue to explore strategic options, which may include further store closings and exiting unprofitable businesses. As a result of these actions, we have incurred and may continue to incur severance, store closure costs and other related expenses.
Added
While we expect our cost containment efforts to yield reductions in 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. Investments On December 5, 2023, the Board of Directors approved a new investment policy (the “Investment Policy”).
Removed
By executing on these priorities, we believe we can create a compelling experience for customers and be positioned to invest pragmatically in growth initiatives. In May 2022, we announced the launch of our non-custodial digital asset wallet to allow gamers and others to store, send, receive, and use cryptocurrencies and NFTs across decentralized apps.
Added
Subsequently, on March 21, 2024, the Board of Directors unanimously authorized revisions to the Investment Policy to codify the role of certain members of the Board of Directors in overseeing the Company’s investments.
Removed
In July 2022, we launched our NFT marketplace to allow gamers, creators, collectors and others to buy, sell and trade NFTs. Our NFT marketplace enables parties to own their digital assets, which are represented and secured on the blockchain, and allows parties to connect to their own digital asset wallets to enable transactions.
Added
In accordance with the revised Investment Policy, the Board of Directors has delegated authority to manage the Company’s portfolio of securities investments to an Investment Committee consisting of the Company’s Chairman of the Board of Directors and Chief Executive Officer, Ryan Cohen, and two independent members of the Board of Directors, together with such personnel and advisors as the Investment Committee may choose.
Removed
In November 2022, we launched the integration of the Immutable X blockchain protocol, which provides access to various Web 3.0 products and NFT gaming assets to our customers. We believe the combination of these efforts to stabilize and optimize our core business are critical to achieve sustained profitability to enable long-term value creation for our stockholders.
Added
The Company’s investments must conform to guidelines set forth in the revised Investment Policy or be approved by either the Investment Committee, by unanimous vote, or the full Board of Directors, by majority vote. Additionally, the Investment Committee may recommend to the Board of Directors further modifications to the Investment Policy from time to time.
Removed
Net sales during fiscal 2022 in our Canada and Europe segments increased by 3.6% and 0.1%, respectively, while net sales in our United States and Australia segments decreased by 2.2% and 0.5%, respectively, when compared to fiscal 2021.
Added
The Investment Committee will direct the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Depending on certain market conditions and various risk factors, Mr.
Removed
SG&A expenses decreased primarily due to the translation impact of a stronger U.S. dollar, a decrease in marketing expenses, and reduction in labor-related and consulting service costs driven by our focus on cost structure optimization efforts, and the recognition of deferred income related to our partnership with Immutable X Pty Limited ("IMX").
Added
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.
Removed
Asset Impairments Asset impairments related to store-level assets decreased $4.0 million, or 59.7% in fiscal 2022 compared to fiscal 2021. During fiscal 2022 and 2021, we recognized $2.7 million and $6.7 million, respectively, in asset impairment charges related to store-level assets.
Added
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 19 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.
Removed
In the first quarter of fiscal 2021, we repaid $73.2 million aggregate principal of our then outstanding 6.75% Senior Notes due 2021 (the "2021 Senior Notes") and the remaining $216.4 million aggregate principal of our then outstanding 10% Senior Notes due 2023 (the "2023 Senior Notes") including a $17.8 million make-whole premium.
Added
Net Sales The following table presents net sales by significant product category: Fiscal 2023 Fiscal 2022 Change Net Sales Percent of Net Sales Net Sales Percent of Net Sales $ % Hardware and accessories $ 2,996.8 56.8 % $ 3,140.0 53.0 % $ (143.2) (4.6) % Software 1,522.0 28.9 1,822.6 30.7 (300.6) (16.5) Collectibles 754.0 14.3 964.6 16.3 (210.6) (21.8) Total $ 5,272.8 100.0 % $ 5,927.2 100.0 % $ (654.4) (11.0) % 20 The following table presents net sales by reportable segment: Fiscal 2023 Fiscal 2022 Change Net Sales Percent of Net Sales Net Sales Percent of Net Sales $ % United States $ 3,429.4 65.1 % $ 4,093.0 69.1 % $ (663.6) (16.2) % Canada 292.5 5.5 344.1 5.8 (51.6) (15.0) Australia 522.5 9.9 588.7 9.9 (66.2) (11.2) Europe 1,028.4 19.5 901.4 15.2 127.0 14.1 Total $ 5,272.8 100.0 % $ 5,927.2 100.0 % $ (654.4) (11.0) % During fiscal 2023, total net sales decreased 11.0% compared to the prior year, with net sales in our United States, Canada and Australia segments decreasing by 16.2%, 15.0% and 11.2%, respectively, compared to the prior year, and net sales in our Europe segment increasing by 14.1% compared to the prior year.
Removed
The effective tax rate of (3.6)% in fiscal 2022 is primarily due to not recognizing benefits on certain current period losses, as well as income taxes due in certain foreign and state jurisdictions in which we operate.
Added
The decline in SG&A expenses in fiscal 2023 compared to the prior year is primarily attributable to a $316.3 million reduction in labor-related costs, consulting services costs, and marketing expenses, driven by our continued focus on cost reduction efforts. SG&A expenses also declined in fiscal 2023 due to a one-time digital asset impairment of $33.7 million recognized in fiscal 2022.
Removed
The effective tax rate of 3.6% in fiscal 2021 is primarily due to not recognizing benefits on certain current period losses, the release of a valuation allowance on deferred tax assets in Australia and New Zealand, incremental tax benefits recognized in association with the CARES Act, as well as income taxes due in certain foreign and state jurisdictions in which we operate.
Added
Store related costs decreased $12.3 million in the current year in connection with store closures, primarily in our European segment. Asset Impairments Asset impairments related to store-level assets increased $2.1 million or 77.8%, in fiscal 2023 compared to the prior year.
Removed
In fiscal 2021, we sold an aggregate of 34,000,000 shares of our common stock under our at-the market equity offering program (the "ATM Transactions"). We generated $1.67 billion in aggregate net proceeds from sales under the ATM Transactions.
Added
This decrease in income tax expense is primarily due to the settlement of positions with certain taxing authorities and reductions in unrecognized tax benefits as a result of the lapse of applicable statute of limitations.
Removed
The net proceeds generated from sales under the ATM Transactions have been, and are expected to be, used for working capital and general corporate purposes, including repayment of indebtedness, funding our transformation, growth initiatives and product category expansion efforts, capital expenditures and the satisfaction of our tax withholding obligations upon the vesting of shares of restricted stock held by our executive officers and other employees.
Added
On December 5, 2023, the Board of Directors approved a new Investment Policy. Subsequently, on March 21, 2024, the Board of Directors amended the new Investment Policy. See "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Investments” for more information.
Removed
Additionally, during fiscal 2021, we repaid the remaining $73.2 million aggregate principal amount of our then outstanding 2021 Senior Notes and the remaining $216.4 million aggregate principal amount of our then outstanding 2023 Senior Notes.
Added
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.
Removed
As of January 28, 2023, no loan amounts were outstanding under the 2026 Revolver and $119.3 million of standby letters of credit were issued and undrawn under the 2026 Revolver. See Item 8, Notes to the Consolidated Financial Statements, Note 14 , "Debt," for additional information.
Added
As of February 3, 2024, based on our borrowing base and amounts reserved for outstanding letters of credit, total availability under the 2026 Revolver was $475.7 million, with no outstanding borrowings. As of February 3, 2024, outstanding standby letters of credit were $5.1 million.
Removed
Cash used in operating activities in fiscal 2021 was primarily attributable to an increase in merchandise inventory levels when compared to prior year to, among other things, support our product category expansion efforts, and to mitigate the full impact of global supply chain issues.
Added
On March 22, 2024, the Company delivered an irrevocable notice pursuant to the 2026 Revolver that reduces the $500 million revolving line of credit to $250 million. The 2026 Revolver will continue to include a $50 million swing loan sub-facility, a $50M Canadian sub-facility and a $250 million letter of credit sublimit.
Removed
Cash provided by financing activities during fiscal 2021 was primarily due to the sale of shares of our common stock in connection with the ATM transactions for aggregate net proceeds of approximately $1.7 billion.
Added
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.
Removed
These proceeds were partially offset by payments of $136.8 million for withholding obligations upon the vesting of shares of restricted stock, repayment of $73.2 million of our then outstanding 2021 Senior Notes, and the voluntary early redemption of our outstanding 2023 Senior Notes for an aggregate of $234.2 million (inclusive of a $17.8 million make-whole premium).
Added
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.
Removed
We did not repurchase shares during fiscal 2022, fiscal 2021, or fiscal 2020. As of January 28, 2023, we have $101.3 million remaining under the repurchase authorization.

… 8 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed3 unchanged
Biggest changeThe aggregate fair value of the forward exchange contracts as of January 28, 2023 and January 29, 2022 was a net liability of $5.9 million and $3.4 million, respectively, as measured by observable inputs obtained from market news reporting services, such as Bloomberg , 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.
Biggest changeThe aggregate fair value of the forward exchange contracts as of 25 February 3, 2024 and January 28, 2023 was a net liability of zero and $5.9 million, respectively, as measured by observable inputs obtained from market news reporting services, such as Bloomberg , 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.
We do not require collateral under derivative or investment agreements. 31
We do not require collateral under derivative or investment agreements. 26
A hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of January 28, 2023 would result in a gain of $10.2 million or a loss of $8.4 million in value of the forward exchange contracts. We do not use derivative financial instruments for trading or speculative purposes.
A hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of February 3, 2024 would result in a gain of $5.9 million or a loss of $4.8 million in value of the forward exchange contracts. We do not use derivative financial instruments for trading or speculative purposes.
We recognized a gain of $7.3 million and a gain of $9.6 million in SG&A expenses in our Consolidated Statement of Operations related to derivative instruments for the fiscal years ended January 28, 2023 and January 29, 2022, respectively.
We recognized a gain of $2.0 million and a gain of $7.3 million in SG&A expenses in our Consolidated Statement of Operations related to derivative instruments for the fiscal years ended February 3, 2024 and January 28, 2023, respectively.

Other GME 10-K year-over-year comparisons