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What changed in GameStop Corp.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GameStop Corp.'s 2022 and 2023 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 2023 report.

+269 added−215 removedSource: 10-K (2023-03-28) vs 10-K (2022-03-17)

Top changes in GameStop Corp.'s 2023 10-K

269 paragraphs added · 215 removed · 148 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe table below sets forth the number and locations of our domestic stores included in the United States segment as of January 29, 2022: Alabama 48 Kentucky 62 North Dakota 7 Alaska 5 Louisiana 55 Ohio 141 Arizona 61 Maine 7 Oklahoma 38 Arkansas 25 Maryland 57 Oregon 31 California 271 Massachusetts 54 Pennsylvania 128 Colorado 48 Michigan 83 Rhode Island 8 Connecticut 31 Minnesota 35 South Carolina 62 Delaware 13 Mississippi 39 South Dakota 6 Florida 193 Missouri 53 Tennessee 78 Georgia 106 Montana 9 Texas 305 Guam 2 Nebraska 18 Utah 25 Hawaii 13 Nevada 34 Vermont 4 Idaho 16 New Hampshire 20 Virginia 98 Illinois 102 New Jersey 82 Washington 59 Indiana 74 New Mexico 22 West Virginia 23 Iowa 24 New York 147 Wisconsin 45 Kansas 27 North Carolina 118 Wyoming 6 Total Domestic Stores 3,018 2 International Locations.
Biggest changeAlabama 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.
Trade-In Program We provide our customers with an opportunity to trade-in their pre-owned gaming, mobility and other products at our stores in exchange for cash or in-store credit which can be applied towards the purchase of other products. This process drives higher market share and offers a broader range of price points for our customers.
Trade-In Program We provide our customers with an opportunity to trade-in their pre-owned gaming, mobility, and other products at our stores in exchange for cash or credit which can be applied towards the purchase of other products. This process drives higher market share and offers a broader range of price points for our customers.
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.
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
ITEM 1. BUSINESS General GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) offers games and entertainment products through its ecommerce properties and stores. Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January.
ITEM 1. BUSINESS General GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) offers games and entertainment products through its stores and ecommerce platforms. Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January.
Financial information about our segments is included in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 8, Notes to the Consolidated Financial Statements, Note 6 , "Segment Information," of this Form 10-K. Merchandise We categorize our sale of products as follows: • Hardware and accessories.
Financial information about our segments is included in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 8, Notes to the Consolidated Financial Statements, Note 5 , "Segment Information," of this Form 10-K. 1 Merchandise We categorize our sale of products as follows: • Hardware and accessories.
Through our Gamer Fund employee assistance program, an employee sponsored 501(c)(3) organization, we have provided temporary assistance to more than 3,800 GameStop associates who have experienced unforeseen emergency or hardship, and more than $750,000 in scholarships. • Safety.
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.
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 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.
In addition, we continuously measure and look for cost effective ways to reduce our carbon emissions and have seen both our total emissions and emissions by store decrease in the U.S. over our baseline year of 2009.
In addition, we continuously measure and look for cost-effective ways to reduce our carbon emissions and have seen both our total emissions and emissions by store decrease in the United States over our baseline year of 2009.
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, virtual reality products and memory cards. 1 • Software.
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.
Each segment consists primarily of retail operations, with the significant majority of our stores and ecommerce properties focused on games, entertainment products and technology. These products are substantially the same regardless of geographic location, with the primary differences in merchandise carried being the timing of the release of new products or technologies in the various segments.
Each segment consists primarily of retail operations, with the significant majority focused on games, entertainment products and technology. These products are substantially the same regardless of geographic location, with the primary differences in merchandise carried being the timing of the release of new products in the various segments.
Fiscal year 2021 consisted of the 52 weeks ended on January 29, 2022 ("fiscal 2021"). Fiscal year 2020 consisted of the 52 weeks ended on January 30, 2021 ("fiscal 2020") and fiscal year 2019 consisted of the 52 weeks ended on February 1, 2020 ("fiscal 2019"). Reportable Segments We operate in four geographic segments: United States, Canada, Australia and Europe.
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.
Our largest vendors are Nintendo, Sony, Microsoft, U&I Entertainment and Electronic Arts, which collectively accounted for a majority of our new product purchases in fiscal 2021. We have established price protections and return rights with our primary gaming product vendors in order to reduce our risk of inventory obsolescence.
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.
Our segments also include 50 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 Game Informer ® (“Game Informer”) magazine, the world's leading print and digital gaming publication.
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.
We identified segments based on a combination of geographic areas, which is the basis of how we manage the organization and analyze performance. Our sales and profits are driven through both our physical stores and broad ecommerce platforms.
We identified segments based on a combination of geographic areas, which is the basis of how we manage the organization and analyze performance. Our Australia geographic segment includes operations in New Zealand for reporting. Our sales and profits are driven through both our physical stores and ecommerce platforms.
Trademarks We have a number of trademarks and service marks, including “GameStop ® ,” “Game Informer ® ,” “EB Games ® ,” “Electronics Boutique ® ,” “Zing Pop Culture ® ,” “Power to the Players ® ” and “GameStop PowerUp Rewards ® ,” which have been registered by us with the U.S. Patent and Trademark Office.
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.
We have designed our compensation and benefits programs to meet the unique needs of employees in our various business segments. These programs are intended to attract, reward and retain talent 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 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.
("Best Buy") and Amazon.com, Inc. (“Amazon.com”), among others. Throughout Europe we compete with major consumer electronics retailers such as Media Markt, Saturn and FNAC, major hypermarket chains like Carrefour and Auchan, and online retailer Amazon.com. Competitors in Canada include Wal-Mart and Best Buy. In Australia, competitors include JB HiFi stores, Big W, Target, and Amazon.com.
(“Walmart”), Target Corporation (“Target”), Best Buy Co., Inc. ("Best Buy"), and Amazon.com, Inc. (“Amazon.com”), among others. Throughout Europe we compete with major consumer electronics retailers such as FNAC-Darty and Media Markt-Saturn, major hypermarket chains like Carrefour and Auchan, and online retailer Amazon.com. Competitors in Canada include Walmart and Best Buy.
Gaming products are also distributed through other methods such as digital delivery. We also compete with sellers of pre-owned and value gaming products and other forms of entertainment activities, including casual and mobile games, movies, television, theater, sporting events and family entertainment centers. In the U.S., we compete with Wal-Mart Stores, Inc. (“Wal-Mart”); Target Corporation (“Target”); Best Buy Co., Inc.
Gaming products are also distributed through other methods such as digital delivery. We also compete with sellers of pre-owned and value gaming products and other forms of entertainment activities, including casual and mobile games, movies, television, theater, sporting events and family entertainment centers. In the United States, we compete with Walmart Stores, Inc.
In 2021, we achieved an 11% reduction in year over year carbon emissions in the U.S. through both operational reductions and renewable sourcing. 5 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 SEC.
For many of our trademarks and service marks, including “Micromania TM ,” 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.
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.
In addition, we generally conduct business on an order-by-order basis, a practice that is typical throughout the industry. We purchase collectibles merchandise from a broad base of domestic and international vendors. We believe that maintaining and strengthening our long-term relationships with our vendors is essential to our operations and continued expansion.
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.
As of January 29, 2022, we had a total of 4,573 stores across all of our segments; 3,018 in the United States, 231 in Canada, 417 in Australia and 907 in Europe. Our stores and ecommerce sites operate primarily under the names GameStop ® (“GameStop”), EB Games ® (“EB Games”) and Micromania TM .
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 ® .
Game Informer ® is a part of the PowerUp Rewards Pro loyalty program and is a key feature of each paid PowerUp Rewards Pro membership.
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.
Seasonality Our business, like that of many retailers, is seasonal, with a major portion of our sales and operating profit realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2021 and 2020, we generated approximately 37% and 42%, respectively, of our sales during the fourth quarter.
Seasonality Our business, like that of many retailers, is seasonal, with the major portion of sales and operating profit realized during the fourth quarter of the fiscal year, which includes the holiday selling season. Results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
We have approximately 12,000 full-time salaried and hourly associates and between 14,000 and 28,000 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. • Development. We are committed to providing our associates with opportunities to develop and grow their careers.
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.
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. The magazine is available by subscription, in both digital and physical formats and is sold both online and in-store.
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.
The PowerUp Rewards membership totals include 5.8 million paying pro members, which represents 31.8% growth compared to prior year. Our loyalty programs generally offer our customers the ability to sign up for a free or paid membership which gives our customers access to exclusive gaming related rewards.
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.
We target strip centers that are conveniently located, have a mass merchant or supermarket anchor tenant and have a high volume of customers. As of January 29, 2022, we offered games and entertainment products in 4,573 stores worldwide. Domestic Locations.
These locations provide easy access and high frequency of visits and, in the case of strip centers and high-traffic pedestrian stores, high visibility. We target strip centers that are conveniently located, have a mass merchant or supermarket anchor tenant and have a high volume of customers.
We use our distribution facilities, store locations and inventory management systems to optimize the efficiency of the flow of products to our stores and customers, enhance fulfillment efficiency and optimize in-stock and overall investment in inventory. In 2020, we introduced same day delivery service in certain markets to enhance the customer shopping and delivery experience.
We use our distribution facilities, store locations and inventory management systems to optimize the efficiency of the flow of products to our stores and customers, enhance fulfillment efficiency and optimize in-stock and overall investment in inventory. Competition The gaming industry is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions.
We offer learning opportunities through our proprietary 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. We believe a more diverse workforce provides many benefits in drawing upon a greater richness of resources, experiences, ideas and talents. • Benefits.
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.
The table below sets forth the number and locations of our international stores included in our segments in Canada, Europe and Australia as of January 29, 2022: Number of Stores Canada 231 Total Stores - Canada 231 Australia 376 New Zealand 41 Total Stores - Australia 417 Austria 8 France 399 Germany 172 Ireland 42 Italy 272 Switzerland 14 Total Stores - Europe 907 Total International Stores 1,555 Business Strategy GameStop is on a strategic path to fully leverage our unique position and brand in gaming.
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.
This includes app & site redesigns, improvements in fulfillment and delivery times, better product availability across all channels, and a further improved customer service experience. • Expand our selection to deliver a market-leading offering in gaming & entertainment.
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.
See "Consolidated Results of Operations—Selling, General and Administrative Expenses" for additional information. 3 PowerUp Rewards Our U.S. loyalty program, called PowerUp Rewards ® ("PowerUp Rewards"), had approximately 50.5 million members as of January 29, 2022, of which approximately 16.1 million members have purchased or traded at GameStop ® in the past year.
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.
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. In 2021 alone, through our U.S. refurbishment center, we refurbished over 0.7 million pieces of software (CDs) and over 2.1 million consumer electronic devices, and recycled over 1.0 million pounds of e-waste.
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.
Globally, we also compete with certain vendors including Sony, Microsoft, and Nintendo, among others, for direct-to-consumer offerings. 4 Market Size Based upon estimates compiled by various market research firms, including NPD Group, Inc.
In Australia, competitors include JB HiFi stores, Big W, Target, and Amazon.com. Globally, we also compete with certain vendors including Sony, Nintendo, and Microsoft among others, for direct-to-consumer offerings.
Our strategic plan is designed to optimize our core business while at the same time, pursuing strategic initiatives to transform GameStop for the future by expanding our addressable market and product offerings to drive growth in the gaming and entertainment industries.
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.
Store Locations Our retail stores are generally located in strip centers, shopping malls and pedestrian areas. These locations provide easy access and high frequency of visits and, in the case of strip centers and high-traffic pedestrian stores, high visibility.
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.
We will continue to prioritize the health and safety of our associates as we navigate the issues arising from the COVID-19 pandemic. 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.
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.
We offer new and pre-owned gaming software for current and certain prior generation consoles. We also sell a wide variety of in-game digital currency, digital downloadable content (“DLC”) and full-game downloads. • Collectibles . Collectibles consist of licensed merchandise, primarily related to the gaming, television and movie industries and pop-culture themes.
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.
Human Capital At GameStop, we strive to attract, retain and develop talent at all levels of our organization. In 2021, as part of these efforts to attract talent throughout the United States, we opened additional offices in Seattle, WA, Pembrook Pines, FL, and Boston, MA.
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.
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GameStop is focused on transforming into a customer-obsessed technology company to delight gamers and is actively focused on the below: • Establish ecommerce excellence. We aim to be the leading destination for games and entertainment across all channels and will scale up our ecommerce operations to make the most convenient solution for our customers.
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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.
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Continue investing in expanding our product offering to relevant categories for our customers, including becoming a leader in PC gaming, virtual reality, and other gaming products. • Leverage existing strengths and assets.
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The table below sets forth the number and locations of our international stores included in our segments in Canada, Europe and Australia.
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Grow our presence in the gaming community and increase market share through enhancing the value of our loyalty program and Game Informer assets while also expanding the scope of our buy, sell, and trade business to support our expanded offering. • Invest in new growth opportunities.
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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.
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As we scale and expand our core offerings we will simultaneously invest in additional growth, including blockchain, digital assets (including non-fungible tokens ("NFTs")), Web 3.0 technology, and new destination formats for our stores. In January 2022, we entered into partnerships with Immutable X Pty Limited (“IMX”) and Digital Worlds NFTs Ltd.
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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.
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("Digital Worlds") pursuant to which IMX will become a technology partner and platform for our NFT marketplace, and Digital Worlds will grant up to $100 million in IMX tokens to creators of NFT content and technology. In addition, Digital Worlds agreed to provide up to approximately $150 million in IMX tokens to GameStop upon the achievement of certain milestones.
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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.
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We believe these future transformation efforts are an important aspect of our continued business to enable long-term value creation for our shareholders. In fiscal 2021 we further strengthened our balance sheet by eliminating $314.6 million of total outstanding debt as of fiscal 2020 and raising $1,672.8 million in gross equity capital through an at-the-market offering.
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We 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.
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Connected to our transformation efforts, we have incurred and may continue to incur severance, store closure costs and expenses for consultants and advisors.
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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.
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The programs' paid memberships generally include a subscription to Game Informer ® magazine and additional discounts and benefits in our stores and ecommerce properties. The GameStop PowerUp Rewards program has also been recognized by Newsweek ® as one of America’s Best Loyalty Programs 2022.
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During fiscal 2022 and 2021, we generated approximately 38% and 37%, respectively, of our sales during the fourth quarter.
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Distribution and Information Management Our operating strategy involves providing a broad merchandise selection for our customers to purchase what they want, when and how they want it.
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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.
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In 2021, we announced the expansion of our North American fulfillment network through the lease of facilities in Reno, Nevada and York, Pennsylvania. See Item 1A.
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Risk Factors, Operational Risks - “We depend on third-party delivery services to deliver products to our retail locations, fulfillment centers and customers on a timely and consistent basis, and changes in the terms we have with these service providers could adversely affect our business and financial position.” Competition The gaming industry is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions.
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("NPD"), International Development Group ("IDG") and DFC Intelligence ("DFC"), we estimate that the market for new physical console gaming systems, accessories and physical software was approximately $18.0 billion in 2021 in the countries in which we operate. This estimated market excludes sales of pre-owned gaming systems, which are not currently measured by any third-party research firms.
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Additionally, based on estimates compiled by DFC, we estimate that the market in North America for content in digital format (full-game and add-on content downloads for console and PC, subscriptions, mobile games and social network games) was approximately $27.0 billion in 2021.
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In response to the COVID-19 pandemic, we implemented enhanced safety measures and made certain other operational changes that were in the best interests of our associates as well as the communities in which we operate, including use of personal protective equipment.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a consequence of these or other events, we may endure interruption to our operations or losses of property, equipment or inventory, which could adversely affect our operations and financial condition. If our systems fail to perform or are inadequate, our ability to manage our business could be disrupted.
Biggest changeThey can also affect our information technology systems, resulting in disruption to various aspects of our operations, including our ability to transact with customers and fulfill orders. As a consequence of these or other events, we may endure interruption to our operations or losses of property, equipment or inventory, which could adversely affect our operations and financial condition.
Our sales of collectibles depend on popularity of 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 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.
Other than restrictions on trading that arise under securities laws (or pursuant to our securities trading policy that is intended to facilitate compliance with securities laws), including the prohibition on trading in securities by or on behalf of a person who is aware of nonpublic material information, we have no restrictions on the right of our employees, directors and officers, and their affiliates, to sell their unrestricted shares of Class A Common Stock.
Other than restrictions on trading that arise under securities laws (or pursuant to our securities trading policy that is intended to facilitate compliance with securities laws), including the prohibition on trading in securities by or on behalf of a person who is aware of material nonpublic information, we have no restrictions on the right of our employees, directors and officers, and their affiliates, to sell their unrestricted shares of Class A Common Stock.
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.
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.
Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment. 13 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. 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.
Any such cybersecurity attack may also require significant investment and resources to identify and remediate, may expose us to costly litigation, government investigations, government enforcement actions, fines and/or lawsuits and may significantly harm our reputation with our members and customers. Weather, natural disasters, public health crises and other unexpected events could adversely affect our operating results.
Any such cybersecurity attack may also require significant investment and resources to identify and remediate, may expose us to costly litigation, government investigations, government enforcement actions, fines and/or lawsuits and may significantly harm our reputation with our customers. Weather, natural disasters, public health crises and other unexpected events could adversely affect our operating results.
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, 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 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.
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.
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.
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 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 platforms have recently 7 been acquired by console manufacturers.
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.
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.
A breach of the covenants or restrictions under the agreement governing our revolving 14 credit facility could result in an event of default. Such an event of default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
A breach of the covenants or restrictions under the agreement governing our revolving credit facility could result in an event of default. Such an event of default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
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.
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.
Any negative publicity relating to our vendors, products, associates and Board members, practices or our Company could damage our reputation and adversely impact our 9 ability to attract and retain customers and employees.
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.
If we are unable to renew or enter into new leases on favorable terms, our earnings may be adversely affected. All of our retail stores are located in leased premises. If the cost of leasing existing stores increases, we cannot assure that we will be able to maintain our existing store locations as leases expire.
If we are unable to renew or enter into new leases on favorable terms, our earnings may be adversely affected. All of our retail stores are located in leased premises. If the cost of leasing existing stores increases, we cannot ensure that we will be able to maintain our existing store locations as leases expire.
Our sales of collectibles are heavily dependent upon the continued demand by our customers for collectibles, apparel, toys, gadgets, electronics and other retail products for pop culture and technology enthusiasts. The popularity of such products is often driven by movies, television shows, music, fashion and other pop culture influences.
Our sales of collectibles are heavily dependent upon the continued demand by our customers for collectibles, apparel, toys, trading cards gadgets, electronics and other retail products for pop culture and technology enthusiasts. The popularity of such products is often driven by movies, television shows, music, fashion and other pop culture influences.
These factors include, but are not limited to: • the timing and allocations of new product releases including new console launches; the amounts devoted to strategic investments, including in multi-channel capabilities and other business initiatives, and failure to achieve anticipated profitability and benefits from such initiatives within the expected time-frames, or at all; • timing and extent of the achievement of anticipated profits from investments, if at all; • 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; and • changes in foreign currency exchange rates.
These factors include, but are not limited to: • the timing and allocations of new product releases including new console launches; • the amounts devoted to strategic investments, including in multi-channel capabilities and other business initiatives, and failure to achieve anticipated profitability and benefits from such initiatives within the expected time-frames, or at all; • the timing and extent of the achievement of anticipated profits from investments, if at all; • 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; • the mix of earnings in the countries in which we operate; • the costs associated with the exit of unprofitable markets, businesses or stores; and • changes in foreign currency exchange rates.
Despite these efforts, we have been the target of cybersecurity attacks in the past and there is no guarantee that the procedures we have implemented to protect against unauthorized access to secure data are adequate.
Despite these efforts, we have been the target of cybersecurity attacks in the past and there is no guarantee that the procedures we have implemented to protect against unauthorized access are adequate.
As a seller of consumer products, we are also subject to various federal, state, local and international laws, regulations and statutes, including laws relating to product safety and consumer protection, including protection of customer data and privacy.
As a seller of consumer products, we are also subject to various federal, state, local and international laws, regulations and statutes, including laws relating to product safety and consumer protection and privacy.
If our relationships with these third parties are terminated or impaired, if we are unable to negotiate acceptable terms with these third parties or if these third parties are unable to deliver products for us, whether due to a labor shortage, slow down or stoppage, responses to the COVID-19 pandemic, or for any other reason, we would be required to use alternative carriers for the shipment of products to our retail locations, fulfillment centers and customers.
If our relationships with these third parties are terminated or impaired, if we are unable to negotiate acceptable terms with these third parties or if these third parties are unable to deliver products for us, whether due to a labor shortage, slow down or stoppage, or for any other reason, we would be required to use alternative carriers for the shipment of products to our retail locations, fulfillment centers and customers.
In addition, changes in the regulatory environment affecting Medicare reimbursements, workplace safety (including in response to the COVID-19 pandemic), 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, 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.
As a result, any event causing a disruption of imports, including labor shortages, natural disasters, public health crises, including the ongoing COVID-19 pandemic, or the imposition of import or trade restrictions in the form of tariffs or quotas could increase the cost and reduce the supply of products available to us, which may negatively impact our business and results of operations.
As a result, any event causing a disruption of imports, including labor shortages, natural disasters, public health crises, or the imposition of import or trade restrictions in the form of tariffs or quotas could increase the cost and reduce the supply of products available to us, which may negatively impact our business and results of operations.
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.
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.
Our success also depends, in part, upon our ability to attract, motivate and retain a highly trained and engaged workforce, management for our stores and skilled merchandising, marketing, financial and administrative personnel.
Our success also depends, in part, upon our ability to attract, motivate and retain a highly trained and engaged workforce, including key executives, management for our stores and skilled merchandising, marketing, financial and administrative personnel.
Some of these factors include consumer disposable income levels, consumer confidence in current and future economic conditions, levels of employment, consumer credit availability, consumer debt levels, interest rates, tax rates, housing market conditions, inflation, socio-political factors, such as civil unrest or political uncertainty, and the effect of weather, natural disasters, and public health crises, including the COVID-19 pandemic.
Some of these factors include consumer disposable income levels, consumer confidence in current and future economic conditions, levels of employment, consumer credit availability, consumer debt levels, interest rates, tax rates, housing market conditions, inflation, tariffs, socio-political factors, such as civil unrest or political uncertainty, and the effect of weather, natural disasters, and public health crises.
Unfavorable changes in our global tax rate could have a negative impact on our business, results of operations and cash flows. 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.
Risks Related to Laws and Regulations Unfavorable changes in our global tax rate could have a negative impact on our business, results of operations and cash flows. 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.
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. 15
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 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.
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.
We compete with mass merchants and regional chains, including Wal-Mart and Target; computer product and consumer electronics stores, including Best Buy; other U.S. and international gaming and PC software specialty stores, such as Carrefour and Media Markt; toy retail chains; internet-based retailers such as Amazon.com; other internet marketplaces, including those operated by game publishers and console manufacturers; online retailers of digital software; and game rental companies.
We compete with mass merchants and regional chains, including Walmart and Target, computer product and consumer electronics stores, including Best Buy, other United States and international gaming and PC software specialty stores, such as FNAC Darty, and Media Markt-Saturn, major hypermarket chains like Carrefour and Auchan, toy retail chains, internet-based retailers such as Amazon.com, other internet marketplaces, including those operated by game publishers and console manufacturers, online retailers of digital software and game rental companies.
If our suppliers and service providers do not provide us with favorable business terms or allocate reduced volumes of their products to us, we may not be able to offer products to our customers in sufficient volumes or at competitive prices.
We purchase substantially all of our products directly from manufacturers, software publishers and, in some cases, distributors. If our suppliers and service providers do not provide us with favorable business terms or allocate reduced volumes of their products to us, we may not be able to offer products to our customers in sufficient volumes or at competitive prices.
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.
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.
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.
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.
We also maintain insurance for our facilities against casualties, and we evaluate our risks and develop contingency plans for dealing with them. Although we have reviewed and analyzed a broad range of disruption risks applicable to our logistics operations, the ones that actually affect us may not be those that we have concluded are most likely to occur.
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.
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.
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.
Our financial results depend significantly upon the business terms we can obtain from our suppliers and service providers, including competitive prices, unsold product return policies, advertising and market development allowances, freight charges and payment terms. We purchase substantially all of our products directly from manufacturers, software publishers and, in some cases, distributors.
Our ability to obtain favorable terms from our suppliers and service providers may impact our financial results. Our financial results depend significantly upon the business terms we can obtain from our suppliers and service providers, including competitive prices, unsold product return policies, advertising and market development allowances, freight charges and payment terms.
Our business, like that of many retailers, is seasonal, with a major portion of our sales and operating profit realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2021 and 2020, we generated approximately 37% and 42%, respectively, of our sales during the fourth quarter.
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.
Factors that affect our ability to maintain sufficient numbers of qualified associates include associate morale, our reputation, unemployment rates, competition from other employers and our ability to offer appropriate compensation and benefits packages.
The turnover rate in the retail and fulfillment industries is relatively high, and there is an ongoing need to recruit and train new store and fulfillment associates. Factors that affect our ability to maintain sufficient numbers of qualified associates include associate morale, our reputation, unemployment rates, competition from other employers and our ability to offer appropriate compensation and benefits packages.
If and to the extent we are unable to successfully execute these initiatives, we may incur unanticipated costs and losses, and face other adverse consequences, such as negative reputational effects. 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.
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.
The outcome of litigation and other legal proceedings and the magnitude of potential losses therefrom, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify. 12 Certain of these legal proceedings, if decided adversely to us or settled by us, may require changes to our business operations that negatively impact our operating results or involve significant liability awards that impact our financial condition.
Certain of these legal proceedings, if decided adversely to us or settled by us, may require changes to our business operations that negatively impact our operating results or involve significant liability awards that impact our financial condition. The cost to defend litigation may be significant.
Furthermore, our plans may not be adequate at the time of occurrence for the magnitude of any particular disruption event that we may encounter.
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.
Economic Risks Economic, social and political conditions in the markets in which we operate could adversely affect demand for the products we sell and impact our business and financial condition. Sales of our products involve discretionary spending by consumers, making our results highly dependent on the health of the economies and consumer confidence in the markets in which we operate.
Economic and Industry Risks Economic, social and political conditions in the markets in which we operate could adversely affect demand for the products we sell and impact our business and financial condition.
Damage to our reputation could adversely affect our business and our ability to attract and retain customers and employees. Our continued success depends upon customers’ perception of our Company.
Our inability to attract and retain qualified personnel or retain key personnel in the future could have a material adverse effect on our business and results of operations. Damage to our reputation could adversely affect our business and our ability to attract and retain customers and employees. Our continued success depends upon customers’ perception of our Company.
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 ability to obtain favorable terms from our suppliers and service providers may impact our financial results.
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.
Such events can adversely affect our workforce and prevent employees and customers from reaching our stores and properties and can disrupt or disable portions of our supply chain, distribution network and refurbishment operations. They can also affect our information technology systems, resulting in disruption to various aspects of our operations, including our ability to transact with customers and fulfill orders.
Such events can adversely affect our workforce and prevent employees and customers from reaching our stores, logistics facilities and other properties and can disrupt or disable portions of our supply chain, distribution network and refurbishment operations.
Any increased delivery and shipping costs 10 could harm our business and financial performance by increasing our costs of doing business and reducing our margins. As we continue to increase our ecommerce capabilities, we expect our reliance on third party delivery services to increase.
Any increased delivery and shipping costs could harm our business and financial performance by increasing our costs of doing business and reducing our margins.
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.
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.
These disruptions and their effects are not predictable with certainty and, although they typically can be mitigated, they cannot be eliminated. We seek to mitigate our exposure to these disruptions in several ways. For example, where feasible, we design the configuration of our facilities to reduce the consequences of disasters and other disruptions.
We seek to mitigate our exposure to these disruptions in several ways. For example, where feasible, we design the configuration of our logistics facilities to reduce the consequences of disasters and other disruptions. We also maintain insurance for these facilities against casualties, and we evaluate our risks and develop contingency plans for dealing with them.
The impact of these potential changes to our business and consolidated financial results cannot be determined until the relevant legislation and policies are finalized. 11 Legislative actions may cause our general and administrative and compliance costs to increase and impact our 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.
Adverse economic, social and political changes in any of the regions in which we sell our products could adversely affect our business in many ways, including by reducing sales and margins. The COVID-19 pandemic has had, and may continue to have, an adverse effect on our business and our financial results.
Adverse economic, social and political changes in any of the regions in which we sell our products could adversely affect our business in many ways, including reduced sales and margins. We face strong competition from multi-channel retailers, ecommerce businesses and others, which directly affects our revenue and profitability.
Consumers are typically more likely to make discretionary purchases, including purchasing gaming and technology products, when there are favorable economic conditions. Our business may be affected by many economic, social, and political factors outside our control.
Our business may be affected by many economic, social, and political factors outside our control.
Our business and results of operations may be negatively impacted if we fail to keep pace with these changes. 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 business and results of operations may be negatively impacted if we fail to keep pace with these changes. If we are unable to successfully manage our profitability and cost reduction initiatives, our operating results could be adversely affected.
Our failure to anticipate, identify and react appropriately to changing trends and preferences of customers could lead to, among other things, excess inventories and higher markdowns. Sales of video games containing graphic violence may decrease as a result of actual violent events or other reasons, and our financial performance may be adversely affected as a result.
Our failure to anticipate, identify and react appropriately to changing trends and preferences of customers could lead to, among other things, excess inventories and higher markdowns. Strategic Risks If we are unable to successfully maintain strong retail and ecommerce experiences for our customers, our sales and results of operations could adversely be impacted.
The cost to defend litigation may be significant. As a result, legal proceedings may adversely affect our business, financial condition, results of operations or liquidity. 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.
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.
Removed
The COVID-19 pandemic has impacted the global economy, changed consumer behaviors and disrupted global supply chains, and may continue to do so.
Added
Sales of our products involve discretionary spending by consumers, making our results highly dependent on the health of the economies and consumer confidence in the markets in which we operate. Consumers are typically more likely to make discretionary purchases, including purchasing gaming and technology products, when there are favorable economic conditions.
Removed
The extent of the impact of the COVID-19 pandemic on our business and financial results will depend on future developments, including the duration and severity of the pandemic, the implementation or recurrence of store closure requirements and operating restrictions placed on our physical locations by governmental authorities, disruptions in the supply chain for the products we sell resulting from labor shortages and other issues caused by the pandemic, and the impact of the pandemic on consumer confidence and spending, as well as the financial markets, all of which are highly uncertain.
Added
The retail environment is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions.
Removed
Therefore, we cannot reasonably estimate the full extent of the COVID-19 pandemic’s impact on our business and financial results. 6 Industry Risks We face strong competition from multi-channel retailers, ecommerce businesses and others, which directly affects our revenue and profitability. The retail environment is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions.
Added
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.
Removed
The COVID-19 pandemic has resulted in labor and raw material shortages at certain suppliers that are part of our supply chain, and we have experienced, and expect to continue to experience, shortages in supply as a result.
Added
These initiatives could strain our existing resources, and we could experience operating difficulties in managing our business, including difficulties in hiring, managing, and retaining employees. If we do not adapt, we may experience erosion to our brand, the quality of our products and services may suffer and our operating results may be negatively impacted.
Removed
If labor and material 7 shortages continue or expand in scope, it could impact our ability to obtain certain products on schedule and, accordingly, could have an adverse effect on our business and financial condition. An adverse trend in sales during the holiday selling season could impact our financial results.
Added
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.
Removed
Our largest vendors are Nintendo, Sony, Microsoft, U&I Entertainment and Electronic Arts, which collectively accounted for a majority of our new product purchases in fiscal 2021.
Added
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.
Removed
Many popular video games contain material with graphic violence. These games receive an “M” or “T” rating from the Entertainment Software Ratings Board. As actual violent events occur and are publicized, or for other reasons, public acceptance of graphic violence in video games may decline.
Added
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.
Removed
Consumer advocacy groups may increase their efforts to oppose sales of graphically-violent video games and may seek legislation prohibiting their sales. As a result, our sales of those games may decrease, which could negatively impact our results of operations.
Added
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.
Removed
Strategic Risks Our strategic plans and transformation initiatives may initially result in a negative impact on our financial results and such plans and initiatives may not achieve the desired results within the anticipated time frame or at all.
Added
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.
Removed
Our ability to successfully implement and execute our strategic plans and transformation initiatives is dependent on many factors, some of which are out of our control. Our strategic plans and transformation initiatives may require significant capital investment and management attention at the expense of other business initiatives and may take longer than anticipated to achieve the desired return.
Added
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.
Removed
Additionally, any new initiative is subject to certain risks, including customer acceptance, competition and the ability to attract and retain qualified personnel to support the initiative. If we are unable to successfully maintain strong retail and ecommerce experiences for our customers, our sales and results of operations could adversely be impacted.
Added
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.
Removed
In addition, improvements to our ecommerce platform involve substantial investments of capital and resources, increasing supply chain and distribution capabilities, attracting, developing and retaining qualified personnel with relevant subject matter expertise and effectively managing and improving the customer experience. In-store and ecommerce retail are competitive and 8 evolving environments.
Added
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.
Removed
In addition, the turnover rate in the retail and fulfillment industries is relatively high, and there is an ongoing need to recruit and train new store and fulfillment associates.
Added
There is no guarantee that these investments will maintain their value as measured against fiat currencies.
Removed
Any turnover in senior management in the future or inability to attract and retain qualified personnel could have a material adverse effect on our business and results of operations. Changes to our Board may disrupt our operations, our strategic focus or our ability to drive stockholder value.
Added
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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table presents our principal facilities: Location Square Footage Owned or Leased Use Grapevine, Texas, USA 426,000 Leased Distribution and administration Grapevine, Texas, USA 182,000 Leased Manufacturing and distribution Shepherdsville, Kentucky, USA 631,000 Leased Distribution York, Pennsylvania, USA 708,000 Leased Distribution Reno, Nevada, USA 532,000 Leased Distribution Brampton, Ontario, Canada 119,000 Leased Distribution and administration Eagle Farm, Queensland, Australia 185,000 Leased Distribution and administration Milan, Italy 123,000 Owned Distribution and administration Additional information regarding our properties can be found in Item 1, “Business—Store Locations” in this Form 10-K.
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.
In August of 2020, we sold and leased-back our Australian headquarters in Eagle Farm, Queensland to an unrelated party. Additionally, in September of 2020, we sold and leased-backed our Canadian headquarters in Brampton, Ontario to an unaffiliated third party. As of January 29, 2022, we owned three and leased 16 office and distribution facilities, totaling approximately 3.2 million square feet.
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.
Lease Terms to Expire During Number of Stores Fiscal 2022 507 Fiscal 2023 1,474 Fiscal 2024 976 Fiscal 2025 564 Fiscal 2026 and later 1,052 Total 4,573 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.
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.
We believe that, as current leases expire, we will be able to obtain either renewals at present locations, leases for equivalent locations in the same area, or be able to close the stores with expiring leases and transfer enough of the sales to other nearby stores or ecommerce properties to improve, if not at least maintain, profitability.
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.
The lease expiration dates for the leased facilities range from 2022 to 2030, with an average remaining lease life, including reasonably certain options, of approximately seven years.
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.
Removed
The terms of the store leases, including reasonably certain options, for the 4,573 leased stores open as of January 29, 2022 expire as follows.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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
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

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the past two fiscal years, we have not declared, and do not anticipate declaring in the near term, dividends on shares of our common stock. 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.
Biggest changeDividends 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.
Stock Comparative Performance Graph The following graph compares the cumulative total stockholder return on our Class A Common Stock for the period commencing January 27, 2017 through January 28, 2022 (the last trading date of fiscal 2021) 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 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.
Total return values were calculated based on cumulative total return assuming (i) the investment of $100 in our Class A Common Stock, the S&P 500 and the Dow Jones Specialty Retailers Index on January 27, 2017 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 2, 2018 and (ii) reinvestment of dividends.
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 11, 2022, there were approximately 125,543 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 22, 2023, there were 197,058 record holders of our Class A Common Stock.
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 1/27/2017 2/2/2018 2/1/2019 1/31/2020 1/29/2021 1/28/2022 GME $ 100.00 $ 71.73 $ 54.94 $ 19.42 $ 1,643.76 $ 495.20 S&P 500 Index $ 100.00 $ 122.82 $ 122.75 $ 149.19 $ 174.90 $ 178.32 Dow Jones Specialty Retailers Index $ 100.00 $ 128.70 $ 147.53 $ 161.94 $ 228.21 $ 218.86 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. 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.
(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. In aggregate, during fiscal 2019, we repurchased a total of 38.1 million shares of our Class A Common Stock, totaling $198.7 million.
Issuer 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.
We did not repurchase shares during fiscal 2021 or fiscal 2020. As of January 29, 2022, we have $101.3 million remaining under the repurchase authorization. Refer to Item 7. Management's Discussion and Analysis - "Share Repurchases" for additional information. 18 ITEM 6. RESERVED 19
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.
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. We paid an aggregate of $40.5 million in cash dividends in the first quarter of fiscal 2019.
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.
These dividends are paid upon vesting of the restricted stock awards. We currently use, and intend to continue to use, all available funds and any future earnings for working capital and general corporate purposes, including funding our transformation, growth initiatives and product category expansion efforts and capital expenditures.
We currently use, and will continue to use, all available funds and any future earnings for working capital and general corporate purposes, maintaining a strong balance sheet, potential strategic initiatives, and capital expenditures.
Removed
Issuer Purchases of Equity Securities Our purchases of our equity securities during the fourth quarter of fiscal 2021 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 31 through November 27, 2022 1,384 $ 210.12 — $ 101.3 November 28, 2021 through January 1, 2022 — $ — — $ 101.3 January 2, 2022 through January 29, 2022 — $ — — $ 101.3 Total 1,384 $ 210.12 — $ 101.3 ______________ (1) Under our 2011 and 2019 Incentive Plans, approved by our Board of Directors and our stockholders, we withheld 1,384 shares of Class A Common Stock from certain employees to satisfy minimum tax withholding obligations relating to the vesting of their restricted stock awards.
Added
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).
Added
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

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Biggest changeDuring fiscal 2021 and 2020, we generated approximately 37% and 42%, respectively, of our sales during the fourth quarter. 21 CONSOLIDATED RESULTS OF OPERATIONS The following table presents certain statement of operations items (in millions) and as a percentage of net sales: Fiscal Year 2021 Fiscal Year 2020 Change Amount Percent of Net Sales Amount Percent of Net Sales $ % Net sales $ 6,010.7 100.0 % $ 5,089.8 100.0 % $ 920.9 18.1 % Cost of sales 4,662.9 77.6 3,830.3 75.3 832.6 21.7 % Gross profit 1,347.8 22.4 1,259.5 24.7 88.3 7.0 % Selling, general and administrative expenses 1,709.6 28.4 1,514.2 29.7 195.4 12.9 % Asset impairments 6.7 0.1 15.5 0.3 (8.8) (56.8) % Gain on sale of assets — — (32.4) (0.6) 32.4 100.0 % Operating loss (368.5) (6.1) (237.8) (4.7) (130.7) (55.0) % Interest expense, net 26.9 0.4 32.1 0.6 (5.2) (16.2) % Loss from continuing operations before income taxes (395.4) (6.6) (269.9) (5.3) (125.5) (46.5) % Benefit tax expense (14.1) (0.2) (55.3) (1.1) 41.2 74.5 % Net loss from continuing operations (381.3) (6.3) (214.6) (4.2) (166.7) (77.7) % Loss from discontinued operations, net of tax — — (0.7) — 0.7 100.0 % Net loss $ (381.3) (6.3) % $ (215.3) (4.2) % $ (166.0) (77.1) % Net Sales The following table presents net sales by significant product category: Fiscal Year 2021 Fiscal Year 2020 Change Net Sales Percent of Net Sales Net Sales Percent of Net Sales $ % Hardware and accessories $ 3,171.7 52.8 % $ 2,530.8 49.7 % $ 640.9 25.3 % Software 2,014.8 33.5 1,979.1 38.9 35.7 1.8 % Collectibles 824.2 13.7 579.9 11.4 244.3 42.1 % Total $ 6,010.7 100.0 % $ 5,089.8 100.0 % $ 920.9 18.1 % 22 The following table presents net sales by reportable segment: Fiscal Year 2021 Fiscal Year 2020 Change Net Sales Percent of Net Sales Net Sales Percent of Net Sales $ % United States $ 4,186.5 69.7 % $ 3,417.1 67.1 % $ 769.4 22.5 % Canada 332.3 5.5 258.4 5.1 73.9 28.6 % Australia 591.8 9.8 625.3 12.3 (33.5) (5.4) % Europe 900.1 15.0 789.0 15.5 111.1 14.1 % Total $ 6,010.7 100.0 % $ 5,089.8 100.0 % $ 920.9 18.1 % Net sales increased $920.9 million, or 18.1%, in fiscal 2021 compared to fiscal 2020.
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.
We believe the following accounting policies are the most critical to aid in fully understanding and evaluating our reporting of transactions and events, and the estimates these policies involve our most difficult, subjective or complex judgments. Valuation of Merchandise Inventories 26 Our merchandise inventories are carried at the lower of cost or market generally using the average cost method.
We believe the following accounting policies are the most critical to aid in fully understanding and evaluating our reporting of transactions and events, and the estimates these policies involve our most difficult, subjective or complex judgments. Valuation of Merchandise Inventories Our merchandise inventories are carried at the lower of cost or market generally using the average cost method.
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 2021 compared to fiscal 2020.
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.
Our senior management has discussed the development and selection of these critical accounting policies, as well as the significant accounting policies disclosed in Item 8, Notes to the Consolidated Financial Statements, N ote 2 , "Summary of Significant Accounting Policies," with the Audit Committee of our Board of Directors.
Our senior management has discussed the development and selection of these critical accounting policies, as well as the significant accounting policies disclosed in Item 8, Notes to the Consolidated Financial Statements, Note 2 , "Summary of Significant Accounting Policies," with the Audit Committee of our Board of Directors.
Cash provided by financing activities in 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 $1.673 billion.
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.
For a comparison of our results of operations for fiscal 2020 compared to fiscal 2019, 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 30, 2021, as filed with the SEC on March 23, 2021. OVERVIEW GameStop Corp.
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.
Cash used in operating activities during 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. The increase in merchandise inventory levels was 25 accompanied by an increase in associated payables.
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.
A 10% change in our obsolescence reserve percentage at January 29, 2022 would have affected net earnings by approximately $1.6 million in fiscal 2021. 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 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.
The effective tax rate of 3.6% 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, as well as income taxes due in certain foreign and state jurisdictions in which we operate.
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.
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 $338.3 million as of January 29, 2022, 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. Our valuation allowances increased to $408.5 million as of January 28, 2023, primarily due to cumulative losses in certain jurisdictions.
Our liability for uncertain tax positions was $12.9 million as of January 29, 2022. Considerable management judgment is necessary to assess the inherent uncertainties related to the interpretations of complex tax laws, regulations and taxing 27 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 $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.
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 29, 2022, in each case, would have affected net earnings by approximately $4.6 million in fiscal 2021.
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.
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.
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.
These proceeds were partially offset by a payment of $136.8 million for withholding obligations upon the vesting of shares of restricted stock, repaid at maturity $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.
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).
On an ongoing basis, we evaluate and consider certain strategic operating alternatives, including divestitures, restructuring or dissolution of unprofitable business segments, 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 in low-risk, short-term investments, as well as equity and debt financing alternatives that we believe may enhance stockholder value.
Additionally, during the first quarter of 2021, we repaid the remaining $73.2 million aggregate principal amount of our then outstanding 6.75% Senior Notes due 2021 ("2021 Senior Notes") and the remaining $216.4 million aggregate principal amount of our then outstanding 10.00% Senior Notes due 2023 ("2023 Senior Notes").
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.
Income Tax We recognized an income tax benefit of $14.1 million representing an effective tax rate of 3.6% in fiscal 2021, compared to an income tax benefit of $55.3 million representing an effective tax rate of 20.5% in fiscal 2020.
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.
Gross Profit Gross profit increased $88.3 million, or 7.0%, in fiscal 2021 compared to fiscal 2020, and gross profit as a percentage of net sales decreased to 22.4% in fiscal 2021 compared to 24.7% in fiscal 2020.
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.
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 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.
Net sales during fiscal 2021 in our United States, Canada and Europe segments improved by 22.5%, 28.6% and 14.1%, respectively, while net sales in our Australia segment decreased 5.4%, when compared to fiscal 2020.
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.
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: 2021 2020 Change Cash (used in) provided by operating activities $ (434.3) $ 123.7 $ (558.0) Cash (used in) provided by investing activities (64.8) 36.9 (101.7) Cash provided by (used in) financing activities 1,200.6 (55.4) 1,256.0 Exchange rate effect on cash, cash equivalents and restricted cash (16.6) 16.3 (32.9) Increase in cash, cash equivalents and restricted cash $ 684.9 $ 121.5 $ 563.4 Operating Activities In fiscal 2021, cash used in operating activities was $434.3 million, compared to cash provided by operating activities of $123.7 million in fiscal 2020.
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.
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.
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.
In the second quarter of 2021, at the request of Micromania SAS, the six separate unsecured term loans held by our French subsidiary, Micromania SAS, for a total of €40.0 million ($44.6 million as of January 29, 2022) were extended for five years.
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.
See Item 8, Notes to the Consolidated Financial Statements, Note 15 , "Income Taxes," for additional information. 24 LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of liquidity are cash from operations, cash on hand, and our revolving credit facilities.
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.
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.
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.
See Item 8, Notes to the Consolidated Financial Statements, Note 9 , "Asset Impairments," for additional information related to the impact on our segments.
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.
In aggregate, during fiscal 2019, we repurchased a total of 38.1 million shares of our Class A Common Stock, totaling $198.7 million, for an average price of $5.19 per share. We did not repurchase shares during fiscal 2021 or fiscal 2020. As of January 29, 2022, we have $101.3 million remaining under the repurchase authorization.
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.
Separate from the 2026 Revolver, we issue letters of credit and bank guarantees, at times supported by cash collateral. As of January 29, 2022, we had $92.4 million of outstanding letters of credit and other bank guarantees under facilities outside of the 2026 Revolver. See Item 8, Notes to the Consolidated Financial Statements, Note 14 , "Debt," for additional information.
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.
(“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 ecommerce properties and thousands of stores. The COVID-19 pandemic has impacted the global economy, changed consumer behaviors and disrupted global supply chains, and may continue to do so.
(“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.
In connection with the voluntary early redemption of our 2023 Senior Notes, we paid a $17.8 million make-whole premium. In the first quarter of 2021, we repaid our then outstanding borrowings of $25.0 million under our asset-based revolving credit facility due November 2022 ("2022 Revolver").
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.
As of January 29, 2022, we had total unrestricted cash on hand of $1,271.4 million and an additional $389.6 million of available borrowing capacity under our revolving credit facilities. During fiscal 2021, we sold an aggregate of 8,500,000 shares of our common stock under our at-the market equity offering program (the "ATM Transactions").
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.
In the first quarter of fiscal 2021, we recognized $0.6 million in asset impairment charges related to our right-of-use lease assets. In the fourth quarter of fiscal 2021, we incurred impairment charges of $6.1 million related to store-level property and equipment, right-of-use asset and other asset impairment charges.
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.
On November 3, 2021, we entered into an asset-based secured revolving credit facility which provides for a borrowing capacity of $500 million with a maturity date of November 3, 2026 (the "2026 Revolver"). See Item 8, Notes to the Consolidated Financial Statements, Note 14 , "Debt," for additional information.
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").
Investing activities In fiscal 2021, cash used in investing activities was $64.8 million compared to cash provided by investing activities of $36.9 million in fiscal 2020. Cash used in investing activities during fiscal 2021 was primarily attributable to continued technological investments, and investments in two new fulfillment centers.
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.
We are taking steps that include: • Increasing the size of our addressable market by offering vast product selection and growing our product catalog across PC gaming, collectibles, consumer electronics, toys, augmented reality, virtual reality, blockchain technology, and other categories that represent the natural extensions of our business; • Expanding fulfillment operations to improve speed of delivery and service to our customers; • Building a superior customer experience, including by establishing a U.S.-based customer care operation supported by frictionless ecommerce and in-store experience; and • Strengthening technology capabilities, including by investing in new systems, modernized ecommerce assets and an expanded, experienced talent base.
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.
We utilize cash generated from operations and have funds available to us under the 2026 Revolver to cover seasonal fluctuations in cash flows and to support our various initiatives. Our cash and cash equivalents are carried at cost and consist primarily of U.S.and Government Prime money market funds and cash deposits with commercial banks.
Our cash and cash equivalents are carried at fair value and consist primarily of U.S. government bonds and notes, money market funds, cash deposits with commercial banks, and highly rated direct short-term instruments that mature in 90 days or less.
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The extent of the impact of the COVID-19 pandemic on our business and financial results will depend on future developments. See Item 1A of Part I, "Risk Factors" for additional information. BUSINESS PRIORITIES GameStop is on a strategic path to fully leverage our unique position and brand in gaming.
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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.
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GameStop is focused on transforming into a customer-obsessed technology company to delight gamers and is actively focused on efforts to (1) establish ecommerce excellence (2) expand our selection to deliver a market-leading offering in gaming & entertainment, (3) leverage existing strengths and assets (4) invest in new growth opportunities.
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As a result, GameStop is focused on three overarching goals: establishing omnichannel retail excellence, achieving profitability, and leveraging brand equity to support growth.
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We believe these future transformation efforts are an important aspect of our continued business to enable long-term value creation for our shareholders. Accordingly, we prioritize long-term revenue growth and market leadership over short-term margins.
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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.
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In fiscal 2021 we further strengthened our balance sheet by eliminating $314.6 million of total outstanding debt and raising $1,672.8 million in gross equity capital through an at-the-market offering. The Company will continue to invest in growth initiatives, while continuing to prioritize maintaining a strong balance sheet.
Added
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.
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Connected to our transformation efforts, we have incurred and may continue to incur severance, store closure costs and expenses for consultants and advisors. See "Consolidated Results of Operations—Selling, General and Administrative Expenses" for additional information.
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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.
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STORE COUNT INFORMATION The following table presents the number of stores by segment as of the end of fiscal 2021 compared to the end of fiscal 2020. 20 January 30, 2021 Net Disposals January 29, 2022 United States 3,192 (174) 3,018 Canada 253 (22) 231 Australia 417 — 417 Europe 954 (47) 907 Total Stores 4,816 (243) 4,573 SEASONALITY Our business, like that of many retailers, is seasonal, with the major portion of sales and operating profit realized during the fourth quarter, which includes the holiday selling season.
Added
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.
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Results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
Added
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.
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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.
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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.
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The increase in net sales was primarily attributable to ongoing demand of the new gaming consoles from Sony and Microsoft, the continued sell-through of the Nintendo gaming product lines, an increase in store traffic compared to the prior year during the onset of the COVID-19 pandemic, and the impact of our product category expansion efforts.
Added
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.
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Our gross profit for fiscal 2021 reflects a shift in product mix towards higher dollar lower margin categories such as new console hardware and increased freight and credit card fees associated with the shift to ecommerce sales. Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses increased $195.4 million, or 12.9%, in fiscal 2021 compared to fiscal 2020.
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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.
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SG&A expenses increased as a result of the impact the COVID-19 pandemic had on our store expenses in prior year as we experienced temporary store closures beginning in March of 2020.
Added
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%.
Removed
Contributing to the increase in SG&A expenses are costs associated with our transformation into a technology company, which include increased labor costs as the Company in-sources talent and expands its capabilities to support growth, severance expenses, and increased marketing and customer care costs. We expect to continue to incur costs associated with our transformation initiatives.
Added
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").
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The increase in SG&A expenses is partially offset by the continued benefit from lower store occupancy costs as a percent of sales driven by our cost reduction initiatives in 2020 and 2021. These net reductions include 243 permanent store closures since January 30, 2021. Asset Impairments Asset impairments decreased $8.8 million, or 56.8% in fiscal 2021 compared to fiscal 2020.
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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.
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Gain on Sale of Assets During fiscal 2020 in separate unrelated transactions, and to unaffiliated third parties, we completed sale and leaseback transactions for our corporate headquarters, a refurbishment center, and ancillary office space in Grapevine, Texas for an aggregate total of $43.7 million, the sale of our Australian headquarters in Eagle Farm, Queensland for $27.0 million, and the sale of our Canadian headquarters in Brampton, Ontario for approximately $16.7 million.
Added
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.
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The net proceeds from the sale of these assets were used for general corporate purposes. As a result of the transactions that occurred during fiscal 2020, a gain on sale of assets of $32.4 million was recognized and is included in our Consolidated Statements of Operations for fiscal 2020.
Added
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.
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See Item 8, Notes to the Consolidated Financial Statements, Note 10 , "Leases," for additional information regarding the sale and leaseback of these facilities.
Added
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.
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Interest Expense, Net 23 Interest expense, net decreased by $5.2 million, or 16.2%, for fiscal 2021 compared to fiscal 2020, primarily due to the voluntary early redemption of the outstanding balance of our 2023 Senior Notes in the first quarter of 2021, partially offset by a $17.8 million make-whole premium paid upon the voluntary early redemption of the outstanding balance of such notes.
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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.
Removed
The effective tax rate of 20.5% in fiscal year 2020 was primarily due to the establishment of a full valuation allowance on U.S. deferred tax assets, a change in the tax status of certain foreign entities, and tax benefits associated with the availability of a five-year carryback period pursuant to the CARES Act.
Added
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.
Removed
We generated $1.68 billion in aggregate gross proceeds from sales under the ATM Transactions, and paid an aggregate of $10.1 million in commissions to the sales agent, among other legal and administrative fees.
Added
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.
Removed
Cash provided by operating activities in fiscal 2020 was primarily due to improvements in working capital as a result of optimizing inventory and accounts payable levels through the cash conversion cycle and more efficient carrying levels of inventory.
Added
Some of our vendors have requested and may continue to request credit support collateral for our inventory purchase obligations and the levels of such collateral will depend on a variety of factors including our inventory purchase levels, available payment terms for inventories, availability of borrowing capacity under our credit facilities, favorable credit terms and costs of providing collateral.
Removed
Cash provided by investing activities in the fiscal 2020 was primarily attributable to the net proceeds from the sale and leaseback of properties including our corporate headquarters, a refurbishment center and ancillary office space in Grapevine, Texas of $43.7 million, the sale of our Australian headquarters in Eagle Farm, Queensland for $27.0 million, the sale of our Canadian headquarters in Brampton, Ontario for approximately $16.7 million, and net proceeds of $8.6 million from the sale of our corporate aircraft Financing activities In fiscal 2021, cash provided by financing activities was $1,200.6 million compared to cash used in financing activities of $55.4 million in fiscal 2020.
Added
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.
Removed
We also repaid $25.0 million of our outstanding borrowing under our 2022 Revolver.
Added
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of January 29, 2022 would result in a gain of $12.9 million or a loss of $10.6 million in value of the forwards, options and swaps. We do not use derivative financial instruments for trading or speculative purposes.
Biggest changeA 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk due to foreign currency and interest rate fluctuations, each as described more fully below. Foreign Currency Risk We use forward exchange contracts to manage currency risk primarily related to intercompany loans denominated in non-functional currencies.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk due to foreign currency fluctuations, described more fully below. Foreign Currency Risk We use forward exchange contracts to manage currency risk primarily related to intercompany loans denominated in non-functional currencies.
The aggregate fair value of the forward exchange contracts as of January 29, 2022 and January 30, 2021 was a net asset of $3.4 million and $0.1 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.
The 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.
We do not require collateral under derivative or investment agreements. 28
We do not require collateral under derivative or investment agreements. 31
We recognized a gain of $9.6 million and a loss of $6.1 million in SG&A expenses in our Consolidated Statement of Operations related to derivative instruments for the fiscal years ended January 29, 2022 and January 30, 2021, respectively.
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.

Other GME 10-K year-over-year comparisons