GME - Earnings call transcript Q3 2017

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Operator

Good day and welcome to GameStop Corp’s Third Quarter 2017 Earnings Conference. A supplemental slide presentation is available at investor.gamestop.com. At the conclusion of the announcement, a question-and-answer session will be conducted electronically. [Operator Instructions] I would like to remind you that this call is covered by the Safe Harbor disclosure contained by GameStop's public documents and is the property of GameStop. It is not for rebroadcast or use by any other party without the prior written consent of GameStop. like Chairman the and I'd Dan over time, Executive DeMatteo, Interim this to call turn to At CEO. Please go ahead, sir.

Dan DeMatteo

Thank Good earnings everyone. you our joining afternoon, third call. for quarter

our members of Raines. senior the are call updating Joining begin I our Bartel, health everyone me and Rob on leadership on the Lloyd, COO; our CFO; want today by team. Tony Paul of

his is his do the In those Paul of an on medical know, Directors who of the asked absence, recurrence not to previously you seeking issue has and For a had disclosed interim assume basis. treatment. role Board me CEO

a thoughts time. recovery. with From Our send Paul this GameStop entire family for family, we during wishes are speedy prayers the best him and and our his encouragement and

not as of From me, CEO then of the you been part team do served GameStop years. until last XX those I have COO who the XXXX, I leadership for as XXXX. until know XXXX For

and will and $XX.X than X%. in also our our as about grew were Results adjusted seven new of with served aspects of I share the due last third operating all than With that all For have business. lagged share overview in Executive let’s were of more said, hardware as Bottom Chairman have nearly quarter were gaming solid our increased involved the challenged Tony XX. details business Rob per the Collectibles technology years, earnings an new expectations, more billion, game and and by driven Total up release been categories which for for line, were and expected $X.XX to results, last later brands and up $X.XX. The adjusted sales million video more were XX% X%, LY. compared strong, was technology Apple's growth iPhone were results. brands. X.X% year. earnings Comps a X.X%. over collectibles positive to software the the

Mobile are there our on would iPhone in three In order will initiatives quarter, maximize brands to holiday highlight. technology important the stores, driving enter our X cost, like Spring I focus main we profitability. and other As AT&T our we points managing specifically sales, to maximizing segment,

more in drive and assortment will with further and by growth items offering to capturing products collectibles that share of a exclusive by market appeal greater our customers. We connect

it have We execution the maintaining in videogame very into the and are source customers. am I heading the on through our competitive the momentum and best value focused encouraged in segment providing for promotions Overall, season. holiday strong

for has team over to businesses. our long now executing management time, have a plans across entire is Rob. the turn and will I team together holiday well seasoned We on a of our worked all on that our sales call focused

Rob Lloyd

Thanks Dan. Good afternoon everyone.

a Nintendo and stronger Our from by lineup results continued last momentum driven quarter the Switch year. third software then were

Switch in for Our season. our QX to drove in-stock sales by demand through comps sales to in remains led which see we position continued allocation strength an strong, holiday October. and the expect Switch Demand

ago. positive X.X% to in quarters our collectibles Some improved three collectibles comps consolidated sales improvement The the hardware The in rate sales. is has positive exhibited including and year as last videogame X.X%, of internationally. core including a flat in constant year XX.X% and Sales in sales growth business up the XX.X%, XXX.X and compared to X.X%, our sales of were business to in consecutive X.X% grown. collectibles million X.X%, include, software U.S., U.S. sequential Growth sales up Total XX.X% X.X%. highlights our have comps sales has was currency. business of margin quarter's of

of in Nintendo X.X% the has leading our software GameStop Switch most see Switch and depth, international greater increase As in markets. we share the in hardware in sales. we following. hardware market the drove U.S. and look

declined the software met compared to expectations titles Destiny share software year of gained basis in The margin on with of X.X%. We we and hardware in as the XX.X% of quarter, sales other last QX. QX the trading markets. Europe Preowned successful preowned points quarter, during improvement promotions through presold sales with New strength and from was the X.X% our promotion associated growth XX showing like in X. other

digital to rest profit Kongregate the gross the XX.X%, would the We increased due XX.X%, was of XX.X%, sales. XX.X%, revenues continue by XX.X% margin X.X% growth from We comp expect than sales launch Digital October expected due trends results of of year, comp to only revenues declined of reflecting X. GAAP driven last X. to GAAP QX receipts these software later was Factoring significantly increased reservations The receipts and year. the was comparable X of down launch gross the will digital two increase while year. the ahead respectively. to able receipts of brands out last take prelaunch the in for declined XX have Tech revenues through of iPhone quarter. down the DLC X later captured XX.X%, was of growth days were and iPhone in in X.X% and sale traffic XX.X%, the on brands margin XX.X%, and the Kongregate. the digital Digital Tech

or $XX.X million, XX.X%. However, $XX gross split iPhone were million the $XX.X $XX.X operating to Tech QX operating down brands compared earnings launch. brands Tech adjusted brands year, dollars last of tech were reflecting earnings million. again million profit were in

quarter, by were reduced of of tech reflecting growth gross a down portfolio. by adjustments of to netting profit in from to an $X.X XXX.X of $XXX.X million, X.X% up of in the QX brands $XXX.X other Adding in foreign store to brands Consolidated gross and currency. payment XX.X and in performance, to During purchase credits year, and the million for year had declines margins. last were the last obligation we operating million] lease XX.X%, our further credit brands SG&A impacted to million, year relating quarter million, accrual earnings last Adjusted for and and earnings, due due was million in million margins million the million was operating the strong from software tech year, were and [XX.X SG&A stores compared X.X was settlement rightsizing the $X.X I US last the hardware million, tech decline gross mix back actual we [ph]. in Consolidated related described, quarter. contingent to $X.X the excluding AT&T dollars. XX.X adjustments

on U.S. XXX.X three videogame now closed XXX strategic basis $X.XX the of earnings million per have positive stores we in to cash, the collectible per stores of have $.XX. share videogame ended to impact We GAAP our effective three X,XXX was tech reduced was XX basis now our internationally. net year. tax timing XX.X%, to tax Pursuant quarter share and plan, income store stores in compared $X.XX, items share. We the tax earnings in X,XXX footprint were approximately per items. with X,XXX. $XXX.X worldwide. tax million Our net discrete last settlement The rate before We a net and opened on adjusted and by adjusted have and quarter and due were these brands now

demand. hardware the on Xbox Nintendo in and outlook, Switch will which launched X, Microsoft’s by One in QX and Xth Moving has to be the high our driven a been

from Duty and strength that November’s Call carried report in overlap of software We NPD will Pokémon. difficult expect a growth

as impacted would challenges that December continues remain be our brands expect notable on sales XXX We the Tech free-up. for XX later for demand expected. releases. track title consumer shortages million. meet NPD have face started to Collectible not launched and no negative than and clear XXX will of our Inventory when to supply is sales full-year traffic to iPhone

XX the to supply. be XX earnings million, We depending downwards of are tech revising million range full-year our brands to in upon

full-year, fully should low mid-single the positive are to trending be approximately For be rate in sales our XX%. The effective same-store digits. to the tax

range our that are $X.XX increase maintaining of as revision and to $X.XX, guidance, results as fact quarter tech the We despite brands ahead are still well the third and the XX% us. driven hardware off earnings of our EPS sales comp of profits the in current

Before to the briefly I amended wanted we credit on facility Tony, turn I to announced the call over touch today.

and maturity over flexibility business. belief to We future partners his I XXXX, terms, and increased appreciate allow for the long-term XXX million our the for support to have to the in for the We November extend strategies. are of improve capacity needs comments. it unable banking turn the to our now to increase of will Tony

Tony Bartel

this stores would lagged quarter. service for branded year's limited challenging gain GameStop they our technology Thanks all and you. their like us launch customers have to the in a positive for coupled quarter for early which Thanksgiving comps, Rob. strong was availability. never share important year, efforts last but of for not as the great provided a associates thanking I only product throughout Quarter three start are in quarter by helped worldwide the business. our advance brands we software holiday thrill and dual with our Good brands before navigated afternoon to seen happy Technology we as to offset profits drove

the we also are of seeing We continued sales have effect previously done. comp the

declined see gross the traffic we consistent comp iconic increase our device in see that of profit the unusual the our we and early did QX, During store XX.X%, immediate negative Based and not characteristics on negative launches, store declined comp quarter. these sales XX.X%. typically

carriers. two loss days QX sales an device quarter In estimated QX, of missed the the of been our stores, launch in new Compared XX $XX resulting Since prior XX constrained fact, days all for November to physical and we preorder X, last results. only extremely allowed with included million to in launches year the supply the so in on in AT&T iPhone delayed in be all in selling any iPhone than consistent profit period. launch more during operating the has

web not and purchases there little equal throughout has AT&T stores. is our just that fact, store today inventory AT&T's retail direct access we program in in are fulfil program. to ecosystem In very through in-store the participating Every fully physical

physical believe traffic waiting shopping supply to to of awareness the the flow. the shifted that inventory for consumer lack We simply device. of However, limiting of purchase has lack availability consumer behavior is supply

the to Switch leading again declines In digital store GameStop the in in positive comps other offset continue and had sales, On categories. Switch on we Strong software attaching highest the growth share branded and industry. collectibles, we business, of drove market have the hardware, side market share. and

Switch Our be for and continue of one to expectation is demand for to gifts. after sort most the holiday of for the the season supply outpace will this that remainder

holiday closely start. Again, Nintendo shelves. demand allocation in hardware, sold we this our to do the are product the out supply We and are best seeing able We with believe we best it. most a to outstrip are is to meet of X as our needs customers. recently the that that entire working soon we launched strong market days off and to Xbox One on Continuing the purchase to its ensure informed the very as console, will hits we sale continue two be it place will leading

key we titles. catalogue software, of performance strong gain on to Moving share performance launches and strong again market based of

the continue XX% the from pleased launch new market Infinite the title World Warfare We year. of and Call launch which Activision's Duty, to be leader recent very last up launches War with II, of we’re on was

Our digital decline, increased unit. content sale as during downloadable Kongregate quarter. X.X% console the downloadable due offset increased sales X.X%, receipts content console Receipts of increased for the a XX.X% our of to

the our to declined X.X%. business quarter, sales Turning preowned for

for by growth the sales previous driven the Nintendo variance was three As to quarter, in quarter software the entire Switch. new

continue We improve efforts our stores. increase trades our to in on to

quarter, for the XX.X% be our bright XXX We stores collectibles a completed now important gross ever pay have the we maintaining our collectibles. trades in business. in Collectibles margin. of in stores to purchased good continues seen. the the a which This We that increase season. XX.X% U.S. a all one-half product per for puts in store of participation X% while highest a position in has one-half spot XX% videogames, seeing preowned is inventory, expansion software grew We resulted that are and to us holiday for and

all of collectibles. amount U.S. footage dedicated In to to of double addition, the that is we stores expansion the completed square

quarter. a done has team fourth of the and licenses securing year, product also not only Our for an great job new next exclusive but for

instance, to first line For products recently from launched Group. Pokémon market of we a the

these in characters. is in-demand So, the that featuring retailer only iconic we are currently America

us products We are X,XXX were also R&D over exclusive in powerful or this we weapon launching have ThinkGeek arm, provides our licenses designed by the the product This that year leveraging best with ensure that sourced development the a industry. ThinkGeek best team. with to

been reach our omnichannel fourth for omnichannel area collectibles has us quarter, the the area One see additional are on track key We grew $XXX in of growth is $XXX collectibles year-to-date. accelerated and of this occurring to in guidance sales that in expect million quarter to growth to segment. We a and year. XX.X% revenue million our XX.X%

you robust combines that from As a have in-store. warehouses online recall, system or ship-to-home pick-up omnichannel and stores our either we our buy

that in-store ship web both GameStop and and added have also buy an provides we aisle We endless ThinkGeek recently to store. online products of

our across channels. is a all PowerUp All Rewards to consistent in wrapped provide experience of this program

Finally, we engage PowerUp Rewards continue our to through program. customers

We are especially able our influence well to unique our value as as and buying habits, customer proposition, program. buy-sell understand trade communicate

trade average program and Rewards with up shopper shop X.X across us the nearly These customers memberships the more XX% they paid to with prior PowerUp more participate our year than buy-sell continues grow Our fully ecosystem. often times over quarter.

is paid tier rollout to call U.S. XX have for stores per $XX our already October all on PowerUp and year. of rolled eclipsed quarter, We members. premium million Pro the we During out Elite completed super new X.X the over sold a and we

Our purchases. the GameStop. elite truly two-day tech for shop best customers with Elite them often free been best for to online and support tier well and Benefits are per have average year. on lead incentives expanded purchase to to The XX additional as opportunities projected offers occasions shipping the more offering as trades, Collectibles of

their of addition, poised In and on purchases have In for summary, we benefits GameStop store video branded quarter a fourth side the game business. also strong trades elevated. on the been core are

traffic particularly in more consumers up our to as now common normal iPhone Thanksgiving that on are that And innovative new call this at also will cadence a o’clock X direction. believe product. experience shift we this that, questions. will With our and open resume the beginning excited sales year opening for finally, I share We PM will

Operator

Consumer we Research. that from go With take Please Instructions] Edge [Operator first you. with our David ahead. question Thank will Schick

David Schick

set-up you thanks the Hi, a could guess busy happy a how time think short-term, that margins with into Could business, work how preowned, and the and some the I weekend gave and the but but just trends you one. that business, preowned driving the in could work interested platforms on the preowned over how new holiday in have short-term? coming you color the on in up, about also not feeds talk with of on business

Dan DeMatteo

to over it turn will I David. Thanks, Tony.

Tony Bartel

I we margin we and those job our take trades David, great take the first bringing are will the doing stores. have this the the of - pay in answer for I Yes, platforms. part back sales of that I all a Rob and question. as of our trades shared, new place Well currently are shared XX% most are on Like

into have inventory we So, quarter. have, we store we that maximizing fourth the positive the in growth is are why inventory going which per

PowerUp We is side we program, especially then get into that of as Rewards buyers our the new these and knowledge are buyers see actually trading of due part into get do inventory. find program we you the in to fact the these that and grow So, very are the these preowned active accelerating that you trades, the or that continues accelerated buying super-premium to program.

we So, video we anticipate the the And do will keep you sales with want term. game pace that in question? Rob, to long margin address physical

Rob Lloyd

Sure.

We very with things this support program. Europe we in of successful results and vendor lot after PSXs. on the a the we in of bit seeing trade the that. in ran quarter little this PSXs, we of are brought saw year, liked we a the One a that program in had spring trade We

of the a the think markets in holiday. to of couple going we’re I course run over that

trend that’s did as QX. why, they part said the we why we rates in So, would of anticipate

discard really this of successful we longer so, might profit where go where them obviously are work, and term, programs running dollars. is would gross around our the we drive in terms they In on will focus in don't like that can again, turn we think doing run they they them. Where

we time say promotions repeat three the our kind better in in to be able about XXXX So, of will trends on March guidance rate the next be I we and year, category, we months spending talking on what and long-term to in will - call. the want the would next here planning programs give our

David Schick

Very helpful.

it something follow-up that it your relationship, change on to worked to to give your Just on fair is assume there assume get some started there over will can know that it color to some you more and is a time, you changed that there - hard how to that the economics, favorable economics? or any tweaks you’ve that could AT&T, here over had was be might adverse time I be as normalize even to were evolve might that fair was

Dan DeMatteo

Sure. them And we and AT&T we continually. with have a great talk relationship with

So, are would and retailer, the all the state retailer I constantly they are flux and authorized of in very authorized of in programs compensation that say interested the channel. their success of

strategy, have compensation channel. in so to that they’ve growth competition pushed customer, be which that make hard the good hard the that, good us that be AT&T we’ve differentiate changes a partner on important a a them of and that there going and place the made they and they to to had important I very is and would sure So, sound stickiness from continue we’ve and drives and recognized reflected financially bundling investments are is that to say they that to authorized worked and greater retail partner and took the to drive us

David Schick

holiday so Thank and Have good much. you a Great. busy weekend.

Dan DeMatteo

Thank you.

Tony Bartel

you. Thank

Operator

Thank you.

our from Baird. with Sebastian take will Colin question We next

Colin Sebastian

first to a extending off, speedy recovery. wishes for Paul I here guess and our Thanks, just

fall, tracking share there full higher early, digital this I those went a faster you and seeing suggested realizing publishers that seeing the somewhat for on sense on market in are couple to down a game and if I physical releases wonder whether after a downloads and initial format the have mix shift titles the are still follow-up? your is what recent game First, of is the it’s have sales they where normalization you a towards, perhaps the mix have

Dan DeMatteo

you. Rob? Colin. Okay Thank

Rob Lloyd

to fall to about say then need at wait in NPD to we’ll is without data not launched, there in - that or on from that a we’ve until or say titles Obviously, in divulging basis. seen we have points the part whether We’ve titles had had less a can get the know a rate will past. talked physical the download I been tell confidence some seen have some that at have that has different. we’ve digital know year. every have and What on Yes. I rate had so the success digital that we publishers is that had strong seeing the looks that’s That’s we or have we those migration XX here our some specifics titles launch download in greater higher had us about handful year. plus a been months, a and on XX% launch, that XX% than XXX of the share those that, last we do combined basis be that

pleased these increasing when of full well, on the and physical download part our we the the as it growing side with remaining material titles market. of So, we’ve launched, share are a strong game seen our see not although We is that. on share

drive to that. We trying are

on titles. digital certain combined believe in are a that of XX% very digital we world physical relevant overall, be can So, and north we

Tony Bartel

at we didn’t over would about time your that where published numbers see be is because around in And we in XX% normalize which cycle. point this that the industry, it point to thought the Colin

game category. in time by launch and our participating The affordability. categories to fastest normalize game are us XX% two do in as we the that areas Rob during for remember digital as for have full as that providing growth well they content. obviously higher the two That’s in and growing where towards the periods. they downloads And us fastest are did console driving growing discovery, so, tend And over shared, and publishers be we’re

Colin Sebastian

believe formats, games base? and store Thanks it’s the format is interesting my to you. Thank whether expand that. guess think and what the GameStop half collectibles, that across that plus from is I format, you’re half wondering question this an on I store and to geographies opportunity And is other for you that roughly seeing because second think I

Dan DeMatteo

Mauler Okay. I answer ask that. to will Mike

Mike Mauler

Yes Dan.

products are are So, new get right and to XX-XX internationally we into still depending our fairly game time have market them they they are that increase with trying has the up what video we’re lot signed about less XX% as come well. we to bring seeing program, we in buy maybe seeing, get games we stores to now we’re balance that of of collectibles later. the video not so can of doing, stores and actually our games, into but ecosystem the which example, but that are if game previously GameStop of to the an A did on that flexible know now able sales buy so type we to year you and and and video for is our are collectibles, the launches, games do new seeing more customer space a we despite as royalty are well devoted changes, those what into

on results our of stores continue are grow based those to seeing. that, we will So types

Colin Sebastian

you. Thank Okay.

Dan DeMatteo

Colin. Thanks

Operator

Thank you.

take Oppenheimer. our now question Nagel will next We with Brian from

Brian Nagel

afternoon. good Hi,

Dan DeMatteo

Brian. Good afternoon,

Brian Nagel

wishes First recovery Paul extend of and would to for my I to family. speedy all, his like

Dan DeMatteo

you. Thank

Brian Nagel

again from do driven of sustainability perspective or by we what software titles behind it I that? it is And that? your in got think a quarter to last the about one, is My How switch at improvement been on of was first primarily questions see it growth, I and it, couple quarters, steady here, first definitely go - you sustainability broader a I I still so higher it’s few think a reflect ticked we is, me the in if question for look of saw higher sales the time on new while. software here, was the it guess have through will it software do this, just it you collects

Dan DeMatteo

Brian, turn to over it I will Tony.

Tony Bartel

one of because was Brian a been us, catalogue definitely all has as stronger. titles also part but large shared, is basically switch has it been - it have thing and our for I strong Yes, it gotten incremental it very

past trade mentioned we dollars competing in tail I in long are which So, that on well. and have been the earlier that that’s are we working more coming those better is And the aggressively, making business it more the of a customer, that and affordable in as and collectibles to Mike sales side as do our bringing our accretive has is shared, been software we new think well.

So, has all working, the we of switch, are strong some but those things but seeing predominance are then been through sales.

point place of November. strength in Now World the what’s that now what’s taking strong so War call clearly II at the this growth driving that’s is of duty right is

Brian Nagel

Got it.

should question you that The the down preowned I there, discussed correctly, a size, that bit, the Is that ticked gross just margins transitory? in margin second the have the is it in it that correct down more if would to quarter, the mix I to on category that sounded I shift this assume looking was at hardware like on it if Rob quarter, prove here on shift knew in a correct?

Dan DeMatteo

Rob?

Rob Lloyd

would closer successful, around the and software, than the hardware haven't either, around the hardware but to very margins margins and were the this to I’ll did the are but with so composition the really PSX it that relative a is we respect much the preowned Brian preowned you disclosed software fair to see know run on You much on driver disclosed in that those hardware programs although is of point we what hardware there, to we numbers assume the side. new was out, haven't past

is analysts margin assume margin there a lower higher from there significant So, I a category. to and that don’t want shift investors a preowned to

Brian Nagel

A That’s the final have a in capital been your bigger aggressive guess a it. have, pay, then helpful. how I should stock a is think we perspective allocation, the for I you with time the a, where dividend there? rank capital buying some now regards from reach going question excess been is back just about Got the and shift for to dividend and picture dividend, continues there paying the dividends, prior the forward, to

Dan DeMatteo

to The dividend to very continues important be us.

year you we period. terms shareholders of buyback form back year cash ago, a last return In if holiday following to did look was of, in we the the

a continue as holiday That’s allocate terms of we means we through for this capital what and process so, that to us. the regular can evaluate capital and ongoing to returning best And year, move to how in shareholders.

Brian Nagel

much. you Thank very

Rob Lloyd

Thanks Brian.

Operator

you. from And Ben we next take now go Thank with question Macquarie. our Please will Schachter ahead.

Ben Schachter

I my want wishes Guys. Paul. Hi. also best to extend to

given following you’ve more traffic, which On can XX, the to that? just iPhone recognition actual the impacts And gross stock it stock, why of past the expect table, understand be given is wondering, will leveraging how potential significant where us Thanks. you off or we has off buybacks? margin to shouldn't recently, at directly, also back sheet question sort cetera financial looking buyback buying acquisitions weaker a I mean for stock capital the excluding of a more going focus company, help bit more revenue about but the see market do think how balance been it guys then stock the on the how is that the about just be is up et late, the even Brian's on possibly talked you on allocation, in on of

Dan DeMatteo

and So, worth We pre-sales mentioned results. the address both in that Tony the period our the I scripted AT&T we iPhone question two on had let remarks of me first. days’

a have that that Direct through direct on we our that and days fulfilment Fulfill as get phone place So, up Every sign in up order supply for honoring went what goes a into is customer the the With gets They that in that how iPhone can revenue into AT&T's and did into signing we an our system delivered do, fulfilment direct program. for an that’s someone come constrained October customers basically When in process the they our can we there consumer we and transaction store completed recognition November we’re later. result, happens program, purchases now. two results into results. QX.

recognition. revenue the So that completes

side capital And base much and in than reasons. going our on, to M&A are would tech but as make our the allocation that through, maximizing it couple in rest to the was buying these activity gives to the things One, the base. past we the that on have brands change the our a goal to talked And the in been, our that past one and EBITDA the don't results themselves authorized M&A overpay. adjust time of retailer this had retailer inside but based business slower year. of stores On activity upon be and at business, we’re opportunity about that we same AT&T compensation be themselves. We of that right authorized now profitability the pause it and let due as of the us sure the profitability want had not own, changes an not iPhone impacted front, valuations market that’s only work

of the a makes for to bit the shareholders. in find would So EBITDA a that we We’ve of us value M&A make challenges is it at perspective sense with broader about to terms pause. believe company, activity that to difficult multiples respect that a to talked add price trading value of on also our a from things

seen haven't from you front the us this M&A year. on So, much

as for develops, similar avenue in move take. the be debt the think how means I current environment be back though last that retailers fair In and buy quarter, will it’s for us an to avenues to say share the if that we did order fourth what terms unlikely and adding allocation I evaluating what to that capital will the through would for to to shares that as in holiday we other we company year. mentioned, of see buybacks of I say

Ben Schachter

to dollar mentioned on just of out is Infinite the XX% was one Thanks. or Duty think versus be full that is shake how that I you year, follow-up, basis quick And for it a basis? Warfare, on unit to you year-over-year up Call think going would

Tony Bartel

see for but say full-year, it’s right place think was on dollar the what Tony. a takes the I been it’s that holiday period. high. Ben, will level now don't to That this launch, the is going during stay necessarily would I basis. that we at during

very, Ben. get a did especially launch, GameStop. off you, strong Thank it So, very to

Operator

Thank from America-Merrill Lynch. you. will Instructions] of more We [Operator Curtis with Nagle Bank hear

Curtis Nagle

the Great, taking thanks questions. for very much

it little pretty Just just are what a drove year-over-year a to you tax particularly basis when quarters, looked switch? accessories, rate the weaker on that like one sounds attaching, on a curious for still are quick a doing you prior it relative good

Dan DeMatteo

VR it continuing tax the really year. strong, are be VR from Sony from that Switch last is to Yes, It’s the really rate so October the overlap is - within overlap. it of of

Curtis Nagle

of now to right much just I by Got it. do where to due expect levels elevated used how that you are guess And then be and on inventory, year-end?

Dan DeMatteo

the quarter. factor, look got is If you on that allocations and business growth up the have inventory mentioned, the as over at up collectibles bit had holiday we XX% the is used minor given a then we in there a hardware Switch our I for it’s as is little the year-over-year, prepare the up of and

Curtis Nagle

of tech products, more, forward speculative, into would one that’s to of how in think may compensated but incorporated I products go you guess the if Time Time AT&T's know I stream. I through, don’t merger given that more on brands Warner if are AT&T may you put of the growth this much is And that digital type revenue Warner so possibly impact be going and it. sells that and Got what

about you are thinking how So, that?

Dan DeMatteo

we're deal point tell work at you compensated to wait We will that with Curtis, those XXXX. work in is products, be at can I AT&T out consummated XXXX have to for before until this going out nothing to but figure we we how

We - - stores. acquisition in for tech material nothing there for brand in that our have

So, unfolds. wait that acquisition how see we will and

Curtis Nagle

and on much luck good holidays. very thanks Okay,

Dan DeMatteo

Thanks, Curtis.

Operator

our I’ll Telsey next Joseph And Markets. question from take Capital you. with Feldman Thank

Joseph Feldman

taking afternoon my guys Hi and good for questions. thanks

you So, wanted the that downward the can to how revision delay have ask because the two? the in much described, for back on, X a the separate to you brands going comp look guys at minute, of that changes you structure, if iPhone in versus the is when tech

Dan DeMatteo

I’ll to pass it Tony.

Tony Bartel

and just going Well previous the the compensation change quarters. delay the and we through iPhone changes baked quarter we of obviously have that in in this inventory visibility represents that forward we passed the the had

of that today have limited XX revision impact the in quarter to that we have purely the impact due in million visibility that the the and days $XX supply to see business. is then we you QX and So, in that this the or

Joseph Feldman

I the the be then presumably pretty holiday will you Got year, what it. we like portion come is if new, that cycle the X, software with have the really year should in next is does season, is business, Xbox launched play, And of that, regard or first what same the One that I think the the how there of very preowned Thank is normal when it kind really for it is this that, Nintendo about it any think like? to business, You out, clarifying. guess, little side to was preowned so of typically switch from platform early what lag although it March Switches [indiscernible]? in different of with back that is a now, is comes

Dan DeMatteo

see years actually we where we ago. is there were what four relative So, dynamic an to interesting

would Switch, a would of to on recognizing So, in that contributor it’s half probably of that block. console meaningful expect our on we the that that business is dynamic the XXXX, preowned the be that just latter the new part more

playing Super are titles are the the you to Xbox because of with long that contrast, into X engaged buying that One competing Nintendo back those Kart, people those So, Zelda, them released preowned and platform. franchise our as that years four business that Mario has look you kind Switch consoles it way keep In ago, with take if Mario did had the PlayStation their for other. each work not two

had sort that the and try go and in consumer so, they traded [indiscernible]. with of one would decide switch that wanted And other you to

this to So, time. the just dynamics Tony? is different add Anything

Tony Bartel

what consoles a XX-year Generally, coming about the the Rob on and average kind like see been bit. we is console last average, days games may Switch of said XXX typically elongate in, that has on of

Joseph Feldman

seen trying wondering that little product, up beef to some to of of seen merchants you malls, you mean, space perspective? competitive in guys I of have, the a seeing definitely more even not And extent standpoint? industry we’ve guys the with anything from I are you. mass emerging, in have an some emerging, because source, just now, one level to some seeing I’m and the dominant their and the selection player be dominant collectibles, regard a kind from but it’s what are the right go we thing, a specialty just not curious selling am and some you collectibles got like, guys Okay, then of last you to popping up, guys to seem

Dan DeMatteo

Hogan ask to I’ll Mike that. take

Mike Hogan

Sure. Thanks question. a What category whole. that first for growth is tremendous we off the seeing as just are in

physical talked the as of in as about as have already the lots that there is is past things that than fast category One almost games. of category less games, this have room big share And our and that the video the is so grown we big is this it or categories in is there video is point far here. of

the actually of and lot and growth awareness driving consumers total to in the lot activity a see of excited a that’s We’re because category in.

is great on the make do the get I that of in can terms relationships, to the footprint the unique we the that the on are able store well. think current those et with of What the cetera, that us licenses our and so Pokémon our of really Tony GameStop of we and go marketplace. power really would we Center to earlier, In example with are this be strategy a power unique is things brand, seeing focus that mentioned

So, the in you seeing going that our new we in excited that are finding a in can products people of have but and in that drive products certainly see merchandisers, you we’re what new to really GameStop bundle we’re really customers buy into is to lot category, be to match fact ability stores. about the jumping we way collectibles, unique traffic and there the message externally a

Joseph Feldman

Got it. Good very much. guys. for luck helpful. That’s Thank quarter you this

Dan DeMatteo

you Thank very much I'm for you. Thank attending. sorry.

Operator

call That turn Dan for part of question-and-answer today's back comments. closing would concludes to call. like the I to over the

Dan DeMatteo

very you much. afternoon. to Thank Thanksgiving and families. for this attending all very all to Happy Thank you your much

Operator

you does your you. Thank participation. conclude That all Thank today's conference. for

GameStop (GME) 21 Nov 172017 Q3 Earnings call transcript