GME 2017 Annual Report

GME 2017 Annual Report

2017 ANNUAL REPORT Letter To Our Shareholders In 2017, GameStop set out to deliver on strategic priorities We are committed to finding ways to maximize profitability designed to drive growth and deliver returns for our going forward. A key aspect to delivering on this goal is to shareholders. Thanks to the passion and hard work of our take a pause on acquiring new businesses in the near-term. associates around the world and their ability to navigate We can drive growth and improve profitability by focusing industry changes, we drove annual sales growth of 7% and on the fundamentals of managing the three businesses delivered adjusted earnings per diluted share of $3.34. that we already have — Video Games, Collectibles and Throughout the year and particularly during the very Technology Brands. Once we improve the operating important holiday period, we continued to demonstrate fundamentals of each and achieve the performance that our family of retail brands — GameStop, EB Games, level we know they can attain, we will explore additional Micromania, ThinkGeek, Zing Pop Culture, Spring Mobile opportunities for growth to drive shareholder value. For AT&T and Simply Mac — are the preferred destinations for 2018, we believe we are in position to once again deliver gaming, collectibles and consumer electronics merchandise strong cash flows and earnings and that our near-term at a great value. focus on improving the fundamentals of our businesses can position the company for long-term success. A few financial highlights from the year: GameStop has long been committed to giving back to the Video Games: communities we serve. As we look to 2018, we are evolving » Video game hardware sales grew 28%, driven by our corporate giving efforts through the introduction innovative new consoles like Nintendo Switch, the PS4 of our new GameStop Gives charity program, which will Pro and Xbox One X. focus on using the power of gaming for good. Through » Video game software sales increased 4%, driven by the partnering with charitable organizations like Make-A- strong performance of new titles. Wish, Autism Speaks, Ronald McDonald House, Starlight Pop Culture: Children’s Foundation, the Children’s Miracle Network and the Call of Duty Endowment, we believe gaming can and » Our global collectibles business grew 29%, further will empower the lives of our customers and their families. demonstrating that this business can be an accelerating contributor to our overall profitability. On behalf of our associates around the world, I would like Global Omni-Channel: to thank all of our stakeholders for their continued support of GameStop. » Global omni-channel sales grew 49% in 2017, driven by investments we’ve made to improve the customer experience and our integrated channels. Sincerely, While we delivered solid results in 2017, generating $325 million in free cash flow and paying $155 million to shareholders in dividends, there are still many areas of our business that can be improved to further drive shareholder Daniel A. DeMatteo value. More specifically, we hold ourselves accountable for Executive Chairman and improving the performance in the Technology Brands and Interim Chief Executive Officer our pre-owned video game category. 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