Greetings, and welcome to the GameStop Fourth Quarter and Fiscal 2020 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Eric Cerny, Investor Relations. Thank you, Mr. Cerny. You may begin.

Thank you, and welcome to GameStop's Fourth Quarter and Fiscal 2020 Earnings Conference Call. This call will include forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Any such statements should be considered in conjunction with the cautionary statements and the safe harbor statement in the earnings release and risk factors discussed in reports filed with the SEC. GameStop assumes no obligation to update any of these forward-looking statements or information. A reconciliation and other information regarding non-GAAP financial measures discussed on the call can be found in the earnings release issued earlier today as well as the Investors section of our website. Joining me today is GameStop's Chief Executive Officer, George Sherman. On today's call, George will share insights into our business and strategic framework for the future, followed by a review of the financial results and strategic direction as we head into fiscal 2021. Please note that we will not be conducting a Q&A session as part of today's call. Now I would like to turn the call over to the company's Chief Executive Officer, George Sherman.

Good afternoon, everyone, and thank you for joining us today. Before reviewing our results, I'd like to take this opportunity to personally thank our entire GameStop team for all that it has accomplished over the past year. Throughout the year, we worked incredibly hard to meet our customers' needs whenever, however and wherever they chose to shop amidst the pandemic-impacted backdrop. I'm so grateful for our team's dedication to our customers and our brand. Fiscal 2020 was an unprecedented time. Our full year results reflect our organization's adaptiveness and focus on navigating the various operating challenges presented by the pandemic. I am particularly proud of how our team members met the expectations of our customers by greeting them during curbside pickups, packing orders that ship from stores, assisting with online orders and offering advice to customers in-store. During this time, our top priority was safeguarding the health and well-being of our associates, customers and communities. As you recall, we closed the majority of our global fleet during the height of the pandemic, resulting in a significant reduction in operating days compared to 2019. When stores were allowed to reopen, we operated under limited hours and at reduced capacity in many locations, and in several of our operating countries, returned to full store closure protocols later in the year. During this time, we worked diligently to plan for safe reopenings and introduced more members of GameStop's loyal customer base to our e-commerce capabilities. In terms of operational initiatives, we accomplished the following in fiscal 2020. We delivered 191% increase in global e-commerce sales to represent approximately 29% of total net sales, up from a low single-digit percentage historically and reflecting investments during the year that enhanced our e-commerce capabilities. This growth allowed us to recapture a substantial majority of our sales from temporary government-mandated store closings and leveraged our improved fulfillment capabilities, including the initial rollout of same-day delivery and several flexible payment options, which helped to facilitate sales and improve the shopping and delivery experience. We delivered over $400 million -- over a $400 million reduction in our reported year-over-year SG&A expenses as a result of ongoing cost optimization efforts. This, combined with an SG&A reduction of $130 million in 2019, adjusted for severance and transformation costs, has resulted in a total SG&A decline of over $530 million over the last 2 years. We continued to transform our physical store presence through ongoing market optimization and global de-densification efforts. This resulted in closing a net 693 stores and reduced store operating costs for the year while transferring some of the sales online into neighboring locations. We enhanced our financial position and flexibility with a stronger balance sheet, reflecting significant improvements in inventory management and related working capital, a healthy overall cash and liquidity position, a material reduction in overall debt and the completion of an exchange offer for our March 2021 notes. Overall, we're pleased with the work we accomplished to achieve our objectives and stabilize and strengthen our business operations. That work will continue, particularly as we explore options for our European businesses, which may include further store closings, exiting unprofitable businesses or investing in e-commerce capabilities. As we go forward, we are focused on transforming into a customer-obsessed technology company that delights gamers. We are working to create a differentiated customer experience that positions us to access new customers, further engage with existing ones and reactivate former ones. We are maintaining an intense focus on initiatives that drive customer lifetime value. Steps we are taking to execute on this mission include: one, investing in technology capabilities, including by in-sourcing talent, revamping systems and evaluating next-generation assets. We continue to build out our team expertise in this area, noting our recent addition of a Chief Technology Officer and Chief Operating Officer to the senior leadership team; two, building superior customer experience, including establishing a U.S.-based customer care operation. We are focused on providing exceptional customer service levels across all channels regardless of where, when or how our customers shop with us. We are accomplishing this through a technology-driven approach, along with leveraging our streamlined retail footprint, to provide an unparalleled service proposition with a focus on surprising and delighting our customers. To this end, we have recently added a senior vice president level Head of Customer Care and other new additions with e-commerce backgrounds to the senior leadership team; three, expanding our product offerings. We are continuing the work to expand our addressable market by growing GameStop's product catalog. This includes growing our product offerings across PC gaming, computers, monitors, game tables, mobile gaming and gaming TVs, to name only a few. These categories represent natural extensions that our customers would expect to buy from us, expanding our addressable market size by over 5x, and over time, will reduce our reliance on the cyclicality of the console-based gaming market; four, modernizing U.S. fulfillment operations to improve speed of delivery and service. We are improving our distribution network to coincide with the continued optimization of our store footprint. This will enable us to provide customers convenient, flexible and competitive delivery options across the entire product spectrum. With our recent additions to the senior leadership team, we are quickly evaluating additional distribution options to improve delivery speed. This group is also working to further optimize our warehouse management and order management technologies and other capabilities that will improve the experience for our customers. We expect to accelerate these and other elements of our transformation while continuing to focus on allowing the company to build upon its progress and capitalize on the emerging console cycle. The progress we've made over the past 2 years positions GameStop for long-term growth and to deliver value for shareholders. Now turning to financial results. I'm very pleased with how we navigated a challenging environment and all that we achieved in the fourth quarter and fiscal 2020. Specific to our fourth quarter results, sales were $2.1 billion, and comp sales increased 6.5% supported by mid-teens positive comparable sales in fiscal January. Global e-commerce sales increased 175% and represented 34% of total sales in the fourth quarter versus 12% of net sales in the prior year period. These results were reflective of the increased console demand as we transition from generation 8 to generation 9 console gaming products for Microsoft and Sony. Our 6.5% comp growth marks our return to positive quarterly comp sales growth, which we achieved despite further COVID-19-mandated closures around the world, particularly in Europe, the most challenging industry-wide shipping crisis realized during the holiday period and severe supply limitations of new products. Notably, console demand remains more robust than we can meet with supply from console makers, and as a result, we continue to see sell-through rates for our console events in a matter of minutes. In the fourth quarter, we estimate that additional pandemic-related store closures mandated by local governments led to a reduction of approximately 27% in European store operating days versus the prior year fourth quarter. Regionally, Australia was the strongest performing region given minimal disruption at the stores and delivered a nearly 30% comp increase. Building on that momentum, 2021 is off to a great start, led by positive 23% comparable sales in February as we continue to benefit from the launch of new consoles and the accessories in games that come with that product. Further, total consolidated sales for February were up 5.3% versus last year despite having permanently closed about 12% of stores globally through de-densification efforts and losing over 36% of store operating days in our international business units, primarily in Europe, due to pandemic-related temporary closures in the month. From a product margin standpoint, overall gross margins were 21.1%, down 610 basis points from our more software-led 27.2% gross margin in the fiscal fourth quarter last year. Decline was driven by an expected increase in mix of lower margin hardware sales, a continued increase in industry-wide freight costs, credit card processing fees driven by our higher penetration of e-commerce sales and a broader promotional stance. Now turning to our expenses and expense management objectives. Our reported SG&A expenses were $419.1 million, reflecting a decline of approximately $92.6 million or 18.1% versus the reported SG&A in the fourth quarter last year and representing approximately 340 basis point improvement on a percent to sales basis. The decrease was driven by a combination of tight expense controls, particularly lower store cost and corporate G&A expense and, to a lesser extent, sales leverage. On an adjusted basis, SG&A declined $68.4 million or 14.1% year-over-year. We reported operating income of $18.8 million on a reported basis compared to operating income of $75.2 million in the prior year fourth quarter. Adjusted operating income was $28.9 million compared to $109.2 million in the prior year period. Income tax in the fourth quarter was a benefit of $69.7 million driven by a change in the tax status of certain foreign entities based on a certain check-the-box elections that we made, along with the impact of the CARES Act, which allowed for a 5-year carryback period for certain current year tax losses. This tax benefit compares to an income tax expense of $43.8 million in the prior year fourth quarter. On a reported basis, net income was $80.5 million or $1.19 per diluted share on 67.8 million shares compared to net income of $21 million or earnings per diluted share of $0.32 in the prior year fourth quarter. Adjusted net income was $90.7 million or $1.34 per diluted share compared to adjusted net income of $83.8 million or $1.27 per diluted share in the fiscal '19 fourth quarter. In the fourth quarter, we continued to focus on de-densifying and streamlining our global store fleet. We closed a net total of 232 stores in the quarter for a total of 693 closures in fiscal 2020. At year-end, we operated 4,816 global stores. Now turning to our full year results. Total consolidated sales were $5.1 billion, a decline of 21.3% over the prior year. The sales decline was attributed to a comp store sales decline of 9.5%, approximately 700 permanent global store closures; disruption from the pandemic around the world, including temporary store closures; vendor supply shortages and the new generation 9 hardware; and a lack of new products at the end of the generation 8 cycle. E-commerce sales increased 191% for the fiscal year to represent nearly 30% of total net sales. Gross margin for the fiscal year decreased 480 basis points to 24.7% from 29.5% in 2019. SG&A expenses for the fiscal year were $1.5 billion, reflecting a decline of $408.5 million or 21.2% versus reported SG&A in fiscal 2019. On an adjusted basis, SG&A declined $348.9 million or 18.9% year-over-year. Importantly, these expenses include approximately $25 million in COVID-related safety protocol costs. As we've said before, we continue to expect more than 2/3 of these reductions to be permanent as they relate to permanent closures of stores and related labor costs associated with our de-densification strategy. We reported an operating loss of $237.8 million compared to an operating loss of $399.6 million in the prior year. Adjusted operating loss was $238 million compared to operating income of $62.3 million in the prior year. Income tax for the year was a benefit of $55.3 million driven by the changes in tax status of certain foreign entities and the impact of certain carryback provisions of the CARES Act previously mentioned. This tax benefit compares to an income tax expense of $37.6 million in the prior year. Our effective tax rate for the year was 18.9%. Importantly, we believe these tax elections will yield between $125 million and $150 million in cash tax benefit to be received early next fiscal year. On a reported basis, our net loss was $215.3 million or a loss of $3.31 per diluted share compared to a net loss of $470.9 million or a loss per diluted share of $5.38 in the prior year. Our adjusted net loss was $138.8 million or a loss of $2.14 per diluted share compared to adjusted net income of $19.1 million or $0.22 per diluted share in fiscal 2019. Turning to the balance sheet. At the end of the fiscal year, we had cash and restricted cash of $635 million, $121.5 million higher than the end of last year, reflecting our continued efforts to optimize working capital and overall capitalization of our balance sheet. We ended the year with total inventory of $602.5 million, a 30% reduction from prior year inventory levels of $859.7 million. As a result of our ongoing inventory management efforts, our inventory efficiency continued to improve for the fourth quarter as we realized a trailing 12-month inventory turn of 5.9x versus 4.4x at the end of 2019. At the end of 2020, our balance sheet and liquidity position were significantly improved versus 2019 despite the impact of the pandemic. This was a result of actions we took to strengthen our financial health in 2020, including completion of an exchange offer and consent solicitation for $216.4 million of our unsecured notes, reducing the amount due to mature in 2021; the execution of 5 sale-leaseback transactions related to office buildings and the sale of a corporate travel asset contributing approximately $95 million towards total liquidity; and the reduction of overall debt for the year by $57 million, including the early redemption of $125 million of our remaining March 2021 notes. Additionally, as of March 15, 2021, we fully redeemed the remaining $73.2 million of 2021 notes and repaid the outstanding balance of $25 million on our ABL. Capital expenditures for the year were $60 million, at the low end of our previously provided guidance of $60 million to $65 million. In fiscal 2020, cash flow from operating activities was an inflow of $123.7 million, an increase of $538.2 million compared to an outflow of $414.5 million during the same period last year. The increase was primarily due to improvements in working capital as a result of optimizing inventory and accounts payable levels through maximizing the cash conversion cycle and more efficient carrying levels of inventory. In terms of our outlook, we're optimistic about our transformation in the emerging console cycle. We recognize business risks remain elevated due to the pandemic and post-pandemic uncertainty. We are not providing specific annual sales and earnings guidance. In summary, 2020 was an unprecedented year, but we're very proud of all that we accomplished to advance our strategic priorities and enhance our financial health. We finished 2020 a stronger company and are well positioned to capitalize on the opportunities ahead of us in 2021 as we move to the next phase of our transformation. GameStop is the only retailer of scale exclusively focused on the gaming industry and adjacent categories. We have a unique opportunity to become the ultimate destination for gamers. I want to take a moment to address several changes to our leadership team. As you know, we announced in February that Jim Bell was stepping down from the CFO role with the company later this week. I want to thank him for his significant contributions to our company during the stabilization and optimization phases of our transformation, particularly his leadership in managing several hundred million dollars in expense reductions and over $350 million from working capital generation. We also announced this week that Frank Hamlin, our Chief Customer Officer, is leaving the company, and I'm very appreciative of his leadership and efforts over the last couple of years of our transformation, specifically his spearheading the concept development and execution of our Tulsa project of interactive Gaming stores. Finally, we are very excited to welcome Jenna Owens as our new Chief Operating Officer. We believe Jenna's extensive career in technology-led organizations, such as Amazon and Google, are another important addition to our leadership team and our future transformation initiatives. Thank you again for your support and interest in GameStop. We remain very excited about the momentum we have, the many positive changes we are making and the talent we are attracting to GameStop, all of which we believe will deliver long-term value creation for our stakeholders.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful evening.