GameStop shows 151% profit increase in Q1
US retailer GameStop has shown a 151.4 percent profit increase to $62.1 million in the first quarter compared to the same period last year.
Sales were well up for the period, increased 41.8 percent to $1,813.6 million, in comparison to $1,279.0 million in the prior year quarter.
Press release after the link.
GRAPEVINE, Texas–(BUSINESS WIRE)–GameStop Corp. (NYSE: GME), the world’s largest video game and entertainment software retailer, today reported sales and earnings for the first quarter ended May 3, 2008.
Net earnings were $62.1 million for the first quarter of 2008, as compared to net earnings of $24.7 million for the first quarter of 2007, an increase of 151.4%. Diluted earnings per share were $0.37, including debt retirement costs of $0.01 per diluted share, beating the high-end of guidance by $0.05 per share.
GameStop sales increased 41.8% to $1,813.6 million in the first quarter, in comparison to $1,279.0 million in the prior year quarter. Comparable store sales increased 27.1% during the first quarter. New video game software sales grew an amazing 72%. The top five selling games during the quarter were Take Two Interactive’s GRAND THEFT AUTO IV, with only five days of sales at the end of the quarter; SUPER SMASH BROS. BRAWL and MARIO KART WII from Nintendo; RAINBOW SIX: VEGAS 2 from Ubisoft; and Electronic Arts’ ARMY OF TWO.
R. Richard Fontaine, Chairman and Chief Executive Officer, indicated, “We are very bullish on the future as three major metrics are transforming the business and accelerating the potential for GameStop growth. The installed base of video game consoles grew 34% in 2007, or nearly 31 million units, the highest incremental growth in the history of the business, and we are forecasting that hardware unit sell-thru will match these levels in 2008. And behind the huge hardware growth is the fact that the demographic for videogaming is expanding dramatically as industry figures indicate that 38% of game players are female. Finally, we have an outstanding line-up of new games coming during the rest of the year, including Nintendo’s WII FIT, Konami’s METAL GEAR SOLID 4, Microsoft’s GEARS OF WAR 2, and Activision’s GUITAR HERO 4.
“GameStop’s trade model continues to provide our customers with a way to lower the cost of videogaming while offering the largest selection of gaming products of any retailer in any market. We continue to attract and serve a broader consumer base as videogaming continues to attract the core gamers and is moving towards becoming mainstream family entertainment.
“With over 5,400 stores, GameStop is moving closer to our customers with more stores conveniently serving more communities. During the first quarter, GameStop opened a record 210 stores and we are well underway to achieving our goal of opening between 550 and 600 new stores in 2008. With half of the new stores opening outside of the U.S., our international store base will grow by 25% and our overall global market share will continue to increase.”
Updated Guidance
For the second quarter of fiscal 2008, GameStop is forecasting comparable store sales to range from +12% to +14%. Diluted earnings per share are expected to range from $0.26 to $0.28. Based on the stronger than expected results in the first quarter of 2008, GameStop is increasing its guidance for full year diluted earnings per share to a range of $2.30 to $2.39, representing a +28% to +33% growth over last year. Comparable store sales are forecast to increase between +10% and +12% for the full fiscal year.
We continue to believe that fiscal 2009 earnings per share will grow at least 25%. This guidance is based on our analysis that the unprecedented growth of new video game hardware during 2007 and 2008, combined with strong tie ratios, significant industry investment, and a great title line-up will drive new video game software sales to double digit growth resulting in higher profitability for the company.
Note that guidance does not include debt retirement costs.
Conference Call and Webcast Information
A conference call with GameStop Corp.’s management is scheduled for May 22, 2008 at 11:00 AM ET to discuss the first quarter sales and earnings results. The conference call will be simulcast on the Internet at http://investor.gamestop.com. The conference call will be archived on the website until June 5, 2008.