GameStop's winning fiscal year allows addition of 400 stores worldwide

GameStop had such a great fiscal 12 months, ending January, that the firm plans on opening another 400 stores worldwide this year.

Total sales for the full year increased 24.1 percent to $8.8 billion. This is compared to $7.1 billion last year, which results in an average store sales increase of +12.3 percent for the entire year.

“Looking at 2009, we are confident in our ability to increase sales and earnings, generate significant cash, advance market share, and maintain a financially sound balance sheet," said GameStop CEO Daniel DeMatteo.

"We have positioned GameStop to offer video game consumers worldwide the best values for gaming.

"During the year, we expect to generate free cash flow (a non-GAAP measure of operating cash flow less capital expenditures) of over $500 million, after having invested $170 million in capital improvements, including the opening of more than 400 new stores worldwide."

Last year, the company opened or acquired over 1,002 stores worldwide, including the purchase of French game retailer Micromania.

Press release below.

GRAPEVINE, Texas--(BUSINESS WIRE)--GameStop Corp. (NYSE: GME), the world’s largest video Game and entertainment software retailer, today reported audited sales and earnings for the fourth quarter and the fiscal year ended January 31, 2009.

Daniel DeMatteo, Chief Executive Officer, stated, “In spite of the current worldwide retail environment, GameStop’s financial performance is being driven by delivering to consumers what they want: stores in a wide range of locations, knowledgeable associates and most importantly, options that provide value. Our affinity with consumers, combined with our solid business model, prudent financial management practices, expansive brand presence and strategic merchandising, allowed us to achieve a record eighth straight year of sales and earnings growth. In 2008, we opened or acquired 1,002 stores worldwide, including the acquisition of Micromania, the largest video game retailer in France.”

Fourth Quarter Financial Results

Net earnings increased 22.4% to $232.3 million in the fourth quarter of 2008, including merger-related income of $12.0 million ($7.5 million, net of tax expense) as compared to net earnings of $189.8 million in the prior year quarter.

Diluted earnings per share were $1.39, at the high end of previously announced guidance, including merger-related income of $0.05 per share, an increase of 21.9% compared to $1.14 in the prior year quarter.

Total sales for the fourth quarter increased 21.9% to $3.5 billion, in comparison to $2.9 billion in the prior year quarter. Comparable store sales increased +9.6% for the fourth quarter.

Full Year Financial Results

Net earnings increased 38.2% to $398.3 million in fiscal 2008, including debt retirement costs and merger-related expenses of $6.9 million (combined $4.4 million, net of tax benefits) as compared to net earnings of $288.3 million in fiscal 2007, including debt retirement costs of $12.6 million ($7.9 million, net of tax benefits).

Diluted earnings per share were $2.38, at the high end of previously announced guidance, including debt retirement costs and merger-related expenses of $0.02 per share, an increase of 36.0% compared to $1.75, including debt retirement costs of $0.05 per share, in fiscal 2007.

Total sales for the full year increased 24.1% to $8.8 billion, in comparison to $7.1 billion in fiscal 2007. Comparable store sales increased +12.3% for the full year.

Business Outlook

“Looking at 2009, we are confident in our ability to increase sales and earnings, generate significant cash, advance market share, and maintain a financially sound balance sheet. We have positioned GameStop to offer video game consumers worldwide the best values for gaming,” concluded DeMatteo.

Based on our expectations of continued proliferation of the hardware installed base, the upcoming new title slate, increasing consumer enthusiasm for our trade-in model, and further expansion of video games as primary, mainstream entertainment, GameStop expects 2009 to be another record year. In spite of the worldwide recession and difficult retail climate, we expect robust increases in sales, operating margins, earnings, and cash generation. As reported on February 19th, GameStop projects 2009 growth as follows:

* Total sales growth between +10.0% and +12.0%
* Comparable store sales of +4.0% to +6.0%
* Diluted earnings per share increasing +18% to +22%

During the year, we expect to generate free cash flow (a non-GAAP measure of operating cash flow less capital expenditures) of over $500 million, after having invested $170 million in capital improvements, including the opening of more than 400 new stores worldwide.

For the first quarter of fiscal 2009, the company expects comparable store sales to range from flat to +2.0%, on top of the 27% comp store sales increase From The prior year quarter when three major software titles were launched (SUPER SMASH BROS. BRAWL, MARIO KART, and GRAND THEFT AUTO IV). Sales growth will be driven by continued strong demand for all new hardware systems, including Nintendo’s DSi, and a strong slate of new video game releases, including Capcom’s Street Fighter IV and RESIDENT EVIL 5 and Microsoft’s HALO WARS. Diluted earnings per share are expected to range from $0.40 to $0.42, an increase of +5.0% to +10.0% over the prior year quarter. During the course of the year, we expect comparable sales increases to vary by quarter, depending on release dates of new titles, and in consideration of the rollover effect of launch dates of titles in 2008.

For the U.S. market, we estimate that new video game software sales will increase between +5.0% and +10.0% in 2009.