Share this on

GameStop expects slowdown after record Q1

By Staff -- Gifts and Dec, 5/22/2009 12:50:00 PM

GRAPEVINE, Texas—Video game and software retailer GameStop Corp. reported record sales and earnings for the first quarter ended May 2, 2009. However, same-store sales for the period dropped more than expected, and are expected to worsen further in the second quarter.

Sales in the first quarter rose 9.2 percent to $1.98 billion, compared to $1.81 billion in the prior year period. Sales were led by the launch of the Nintendo DSi handheld system and demand for Capcom’s Resident Evil 5 and Street Fighter IV; however, sell through of these titles did not compare to the "tremendous" success of Grand Theft Auto IV from Take Two Interactive and Nintendo’s Super Smash Bros. Brawl in the prior year, the company said in a statement.

Q1 net earnings were $70.4 million, a rise of 13.4 percent from the same period a year ago. Earnings include debt retirement costs of $2.9 million ($1.8 million, net of tax benefits), as compared to net earnings of $62.1 million in the prior year period. Diluted earnings per share were $0.42, including debt retirement costs of $0.01 per diluted share.

First quarter comparable store sales were lower than expected, declining slightly by 1.5 percent, due primarily to sharper recessionary effects in Europe and a slowdown of new console sales that occurred late in the quarter, according to the company.

“During the quarter GameStop sustained its strong earnings growth momentum and exceeded earnings guidance despite less than planned comparable store sales,” says Daniel DeMatteo, CEO. “Although new video game software sales declined by 2.8 percent, lower-priced used products grew a robust 31.9 percent, illustrating that value is becoming more important to our customers."

For the second quarter of fiscal 2009, GameStop is now forecasting diluted earnings per share to range from $0.28 to $0.33 compared to $0.34 in the prior year period, when earnings grew 162 percent over the second quarter of 2007. Comparable store sales are projected to decline by 8 percent to 11 percent, due to an unfavorable comparison to the 20 percent increase in same store sales in the prior year quarter, declining new console unit sales, and the impact of government stimulus checks issued last year.

Adds DeMatteo, “In the second quarter, like the first, we face very strong comparisons to the prior year period due to the unprecedented number of blockbuster titles released in the first half of 2008 and a significantly more brittle global economy. We do expect the back half of this year to be stronger than the first half due to a full and wide-ranging new title lineup. All together, this places us in a prime position to capitalize on the growth in the market in the fall and holiday seasons.”

Share this on

Talkback

We would love your feedback!

GameStop dips as hardware sales slip

Aug 21, 2009

GameStop's holiday sales flat as store comps slide

Jan 8, 2010

GameStop sets holiday sales record

Jan 8, 2009

Also by this author

»MORE

Featured Company

FurnitureCore.com

FurnitureCore.com is a dynamic web application aimed at the furniture industry. Retailers and manufacturers alike will find our deep reserve of tools to be exactly what their furniture business needs.www.furniturecore.com... more