GameStop Reveals Increased Profits, Good Prospects

Representatives from U.S. video game retail chain GameStop have revealed details of the company financial results for the first quarter, ended April 30. During this time net income rose to $10.4 million, from $6.7 million a year earlier. Revenue also rose to $474.7 million from $371.7 million. The company indicated that the PSP hardware and software launch, as well as titles such as Gran Turismo 4, God of War, Doom 3 and Tekken 5 were the main driving forces behind software sales, which were up 21 percent on the same period last year - with a comparable store sales increase of 12 percent. GameStop expects comparable store sales to rise 5 percent to 7 percent, and diluted earnings per share to reach 14 cents to 15 cents in the second quarter as the PSP continues to prove popular and anticipation increases for the Xbox 360. R. Richard Fontaine, Chairman & Chief Executive Officer, commented on the results: "The first quarter was particularly successful due mostly to strong performances in both software sales and a resurgent growth in hardware. Sony's PSP, which launched on March 24th, was a tremendous success and has been a consistent seller throughout the quarter. In addition, after a period of unanticipated inventory shortages, Sony's PlayStation 2 was in stock for most of the last month of the quarter and continues to sell very well. We are off to a great start to our fiscal year; a year in which the hardware momentum is already building from the PSP launch towards the release of Microsoft's Xbox 360 expected in the fall." Full year 2005 diluted earnings are expected to reach $1.30 to $1.40 per share, excluding the impact of the purchase of Electronics Boutique, seen closing in the third quarter and is expected to add significantly to earnings in the second half of the year. The acquisition of Electronics Boutique was announced in April, for an estimated $1.63 billion. Analysts suggest that the newly merged company could rival Wal-Mart as the largest individual seller of video games in the U.S., with 3,200 stores nationally and 600 abroad.