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GameStop Exceeds Q3 Expectations

20 Nov, 2007 By: John Latchem

GameStop executives in their financial call reported the third quarter (ended Nov. 3) was the best ever Q3 for the video game retailer.

Net Q3 earnings were $52 million, compared to $13.6 million in 2006, a 283% increase. Total sales increased 59.3% to 1.6 billion, compared to $1 billion during the same period last year. Comp-store sales grew 46.3%, and operating earnings increased by 116%. New video game software sales rose 59%, and hardware sales jumped 149%.

During the quarter, Gamestop opened 181 new stores worldwide (12 closed, for a net gain of 169), bringing the total of new stores for the year to 417 and the franchise total to more than 5,000. Including stores anticipated to open in the fourth quarter, Gamestop will surpass its goal of 500 to 550 new stores in all of 2007.

Because of the higher-than-expected Q3 results, GameStop projects Q4 comp-store sales growth of 7% to 9 %, up from 4% to 5%.

Chairman and CEO R. Richard Fontaine said GameStop, with its unique selection of new and used product, is positioned to benefit from emerging industry trends such as more first-time gamers, more female gamers and more gift-givers.

“The more people understand what the GameStop brand stands for, the brighter our future, and we're just beginning to push the brand,” Fontaine said.

Vice chairman and COO Daniel DeMatteo anticipates record hardware sales in Q4, which should translate to record software sales in 2008. He cited the continued popularity of the Nintendo Wii and DS, and price drops for Microsoft's Xbox 360 and Sony's PlayStation 3 and PlayStation Portable bundles. In particular, he noted PS3 sales doubled after the recent price cut and expects that trend to continue in Q4.

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