GameStop Posts Record Sales, Earnings21 Mar, 2006 By: Erik Gruenwedel
The October acquisition of rival Electronics Boutique already paid dividends for GameStop Corp. in fourth-quarter (ended Jan. 28) fiscal year 2005.
Grapevine, Texas-based GameStop posted record quarterly profit of $85 million, compared to $34.5 million during the same period last year. Revenue was $1.7 billion, compared to $708 million last year. Record fiscal-year 2005 revenue topped $3 billion, compared to $1.8 billion last year.
“We now have a 21% share of all new video game sales in the U.S., according to The NPD Group,” said Richard Fontaine, chairman and CEO of GameStop.
That said, same-store sales dropped 0.3% for the quarter and 1.4% for FY 2005. The company expects a further decline in same-store sales in the first quarter, due primarily to Sony Corp.'s announced launch delay of PlayStation 3.
Company executives, in a conference call, said they expect limited fourth-quarter availability in the U.S. of the PlayStation 3 console to be in the 1-to-1.2 million-unit-range.
“We are assuming a launch of Nintendo's Revolution system in the quarter to be in the 750,000-unit range,” said Dan DeMatteo, vice chairman and COO of GameStop.
In the interim, the company continues to promote its software trade-in programs, which it believes give customers “a source of currency that drives our business.” The influx of used product, however, has not kept up with demand.
“This is a category where we are chasing product,” said Fontaine. “We are somewhat light.”