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Year-End's Big Game Hunt Bolsters Retail Stocks

25 May, 2001 By: Holly J. Wagner

Some specialty retailers are reporting that video games and the promise of new consoles late this year are the bright spot, even in a season of brutal earnings losses.

Toys "R" Us reported an $18 million loss for the quarter ended May 5, but last week the chain’s stock rallied to a 52-week high of $30.98 onprojections that new game consoles like the Sony PlayStation 2 and Microsoft Xbox would account for 17% to 18% of the chain’s total sales at year-end. "Toys "R" Us is well positioned to deliver positive results in the fourth quarter of fiscal 2001," president and c.e.o. John Eyler said in a statement. "The real news will be in the fourth quarter, when you have the combination of all the video game platforms simultaneously creating a buzz in the industry."

Meanwhile, book giant Barnes & Noble reported it lost $11.5 million in the fiscal first quarter, compared to a loss of $4.1 million in the same period last year.

Barnes & Noble subsidiary Babbage’s, the umbrella for the Software Etc. and GameStop brands, helped staunch the financial hemorrhage on the strength of game sales, the company reported.

Barnes & Noble same-store sales increased a paltry 2.3% for the first quarter, compared to a 13.2% hike at Babbage’s. Analysts said they expect third and fourth quarter performance to accelerate.

"Given the increased availability of PlayStation 2, we would expect sales from the video game segment to be very strong," J.P. Morgananalyst Danielle Fox told Reuters.

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