GameStop Reports Huge Fiscal Numbers
Hey, games are big business. GameStop has officially declared their fourth-quarter and year-end results for its fiscal 2006, and boy, did they have one hell of a year according to GameSpot.
Right off the bat, let's start with the biggest one- $5.3 billion. That's the total amount of sales the retailer raked in during fiscal 2006. The 4,800 stores worldwide created a 72% leap over the previous year's $3.1 billion, and the holidays contributed significantly to that increase. Of the $5.3 billion, $2.3 billion came in the holiday quarter, and that is 38% higher than 2005's holiday quarter. Of course, the fiscal 2006 did have one extra week, but even so...that's impressive.
Merging with EB Games was apparently a good move, as 2006 was its first full year with the new business arrangement. The total net earnings for GameStop/EB was $158.3 million, which is 57% more than the $100.8 million the company posted in fiscal 2005. And again, the holiday quarter was the catalyst, delivering $129.8 million in net earnings; a 53% jump over 2005's net of $85 million.
These gaudy numbers have caused dollar signs to pop up in the eyes of GameStop executives, as they're now expecting further growth in 2007. In fact, they're hoping for a sales growth of between 19% and 21%, and they plan to open another 500 stores worldwide. Not surprisingly, analysts are also thinking positive about GameStop's 2007 prospects.
In one note to investors from Lazard Capital Markets' Colin Sebastian, he said: "GameStop should benefit from multiple tailwinds, including the ramping installed base of new consoles, increasing handheld product sales (DS and PSP), growing used business, and a more robust software release schedule."
Michael Pachter from Wedbush Morgan Securities is also on board, saying GameStop has a "tremendous opportunity" to enjoy some international expansion. It's all good for the games retailer right about now, and of course, it's usually helpful to have two console launches during the year. So can 2007 bring in even bigger numbers? Heck, probably.
3/28/2007 Ben Dutka