GameStop's Revenues Nearly Double, Profits Slip
It's probably no surprise that last weekend was one of the biggest ever for gaming retailers, what with the PS3 launch on Friday and the Wii launch on Sunday. But what we didn't know was that GameStop/EB was doing quite well even before the crazy console launches.
For a span of 13 weeks ending October 28 - well before the mid-November system launches - the mega-retailer reported sales of over $1 billion, which is a whopping 89% increase over the $534 million reported from the same quarter last year. In total, their store sales were up 8.8% for the quarter, trumping earlier predictions by about 4-6%.
This spike was attributed to big sales numbers for some of the newest games in the hopper; Madden NFL 07, Saints Row, Dead Rising, and Splinter Cell: Double Agent. Hardware sales also experienced a steep increase, as GameStop reported a 69% increase over last year's quarter. Strong sales of the Xbox 360 and DS Lite apparently helped to drive that surge.
However, while the revenue was sky-high, the company's profits fell shy of expectations. They reported a net profit of about $13.6 million (a diluted earnings per share of about 18 cents), which is just short of what they hoped for; a diluted earning of approximately 20 to 22 cents per share.
As for the current quarter, GameStop predicts comparable store sales to be up 14 to 18% over last year, with expected earnings-per-share numbers to be between $1.53 and $1.59. Not surprisingly, investors were pleased with the previous quarter's results: GameStop shares trading is up more than $2 - about 4% - as of yesterday.
11/22/2006 Ben Dutka