Sales, Profits Soar at GameStop

GRAPEVINE, TX-Buoyed by last year’s acquisition of its chief rival, video game and software retailer GameStop saw its financial status soar beyond expectations in fiscal 2005, as profits jumped to more than $100 million for the period ending Jan. 28, 2006 with sales topping $3 billion. In the year prior to GameStop’s acquisition of Electronics Boutique, the Grapevine, TX-based retailer listed $61 million in profits and $1.8 billion in sales.

“2005 was an exceptional year for GameStop and our shareholders,” R. Richard Fontaine, the company’s chairman and chief executive officer, said in announcing the year end and fourth quarter numbers. “We achieved record sales, increased gross margins, and kept expenses well under control in the midst of explosive growth.”

While some retailers struggled during the holiday season, GameStop reported that fourth-quarter sales increased 135.2% to $1.67 billion, more than twice the $708 million in sales in during the same November to January period in the last fiscal year. Net income rose to $85 million, or $1.10 per share, during the quarterly period. For fiscal 2005, sales were up 67.8%, growing to more than $3 billion from just north of $1.8 billion in 2004. Sales at comparable stores, a key measure of performance, decreased 1.4% during fiscal 2005.

Company execs predict even better numbers in fiscal 2007 with sales expected to rise between 14% and 17% with comparable store sales increasing from 6% to 9% during the period and earnings of $1.83 to $1.93 a share. During the first quarter, earnings are projected to be between 4 cents and 5 cents a share. Same-store sales for the period are expected to be 7% to 9% lower, due primarily to the launch of Sony’s PSP hand-held game console in that prior-year quarter, company officials said.

GameStop, which bills itself as the world’s largest video game retailer, operates more than 4,400 retail stores throughout North America and Europe. The company opened 792 new stores, including 450 in the US and 342 internationally, during 2005 and plans to open 400 additional stores in 2006 with an estimated 600 new store openings planned for 2007 and 2008.