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|GameStop Rises Above Recession|
GameStop Corp. (NYSE: GME), the world's largest video game and entertainment software retailer, today reported record sales results for the nine-week holiday period, November 2, 2008 thru January 3, 2009.
During the 2008 holiday period, total sales were $2,856.0 million, a 22.3% increase from the prior year of $2,334.6 million. Comparable store sales for the period increased 10.2%.
New video game software sales were outstanding, growing 23.5% with many titles selling in record numbers. The top five video games sold during the holiday period were Activision's Call of Duty: World at War and Guitar Hero World Tour, Microsoft's Gears of War 2, Blizzard Entertainment's World of Warcraft: Wrath of the Lich King, and Nintendo's Wii Fit.
Hardware sales, led by Nintendo's Wii and Microsoft's Xbox 360, were also robust, dramatically increasing the installed base of new users that should drive software demand in 2009 and beyond.
Daniel DeMatteo, Chief Executive Officer, commented, "As expected, the consumer saw great entertainment value in video games in one of the most challenging holiday shopping seasons ever. In fact, in the midst of a serious recession, our average transaction was higher this year than last. In addition, our proprietary inventory management systems allowed us to maintain a great in-stock position during the busiest season we have ever experienced. A major highlight of the period was that GameStop's sales grew in every worldwide territory in which we operate; a clear indication that the GameStop model works everywhere."
J. Paul Raines, Chief Operating Officer, noted, "Our store associates did a tremendous job of making sure all of our holiday shoppers found the right systems, games, and accessories to fill their wish lists. Their hard work and knowledge of our wide assortment of game products was critical in serving a record number of GameStop customers. Of note this year, gift card sales during the nine-week period rose 15% over last year and the day after Christmas was the third highest sales volume day in GameStop's history."
In a very challenging retail environment, we successfully managed our business to achieve our forecasted earnings. While sales significantly exceeded forecast, gross margin rates were lower than anticipated as a result of a higher mix of hardware sales and the success of our value messaging and promotions during the holiday period. Therefore, we are increasing our fourth quarter 2008 comparable store sales guidance to +9.0% to +9.5%. We are also raising the low end of our previously announced fourth quarter 2008 diluted earnings per share guidance by $0.02, resulting in a range of $1.31 to $1.34, which represents a +15% to +18% increase over the prior year quarter.
Full year diluted earnings per share are now forecast to range from $2.37 to $2.40, an increase of +32% to +33% over the prior year. Comparable store sales are projected to increase between +12.0% and +12.5% for the full year, with total sales growing between +24% and +25%.
Note that guidance does not include debt retirement costs or merger related expenses.
Full year 2008 sales and earnings results and fiscal 2009 earnings guidance are expected to be released in mid-March 2009.
Headquartered in Grapevine, TX, GameStop Corp., a Fortune 500 and S&P 500 company, is the world's largest video game and entertainment software retailer. The company operates 6,188 retail stores in 17 countries worldwide. The company also operates two e-commerce sites, GameStop.com and EBgames.com, and publishes Game Informer(R) magazine, a leading multi-platform video game publication. GameStop Corp. sells new and used video game software, hardware and accessories for video game systems from Sony, Nintendo, and Microsoft. In addition, the company sells PC entertainment software, related accessories and other merchandise. General information on GameStop Corp. can be obtained at the company's corporate website: http://www.gamestopcorp.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, the outlook for fiscal 2008 and beyond, future financial and operating results, projected store openings, the company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of GameStop's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the inability to obtain sufficient quantities of product to meet consumer demand, including Nintendo's Wii; the timing of release of video game titles for next generation consoles; the risks associated with expanded international operations and the integration of recent acquisitions, including Micromania; and economic and other events that could reduce or impact consumer demand. Additional factors that could cause GameStop's results to differ materially from those described in the forward-looking statements can be found in GameStop's Annual Report on Form 10-K for the fiscal year ended February 2, 2008 filed with the SEC and available at the SEC's Internet site at http://www.sec.gov or http://investor.gamestop.com.
Schedule I GameStop Corp. Sales Mix 9 Weeks Ended 9 Weeks Ended Jan. 3, 2009 Jan. 5, 2008 Percent Percent Sales of Total Sales of Total Sales (in millions): New video game hardware $ 680.2 23.8 % $ 607.3 26.0 % New video game software 1,246.0 43.7 % 1,008.6 43.2 % Used video game products 543.5 19.0 % 411.5 17.6 % Other 386.3 13.5 % 307.2 13.2 % Total $ 2,856.0 100.0 % $ 2,334.6 100.0 %
SOURCE: GameStop Corp.