| Solid Increases in Sales, Operating Margins, EPS, and Cash Generation Expected in 2009
GRAPEVINE, Texas--(BUSINESS WIRE)--Mar. 26, 2009--
GameStop Corp. (NYSE: GME), the world’s largest video game and
entertainment software retailer, today reported audited sales and
earnings for the fourth quarter and the fiscal year ended January 31,
2009.
Daniel DeMatteo, Chief Executive Officer, stated, “In spite of the
current worldwide retail environment, GameStop’s financial performance
is being driven by delivering to consumers what they want: stores in a
wide range of locations, knowledgeable associates and most importantly,
options that provide value. Our affinity with consumers, combined with
our solid business model, prudent financial management practices,
expansive brand presence and strategic merchandising, allowed us to
achieve a record eighth straight year of sales and earnings growth. In
2008, we opened or acquired 1,002 stores worldwide, including the
acquisition of Micromania, the largest video game retailer in France.”
Fourth Quarter Financial Results
Net earnings increased 22.4% to $232.3 million in the fourth quarter of
2008, including merger-related income of $12.0 million ($7.5 million,
net of tax expense) as compared to net earnings of $189.8 million in the
prior year quarter.
Diluted earnings per share were $1.39, at the high end of previously
announced guidance, including merger-related income of $0.05 per share,
an increase of 21.9% compared to $1.14 in the prior year quarter.
Total sales for the fourth quarter increased 21.9% to $3.5 billion, in
comparison to $2.9 billion in the prior year quarter. Comparable store
sales increased +9.6% for the fourth quarter.
Full Year Financial Results
Net earnings increased 38.2% to $398.3 million in fiscal 2008, including
debt retirement costs and merger-related expenses of $6.9 million
(combined $4.4 million, net of tax benefits) as compared to net earnings
of $288.3 million in fiscal 2007, including debt retirement costs of
$12.6 million ($7.9 million, net of tax benefits).
Diluted earnings per share were $2.38, at the high end of previously
announced guidance, including debt retirement costs and merger-related
expenses of $0.02 per share, an increase of 36.0% compared to $1.75,
including debt retirement costs of $0.05 per share, in fiscal 2007.
Total sales for the full year increased 24.1% to $8.8 billion, in
comparison to $7.1 billion in fiscal 2007. Comparable store sales
increased +12.3% for the full year.
Business Outlook
“Looking at 2009, we are confident in our ability to increase sales and
earnings, generate significant cash, advance market share, and maintain
a financially sound balance sheet. We have positioned GameStop to offer
video game consumers worldwide the best values for gaming,” concluded
DeMatteo.
Based on our expectations of continued proliferation of the hardware
installed base, the upcoming new title slate, increasing consumer
enthusiasm for our trade-in model, and further expansion of video games
as primary, mainstream entertainment, GameStop expects 2009 to be
another record year. In spite of the worldwide recession and difficult
retail climate, we expect robust increases in sales, operating margins,
earnings, and cash generation. As reported on February 19th,
GameStop projects 2009 growth as follows:
-
Total sales growth between +10.0% and +12.0%
-
Comparable store sales of +4.0% to +6.0%
-
Diluted earnings per share increasing +18% to +22%
During the year, we expect to generate free cash flow (a non-GAAP
measure of operating cash flow less capital expenditures) of over $500
million, after having invested $170 million in capital improvements,
including the opening of more than 400 new stores worldwide.
For the first quarter of fiscal 2009, the company expects comparable
store sales to range from flat to +2.0%, on top of the 27% comp store
sales increase from the prior year quarter when three major software
titles were launched (SUPER SMASH BROS. BRAWL, MARIO KART, and GRAND
THEFT AUTO IV). Sales growth will be driven by continued strong
demand for all new hardware systems, including Nintendo’s DSi, and a
strong slate of new video game releases, including Capcom’s STREET
FIGHTER IV and RESIDENT EVIL 5 and Microsoft’s HALO WARS.
Diluted earnings per share are expected to range from $0.40 to $0.42, an
increase of +5.0% to +10.0% over the prior year quarter. During the
course of the year, we expect comparable sales increases to vary by
quarter, depending on release dates of new titles, and in consideration
of the rollover effect of launch dates of titles in 2008.
For the U.S. market, we estimate that new video game software sales will
increase between +5.0% and +10.0% in 2009.
Note that guidance does not include debt retirement costs or merger
related expenses.
About GameStop
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 6,207 retail stores in 17
countries worldwide. The company also operates an e-commerce site,
GameStop.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.
Safe Harbor
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
2009 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.
GameStop undertakes no obligation to publicly update or revise any
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; the impact of
increased competition and changing technology in the video game
industry; 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.
|
GameStop Corp.
|
|
Statements of Operations
|
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
13 weeks
|
|
13 weeks
|
|
|
|
ended
|
|
ended
|
|
|
|
Jan. 31, 2009
|
|
Feb. 2, 2008
|
|
|
|
|
|
|
|
Sales
|
|
$
|
3,492,114
|
|
|
$
|
2,865,585
|
|
|
Cost of sales
|
|
|
2,652,937
|
|
|
|
2,181,510
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
839,177
|
|
|
|
684,075
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
expenses
|
|
|
433,285
|
|
|
|
357,512
|
|
|
Depreciation and amortization
|
|
|
38,092
|
|
|
|
33,412
|
|
|
Merger-related expenses (income)
|
|
|
(12,012
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
379,812
|
|
|
|
293,151
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
12,331
|
|
|
|
8,390
|
|
|
|
|
|
|
|
|
Earnings before income
|
|
|
|
|
|
tax expense
|
|
|
367,481
|
|
|
|
284,761
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
135,156
|
|
|
|
94,960
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
232,325
|
|
|
$
|
189,801
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
Basic
|
|
$
|
1.42
|
|
|
$
|
1.18
|
|
|
Diluted
|
|
$
|
1.39
|
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
|
outstanding:
|
|
|
|
|
|
Basic
|
|
|
163,812
|
|
|
|
160,980
|
|
|
Diluted
|
|
|
167,244
|
|
|
|
166,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Sales:
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
Cost of sales
|
|
|
76.0
|
%
|
|
|
76.1
|
%
|
|
|
|
|
|
|
|
Gross profit
|
|
|
24.0
|
%
|
|
|
23.9
|
%
|
|
|
|
|
|
|
|
SG&A expenses
|
|
|
12.4
|
%
|
|
|
12.5
|
%
|
|
Depreciation and amortization
|
|
|
1.1
|
%
|
|
|
1.2
|
%
|
|
Merger-related expenses (income)
|
|
|
-0.4
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
10.9
|
%
|
|
|
10.2
|
%
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
0.4
|
%
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
Earnings before income
|
|
|
|
|
|
tax expense
|
|
|
10.5
|
%
|
|
|
9.9
|
%
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
3.8
|
%
|
|
|
3.3
|
%
|
|
|
|
|
|
|
|
Net earnings
|
|
|
6.7
|
%
|
|
|
6.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
GameStop Corp.
|
|
Statements of Operations
|
|
(in thousands, except per share data)
|
|
|
|
|
|
52 weeks
|
|
52 weeks
|
|
|
|
ended
|
|
ended
|
|
|
|
Jan. 31, 2009
|
|
Feb. 2, 2008
|
|
|
|
|
|
|
|
Sales
|
|
$
|
8,805,897
|
|
|
$
|
7,093,962
|
|
|
Cost of sales
|
|
|
6,535,762
|
|
|
|
5,280,255
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2,270,135
|
|
|
|
1,813,707
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
expenses
|
|
|
1,445,419
|
|
|
|
1,182,016
|
|
|
Depreciation and amortization
|
|
|
145,004
|
|
|
|
130,270
|
|
|
Merger-related expenses
|
|
|
4,593
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
675,119
|
|
|
|
501,421
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
38,837
|
|
|
|
47,774
|
|
|
Debt extinguishment expense
|
|
|
2,331
|
|
|
|
12,591
|
|
|
|
|
|
|
|
|
Earnings before income
|
|
|
|
|
|
tax expense
|
|
|
633,951
|
|
|
|
441,056
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
235,669
|
|
|
|
152,765
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
398,282
|
|
|
$
|
288,291
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
Basic
|
|
$
|
2.44
|
|
|
$
|
1.82
|
|
|
Diluted
|
|
$
|
2.38
|
|
|
$
|
1.75
|
|
|
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
|
outstanding:
|
|
|
|
|
|
Basic
|
|
|
163,190
|
|
|
|
158,226
|
|
|
Diluted
|
|
|
167,671
|
|
|
|
164,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Sales:
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
Cost of sales
|
|
|
74.2
|
%
|
|
|
74.4
|
%
|
|
|
|
|
|
|
|
Gross profit
|
|
|
25.8
|
%
|
|
|
25.6
|
%
|
|
|
|
|
|
|
|
SG&A expenses
|
|
|
16.4
|
%
|
|
|
16.7
|
%
|
|
Depreciation and amortization
|
|
|
1.6
|
%
|
|
|
1.8
|
%
|
|
Merger-related expenses
|
|
|
0.1
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
7.7
|
%
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
0.5
|
%
|
|
|
0.7
|
%
|
|
Debt extinguishment expense
|
|
|
0.0
|
%
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
Earnings before income
|
|
|
|
|
|
tax expense
|
|
|
7.2
|
%
|
|
|
6.2
|
%
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
2.7
|
%
|
|
|
2.1
|
%
|
|
|
|
|
|
|
|
Net earnings
|
|
|
4.5
|
%
|
|
|
4.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
GameStop Corp.
|
|
Balance Sheets
|
|
(in thousands, except per share data)
|
|
|
|
|
|
Jan. 31,
|
|
Feb. 2,
|
|
|
|
2009
|
|
|
2008
|
|
ASSETS:
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
578,141
|
|
|
$
|
857,414
|
|
Receivables, net
|
|
|
65,981
|
|
|
|
56,019
|
|
Merchandise inventories
|
|
|
1,075,792
|
|
|
|
801,025
|
|
Prepaid expenses and other current assets
|
|
|
74,512
|
|
|
|
52,778
|
|
Deferred taxes
|
|
|
23,615
|
|
|
|
27,481
|
|
Total current assets
|
|
|
1,818,041
|
|
|
|
1,794,717
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
Land
|
|
|
10,397
|
|
|
|
11,870
|
|
Buildings & leasehold improvements
|
|
|
454,651
|
|
|
|
378,611
|
|
Fixtures and equipment
|
|
|
619,845
|
|
|
|
538,738
|
|
|
|
|
1,084,893
|
|
|
|
929,219
|
|
Less accumulated depreciation and amortization
|
|
|
535,639
|
|
|
|
417,550
|
|
Net property and equipment
|
|
|
549,254
|
|
|
|
511,669
|
|
|
|
|
|
|
|
Goodwill, net
|
|
|
1,862,107
|
|
|
|
1,402,440
|
|
Other noncurrent assets
|
|
|
283,188
|
|
|
|
67,065
|
|
Total assets
|
|
$
|
4,512,590
|
|
|
$
|
3,775,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,047,963
|
|
|
$
|
844,376
|
|
Accrued liabilities
|
|
|
514,748
|
|
|
|
416,181
|
|
Total current liabilities
|
|
|
1,562,711
|
|
|
|
1,260,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
104,486
|
|
|
|
78,415
|
|
Senior fixed notes payable, net of discount
|
|
|
545,712
|
|
|
|
574,473
|
|
Total liabilities
|
|
|
2,212,909
|
|
|
|
1,913,445
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Preferred stock - authorized 5,000 shares; no shares
|
|
|
|
|
|
issued or outstanding
|
|
|
--
|
|
|
|
--
|
|
Class A common stock - $.001 par value; authorized 300,000 shares;
|
|
|
|
|
|
163,843 and 161,007 shares issued and outstanding, respectively
|
|
|
164
|
|
|
|
161
|
|
Additional paid-in-capital
|
|
|
1,307,453
|
|
|
|
1,208,474
|
|
Accumulated other comprehensive income (loss)
|
|
|
(28,426
|
)
|
|
|
31,603
|
|
Retained earnings
|
|
|
1,020,490
|
|
|
|
622,208
|
|
Total stockholders' equity
|
|
|
2,299,681
|
|
|
|
1,862,446
|
|
Total liabilities and stockholders' equity
|
|
$
|
4,512,590
|
|
|
$
|
3,775,891
|
|
|
|
|
|
|
|
|
|
|
Schedule I
|
|
GameStop Corp.
|
|
Sales Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
13 Weeks Ended
|
|
|
|
Jan. 31, 2009
|
|
Feb. 2, 2008
|
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
|
Sales
|
|
of Total
|
|
Sales
|
|
of Total
|
|
Sales (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
813.1
|
|
23.3
|
%
|
|
$
|
719.8
|
|
25.1
|
%
|
|
New video game software
|
|
|
1,483.9
|
|
42.5
|
%
|
|
|
1,209.0
|
|
42.2
|
%
|
|
Used video game products
|
|
|
714.2
|
|
20.5
|
%
|
|
|
546.7
|
|
19.1
|
%
|
|
Other
|
|
|
480.9
|
|
13.7
|
%
|
|
|
390.1
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,492.1
|
|
100.0
|
%
|
|
$
|
2,865.6
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
|
|
Jan. 31, 2009
|
|
Feb. 2, 2008
|
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
|
Sales
|
|
of Total
|
|
Sales
|
|
of Total
|
|
Sales (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
1,860.2
|
|
21.1
|
%
|
|
$
|
1,668.9
|
|
23.5
|
%
|
|
New video game software
|
|
|
3,685.0
|
|
41.9
|
%
|
|
|
2,800.7
|
|
39.5
|
%
|
|
Used video game products
|
|
|
2,026.6
|
|
23.0
|
%
|
|
|
1,586.7
|
|
22.4
|
%
|
|
Other
|
|
|
1,234.1
|
|
14.0
|
%
|
|
|
1,037.7
|
|
14.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,805.9
|
|
100.0
|
%
|
|
$
|
7,094.0
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule II
|
|
GameStop Corp.
|
|
Gross Profit Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
13 Weeks Ended
|
|
|
|
Jan. 31, 2009
|
|
Feb. 2, 2008
|
|
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
|
Gross
|
|
Profit
|
|
Gross
|
|
Profit
|
|
|
|
Profit
|
|
Percent
|
|
Profit
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
44.2
|
|
5.4
|
%
|
|
$
|
37.6
|
|
5.2
|
%
|
|
New video game software
|
|
|
308.0
|
|
20.8
|
%
|
|
|
257.6
|
|
21.3
|
%
|
|
Used video game products
|
|
|
331.5
|
|
46.4
|
%
|
|
|
262.2
|
|
48.0
|
%
|
|
Other
|
|
|
155.5
|
|
32.3
|
%
|
|
|
126.7
|
|
32.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
839.2
|
|
24.0
|
%
|
|
$
|
684.1
|
|
23.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
|
|
Jan. 31, 2009
|
|
Feb. 2, 2008
|
|
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
|
Gross
|
|
Profit
|
|
Gross
|
|
Profit
|
|
|
|
Profit
|
|
Percent
|
|
Profit
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
112.6
|
|
6.1
|
%
|
|
$
|
108.2
|
|
6.5
|
%
|
|
New video game software
|
|
|
768.4
|
|
20.9
|
%
|
|
|
581.7
|
|
20.8
|
%
|
|
Used video game products
|
|
|
974.5
|
|
48.1
|
%
|
|
|
772.2
|
|
48.7
|
%
|
|
Other
|
|
|
414.6
|
|
33.6
|
%
|
|
|
351.6
|
|
33.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,270.1
|
|
25.8
|
%
|
|
$
|
1,813.7
|
|
25.6
|
%
|
Source: GameStop Corp.
Media Contact:
Chris
Olivera
Vice President,
Corporate Communications
GameStop
Corp.
(817) 424-2130
or
Investor
Contact:
Matt Hodges
Director,
Investor
Relations
GameStop Corp.
(817) 424-2130
|
