GameStop, which has been the subject of takeover rumours in recent months, reported its first-quarter earnings this morning.
Here’s a breakdown:
- Net income rose to $75.17 million up from $70.43 million from the same quarter last year.
- EPS grew 14% to $0.48.
- Sales were up 5.1% to $2.08 billion compared to $1.98 billion the prior year.
- Earnings beat analyst consensus of $2.03 billion in revenue for Q1.
- Company reaffirms Q210 outlook, expects EPS to range from $0.25 to $0.27, a 9% to 17% increase over last year’s quarter.
- Same store sales range from flat to up 2%.
- New software sales increase 13%;
Overall, the company continues to perform well as gamers will continue flock to stores for big ticket items this year like the Xbox 360 Slim and games like Halo: Reach. Below, the release in full:
GRAPEVINE, Texas, May 20, 2010 (BUSINESS WIRE) –GameStop Corp. (NYSE: GME), the world’s largest video game and entertainment software retailer, today reported sales and earnings for the first quarter ended May 1, 2010.
Total sales for the first quarter increased 5.1% to $2.08 billion, in comparison to $1.98 billion in the prior year quarter. Comparable store sales decreased 1.6%, due to a decline in hardware price points and hardware supply constraints. However, new video game software sales increased 13.3%, driven by a very strong slate of new games with Battlefield Bad Company 2 from Electronic Arts, Sony’s God of War III, Final Fantasy XIII by Square Enix, Pokèmon SoulSilver and HeartGold from Nintendo, and Take 2’s Bioshock 2 making up the top sellers.
Net earnings for the first quarter increased 6.8% to $75.2 million, as compared to net earnings of $70.4 million, including debt retirement costs of $2.9 million ($1.8 million, net of tax benefits) in the prior year quarter. Diluted earnings per share increased 14.3% to $0.48, as compared to $0.42 in the prior year quarter, including debt retirement costs of $0.01 per diluted share. Over the past four years, first quarter earnings have grown at a compounded annual growth rate of 62%.
Daniel DeMatteo, GameStop’s Chief Executive Officer, stated, “I am pleased that our earnings have achieved the high end of guidance and total company sales have exceeded $2 billion for the first time in a non-holiday quarter. By maintaining a sharp focus on our customer needs and overall business execution, our strong brick and mortar business continues to provide the capital needed to invest in new stores as well as execute our strategic plan to incorporate digital gaming into our global operations.
“The in-store Legends of Zork test proved highly successful in economically acquiring and converting our customers to browser game players. Additionally, at the end of this month, GameStop will be marketing and selling downloadable content in a group of test stores. Of equal importance, our new customer loyalty program will launch in select markets. Altogether, we continue to deliver a superior shopping experience and are introducing our customers to the digital options for gaming.”
Paul Raines, Chief Operating Officer, said, “Our store associates did an outstanding job of executing our ‘Go Big’ marketing campaigns to promote hot new titles. Their effectiveness can be measured by the significant day one, week one and overall market share GameStop captured of this quarter’s new releases. Our unique buy-sell-trade model continues to provide a strong value proposition for new game buyers.”
For the second quarter of fiscal 2010, the company expects comparable store sales to range from -2.0% to +2.0%. Diluted earnings per share are expected to range from $0.25 to $0.27, a 9% to 17% increase over the prior year quarter.
Based on our current industry analysis and expected strength of several upcoming new video game software releases, the company is projecting third quarter fiscal 2010 diluted earnings per share to range from $0.38 to $0.41, a 19% to 28% increase over the prior year quarter.
GameStop is reiterating its full year diluted earnings per share guidance range of $2.58 to $2.68, representing a 14% to 18% increase over fiscal 2009. Full year comparable store sales are still expected to range from flat to +2.0%.
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