The locally-based retailer which operates 4,592 stores throughout the United States, Canada, Europe, New Zealand and Puerto Rico, opened 81 stores in the third quarter, adding 40 outlets to its US holdings and 41 internationally. The company closed 40 stores worldwide during the quarter ended Oct. 28, eliminating 19 in the US and 20 internationally, mainly in Spain, GameStop's chairman and CEO R. Richard Fontaine said in a conference call with analysts.
The video game retailing giant said strong sales at established stores and increased sales of video game consoles helped the company achieve a net income of $13.6 million, or 17 cents per share, in a turnaround from last year's third quarter loss of $2.5 million, or 4 cents per share.
Last years results reflected costs associated with the acquisition of Electronics Boutique Holding Corp. and debt retirement, the company said. Excluding those 5 cents per share earning charges, the results were on par with analysts earnings expectations of 22 cents per share.
A 14% increase in new gaming software sales propelled quarterly revenue up 89% to $1.01 billion during the three month period, an increase over the $534.2 million earned in last year's third quarter. Hardware sales were also up 69% due to strong sales of Sony's PlayStation 2, Microsoft's Xbox 360 and Nintendo's DS Lite, the company said.
"Our 69% increase in hardware sales highlights the momentum of the business and furthermore positions GameStop to be the most significant launch partner for all the new hardware systems," says Fontaine.Dan DeMatteo, vice chairman and chief operating officer, says the Sony PS3 and Nintendo Wii launches were sellouts for the mall-based retailer, which has already re-supplied both systems in time for the holiday shopping season.
The company says it expects fourth quarter earnings to range from $1.53 to $1.50 per share for a quarterly growth of 40% to 45%. Sales at stores open at least a year are expected to increase between 14% and 18% during that quarter.
DeMatteo said sales for the full 2006 fiscal yar are expected to grow 15% to 17% with comparable store sales increasing between 7% and 9% and earnings for the full year ranging from $1.98 to $2.04.
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