GameStop Profit Leaps on Strong Game Sales

Top U.S. video game retailer GameStop reported stronger-than-expected quarterly results amid upbeat sales of games, consoles and hand-held players, helping its shares jump upward.

The Grapevine, Texas-based company's net earnings rose to $129.8 million, or 81 cents a share, for the fiscal fourth quarter ended Feb. 3, up from net income of $85.0 million, or 55 cents a share, in the year-earlier period.

Sales rose to $2.3 billion from $1.7 billion in the same quarter a year earlier, it said.

Analysts, on average, had seen the company posting a profit of 80 cents a share on revenue of $2.1 billion, according to Reuters Estimates.


GameStop shares surged 11.7%, to $31.25, in pre-market trade.

For fiscal 2007, which ends February 2, 2008, the company forecast comparable store sales to rise 14% to 16%, backed by a slate of video game releases.

Diluted earnings per share for the full year are expected to range from $1.37 to $1.40, it said. It also forecast earnings per share to grow at least 25% annually in fiscal 2008 and 2009.

GameStop Chairman and Chief Executive R. Richard Fontaine said in a statement that the annual forecast was based on the company's views that the latest growth cycle will be "deeper, wider, and longer than any previous period of new console introductions."

"No previous cycle has had the diversity of console attributes currently in our stores; no previous cycle has merged other technologies like HDTV, Wi-Fi, and MP3 attributes to make the gaming experience truly the best ever," he said.

For the first quarter of fiscal 2007, the company forecast comparable store sales to rise 12% to 14%, driven in part by the expected launch of Sony's PlayStation 3 in Europe and Australia, as well as continued strong demand for Microsoft Xbox 360 titles.

Diluted earnings per share for the first quarter are expected to range from 15 cents to 16 cents, it said.