GameStop holiday sales top $1.3 billion

Though the normal consensus on holiday wish lists is for a white Christmas, the only color retailers want to see is green. With the gaming industry idling between generations of consoles and trying to follow up a record-setting 2004 holiday season, prospects for 2005 weren't so jolly.

However, GameStop did more than just survive the frosty season; the specialty retailer actually performed better than it had anticipated. For the holiday period, the nine weeks ending December 31, 2005, GameStop hauled in almost $1.35 billion. The take represents a 133 percent increase over the same period in 2004, when GameStop (sans Electronic Boutique's near 2,000 stores) sold just under $578 million.

December's comparable store sales rose 8.7 percent, following a disappointing November that lacked the blockbusters of 2004 such as Halo 2 and Grand Theft Auto: San Andreas.

R. Richard Fontaine, GameStop chairman and CEO, gave his explanations for the upswing. "This year's holiday performance was particularly notable as GameStop did a great job of working our business model and generating strong contributions from all categories of the business. While new video game sales were slow in November, they rebounded in December, and we experienced near double-digit growth, but did so on a broad range of titles. Hardware sales were also strong and our used product attracted the value shopper while making a significant contribution to total gross margin increases for the period."

It wasn't all good news for GameStop. Questionable supplies of Xbox 360s made the company downgrade its same-store sales outlook for the quarter. Where the company had expected up to a 2 percent increase in same-store sales, it has revised that to a decrease of as much as .5 percent. Despite that, Fontaine thinks the long-term future looks good, largely because of the acquisition of EB.

"In addition, our merger with Electronics Boutique, completed in October, has already begun to pay off," Fontaine said. "Many 'best practices' were instituted in the quarter, which had significant margin implications and cost savings over the holiday period. And the better news is that we fully expect these synergies to increase as we move through 2006."

As of press time, GameStop's stock is up $3.80 to $37.35 per share (an 11 percent jump) on the news that the company is adjusting its guidance for Q4 and the full year.