EB Games' holiday sales surge, CEO predicts console price cut

In a conference call earlier today, Electronics Boutique reported a significant jump in holiday sales. The games retailer, which sells PC and console hardware, software, and accessories out of over 1,500 stores worldwide, said that total sales for the nine-week holiday period that ended January 3, 2004, grew 24.4 percent.

EB tallied $544.4 million in sales revenues during that time period, up from $437.6 million for the same period the year previous. Jeffrey Griffiths, president and CEO of the company, added that comparable store sales increased by 2.5 percent for the nine-week period, exceeding the company's forecast and that of Wall Street analysts.

But the sales increase didn’t come easy. Griffiths said it took more extensive and more aggressive advertising campaigns to drive consumers to its stores. But the results for EB were positive, with sales outpacing the industry’s and GameCube and Game Boy Advance sales performing especially strongly, jumping 70 percent over last year’s same period sales.

Griffiths pegged Need For Speed Underground across all platforms as the number one selling title in all its worldwide markets. Other top-sellers were True Crime (all platforms), Final Fantasy X-2 (PS2), Medal of Honor Rising Sun (all platforms), Lord of the Rings: Return of the King (all platforms), Tony Hawk's Underground (all platforms), and Mario Kart: Double-Dash!! on GameCube.

EB CFO James Smith added that "PC games did better than we expected" during the holiday period. He attributed the strong showing to the company's decision to include its PC roster of games in holiday promotions while its competition did not. Still, he did recognize that most analysts have seen PC game sales trending downward recently.

The conference call ended with Griffiths predicting that console prices were due for a price drop in either late calendar Q1 or early Q2 2004, and that overall, the company expected its own first quarter earnings (February through April) to be either flat or only slightly higher.

[UPDATE] Wall Street analyst Michael Pachter of Wedbush Morgan Securities lent credence to many of Griffiths' comments. Giving a nod to Griffiths' prediction of an early year price drop among the console manufacturers, Pachter went one step further, fingering which company will move first. "Griffiths' console price projection sounds like inside information. He would know if [a price] cut [is] planned for now," Pachter told GameSpot. Naming names, Pachter said, "Sony will be first at $149. I still think in February."

Pachter also sided with Griffiths' prediction of modest growth during the first part of the year, predicting that overall industry growth would probably be "decent, mid singles" (i.e., 4 to 6 percent).