Full-year GameStop sales surpass $5 billion

GameStop announced its fourth quarter and year-end results for its fiscal 2006 today, and the specialty retailer posted some big numbers, not only in recapping its past, but also in providing investor guidance for the future.

The biggest number released by GameStop was $5.3 billion, the amount of sales racked up for the full fiscal year 2006 (the 53-week period ended February 3) across its nearly 4,800 stores worldwide. That full-year sales tally is a 72 percent jump over GameStop's $3.1 billion fiscal 2005 (which only consisted of 52 weeks). Of that $5.3 billion, $2.3 billion came in the holiday quarter, a jump of more than 38 percent over the same period the year before. However, part of that increase was due to the company's fiscal fourth quarter of 2006 having an extra week.

The jump in revenues isn't terribly surprising, as 2006 was the company's first full year after its 2005 merger with rival EB Games. However, the specialty retailer wasn't just bringing in more money; it was holding onto more of it as well.

GameStop said its net earnings--that is, profit--for the year were $158.3 million, 57 percent higher than the $100.8 million in net earnings it posted for fiscal year 2005. The fourth quarter alone saw the retailer rake in $129.8 million in net earnings, besting the previous year's $85 million holiday-season take by nearly 53 percent.

Looking ahead, GameStop expects fiscal 2007 to continue the growth trend, with sales up between 19 percent and 21 percent. The company also said it intends to open 500 to 550 stores worldwide in 2007. Analysts were similarly bullish about the company's prospects.

Lazard Capital Markets' Colin Sebastian raised his guidance on the company in a note to investors, saying, "GameStop should benefit from multiple tailwinds, including the ramping installed base of new consoles, increasing handheld product sales (DS and PSP), growing used business, and a more robust software release schedule."

Wedbush Morgan Securities' Michael Pachter also raised his guidance on the retailer, saying it has tremendous opportunity to expand its operation internationally. Specifically, Pachter speculated that Blockbuster's UK Gamestation chain of stores might be a fitting acquisition target for GameStop.

Similarly bullish on the retailer was Pacific Crest Securities' Evan Wilson, who noted that a "looming" PlayStation 2 price cut to $99 could help offset any precipitous decline in sales of Sony's last-gen system, while saying that significantly improved supplies of the Wii expected in April could serve as a catalyst going into the traditionally slow sales months for the industry.