GameStop's Q1 again bests records
Specialty retailer rides off-peak releases to 151 percent profit growth to $62.1 million on revenues up 41.8 percent to $1.8 billion.
The gaming industry may not be completely sold on year-round high-profile releases yet, but GameStop certainly seems to be enjoying the extra business. Following a banner 2007 year in which the gaming-focused retailer posted its largest gains yet--$288.3 million profit on $7.1 billion in revenue--GameStop said today that it has once again bested its previous year's performance for its first fiscal quarter ended May 3.
Unsurprisingly, GameStop's results have been buoyed in no small part by the unseasonal influx of high-profile releases. Revenues for the world's largest specialty retailer of games spiked 41.8 percent for the period, rising to $1.8 billion from $1.3 billion in 2007. More importantly for GameStop brass, the retailer's net earnings rocketed 151 percent to $62.1 million for the quarter.
Similarly unsurprising were the top titles for the three-month period, as reported by GameStop. With Take-Two reporting first-week sales of Grand Theft Auto IV hitting $500 million, GameStop said that Rockstar's latest scored top billing on its sales charts. No easy feat, considering that Rockstar's latest was only on store shelves for five days before the end of GameStop's reporting period. The remainder of the top five in descending order were Nintendo's Super Smash Bros. Brawl and Mario Kart Wii, Ubisoft's Tom Clancy's Rainbow Six Vegas 2, and Electronic Arts' Army of Two.
"We are very bullish on the future as three major metrics are transforming the business and accelerating the potential for GameStop growth," said GameStop chairman and CEO R. Richard Fontaine. "The installed base of video game consoles grew 34 percent in 2007, or nearly 31 million units, the highest incremental growth in the history of the business, and we are forecasting that hardware unit sell-thru will match these levels in 2008. And behind the huge hardware growth is the fact that the demographic for video gaming is expanding dramatically as industry figures indicate that 38 percent of game players are female."
Of equal importance to console adoption rates and an expanding audience are publishers' upcoming lineups, and the rest of the year is looking quite good in Fontaine's eyes. "We have an outstanding lineup of new games coming during the rest of the year, including Nintendo's Wii Fit, Konami's Metal Gear Solid 4, Microsoft's Gears of War 2, and Activision's Guitar Hero IV," he said. To further feed growth, GameStop said it had opened a record 210 stores in its first quarter and was on track to cut the ribbon on 550 to 600 new stores in 2008.
GameStop also said today that it was revising its guidance for its second quarter and full year. GameStop is narrowing its second-quarter guidance to 12 to 14 percent sales growth. Thanks to its strong first-quarter start, the retailer also said it would be raising its earnings per share guidance for the full year to $2.30 to $2.39, a 28 to 33 percent uptick.
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