Legit Reviews

GRAPEVINE, Texas, Aug 18, 2011 (BUSINESS WIRE) --

GameStop Corp. (NYSE: GME), the world's largest multichannel video game retailer, today reported sales and earnings for the second quarter ended July 30, 2011.

Financial Results

Total sales for the second quarter of 2011 were $1.74 billion, a decrease of 3.1% compared to $1.80 billion in the prior year quarter. Total company comparable store sales were -9.1%, impacted by lower hardware sales and a lighter software title slate than the prior year quarter. While new hardware and software underperformed, pre-owned sales increased 12% and digital sales increased 69%, exceeding quarterly expectations.

The top five selling games during the quarter were L.A. Noire by Rockstar Games, NCAA Football 12 by Electronic Arts, inFAMOUS 2 by Sony, Brink by Bethesda Softworks, and Mortal Kombat by Warner Home Video Games.

Net earnings were $30.9 million compared to $40.3 million in the prior year quarter. As planned, the company continued spending on its strategic initiatives during the quarter. Diluted earnings per share were in-line with guidance at $0.22 compared to $0.26 in the prior year quarter. The strength of the pre-owned business and growth in digital channels led to gross margins of 31.2%, an increase of 250 basis points and the company's highest margin rate in five years.

Paul Raines, chief executive officer, stated, "GameStop's resilient retail model enabled us to achieve our earnings plan despite a challenging period for the industry. Through the back half of the year, we expect industry software sales to accelerate based on an exciting title line-up. Meanwhile, the digital and loyalty programs we have brought to market continue to gain traction with consumers and position us as a leading partner with publishers."

Rob Lloyd, chief financial officer, said, "Continued strength in pre-owned sales, improved gross margins, tight cost controls and capturing a high rate of sales transfers all contributed to our financial results. Additionally, we continue to focus on executing our capital allocation plan to maximize shareholder returns while we invest in our long-term strategic initiatives."

Earnings Guidance

For the third quarter of fiscal 2011, the company expects comparable store sales to range from 2.0% to 4.0%. Diluted earnings per share are expected to range from $0.38 to $0.41.

GameStop is reiterating its full year diluted earnings per share guidance range of $2.82 to $2.92, representing a 6.4% to 10.2% increase over fiscal 2010. Full year comparable store sales are now expected to range from 1.0% to 3.0% based on revised annual revenue growth of 4.5% to 6.5%.

Share Repurchase Update

During the second quarter, GameStop repurchased 1.36 million shares at an average price of $25.38, or $34.6 million worth of stock. At the end of the quarter, the company had approximately $348 million remaining of its current share and debt repurchase authorization.

Conference Call and Webcast Information

A conference call with GameStop Corp.'s management is scheduled for Aug. 18, 2011 at 10:00 a.m. CDT to discuss the second quarter sales and earnings results. The conference call will be simulcast online at http://investor.GameStop.com/. The conference call will be archived on the website until Sept. 18, 2011.

GameStop is scheduled to present at the Goldman Sachs 18th Annual Global Retailing Conference on Thursday, Sept. 8 at the Marriott Marquis Hotel in New York City.

About GameStop

GameStop Corp. (NYSE: GME), a Fortune 500 and S&P 500 company headquartered in Grapevine, Texas, is the world's largest multichannel video game retailer. GameStop's retail network and family of brands include 6,582 company-operated stores in 17 countries worldwide and online at www.GameStop.com. The network also includes: www.Kongregate.com, a leading browser-based game site; Game Informer(R) magazine, the leading multi-platform video game publication; Spawn Labs, a streaming technology company; and Impulse, Inc., a digital distribution platform available at www.GameStop.com/impulse.