GameStop Corp. Comparable Sales Up 22.9%; Second Quarter 2002 EPS Exceeds Estimates
100 New Stores Opened in First Half 2002; Guidance for Strong Second Half
GameStop Corp. (NYSE:GME), the nation's largest video game and
entertainment software specialty retailer, today reported sales and
earnings for the second quarter ended August 3, 2002.
GameStop sales increased 32.6% to $274.3 million in the second
quarter of 2002, compared with $206.8 million in the prior year
quarter. Sales growth resulted from a 22.9% increase in comparable
store sales, as well as the sales from 100 new stores added during the
first half of the fiscal year. The increase in comparable store sales
was due to solid performance throughout the video game category, and
was on top of a 33.1% comparable store sales increase in the prior
year quarter. The continued strength in existing Sony PlayStation 2,
Microsoft Xbox, and Nintendo GameCube systems, each of which realized
a significant price reduction, resulted in higher than anticipated
sales volume in the quarter.
Net earnings for the second quarter totaled $6.1 million, or $0.10
per share, as compared to analyst consensus estimates of $0.07 per
share. In the prior year quarter, the company experienced a net loss
of $4.8 million, or ($0.13) per share.
For the second quarter, EBITDA nearly tripled to $15.5 million
from $5.2 million in the prior year quarter.
R. Richard Fontaine, Chairman & Chief Executive Officer,
commented, "We are pleased with our exceptional second quarter
results; in particular with the strong diversity of sales over so many
gaming platforms. Hardware sales were extraordinarily strong, with
increases in both units and dollars; yet, the strength of our new and
used software and accessories resulted in improved gross margins for
the quarter."
As the outlook for the second half remains very strong, we are
raising our third quarter EPS guidance to between $0.13 and $0.14 per
share, with a comparable store sales increase of 25%. In addition, we
are reiterating our fourth quarter EPS guidance of $0.62 to $0.68 per
share, with a comparable store sales increase of 8% to 12%.
A conference call with GameStop Corp.'s management will be
simulcast on the Web at (http://www.gamestop.com) beginning at 5:00 PM
ET on August 19, 2002, and will be accessible at
(http://www.gamestop.com/investor-relations), where it will be
archived until September 2, 2002.
About GameStop Corp.
Headquartered in Grapevine, TX, GameStop Corp. (NYSE:GME), is the
nation's largest video game and entertainment software specialty
retailer. The company operates 1,128 retail stores throughout 49
states, the District of Columbia and Puerto Rico, under the
GameStop(R), Babbage's(R), Software Etc.(TM) and FuncoLand(R) brands.
In addition, the company owns a commerce-enabled Web property,
GameStop.com, and Game Informer magazine, a leading video and computer
game publication.
GameStop Corp. sells the most popular new software, hardware and
game accessories for the PC and next generation video game systems
from Sony, Nintendo, and Microsoft, and is also the industry's largest
reseller of used video games. In addition, the company sells computer
and video game magazines and strategy guides, action figures, and
other related merchandise to more than 30 million customers.
Barnes and Noble, Inc. (NYSE:BKS), the world's largest
bookseller, has approximately a 60 percent interest in GameStop.
General information on GameStop Corp. can be obtained via the Internet
by visiting the company's corporate Website:
http://www.gamestop.com/investor-relations.
SAFE HARBOR
This press release (including any attached schedules) contains
"forward-looking statements." GameStop Corp. is including this
statement for the express purpose of availing itself of the
protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. These forward-looking statements are based on currently
available information and represent the beliefs of the management of
the company. These statements are subject to risks and uncertainties
that could cause actual results to differ materially. These risks
include, but are not limited to, general economic and market
conditions, decreased consumer demand for the company's products,
possible disruptions in the company's computer or telephone systems,
possible work stoppages or increases in labor costs, possible
increases in shipping rates or interruptions in shipping service,
effects of competition, possible disruptions or delays in the opening
of new stores or the inability to obtain suitable sites for new
stores, higher than anticipated store closing or relocation costs,
higher interest rates, the performance of the company's online and
other initiatives, the successful integration of acquired businesses,
unanticipated increases in merchandise or occupancy costs,
unanticipated adverse litigation results or effects, product
shortages, and other factors which may be outside of the company's
control. Please refer to the company's reports on file with the SEC
for a more detailed discussion of these and other risks that could
cause results to differ materially.
GameStop Corp.
Statements of Operations
(in thousands of dollars, except per share data)
13 weeks 13 weeks
ended ended
August 3, 2002 August 4, 2001
---------------- ---------------- Sales $ 274,262 $ 206,806 Cost of sales 200,817 153,095
---------------- ----------------
Gross profit 73,445 53,711
Selling, general and
administrative expenses 57,959 48,501 Depreciation and amortization 5,623 4,672 Amortization of goodwill - 2,781
---------------- ----------------
Operating earnings (loss) 9,863 (2,243) Interest expense (income), net (368) 4,998
---------------- ---------------- Earnings (loss) before income
tax expense (benefit) 10,231 (7,241) Income tax expense (benefit) 4,113 (2,392)
---------------- ----------------
Net earnings (loss) $ 6,118 $ (4,849)
================ ================
Earnings (loss) per
common share:
Basic $ 0.11 $ (0.13)
Diluted $ 0.10 $ (0.13)
Weighted average common
shares outstanding:
Basic 56,842,558 36,009,000
Diluted 61,301,493 36,009,000
Percentage of sales:Sales 100.0% 100.0% Cost of sales 73.2% 74.0%
---------- ----------
Gross profit 26.8% 26.0%SG&A expenses 21.1% 23.5% Depreciation and amortization 2.1% 2.3% Amortization of goodwill 0.0% 1.3%
---------- ----------
Operating earnings (loss) 3.6% -1.1%
Interest expense (income), net -0.1% 2.4%
---------- ----------
Earnings (loss) before income
tax expense (benefit) 3.7% -3.5%
Income tax expense (benefit) 1.5% -1.2%
---------- ----------
Net earnings (loss) 2.2% -2.3%
========== ==========
GameStop Corp.
Statements of Operations
(in thousands of dollars, except per share data)
26 weeks 26 weeks
ended ended
August 3, 2002 August 4, 2001
---------------- ----------------
Sales $ 545,667 $ 408,161 Cost of sales 403,131 306,442
---------------- ---------------- Gross profit 142,536 101,719Selling, general and
administrative expenses 113,216 94,691 Depreciation and amortization 10,743 9,131 Amortization of goodwill - 5,562
---------------- ---------------- Operating earnings (loss) 18,577 (7,665)
Interest expense, net 125 10,801
---------------- ---------------- Earnings (loss) before income
tax expense (benefit) 18,452 (18,466)
Income tax expense (benefit) 7,420 (6,387)
---------------- ----------------
Net earnings (loss) $ 11,032 $ (12,079)
================ ================
Earnings (loss) per
common share:
Basic $ 0.20 $ (0.34)
Diluted $ 0.18 $ (0.34)
Weighted average common
shares outstanding:
Basic 55,592,817 36,009,000
Diluted 60,002,084 36,009,000
Percentage of sales:Sales 100.0% 100.0% Cost of sales 73.9% 75.1%
---------- ----------
Gross profit 26.1% 24.9%SG&A expenses 20.7% 23.2% Depreciation and amortization 2.0% 2.2% Amortization of goodwill 0.0% 1.4%
---------- ----------
Operating earnings (loss) 3.4% -1.9%
Interest expense, net 0.0% 2.6%
---------- ----------
Earnings (loss) before income
tax expense (benefit) 3.4% -4.5%
Income tax expense (benefit) 1.4% -1.5%
---------- ----------
Net earnings (loss) 2.0% -3.0%
========== ==========
GameStop Corp.
Balance Sheets
(in thousands of dollars, except per share data)
August 3, 2002 August 4, 2001
---------------- ----------------
ASSETS: Current assets:
Cash and cash equivalents $ 152,623 $ 7,261
Receivables, net 4,762 3,865
Merchandise inventories 132,786 122,922
Prepaid expenses and other
current assets 8,549 6,615
Deferred taxes 3,418 5,568
---------------- ----------------
Total current assets 302,138 146,231
---------------- ---------------- Property and equipment:
Leasehold improvements 32,837 23,453
Fixtures and equipment 69,742 48,796
---------------- ----------------
102,579 72,249
Less accumulated
depreciation and
amortization 44,293 23,859
---------------- ----------------
Net property and
equipment 58,286 48,390
---------------- ---------------- Goodwill, net 317,957 313,855 Other noncurrent assets 1,196 548
---------------- ----------------
Total assets $ 679,577 $ 509,024
================ ================
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT): Current liabilities:
Accounts payable $ 114,115 $ 105,865
Accrued liabilities 55,062 38,349
---------------- ----------------
Total current
liabilities 169,177 144,214
Payable to Barnes & Noble, Inc. - 391,048 Deferred taxes 3,065 4,116 Other long-term liabilities 2,697 2,335
---------------- ----------------
Total liabilities 174,939 541,713
---------------- ----------------
Stockholders' equity (deficit): Preferred stock - authorized
5,000 shares; no shares
issued or outstanding - - Class A common stock - $.001 par
value; authorized
300,000 shares; 20,835 shares
issued and outstanding 21 - Class B common stock - $.001 par
value; authorized 100,000 shares; 36,009 shares issued and outstanding 36 36Additional paid-in-capital 491,333 (15,902) Retained earnings (deficit) 13,248 (16,823)
---------- ----------
Total stockholders'
equity (deficit) 504,638 (32,689)
---------- ----------
Total liabilities and
stockholders' equity
(deficit) $679,577 $509,024
========== ==========
GameStop Corp.
Retail Sales Mix
13 weeks 13 weeks
ended ended
August 3, 2002 August 4, 2001
---------------- ----------------
Video Game Hardware 22% 21% Video Game Software 52% 50% Video Game Accessories
12% 11% PC Software 9% 12% PC Accessories and Other 5% 6%
*T
CONTACT: GameStop Corp.
Media Contact:
Lori M. Milovich, 817/424-2130
Director, Public & Investor Relations
or
Investor Contact:
David W. Carlson, 817/424-2130
Executive Vice President & Chief Financial Officer
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