GameStop Corp. Comparable Sales Up 30.3%; Third Quarter 2002 EPS Exceeds Estimates; 63 New Stores Opened in Third Quarter; Reiterate Guidance for Strong Fourth Quarter
GRAPEVINE, Texas--(BUSINESS WIRE)--Nov. 18, 2002--GameStop Corp. (NYSE:GME), the nation's largest video game and entertainment software specialty retailer, today reported sales and earnings for the third quarter ended November 2, 2002.
GameStop sales increased 44.3% to $286.7 million in the third quarter of 2002, compared with $198.8 million in the prior year quarter. Sales growth resulted from a 30.3% increase in comparable store sales, as well as the sales from 163 new stores added during the first three quarters of the fiscal year. The increase in comparable store sales was due to solid performance throughout the video game category, including continued strength in existing Sony PlayStation 2, Microsoft Xbox, and Nintendo GameCube systems. Significant titles released during the quarter included Madden NFL 2003 and Kingdom Hearts from Electronic Arts, Super Mario Sunshine from Nintendo, Tekken 4 from Namco, and Grand Theft Auto: Vice City from Take Two Interactive.
Net earnings for the third quarter totaled $9.8 million, or $0.16 per share, as compared to analyst consensus estimates of $0.14 per share. In the prior year quarter, the company earned $0.3 million, or $0.01 per share.
For the third quarter, EBITDA increased 64% to $21.8 million from $13.3 million in the prior year quarter.
R. Richard Fontaine, Chairman & Chief Executive Officer, commented, "We are pleased with our third quarter results, and continue to be very positive about the growth and earnings prospects of our business model. During the quarter, both our mall and strip strategies performed very well, and our new store performance continued to exceed expectations. In addition, I am particularly pleased with the accelerated level of our expense leveraging, and the significant growth of our operating earnings."
As the outlook for the fourth quarter remains positive, 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 November 18, 2002, and will be accessible at (http://www.gamestop.com/investor-relations), where it will be archived until December 2, 2002.
About GameStop Corp.
Headquartered in Grapevine, Texas, GameStop Corp. (NYSE:GME), is the nation's largest video game and entertainment software specialty retailer. The company operates 1,186 retail stores throughout 49 states 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
November 2, November 3,
2002 2001
----------- -----------
Sales $286,728 $198,766
Cost of sales 212,883 144,188
----------- ----------
Gross profit 73,845 54,578
Selling, general and administrative
expenses 52,001 41,296
Depreciation and amortization 5,862 4,892
Amortization of goodwill -- 2,781
----------- ----------
Operating earnings 15,982 5,609
Interest expense (income), net (380) 4,649
----------- ----------
Earnings before income
tax expense 16,362 960
Income tax expense 6,577 707
----------- ----------
Net earnings $9,785 $253
============ ===========
Earnings per common share:
Basic $0.17 $0.01
Diluted $0.16 $0.01
Weighted average common shares
outstanding:
Basic 56,931,000 36,009,000
Diluted 61,111,000 41,114,000
Percentage of sales:
--------------------------------------------
Sales 100.0% 100.0%
Cost of sales 74.2% 72.5%
----------- ----------
Gross profit 25.8% 27.5%
SG&A expenses 18.2% 20.8%
Depreciation and amortization 2.0% 2.5%
Amortization of goodwill 0.0% 1.4%
----------- ----------
Operating earnings 5.6% 2.8%
Interest expense (income), net -0.1% 2.3%
----------- ----------
Earnings before income
tax expense 5.7% 0.5%
Income tax expense 2.3% 0.4%
----------- ----------
Net earnings 3.4% 0.1%
============= ==========
GameStop Corp.
Statements of Operations
(in thousands of dollars, except per share data)
39 weeks 39 weeks
ended ended
November 2, November 3,
2002 2001
----------- ----------
Sales $832,395 $606,927
Cost of sales 616,014 450,630
----------- ----------
Gross profit 216,381 156,297
Selling, general and administrative
expenses 165,217 135,987
Depreciation and amortization 16,605 14,023
Amortization of goodwill -- 8,343
----------- ----------
Operating earnings (loss) 34,559 (2,056)
Interest expense (income), net (255) 15,450
----------- ----------
Earnings (loss) before income
tax expense (benefit) 34,814 (17,506)
Income tax expense (benefit) 13,997 (5,680)
----------- ----------
Net earnings (loss) $20,817 $(11,826)
============ ==========
Earnings (loss) per common share:
Basic $0.37 $(0.33)
Diluted $0.34 $(0.33)
Weighted average common shares
outstanding:
Basic 56,039,000 36,009,000
Diluted 60,372,000 36,009,000
Percentage of sales:
--------------------------------------------
Sales 100.0% 100.0%
Cost of sales 74.0% 74.2%
----------- ----------
Gross profit 26.0% 25.8%
SG&A expenses 19.9% 22.4%
Depreciation and amortization 2.0% 2.3%
Amortization of goodwill 0.0% 1.4%
----------- ----------
Operating earnings (loss) 4.1% -0.3%
Interest expense (income), net -0.1% 2.6%
----------- ----------
Earnings (loss) before income
tax expense (benefit) 4.2% -2.9%
Income tax expense (benefit) 1.7% -0.9%
----------- ----------
Net earnings (loss) 2.5% -2.0%
============= ==========
GameStop Corp.
Balance Sheets
(in thousands of dollars, except per share data)
November 2, November 3,
2002 2001
----------- ----------
ASSETS:
Current assets:
Cash and cash equivalents $125,121 $7,982
Receivables, net 7,461 5,263
Merchandise inventories 268,393 211,822
Prepaid expenses and other current assets 8,976 8,035
Deferred taxes 3,418 4,825
----------- ----------
Total current assets 413,369 237,927
----------- ----------
Property and equipment:
Leasehold improvements 36,413 25,640
Fixtures and equipment 77,590 54,956
----------- ----------
114,003 80,596
Less accumulated depreciation and
amortization 49,854 28,756
----------- ----------
Net property and equipment 64,149 51,840
----------- ----------
Goodwill, net 317,957 311,075
Other noncurrent assets 1,148 551
----------- ----------
Total assets $796,623 $601,393
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT):
Current liabilities:
Accounts payable $209,491 $144,354
Accrued liabilities 66,388 43,179
----------- ----------
Total current liabilities 275,879 187,533
Payable to Barnes & Noble, Inc. - 440,743
Deferred taxes 3,065 3,098
Other long-term liabilities 2,777 2,455
----------- ----------
Total liabilities 281,721 633,829
----------- ----------
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; 20,971 shares
issued and outstanding 21 --
Class B common stock - $.001 par value;
authorized 100,000 shares; 36,009 shares
issued and outstanding 36 36
Additional paid-in-capital 491,812 (15,902)
Retained earnings (deficit) 23,033 (16,570)
------------- ------------
Total stockholders' equity (deficit) 514,902 (32,436)
------------- ------------
Total liabilities and stockholders'
equity (deficit) $796,623 $601,393
============= ============
GameStop Corp.
Retail Sales Mix
13 weeks 13 weeks
ended ended
November 2, November 3,
2002 2001
----------- ----------
Video Game Hardware 15% 18%
Video Game Software 61% 53%
Video Game Accessories 12% 11%
PC Software 7% 12%
PC Accessories and Other 5% 6%
| CONTACT: | GameStop Corp., Grapevine |
|---|---|
| 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 | |