Game sales lift GameStop 3Q profit 12 percent

AP News
|
Posted: Nov 19, 2009 11:26 AM

GameStop Corp., the world's largest video game retailer, said Thursday that sales of new hot-selling games helped boost its third-quarter profit nearly 12 percent and offset a sales decline for video game hardware.

The profit narrowly beat Wall Street expectations, and shares edged up in morning trading as the broader markets sold off.

Net earnings for the quarter ended Oct. 13 were $52.2 million, or 31 cents per share, up from a profit of $46.7 million, or 28 cents per share, in the same quarter a year ago.

Excluding debt retirement costs that amounted to a penny per share, GameStop's operating profit of 32 cents per share beat the consensus estimate of analysts surveyed by Thomson Reuters, who forecast 30 cents per share, on average.

The latest quarter's profit was also near the upper end of a range of 27 to 33 cents per share that the company had forecast on Nov. 10.

Sales rose 8.2 percent to $1.83 billion _ beating analysts' estimate of $1.73 billion _ from $1.7 billion a year ago.

Sales of new software rose 9.4 percent, while used product sales jumped 19 percent. Those gains helped offset a decline in sales of new video game hardware. Sales at stores open at least a year _ considered a key measure of a retailer's financial health _ fell 7.8 percent. That's in line with forecast the company offered last week, for a decline of 6 to 11 percent.

Shares rose 12 cents to $24.21 in morning trading.

The Grapevine, Texas-based chain, which owns 6,391 stores in 17 countries, has recently suffered from a dearth of hit games and cautious spending by consumers. But it said Thursday that new games in the latest quarter "were well-received by consumers and met or exceeded our initial sales expectations."

Those games include Electronic Arts' "Madden NFL 10," Microsoft's "Halo 3: ODST," Warner Home Video Games' "Batman: Arkham Asylum," 2K Sports' "NBA 2K10" and Nintendo's "Wii Sports Resort."

GameStop CEO Daniel DeMatteo said Activision's "Call of Duty: Modern Warfare 2" sold more than 2.5 million copies worldwide in its first 72 hours of release.

"We are optimistic that the huge success of this game will serve as a bellwether for what we can expect for the remainder of our holiday game sales," DeMatteo said.

For the fourth quarter, GameStop reaffirmed expectations for a profit of $1.47 to $1.65 per share, in line with analysts' consensus forecast of $1.57.