GameStop beats 1Q EPS guidance

GRAPEVINE, Texas GameStop reported that net earnings for the first quarter increased 13.4% to $70.4 million, including debt retirement costs of $2.9 million ($1.8 million, net of tax benefits), as compared to net earnings of $62.1 million in the prior year period. Diluted earnings per share were 42 cents, including debt retirement costs of 1 cent per diluted share, and exceeded the high-end of guidance, an increase of 13.5% compared to 37 cents in the prior year quarter.

Total sales for the first quarter increased 9.2% to $1.98 billion, as compared to $1.81 billion in the prior year period. Sales were led by a very successful launch of the Nintendo DSi handheld system and strong releases of Capcom’s Resident Evil 5 and Street Fighter IV; however, sell through of these titles could not compare to the tremendous success of Grand Theft Auto IV from Take Two Interactive and Nintendo’s Super Smash Bros. Brawl in the prior year.

First quarter comparable-store sales were lower than expected, declining slightly by 1.5%, due primarily to sharper recessionary effects in Europe and a slowdown of new console sales that occurred late in the quarter.

“During the quarter GameStop sustained its strong earnings growth momentum and exceeded earnings guidance despite less than planned comparable store sales,” indicated Daniel DeMatteo, CEO of GameStop. “Although new video game software sales declined by 2.8%, lower-priced used products grew a robust 31.9%, illustrating that value is becoming more important to our customers.