GameStop reports lower earnings

GRAPEVINE, Tex. GameStop reported lower sales and earnings results for the second quarter ended Aug. 1.

GameStop sales were $1.74 billion, a 3.7% decrease compared with sales of $1.8 billion in the prior year quarter. Despite gaining over 200 basis points in new video game market share during the quarter, same-store sales decreased 14.1% due to lower new console unit sales, a lack of strong new software titles compared with last year’s record releases and customer caution due to the continued weak economy.

Net earnings were $38.7 million, representing the second highest summer quarter in GameStop history, a 32.3% decrease compared with net earnings of $57.2 million in the prior year period. Diluted earnings per share were 23 cents, compared with 34 cents in the prior-year quarter, when earnings per share grew 162%.

“Due to the effects of the recession and strong prior year comparisons, the video game industry experienced a sharp decline in consumer spending during the quarter,” said Daniel DeMatteo, GameStop CEO. “Looking ahead, as the new title release schedule improves, we expect positive earnings growth in the back half of the year.”

For the third quarter of fiscal 2009, GameStop is forecasting diluted earnings per share to range from 27 cents to 33 cents, as compared with 28 cents in the prior year period. Same-store sales are projected to range from -11% to -6%.

For the fourth quarter of fiscal 2009, GameStop is forecasting diluted earnings per share to range from $1.47 to $1.65, as compared with$1.39 in the prior year period. Same-store sales are projected to range from -7% to -1%.

For fiscal 2009, GameStop is lowering diluted earnings per share guidance from the previously communicated range of $2.83 to $2.93 to a range of $2.40 to $2.64, representing annual EPS growth of flat to +10%. Comparable-store sales are now projected to range from -8.% to -4% in fiscal 2009.