GameStop’s profits more than double
08/21/2014 3:49 PM
08/21/2014 3:51 PM
Profits at Grapevine-based GameStop Corp. more than doubled in the second quarter, the company said Thursday, as the electronics retailer continued to benefit from strong sales of new Xbox One and PlayStation 4 video game systems.
Net earnings for the three months that ended Aug. 2 totaled $24.6 million, or 22 cents a share, up 134 percent from the same period a year ago. Total sales increased 25 percent to $1.73 billion, and same-store sales increased by 21.9 percent.
The results, released after the close of trading, drove its shares higher. GameStop stock (ticker: GME) moved up $2.71, or nearly 7 percent, to $43.20 in after-hours trading after closing down 84 cents in the regular session.
Rob Lloyd, GameStop’s chief financial officer, said the results demonstrate “the power of the new console cycle,” adding that all the company’s units, including new chains Spring Mobile and Simply Mac, contributed to the positive results.
GameStop employs about 2,400 people in Grapevine at its corporate headquarters and a refurbishment center, where it overhauls and repairs used devices.
GameStop President Tony Bartel hosted the company’s conference call, stepping in for CEO Paul Raines, 50, who had surgery to remove a small brain tumor last week. The company said this week that the cancer was caught early and that the prognosis is “very good” for a full recovery.
Bartel told Wall Street analysts that Raines “is in good spirits as he continues his recovery.”
Bartel and other top executives expressed confidence that GameStop will continue its strong performance the rest of the year as about two dozen highly anticipated video games are scheduled for release.
“The new gaming cycle is gaining momentum,” Bartel said.
The company, which operates more than 6,600 video game stores globally, said its hardware sales increased 125 percent and sales of new video game software increased 15.6 percent. It also boasted gains in digital receipts and sales of used equipment.
Lloyd said GameStop has not seen any impact from competitors in its high-profit pre-owned business, a reference to Wal-Mart’s entry into the used business this year.
Lloyd also said the company is “well on its way” to its goal of adding 300 to 400 stores to the Spring Mobile and Simply Mac chains it acquired last year. GameStop started the year with 218 stores, currently has more than 300 and plans to have between 500 and 600 by the end of the year.
Lloyd said the technology brands business recorded an operating profit of $7 million in the second quarter, accounting for 40 percent of its profit growth.
The company maintained its full-year guidance calling for earnings per share in a range of $3.40 to $3.70 a share, and same-store sales growth of 6 to 12 percent.
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