GameStop Corp. (NYSE: GME), the world’s largest video game and entertainment software retailer, today reported audited sales and earnings for the fourth quarter and the fiscal year ended January 30, 2010.
Financial Results
Total sales for the fourth quarter of 2009 increased 0.9% to $3.52 billion, in comparison to $3.49 billion in the prior year quarter. Comparable store sales decreased 7.9%. Net earnings decreased 7.1% to $215.9 million, as compared to net earnings of $232.3 million, including merger-related income of $12.0 million ($7.5 million, net of tax expense) in the prior year quarter. Diluted earnings per share were $1.29, as compared to $1.39, including merger-related income of $0.05 per share in the prior year quarter.
For fiscal year 2009, total sales increased 3.1% to $9.08 billion, in comparison to $8.81 billion in fiscal 2008. Comparable store sales decreased 7.9%. Net earnings decreased 5.3% to $377.3 million, including debt retirement costs of $5.3 million ($3.3 million, net of tax benefits), as compared to fiscal 2008 net earnings of $398.3 million, including debt retirement costs and merger-related expenses of $6.9 million (combined $4.4 million, net of tax benefits). Diluted earnings per share were $2.25, including debt retirement costs of $0.02 per share, as compared to $2.38, including debt retirement costs and merger-related expenses of $0.02 per share, in fiscal 2008.
“GameStop delivered its second highest earnings year ever in fiscal 2009, in spite of the weak worldwide economic environment,” indicated Daniel DeMatteo, Chief Executive Officer. “We saw global market share growth as new software sales increased 1.2%, proving once again that the great entertainment value and exceptional service GameStop delivers resonates with our customers. Each facet of our business has been evaluated in the past year and I am pleased that our team worldwide is working harder than ever to enhance our core competitive advantages and also build new, exciting growth drivers.
“GameStop remains committed to our long-range plans by prudently investing in new stores and strategic initiatives to strengthen our relationship with our customers. In 2010, we see great opportunity to deliver earnings growth by improving global operational efficiencies, expanding our leading market share and utilizing the buy-sell-trade model to drive new and used software sales.”
Business Outlook
For fiscal 2010, based on current market trends, GameStop expects the following:
-
Total sales growth between +4.0% and +6.0%
- New hardware: -5.0% to -15.0%
- New software: +2.0% to +5.0%
- Used products: +5.0% to +10.0%
- Other: +5.0% to +10.0%
- Comparable store sales of 0.0% to +2.0%
- Diluted earnings per share ranging from $2.58 to $2.68, an annual increase of +14% to +18%, based on expected outstanding diluted shares of 155,000,000.
During the year, GameStop intends to execute our previously announced capital allocation plan, which includes the following cash deployment:
- $75 million in the opening of 400 new stores
- $125 million in store improvements, information system support, refurbishment upgrades, distribution expansion and loyalty program enhancements
- $100 million reserved for acquisition and investments
- $300 million for share repurchases
Based on our current financial projections, the company forecasts it will end fiscal 2010 with $900 million cash on hand.
For the first quarter of fiscal 2010, the company expects comparable store sales to range from -3.0% to 0.0%, driven by reduced hardware price points compared to last year. Diluted earnings per share are expected to range from $0.46 to $0.48, a 7% to 12% increase over the prior year quarter.
Note that guidance does not include debt retirement costs.
Share Buyback Update
In January, as part of our 2010 capital allocation plan, we announced a $300 million share repurchase program. As of today, GameStop has purchased 12,642,200 shares at an average price of $19.56, or $247 million worth of stock.
About GameStop
Headquartered in Grapevine, TX, GameStop Corp., a Fortune 500 and S&P 500 company, is the world's largest video game and entertainment software retailer. The company operates 6,450 retail stores in 17 countries worldwide. The company also operates e-commerce sites, including GameStop.com, and publishes Game Informer(R) magazine, a leading multi-platform video game publication. GameStop Corp. sells new and used video game software, hardware and accessories for video game systems from Sony, Nintendo, and Microsoft. In addition, the company sells PC entertainment software, related accessories and other merchandise. General information on GameStop Corp. can be obtained at the company's corporate website: http://www.gamestopcorp.com.
Safe Harbor
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, the outlook for fiscal 2010 and beyond, future financial and operating results, projected store openings, the company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of GameStop's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. GameStop undertakes no obligation to publicly update or revise any forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the inability to obtain sufficient quantities of product to meet consumer demand, including console hardware; the timing of release of video game titles for next generation consoles; the risks associated with expanded international operations and the integration of acquisitions; the impact of increased competition and changing technology in the video game industry; and economic and other events that could reduce or impact consumer demand. Additional factors that could cause GameStop's results to differ materially from those described in the forward-looking statements can be found in GameStop's Annual Report on Form 10-K for the fiscal year ended January 31, 2009 filed with the SEC and available at the SEC's Internet site at http://www.sec.gov or http://investor.gamestop.com.
| GameStop Corp. | ||||||||
| Statements of Operations | ||||||||
| (in thousands, except per share data) | ||||||||
| 13 weeks | 13 weeks | |||||||
| ended | ended | |||||||
| Jan. 30, 2010 | Jan. 31, 2009 | |||||||
| Sales | $ | 3,524,013 | $ | 3,492,114 | ||||
| Cost of sales | 2,649,964 | 2,652,937 | ||||||
| Gross profit | 874,049 | 839,177 | ||||||
| Selling, general and administrative | ||||||||
| expenses | 483,309 | 433,285 | ||||||
| Depreciation and amortization | 43,386 | 38,092 | ||||||
| Merger-related expenses (income) | - | (12,012 | ) | |||||
| Operating earnings | 347,354 | 379,812 | ||||||
| Interest expense, net | 9,755 | 12,331 | ||||||
| Earnings before income | ||||||||
| tax expense | 337,599 | 367,481 | ||||||
| Income tax expense | 123,213 | 135,156 | ||||||
| Consolidated net income | 214,386 | 232,325 | ||||||
| Net loss attributable to noncontrolling interests | 1,536 | - | ||||||
| Consolidated net income attributable to GameStop | $ | 215,922 | $ | 232,325 | ||||
| Net income per common share: | ||||||||
| Basic1 | $ | 1.31 | $ | 1.42 | ||||
| Diluted1 | $ | 1.29 | $ | 1.39 | ||||
| Weighted average common shares | ||||||||
| outstanding: | ||||||||
| Basic | 164,290 | 163,812 | ||||||
| Diluted | 167,556 | 167,244 | ||||||
Percentage of Sales: | ||||||||
| Sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales | 75.2 | % | 76.0 | % | ||||
| Gross profit | 24.8 | % | 24.0 | % | ||||
| SG&A expenses | 13.7 | % | 12.4 | % | ||||
| Depreciation and amortization | 1.2 | % | 1.1 | % | ||||
| Merger-related expenses (income) | 0.0 | % | -0.4 | % | ||||
| Operating earnings | 9.9 | % | 10.9 | % | ||||
| Interest expense, net | 0.3 | % | 0.4 | % | ||||
| Earnings before income | ||||||||
| tax expense | 9.6 | % | 10.5 | % | ||||
| Income tax expense | 3.5 | % | 3.8 | % | ||||
| Consolidated net income | 6.1 | % | 6.7 | % | ||||
| Net loss attributable to noncontrolling interests | 0.0 | % | 0.0 | % | ||||
| Consolidated net income attributable to GameStop | 6.1 | % | 6.7 | % | ||||
| 1 Basic net income per share and diluted net income per share are calculated based on consolidated net income | ||||||||
| attributable to GameStop. | ||||||||
| GameStop Corp. | ||||||||
| Statements of Operations | ||||||||
| (in thousands, except per share data) | ||||||||
| 52 weeks | 52 weeks | |||||||
| ended | ended | |||||||
| Jan. 30, 2010 | Jan. 31, 2009 | |||||||
| Sales | $ | 9,077,997 | $ | 8,805,897 | ||||
| Cost of sales | 6,643,345 | 6,535,762 | ||||||
| Gross profit | 2,434,652 | 2,270,135 | ||||||
| Selling, general and administrative | ||||||||
| expenses | 1,635,124 | 1,445,419 | ||||||
| Depreciation and amortization | 162,495 | 145,004 | ||||||
| Merger-related expenses | - | 4,593 | ||||||
| Operating earnings | 637,033 | 675,119 | ||||||
| Interest expense, net | 43,177 | 38,837 | ||||||
| Debt extinguishment expense | 5,323 | 2,331 | ||||||
| Earnings before income | ||||||||
| tax expense | 588,533 | 633,951 | ||||||
| Income tax expense | 212,804 | 235,669 | ||||||
| Consolidated net income | 375,729 | 398,282 | ||||||
| Net loss attributable to noncontrolling interests | 1,536 | - | ||||||
| Consolidated net income attributable to GameStop | $ | 377,265 | $ | 398,282 | ||||
| Net income per common share: | ||||||||
| Basic1 | $ | 2.29 | $ | 2.44 | ||||
| Diluted1 | $ | 2.25 | $ | 2.38 | ||||
| Weighted average common shares | ||||||||
| outstanding: | ||||||||
| Basic | 164,525 | 163,190 | ||||||
| Diluted | 167,875 | 167,671 | ||||||
Percentage of Sales: | ||||||||
| Sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales | 73.2 | % | 74.2 | % | ||||
| Gross profit | 26.8 | % | 25.8 | % | ||||
| SG&A expenses | 18.0 | % | 16.4 | % | ||||
| Depreciation and amortization | 1.8 | % | 1.6 | % | ||||
| Merger-related expenses | 0.0 | % | 0.1 | % | ||||
| Operating earnings | 7.0 | % | 7.7 | % | ||||
| Interest expense, net | 0.4 | % | 0.5 | % | ||||
| Debt extinguishment expense | 0.1 | % | 0.0 | % | ||||
| Earnings before income | ||||||||
| tax expense | 6.5 | % | 7.2 | % | ||||
| Income tax expense | 2.4 | % | 2.7 | % | ||||
| Consolidated net income | 4.1 | % | 4.5 | % | ||||
| Net loss attributable to noncontrolling interests | 0.1 | % | 0.0 | % | ||||
| Consolidated net income attributable to GameStop | 4.2 | % | 4.5 | % | ||||
| 1 Basic net income per share and diluted net income per share are calculated based on consolidated net income | ||||||||
| attributable to GameStop. | ||||||||
| GameStop Corp. | ||||||||
| Balance Sheets | ||||||||
| (in thousands, except per share data) | ||||||||
| Jan. 30, | Jan. 31, | |||||||
| 2010 | 2009 | |||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 905,418 | $ | 578,141 | ||||
| Receivables, net | 64,006 | 65,981 | ||||||
| Merchandise inventories | 1,053,553 | 1,075,792 | ||||||
| Prepaid expenses and other current assets | 83,098 | 74,512 | ||||||
| Deferred taxes | 21,229 | 23,615 | ||||||
Total current assets | 2,127,304 | 1,818,041 | ||||||
| Property and equipment: | ||||||||
| Land | 11,569 | 10,397 | ||||||
| Buildings & leasehold improvements | 522,965 | 454,651 | ||||||
| Fixtures and equipment | 711,477 | 619,845 | ||||||
| 1,246,011 | 1,084,893 | |||||||
| Less accumulated depreciation and amortization | 661,810 | 535,639 | ||||||
| Net property and equipment | 584,201 | 549,254 | ||||||
| Goodwill, net | 1,946,513 | 1,833,011 | ||||||
| Other noncurrent assets | 297,309 | 283,188 | ||||||
| Total assets | $ | 4,955,327 | $ | 4,483,494 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 961,673 | $ | 1,047,963 | ||||
| Accrued liabilities | 694,003 | 514,748 | ||||||
| Total current liabilities | 1,655,676 | 1,562,711 | ||||||
| Other long-term liabilities | 129,297 | 104,486 | ||||||
| Senior fixed notes payable, net of discount | 447,343 | 545,712 | ||||||
| Total liabilities | 2,232,316 | 2,212,909 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock - authorized 5,000 shares; no shares | ||||||||
| issued or outstanding | -- | -- | ||||||
| Class A common stock - $.001 par value; authorized 300,000 shares; | ||||||||
| 158,662 and 163,843 shares issued and | ||||||||
| outstanding, respectively | 159 | 164 | ||||||
| Additional paid-in-capital | 1,210,539 | 1,307,453 | ||||||
| Accumulated other comprehensive income (loss) | 114,704 | (57,522 | ) | |||||
| Retained earnings | 1,397,755 | 1,020,490 | ||||||
Equity attributable to GameStop Corp. stockholders | 2,723,157 | 2,270,585 | ||||||
| Equity attributable to noncontrolling interest | (146 | ) | - | |||||
| Total equity | 2,723,011 | 2,270,585 | ||||||
| Total liabilities and stockholders' equity | $ | 4,955,327 | $ | 4,483,494 | ||||
| Schedule I | ||||||||||||
| GameStop Corp. | ||||||||||||
| Sales Mix | ||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | |||||||||||
| Jan. 30, 2010 | Jan. 31, 2009 | |||||||||||
| Percent | Percent | |||||||||||
| Sales | of Total | Sales | of Total | |||||||||
| Sales (in millions): | ||||||||||||
| New video game hardware | $ | 737.9 | 20.9 | % | $ | 813.1 | 23.3 | % | ||||
| New video game software | 1,561.2 | 44.3 | % | 1,483.9 | 42.5 | % | ||||||
| Used video game products | 777.1 | 22.1 | % | 714.2 | 20.5 | % | ||||||
| Other | 447.8 | 12.7 | % | 480.9 | 13.7 | % | ||||||
| Total | $ | 3,524.0 | 100.0 | % | $ | 3,492.1 | 100.0 | % | ||||
| 52 Weeks Ended | 52 Weeks Ended | |||||||||||
| Jan. 30, 2010 | Jan. 31, 2009 | |||||||||||
| Percent | Percent | |||||||||||
| Sales | of Total | Sales | of Total | |||||||||
| Sales (in millions): | ||||||||||||
| New video game hardware | $ | 1,756.5 | 19.3 | % | $ | 1,860.2 | 21.1 | % | ||||
| New video game software | 3,730.9 | 41.1 | % | 3,685.0 | 41.9 | % | ||||||
| Used video game products | 2,394.1 | 26.4 | % | 2,026.6 | 23.0 | % | ||||||
| Other | 1,196.5 | 13.2 | % | 1,234.1 | 14.0 | % | ||||||
| Total | $ | 9,078.0 | 100.0 | % | $ | 8,805.9 | 100.0 | % | ||||
| Schedule II | ||||||||||||
| GameStop Corp. | ||||||||||||
| Gross Profit Mix | ||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | |||||||||||
| Jan. 30, 2010 | Jan. 31, 2009 | |||||||||||
| Gross | Gross | |||||||||||
| Gross | Profit | Gross | Profit | |||||||||
| Profit | Percent | Profit | Percent | |||||||||
| Gross Profit (in millions): | ||||||||||||
| New video game hardware | $ | 40.9 | 5.5 | % | $ | 44.2 | 5.4 | % | ||||
| New video game software | 322.2 | 20.6 | % | 308.0 | 20.8 | % | ||||||
| Used video game products | 360.7 | 46.4 | % | 331.5 | 46.4 | % | ||||||
| Other | 150.3 | 33.6 | % | 155.5 | 32.3 | % | ||||||
| Total | $ | 874.1 | 24.8 | % | $ | 839.2 | 24.0 | % | ||||
| 52 Weeks Ended | 52 Weeks Ended | |||||||||||
| Jan. 30, 2010 | Jan. 31, 2009 | |||||||||||
| Gross | Gross | |||||||||||
| Gross | Profit | Gross | Profit | |||||||||
| Profit | Percent | Profit | Percent | |||||||||
| Gross Profit (in millions): | ||||||||||||
| New video game hardware | $ | 113.5 | 6.5 | % | $ | 112.6 | 6.1 | % | ||||
| New video game software | 795.0 | 21.3 | % | 768.4 | 20.9 | % | ||||||
| Used video game products | 1,121.2 | 46.8 | % | 974.5 | 48.1 | % | ||||||
| Other | 405.0 | 33.8 | % | 414.6 | 33.6 | % | ||||||
| Total | $ | 2,434.7 | 26.8 | % | $ | 2,270.1 | 25.8 | % | ||||
Contacts:
Chris
Olivera
Vice President,
Corporate Communications
GameStop
Corp.
(817) 424-2130
or
Investor
Contact:
Matt Hodges
Director,
Investor
Relations
GameStop Corp.
(817) 424-2130
