GameStop Reports Second Quarter 2013 Results

GRAPEVINE, Texas--(BUSINESS WIRE)--Aug. 22, 2013-- GameStop Corp. (NYSE: GME), the world’s largest multichannel video game retailer, today reported sales and earnings for the second quarter ended Aug. 3, 2013.

Second Quarter Results

Total global sales for the second quarter of 2013 were $1.38 billion compared to $1.55 billion in the prior year quarter, a decrease of 10.7%. Consolidated comparable store sales also decreased 10.7%, slightly better than the guidance provided on May 23.

During the quarter, mobile sales expanded 121.4% to $55.1 million and digital receipts grew 17.9% to $158.0 million. Sales of new software decreased 9.3%, outperforming the overall market and leading to 290 basis points of market share gain during the quarter. New hardware sales declined 19.4% and pre-owned sales decreased 6.0% as consumers continue to wait for the launch of the new consoles later this year.

GameStop’s net earnings for the second quarter were $10.5 million compared to net earnings of $21.0 million in the prior year quarter. Diluted earnings per share were $0.09, exceeding the high end of the company’s guidance by $0.02. Expense control and gross margin improvement were the primary drivers of the better-than-expected results.

“Through two quarters, the year has played out as expected,” stated Paul Raines, chief executive officer. “During this console transition period, our financial results have been supported by the continued growth of our emerging businesses. This strength helped drive a 130 basis point improvement in gross margin rate for the second quarter.”

Raines continued, “Of course, excitement continues to build for the upcoming new games and the launch of the PS4 and Xbox One. As the global gaming leader, GameStop is uniquely positioned to capitalize on the new, innovative products coming to market.”

Capital Allocation Update

During the second quarter of 2013, GameStop repurchased approximately 2.39 million shares at an average price of $37.21, or $88.9 million worth of stock. There is now approximately $311 million remaining on the existing repurchase authorization.

GameStop’s board of directors also declared a quarterly cash dividend of $0.275 per common share payable on Sept. 19, 2013 to shareholders of record at the close of business on Sept. 3, 2013.

Earnings Guidance

For the third quarter of fiscal 2013, GameStop expects comparable store sales to range from +11.0% to +15.0%. Diluted earnings per share are expected to range from $0.50 to $0.55.

Based on the strong second quarter results as well as positive trends in new console pre-orders and higher-than-expected launch quantity allocation, the company is increasing the lower and upper end of its previously announced full year diluted earnings per share guidance range of $2.90 to $3.15 to $3.00 to $3.20. Full year comparable store sales are expected to range from -3.5% to +1.5%.

Note: Current guidance only includes the effect of the shares repurchased thus far in fiscal 2013.