Net earnings were $57.2 million for the second quarter of 2008, compared to net earnings of $21.8 million for the second quarter of 2007, an increase of 162.1%. Diluted earnings per share were $0.34, compared to $0.13 in the prior year quarter, exceeding the high-end of previously released guidance by $0.06 per share.
GameStop sales increased 34.8% to $1,804.4 million in the second quarter, compared to $1,338.2 million in the prior year quarter. Comparable store sales increased 20.0% during the second quarter as new video game software sales grew 43%. The top five selling games during the quarter were Take Two’s Grand Theft Auto IV, Metal Gear Solid 4: Guns of the Patriots from Konami, NCAA Football 09 by Electronic Arts, Nintendo’s Wii Fit and Battlefield: Bad Company from Electronic Arts.
R. Richard Fontaine, Chairman and Chief Executive Officer, stated, “In the second quarter, we produced record revenues in each of the geographical regions where we operate. By prioritizing our investments and focusing our resources, GameStop continues to significantly outperform the specialty retail segment as a whole, when comparing top-line growth, comparable store sales, and net earnings growth.”
Fontaine continued, “We are raising our full year 2008 EPS guidance based on growth of the worldwide installed base and our expectations of a strong second half of the year. We have consistently delivered superior returns to our shareholders by driving value through our new and used business model, generating exceptional returns from our new store expansion and we fully expect this performance to continue.”
Daniel DeMatteo, GameStop's Vice Chairman and Chief Operating Officer, indicated, "GameStop customers not only have the benefit of our convenient locations, associates with unmatched product knowledge, and an attractive buy-sell-trade model, but an exceptional spectrum of games for all players. In fact, the National Retail Federation recently named GameStop as the top 'Power Player' Entertainment Retailer in the US.
“Expected releases in the second half of the year include great sequels like Guitar Hero: World Tour and Call of Duty: World at War, new IP such as LEGO Batman, Little Big Planet and Spore, as well as second generation hits like Fable 2, Rock Band 2 and Gears of War 2,” said DeMatteo.
Updated Guidance
Based on the stronger than expected results in the second quarter of 2008 and increased confidence in the second half video game line-up, GameStop is increasing its fiscal 2008 guidance.
Full year diluted earnings per share are now forecast to range from $2.45 to $2.50, representing a +36% to +39% growth rate over last year. Comparable store sales are projected to increase between +12% and +14% for the full year, with total sales growing between +23% and +25%.
For the third quarter of fiscal 2008, GameStop is forecasting diluted earnings per share to range from $0.36 to $0.38, representing EPS growth of +9% to +15%. Comparable store sales in the third quarter are expected to range from flat to +2%.
For the fourth quarter of fiscal 2008, GameStop is forecasting diluted earnings per share to range from $1.37 to $1.40, representing EPS growth of +20% to +23%. Comparable store sales in the fourth quarter are expected to range from +8% to +10%.
GameStop continues to believe that fiscal 2009 earnings per share will grow at least 25%. This guidance is based on our analysis that the unprecedented growth of new video game hardware during 2007 and 2008, combined with strong tie ratios, significant industry investment, and a great title line-up will drive new video game software sales to double-digit growth resulting in higher profitability for the company.