By Dan Gallagher
SAN FRANCISCO (Dow Jones) -- GameStop Corp. said Thursday
morning that results for the fourth quarter will come in at the
high end of expectations thanks to strong holiday sales of video
games.
The Grapevine, Texas-based game retailer (GME) also issued a
forecast for the current year that was ahead of Wall Street's
estimates. The news sent the company's stock up 11% to $27.70 by
midday Thursday; the shares have gained nearly 30% since the first
of the year.
"The video game business continues to enjoy robust growth,
making it the fastest growing of the many consumer goods
categories," CEO Dan DeMatteo said in a statement.
For the quarter ended Jan. 30, GameStop said sales were $3.5
billion a 22% increase over he prior year and ahead of the $3.46
billion expected by analysts for the period, according to consensus
forecasts from Thomson Reuters.
Earnings for the period are expected to come in between $1.33
and $1.44 per share, the company said. Analysts were expecting
$1.33 per share.
For the fiscal year ending in January of 2010, GameStop said it
expects total sales to grow between 10% and 12%, which implies
revenue between $9.68 and $9.86 billion. Analysts had been
expecting revenue of $9.67 billion for the year.
Earnings per share for the year are expected to grow between 18%
and 22%, ahead of Wall Street's estimates.
GameStop's results were fueled by record-setting sales of video
game software and hardware. According to data from the NPD Group,
total video game sales in the U.S. hit $21.3 billion for the year -
up 19% from the previous year. Sales of game software were up 26%
during that period.
Colin Sebastian of Lazard Capital Markets said in a note to
clients that GameStop's results show the company is "still running
on all cylinders," but could face tough comparisons to last
year.
"Solid holiday numbers from GameStop support our view and checks
that industry sales remain relatively healthy, consistent with
historical trends amid economic downturns," he wrote. "However,
performance still appears uneven (e.g., strong Nintendo, slower
PlayStation). Additionally, we note that tough growth comps are
likely to translate into lower industry sales in [the first half
of] 2009, before growth reaccelerates in [the second half]."