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GameStop Sees Surprise December Sales Rise, Overall Decline

Officials from predominant U.S. specialty game retailer GameStop have reported sales of $1,347 million during the nine week Christmas period, ending December 31st. This r...
Officials from predominant U.S. specialty game retailer GameStop have reported sales of $1,347 million during the nine week Christmas period, ending December 31st. This represents a decrease in comparable store sales of 1.5 percent over that entire period compared to 2004, but December sales actually were up by 8.7 percent compared to the previous year, somewhat of a surprise. In fact, total sales for GameStop were a 133% increase from the prior year holiday period of $577.7 million, but this was primarily due to the addition of the Electronics Boutique stores acquired in October 2005, and the above comparisons were done using historical EB data as well as GameStop data. The chain’s five best selling new games during the period were WWE SmackDown! vs. Raw 2006 (PS2) from THQ, Star Wars: Battlefront II (PS2/Xbox) from LucasArts, Mario Kart DS from Nintendo and Call of Duty 2 (PC/Xbox 360) from Activision. R. Richard Fontaine, chairman and CEO, commented: "This year's holiday performance was particularly notable as GameStop did a great job of working our business model and generating strong contributions from all categories of the business. While new video game sales were slow in November, they rebounded in December, and we experienced near double digit growth, but did so on a broad range of titles. Hardware sales were also strong and our used product attracted the value shopper while making a significant contribution to total gross margin increases for the period." As a result of the stronger margins and cost savings generated during the quarter the company has increased its fourth quarter earnings predictions back up to between $1.06 and $1.08 per share, and full year earnings predictions also increased, definitely good news for the company. However, due in part to stock issues revolving around the Xbox 360 console the company, is revising its fourth quarter comparable store sales guidance, compared to 2004, to range from 0 to -0.5 percent growth. This follows a previous downgrade to between 0 and 2 percent for comparable store sales back in late November, showing that overall, the situation is still a disappointing one.

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