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GameStop 2Q Earnings Blow Away Analysts' Estimates
Friday, August 22, 2008 3:54 AM
Symbols: CS, GME
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(Source: The Dallas Morning News)trackingBy Victor Godinez, The Dallas Morning News

Aug. 22--GameStop Corp. gave a shout-out Thursday to a collection of gangsters, football players and yoga instructors for contributing to a stellar second quarter.

Revenue at the Grapevine-based video game retailer hit $1.8 billion in the quarter, up from $1.34 billion in the same period a year ago.

Profit jumped to $57.2 million, or 34 cents per share, compared with last year's $21.8 million, or 13 cents per share.

Analysts had been looking for revenue of $1.66 billion and a profit of 28 cents per share.

The company also raised its financial guidance for the full year.

"In the second quarter, we produced record revenues in each of the geographical regions where we operate," chairman and chief executive Richard Fontaine said in a news release.

During a conference call, vice chairman and chief operating officer Dan DeMatteo said the slow economy is driving sales of GameStop's lower-priced used games.

"We think that the used model, in these economic times, is a real differentiator between GameStop and other people that sell video games," he said.

The company also said that same-store sales -- a measure of sales at stores that have been open at least one year -- jumped 20 percent in the quarter, thanks to blockbusters such as Grand Theft Auto IV, NCAA Football '09 and Wii Fit.

But Credit Suisse analyst Gary Balter said in a note after the results were released that some investors are concerned that same-store sales growth could be slowing, and that GameStop might be losing some market share to other retailers.

"That being said, the key to the investment story from here is evidence of the sustainability of earnings growth," Mr. Balter wrote. "We believe growth in the used business will be a key component of that, and we hope to see further evidence in the coming quarters."

Shares of GameStop lost 4 cents to close at $43.48.

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