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Electronics Boutique Revenue Climbs 36.2%

5/27/2005 08:23:00 AM Eastern

West Chester, Pa. — Video game and related products specialty retailer Electronics Boutique recorded a 36.2 percent increase in fiscal first-quarter revenue, rising to $507.1 million from a year-ago $372.4 million. Comp-store sales rose 14.6 percent.

The retailer’s rise in sales was driven by strong demand for hardware, namely the successful launch of the Sony PSP, and sales of the Sony PS2 slim and Nintendo DS, as well as movement of software, total sales of which jumped 30.4 percent in the three months, ended April 30. Software sales were led by Sony’s ‘Gran Turismo 4’ and continued increases in the company’s pre-played business.

Gross margin for the 2,000-plus-store chain, however, dropped to 26 percent in the first quarter, down from 26.9 percent, as Electronics Boutique shifted its sales mix to lower margin hardware.

At the end of the first quarter, the domestic retail sales mix at Electronics Boutique included a 57 percent share in video game software, down from 61 percent in the year-ago three months, and a 23 percent share in video game hardware, up from 17 percent year-on-year.

The PC software revenue mix share in the first quarter dropped to 7 percent, from 9 percent in the first three months the prior year, while the accessories share of mix declined to 9 percent, from 11 percent.

Excluding costs related to the retailer’s pending merger with GameStop, announced last April, net income increased 22.6 percent, hitting $3.7 million, compared with $3 million in the same period in 2004. If about $1.5 million in pretax merger-related costs are factored in, net income for the first three months came in at $2.8 million.

As reported, Electronics Boutique and retailer GameStop have entered a definitive agreement to merge, which will create a video game retail operation with over 4,000 stores worldwide. The deal is expected to close in the third quarter.

In addition, Electronics Boutique has announced the acquisition of Spanish retailer Jump Ordenadores.

During the first quarter, Electronics Boutique opened 106 new stores, increasing total store count to 2,071. This compares with the 1,623 locations open at the end of the first quarter a year earlier.