Grapevine, Texas - No. 1 specialty gaming retailer GameStop reported single-digit sales and earnings increases for the second quarter, ended July 31.
Profits increased 4.2 percent to $40.3 million while net sales rose 3.4 percent to $1.8 billion. Same-store sales edged up nearly 1 percent on purchases of new hardware systems and new software titles. Sales of new titles increased 5.3 percent during the quarter, reflecting "strong market share gains," the company said.
CEO J. Paul Raines said the results "demonstrate the resiliency of our business model as we achieved both top-line and earnings growth despite the ongoing volatility in the global economy."
He said U.S. operations were "strong relative to the industry with solid comparable store sales and continued new video game market share gains," while the company continues to focus internationally on the execution of its used-game model to improve operational efficiencies.
Executive chairman Dan DeMatteo said GameStop will accelerate the launch of two initiatives -- a PowerUp Rewards customer loyalty program and in-store sales of downloadable content -- due to "outstanding initial results," and will complete their national rollouts in the third quarter. He also announced the acquisition of Kongregate, a social gaming destination, to advance the company's digital strategy.
The company also completed its $300 million share repurchase program during the quarter, and year-to-date has opened 99 net new stores, including 48 in the U.S., bringing the total store count to 6,549 locations in 17 countries.
Looking ahead, GameStop continues to project a 14 percent to 18 percent increase in full-year earnings per share over fiscal 2009, based on the new customer initiatives and the launch of Microsoft's Kinect, the new motion- and voice-sensor interface for Xbox. The company is also projecting a 3 percent to 6 percent increase in same-store sales for the third quarter.
The chain said its top-five selling games during the second quarter were Rockstar Games' Red Dead Redemption; Nintendo's Super Mario Galaxy 2; THQ's UFC Undisputed 2010; StarCraft II: Wings of Liberty,
by Blizzard Entertainment; and EA Sports' NCAA Football 11.