Financial Web site The Motley Fool may have gotten it right today. This morning, shortly after the nation's largest game retailer reported its financials for the quarter ending July 31, the Fool ran a story that it headlined: Can GameStop Be Stopped?
Maybe not. The Texas-based retailer tallied sales of $345.6 million for the quarter, up 13 percent from the same quarter a year ago. Earnings, too, were up. For the company's second quarter, net earnings were $7.7 million, up more that $1 million from the same quarter a year ago.
Revenue driven by game software was dramatically higher for the quarter. Not surprisingly, the company cited Spider-Man 2, NCAA Football 2005, and ESPN NFL 2K5 as key drivers behind a 17 percent jump in revenues from game software.
According to GameStop CEO R. Richard Fontaine, the only thing stopping GameStop from depositing even more cash into its coffers was supply. "We experienced strong hardware sales at the beginning of the second quarter due to price cuts on the Microsoft Xbox and Sony PlayStation 2 systems and our in-store promotional activities," Fontaine said in a statement. "However, unanticipated hardware shortages in late June and July on the PlayStation 2, and to a lesser extent, the Xbox, impacted the momentum that we had built earlier in the quarter."
Lost sales based on insufficient inventory, something that affected all retailers, was a theme echoed in a number of analyst memos released earlier today (see GameSpot's coverage of NPD figures for the month of July).
In addition to sales figures, GameStop said its margins had increased from 29.1 percent last year to 31 percent in the most recent quarter. The company opened 77 stores during the quarter (73 net) and expects to reach its targeted 300 to 330 new stores in fiscal year 2004.
Looking ahead, Fontaine said the company was poised to take advantage of a strong lineup of upcoming titles. He is prepping investors for the best, saying the next two quarters could go down in history as "the most robust software lineup in the last five years."