GMEB Gamestop Corp

GameStop Corp. (NYSE:GME)(NYSE:GME.B), a leading global video game and entertainment software retailer, today reported sales results for the nine-week holiday period ending December 31, 2005. Total sales for the nine weeks ended December 31, 2005, were $1,347.4 million, a 133% increase from the prior year holiday period of $577.7 million which was primarily due to the addition of the Electronics Boutique stores acquired in October 2005. In spite of the widely publicized shortages of Microsoft's Xbox 360, pro-forma comparable store sales for the holiday period were in line with expectations decreasing 1.5%. After a difficult comp in November due to the release of Halo 2 and Grand Theft Auto: San Andreas in the prior year, December pro-forma comparable store sales showed tremendous growth increasing 8.7%. R. Richard Fontaine, Chairman and Chief Executive Officer, 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." "I am also very encouraged that our holiday promotional marketing drove home the overall concept of value, assortment, and trade-in potential without depending on steep discounts with little margin." Fontaine continued, "In addition, our merger with Electronics Boutique, completed in October, has already begun to pay off. Many 'best practices' were instituted in the quarter which had significant margin implications and cost savings over the holiday period. And the better news is that we fully expect these synergies to increase as we move through 2006." The top five new video games sold during the holiday period were WWE Smackdown vs. Raw 2006 from THQ, Star Wars Battlefront II for both PlayStation 2 and Xbox from Lucas Arts, Mario Kart DS from Nintendo and Call of Duty 2 from Activision. Updated Guidance Based on strong gross margins and cost savings generated during the quarter, GameStop is increasing its fourth quarter diluted earnings per share guidance to between $1.06 and $1.08. Full year earnings per diluted share are now forecasted to range from $1.75 to $1.78 as compared to our previously announced guidance of $1.65 to $1.70, released on November 29, 2005. Please note that earnings guidance does not include merger costs related to the business combination with Electronics Boutique. Based on sales results to date in the quarter and the uncertain flow of Microsoft's Xbox 360 hardware in the month of January, GameStop is revising its fourth quarter pro-forma comparable store sales guidance to range from flat to -0.5%. Full year sales and earnings results and fiscal 2006 earnings guidance are expected to be released in mid-March 2006. Conference Call and Webcast Information A conference call with GameStop Corp.'s management is scheduled for January 5, 2006 at 11:00 a.m. ET to discuss the 2005 holiday sales results. The conference call will be simulcast on the Internet at (http://www.gamestop.com/investor-relations/). The conference call will be archived on the website until January 19, 2006. About GameStop Corp. Headquartered in Grapevine, TX, GameStop Corp. is one of the world's largest video game and entertainment software retailers. As of October 29, 2005, the company operated 4,416 retail stores throughout the United States and fifteen countries worldwide. The company also owns two e-commerce sites, GameStop.com and EBgames.com, and Game Informer(R) magazine, a leading video and computer game publication. GameStop Corp. sells the most popular new software, hardware and game accessories for the PC and next generation video game systems from Sony, Nintendo, and Microsoft. In addition, the company sells computer and video game magazines and strategy guides, action figures, and other related merchandise. General information on GameStop Corp. can be obtained at the company's corporate Website: http://www.gamestop.com/investor-relations/. Safe Harbor This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the outlook for the fourth quarter and the full year, the ability of the management team to lead the combined operations, anticipated sell-through and demand for Xbox 360, future financial and operating results, the new company's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of GameStop's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the risk that the businesses of GameStop and Electronics Boutique will not be integrated successfully or that the cost savings and other synergies from the combination may not be fully realized or may take longer to realize than expected; the inability to obtain sufficient quantities of product to meet consumer demand; and economic and other events that could reduce or impact consumer demand. Additional factors that could cause GameStop's results to differ materially from those described in the forward-looking statements can be found in the Annual Reports on Forms 10-K/A of GameStop and Electronics Boutique for the fiscal year ended January 29, 2005 filed with the SEC and available at the SEC's Internet site at http://www.sec.gov. -0- *T GameStop Corp. Retail Sales Mix ---------------- 9 weeks 9 weeks Ended Ended December 31, 2005 January 1, 2005 ------------------ ------------------ New video game hardware 20.4% 14.5% New video game software 43.7% 46.9% Used video game products 19.3% 21.4% Other 16.6% 17.2% *T