GameStop posts third quarter loss of USD 2.5 million

US retailer GameStop has published third quarter financial results which show a net loss of USD 2.5 million in a report which also expresses concerns about Xbox 360 Christmas stock allocations.

The loss is in line with what was expected, despite the fact that GameStop made a profit of USD 12 million during the same period in 2004. Diluted loss per share stood at USD 0.04, including merger costs of USD 0.19 and hurricane losses and disaster relief of USD 0.01 per diluted share.

GameStop paid USD 1.44 billion in stock and cash to acquire GameStop earlier this year, and also handed over USD 18.8 million in merger costs which contributed to the loss. The company also reported a 12 per cent drop in "comparable store sales" - stores that have been open for more than 12 months - and blamed this on a lack of major software releases.

Overall, sales rose by 28.2 per cent to USD 534.2 million, up from USD 416.7 million in 2004. GameStop's full year forecast has been updated, with fourth quarter results of between 0-2 per cent for comparable store sales predicted as a result of limited stocks of Xbox 360 - an issue which increasingly concerns GameStop.

"On the Xbox 360 front, GameStop sold through every copy we had and did so in record time... In fact, our attach ratio of games and accessories to date has never been higher for any release in GameStop's history," stated CEO R. Richard Fontaine.

"Our only concern is that the total hardware released to date in the U.S., and to GameStop, are far less than we had anticipated. While we expect to be supplied throughout the holiday season, the exact quantities to be shipped are not yet clear."

Fontaine also attributed part of GameStop's net loss to the arrival of the Xbox 360, stating: "During November we experienced weaker than expected new video game software sales mainly due to core customers waiting for the launch of Microsoft's Xbox 360 and to value consumers continuing to gravitate to used video games."

"We anticipate this trend to continue to a degree throughout the holiday season, with gross sales levels declining, but strong margin contributions supporting forecasted earnings."

GameStop is generally optimistic about the future, however: ""We made significant progress during the third quarter to position ourselves for the fourth quarter and the long term," Fontaine said.

"We successfully completed our merger with Electronics Boutique, integration milestones are being met, and a number of best practices have already been cross-applied to the combined company."