GameStop reports strong December figures, beats analyst projections

Top US videogames retail chain GameStop has announced its financial results for the nine-week holiday season, revealing a far smaller than expected decline in revenues thanks to strong sales in December.

Like for like revenues for the full period came in 1.5 per cent down on the same period last year, well ahead of analyst expectations - even the most positive of which had anticipated a drop of four per cent, with some estimates as high as ten per cent.

The firm was buoyed by stronger than expected sales in December, when the market picked up from a major slump through November and allowed GameStop to record an 8.7 per cent rise in like for like sales.

A strong launch for Xbox 360, despite the hardware shortages, and good performance from both the Nintendo DS and the GameCube were cited as key drivers for the December performance, while analysts have also noted the strength of the retailer's used games business - an area in which GameStop controls some 80 per cent of the market in the USA.

The company also experienced a boost from the smooth progress of the integration of the Electronics Boutique business, which is yielding cost savings more rapidly than expected - leading the firm to raise its earnings per share guidance for the current quarter from a range of $0.98 to $1.02, to a new range of $1.06 to $1.08.

Although GameStop's results are far better than expected, analysts today warned that this may not be reflected in the results of software publishers for the quarter - with Banc of America Securities' Gary Cooper commenting that GameStop has likely gained market share against its competitors, while Michael Pachter of Wedbush Morgan Securities praised the firm's "flawless execution in a challenging market."

"We do not believe that GameStop's strength is an indication of strength at either Activision or EA," commented Cooper in a research note today. "Business obviously picked up near the end of December and publisher results may be slightly better than our forecasts. However, we believe Nintendo, Sony and THQ performed better than expected, while Activision, EA and Take Two performed below expectations."

"Thus, we still expect a round of subdued conference calls and below Street expectation guidance for most publishers (except THQ) later in January," he concluded.