GameStop Management Discusses Q1 2012 Results - Earnings Call Transcript

GameStop (GME)

Q1 2012 Earnings Call

May 17, 2012 11:00 am ET

Executives

J. Paul Raines - Chief Executive Officer

Robert A. Lloyd - Chief Financial Officer and Executive Vice President

Michael K. Mauler - Executive Vice President of International

Tony D. Bartel - President

Analysts

Seth Basham - Crédit Suisse AG, Research Division

Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division

Anthony C. Chukumba - BB&T Capital Markets, Research Division

Brian Karimzad - Goldman Sachs Group Inc., Research Division

Edward S. Williams - BMO Capital Markets U.S.

David G. Magee - SunTrust Robinson Humphrey, Inc., Research Division

Presentation

Operator

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Good morning, everyone. Welcome to GameStop Corporation's First Quarter 2012 Earnings Call. Today's call is being recorded. [Operator Instructions] I would like to remind you that this call is covered by the Safe Harbor disclosure contained in GameStop's public documents and is the property of GameStop. It is not for rebroadcast or for use by any other party without prior written consent of GameStop. At this time, I'd like to turn the call over to Mr. Paul Raines, Chief Executive Officer of GameStop Corporation. Please go ahead, sir.

J. Paul Raines

Good morning, and thank you for joining us on the GameStop First Quarter Earnings Call and Update. As we begin our remarks today, we would like to once again thank all of our GameStop associates worldwide who strive everyday to deliver the best customer service and innovation in video gaming.

As you saw in our press release of last Thursday, May 10, our earnings of $0.54 per share came in at the higher end of our original guidance, reflecting the margin expansion we are seeing from our preowned digital and mobile businesses. These margin enhancing businesses are filling the profitability gap in this environment of slower physical software and console sales. And the results they are generating are a direct result of the strategic transformation work we have undertaken since 2009. The first quarter was, however, weaker than we expected on the top line, with a negative 12.5% comp due primarily to the slower new physical software and console sales. It is clear that GameStop as well as those following our industry are struggling to forecast software and hardware sales during the late stages of the current console cycle.

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