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GameStop Reports Sales And Earnings For Fiscal 2012 And Provides 2013 Outlook

Stocks in this article: GME

GameStop Corp. (NYSE: GME), the world’s largest multichannel video game retailer, today reported sales and earnings for the fourth quarter and fiscal year ended Feb. 2, 2013. The fourth quarter and fiscal year 2012 results include an extra week compared to fiscal 2011.

Paul Raines, chief executive officer, stated, “While 2012 was a challenging year for console gaming, we focused on factors within our control. We expanded our market leadership position, maintained our financial strength and controlled our spending. Perhaps most importantly, we invested in our mobile and digital businesses to position the company for future success. These channels delivered as planned and significantly contributed to our highest ever gross margin and profitability.”

Fourth Quarter Results

Total global sales for the fourth quarter of 2012 were $3.56 billion compared to $3.58 billion in the prior year quarter. Consolidated comparable store sales decreased 4.6% compared to the prior year quarter. Fourth quarter sales were essentially flat to the prior year quarter, which included 60.3% growth in digital receipts and $100.0 million of mobile sales offsetting weakness in the core business.

In the fourth quarter, the company recorded asset impairment charges of $1.9 million ($1.2 million, net of tax benefits), or $0.01 per share, as a result of impairment tests of property, equipment and other assets. A reconciliation of non-GAAP adjusted net income to GAAP net income is included with this release (Schedule III).

Excluding the impairment charges, GameStop’s adjusted net earnings for the fourth quarter increased 9.5% to $262.3 million compared to adjusted net earnings of $239.5 million in the prior year quarter. The increase in earnings was primarily due to the positive impact of the 53 rd week in 2012 and a 100 basis point improvement in the gross margin rate.

Adjusted diluted earnings per share were in-line with guidance at $2.16, a 24.9% increase compared to adjusted diluted earnings per share of $1.73 in the prior year quarter. The 53 rd week contributed approximately $10.1 million of net earnings, or $0.08 per diluted share, to the fourth quarter.

Including the impairment charges, GameStop’s fourth quarter net earnings were $261.1 million compared to net earnings of $174.7 million in the prior year quarter. Diluted earnings per share were $2.15 compared to diluted earnings per share of $1.27 in the prior year quarter.

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