GameStop Knocks Off Estimate

Sales more than double.
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GameStop

(GME) - Get Report

reported better-than-expected first-quarter earnings Thursday as sales more than doubled, thanks to the acquisition of Electronics Boutique.

GameStop earned $11.7 million, or 15 cents a share, in the quarter, compared with $10.3 million, or 19 cents a share, a year ago (the average number of diluted shares rose 44%, year over year). On average, analysts had been expecting earnings of 5 cents a share in the most recent quarter.

First-quarter sales were $1.04 billion, up from $474.7 million. Analysts were expecting sales of $1.03 billion in the most recent quarter.

"Our exceptionally strong results this quarter are due primarily to the improved flow of Xbox 360 hardware, early acceptance of the $59.99 price point for next generation software, and the successful completion of key integration strategies between GameStop and EB Games," it said.

In the second quarter, GameStop expects to earn 8 cents or 9 cents a share, excluding stock-options expense. Analysts were forecasting earnings of 8 cents a share. For the year, the company sees earnings of $2.10 to $2.20 a share, excluding options; analysts were forecasting earnings of $1.91 a share.

GameStop expects same-store sales to do anything from fall by 2% to rise by 1% in the second quarter.

"While there is more work that needs to be done to fully complete the merger, we have concluded many critical facets of the integration, including the roll out of GameStop's inventory management system to EB stores, applying best practices to the company's operations, the closing of the West Chester general office and the Coatesville distribution center, and restructuring of field management. We continue to have great confidence in our new and used business model as an earnings driver while the industry moves through the transformation to multiple new hardware platforms."