Wednesday, May 21, 2008

just a little more on gme

will gme's hot streak continue? the company will report tomorrow morning, and the expectation is for the company to almost double the profit levels of the first quarter of 2007.

like i wrote earlier, the consensus analysts' estimate for gme is for earnings of 35 cents per share vs. just 16 cents a year ago. as consumers search for lower cost entertainment options and home gaming spreads, the company has become one of the few bright spots on the retail landscape. it has exceeded expectations for the last five quarters and is hoping to make it six. as with many fast-growing companies, analysts have been scrambling to keep up, raising their estimates three times in the last three months.

sales have been helped by the introduction of several hot new game titles, including the controversial but very popular Grand Theft Auto IV released earlier this month. the popularity of the Nintendo Wii and its DS handheld gaming platform has also fueled sales increases for the retailer. in addition to the platforms, Wii games such as Super Smash Brothers have been a huge hit for gme. the company has also ramped up its used games sales in recent months, responding to consumer demand for lower-priced entertainment.

the company is already one of the fastest-growing retailers and has no plans to slow any time soon. the company hopes to open around 600 stores this year after 586 new locations last year. currently, there are 5,260 stores in 17 countries around the world. half of the new stores planned for 2008 are expected to be outside the us, and company officials have said that they expect growth rates in key european markets to exceed those here in the us in 2008. two-thirds of new international store openings for this year will be in europe, with the balance in canada and australia.

in the us, gme currently has about 25% of the new video game and an enormous 80% of the used game market. the ability for consumers to turn in one game for a credit is one of the company's key selling features and gives it a ready inventory of used video games for consumers to purchase unlike the big box competitors.

long gme

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