Electronics Boutique Announces Third Quarter Financial Results

Electronics Boutique Announces Third Quarter Financial Results Total Revenue Increases 37.4% to $446 Million; EPS Rises Significantly to $0.30 WEST CHESTER, Pa., Nov. 18 /PRNewswire-FirstCall/ -- Electronics Boutique Holdings Corp. (NASDAQ:ELBO), the leading global specialty retailer of video games and related products, today announced financial results for the third quarter and nine months ended October 30, 2004. Financial Results In line with previously announced expectations, total revenue for the third quarter of fiscal 2005 increased 37.4% to $446.0 million from $324.7 million in the same period last year. Top line growth resulted from a 35% increase in video game software sales. Comparable store sales increased 13.8%, versus a decline of 6.5% last year, driven by broad-based strength in all categories and across all geographic regions. Net income for the quarter increased to $7.3 million, or $0.30 per diluted share, compared to net income of $1.5 million, or $0.06 per diluted share, in the same period last year. Commenting on third quarter results, Jeffrey Griffiths, President and Chief Executive Officer, stated, "We are very pleased to report impressive third quarter results that again outperformed the industry as a whole. We significantly expanded both our top and bottom lines, highlighting the strong performance that can be generated when our business model is complemented by a positive industry environment. We demonstrated gains across all areas of our business. These gains were fueled in part by better than anticipated new release performance as well as the early launch of Sony's new PlayStation 2 model. In addition, we continued to make progress on our initiatives to grow our higher-margin pre-played category and international business." During the quarter, the Company opened a record 140 new stores, increasing the total store count to 1,869 as of October 30, 2004. The Company operated 1,436 stores at the end of the third quarter of fiscal 2004. For the first nine months of fiscal 2005, total revenue increased 26.9% to $1,180.4 million from $930.3 million in the prior-year period. Net income increased 125% to $14.2 million, or $0.58 per diluted share, from $6.3 million, or $0.25 per diluted share, last year. Current Company Outlook As recently announced, based on the better than anticipated year to date performance and current industry visibility, the Company expects fourth quarter revenue to increase between 18% and 21%, driven by a comparable store sales increase of 4% to 6%, and diluted earnings per share in the range of $1.62 to $1.72. This translates to a total annual revenue increase in the range of 23% to 25% and annual earnings between $2.20 and $2.30 per diluted share. Mr. Griffiths concluded, "As we enter the holiday selling season, we are confident in our market position and our ability to achieve our strategic objectives. We anticipate a continuation of the positive trends we experienced in the third quarter. Additionally, we are very encouraged by the state of the industry especially given the strong lineup of new releases, led by Microsoft's Halo 2 and Take Two's Grand Theft Auto: San Andreas, as well as the launch of the Nintendo DS in the portable gaming category next week." Conference Call Information The Company will host an investor conference call today at 5 p.m. Eastern to review its financial results. The call will be open to all interested investors through a simultaneous Internet broadcast at http://www.ebholdings.com/, and it will be archived for two weeks on the website. A recording of the call will also be available at 8 p.m. Eastern on November 18, 2004 through midnight on November 25, 2004. Listeners should call (800) 642-1687 (domestic) or (706) 645-9291 (international), and use access code 2083653. About Electronics Boutique Holdings Corp. Electronics Boutique, a Fortune 1000 company, is the leading global specialty retailer dedicated exclusively to video game hardware and software, PC entertainment software, accessories and related products. As of October 30, 2004, the company operated 1,869 stores in the United States, Australia, Canada, Denmark, Germany, Italy, New Zealand, Norway, Puerto Rico and Sweden -- primarily under the names EB Games and Electronics Boutique. The company operates an e-commerce website at http://www.ebgames.com/. Additional company information is available at http://www.ebholdings.com/. This release contains forward-looking statements, including statements by Jeffrey Griffiths and those related to the financial performance of Electronics Boutique for the fourth quarter and full fiscal year ending January 29, 2005, to projected sales and consumer demand for the balance of the fiscal year, and to the outlook for the video game industry in general. Forward-looking statements refer to expectations, projections and other characterizations of future events or circumstances and are often identified by the use of words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimated," "continue" or comparable terminology. In addition to factors specified in Electronics Boutique's recent filings with the Securities and Exchange Commission, there are other factors that could cause actual results to materially differ from those expressed or implied in these forward-looking statements, such as the schedule and sell-through for new software releases, consumer demand for video game hardware and software, the timing of the introduction of new generation hardware systems, pricing changes by key vendors for hardware and software and the timing of any such changes, the adequacy of supplies of new and pre-played product, increased competition and promotional activity from other retailers, and the availability of locations for, and timing of the opening of, new stores. In light of the risks and uncertainties inherent in the forward-looking statements, these statements should not be regarded as a representation by Electronics Boutique or any other person that the projected results, objectives or plans will be achieved. Electronics Boutique undertakes no obligation to revise or update the forward-looking statements to reflect events or circumstances after the date hereof. Electronics Boutique Holdings Corp. Consolidated Statements of Income (unaudited) (Amounts in thousands, except per-share amounts) 13 Weeks Ended 39 Weeks Ended Oct. 30, Nov. 1, Oct. 30, Nov. 1, 2004 2003 2004 2003 Net sales $444,582 $323,146 $1,176,033 $925,541 Management fees 1,465 1,570 4,384 4,722 Total revenues 446,047 324,716 1,180,417 930,263 Cost of goods sold 322,788 235,538 848,244 678,420 Gross profit 123,259 89,178 332,173 251,843 Costs and expenses: Selling, general and administrative expense 102,926 80,046 285,279 222,884 Depreciation and amortization 9,238 7,040 25,629 19,967 Operating income 11,095 2,092 21,265 8,992 Interest income, net 483 276 1,319 1,115 Income before income tax expense 11,578 2,368 22,584 10,107 Income tax expense 4,289 886 8,365 3,783 Net income $7,289 $1,482 $14,219 $6,324 Net income per share: Basic $0.31 $0.06 $0.59 $0.25 Diluted $0.30 $0.06 $0.58 $0.25 Weighted average shares outstanding: Basic 23,892 24,742 24,086 25,203 Diluted 24,297 25,243 24,462 25,502 Electronics Boutique Holdings Corp. Selected Consolidated Balance Sheet Data (Amounts in thousands) Oct. 30, Nov. 1, Jan. 31, 2004 2003 2004 (unaudited) (unaudited) (audited) Cash and cash equivalents $71,485 $72,924 $157,968 Merchandise inventories 339,979 258,607 253,577 Total current assets 459,455 382,604 477,687 Total assets 655,047 536,250 636,375 Accounts payable 250,787 206,967 220,481 Total current liabilities 340,870 260,788 311,679 Total liabilities 359,751 273,885 332,395 Total stockholders' equity 295,296 262,365 303,980 Schedule 1 Electronics Boutique Holdings Corp. Domestic Retail Sales Mix 13 Weeks Ended 13 Weeks Ended Oct. 30, Nov. 1, 2004 2003 Video Game Software 64% 61% Video Game Hardware 14% 16% PC Software 9% 11% Accessories 9% 9% Other 4% 3% Source: Electronics Boutique Holdings Corp. CONTACT: James A. Smith, Chief Financial Officer of Electronics Boutique Holdings Corp., +1-610-430-8100; or Financial Dynamics: Investors - Cara O'Brien/Melissa Myron, or Media - Melissa Merrill, +1-212-850-5600 Web site: http://www.ebholdings.com/ http://www.ebgames.com/ ------- Profile: International Entertainment