-- Comparable Store Sales Up 10%
-- Record Sales for Quarter Produce Earnings In Excess Of Company's
Expectations
-- Dreamcast, GameBoy & Pokemon Strong Through Holidays
WEST CHESTER, Pa., March 9 /PRNewswire/ -- Electronics Boutique Holdings
Corp. (Nasdaq: ELBO), among the world's largest specialty retailers of
electronic games, today reported results for the fourth quarter of its fiscal
2000 year, which ended January 29, 2000. During the fourth quarter of fiscal
2000, the Company completed expenditures towards a previously announced
advertising and branding campaign, which was initiated during the third
quarter. The campaign contributed to Electronics Boutique's record setting
holiday season and produced financial results in excess of the Company's
expectations.
Net income for the fourth quarter of 2000 totaled $15.5 million, or
$0.71 per share fully diluted. Excluding $9.1 million of pre-tax expenses
related to the branding campaign, net income for the fourth quarter of 2000
increased 29% to $21.2 million, or $0.97 per share fully diluted, compared
with $16.5 million, or $0.81 per share fully diluted, for the year-ago
quarter.
Total revenues increased 24% to $314.6 million in the fourth quarter of
fiscal 2000, compared with $252.9 million in the prior-year period. Revenue
growth resulted from a 10% increase in comparable store sales, as well as an
increase in the retail store base. The increase in comparable store sales was
due to strong sales of Sega Dreamcast and Nintendo GameBoy hardware and
software, and toys and trading cards particularly related to Pokemon. The
Company had 619 stores in operation as of January 29, 2000, compared with 528
stores a year earlier.
For the twelve months ended January 29, 2000, the Company reported net
income excluding branding campaign expenses of $29.8 million, or $1.44 per
share fully diluted, compared with pro forma net income of $20.1 million, or
$1.11 per share fully diluted, for fiscal 1999. Including branding campaign
expenses, net income for fiscal 2000 was $22.8 million, or $1.10 per share.
The pro forma results for fiscal 1999 reflect that Electronics Boutique
converted from S corporation to C corporation status in July 1998 in
connection with its initial public offering. Total revenues for fiscal 2000
increased 27% to $728.7 million, compared with $573.9 million for fiscal 1999.
The Company's strong 23.9% gross margin on sales for the fourth quarter,
compared with 23.3% for the year ago period, is particularly compelling given
the continued strength of the Dreamcast hardware sales which generate low
margins. This reflects the company's success at selling multiple pieces of
higher margin software and accessories with each hardware system, in addition
to strong performance from higher margin products such as GameBoy software and
accessories, toys and trading cards.
Joseph J. Firestone, President and Chief Executive Officer, commented, "We
achieved many milestones during the past fiscal year including the largest
single day of sales and strongest holiday season in our history. We proved
that we are the top retailer for game enthusiasts by being the number one
retailer for the Dreamcast system on its initial release date. We often have
the highest market share in the initial days of a new game or system release,
which we believe reflects our winning formula. EBWorld.com continues to
perform strongly, with site traffic jumping 135% to 8.1 million visits in the
current fourth quarter from 3.4 million visits in last year's quarter. We
were able to take orders through 9 PM December 23rd for next day delivery.
Our satisfied customers wrote and thanked us profusely. We also are
particularly pleased with the results of our branding campaign. Originally
designated to promote the EBWorld.com brand, we are seeing significant
benefits to our retail stores as well."
"We look towards fiscal 2001 with great excitement as momentum in our
industry continues to build for new product releases. We expect to open 100
to 125 new stores worldwide in fiscal 2001, including entry into New Zealand
and the expansion of our EBKids format store. In terms of new product
releases, Sony's PlayStation 2 is expected to be released in the fall and we
will launch an aggressive pre-sell program in the second quarter. While
Dreamcast was the most successful launch of a new hardware system to date,
Sony is expected to introduce the PlayStation 2 with twice as many units as
the Dreamcast and a strong assortment of game titles," concluded Mr.
Firestone.
EBWorld.com net sales for the fourth quarter totaled $8.8 million,
bringing the full year total to $14.1 million. This compares with $2.9
million for the year-ago quarter and $4.3 million for fiscal 1999. Fourth
quarter Internet sales were driven by an extremely strong 9-week holiday
season, which more than tripled the fiscal 1999 holiday season.
Electronics Boutique is among the world's largest specialty retailers of
video and computer games and also sells video game hardware, PC productivity
software and accessories. The company currently operates 619 stores in 46
states, Puerto Rico, Canada, Australia and South Korea, primarily under the
names Electronics Boutique and Stop 'N Save Software. The Company has also
established a separate e-commerce division, EBWorld.com, Inc. The Company's
website can be found at http://www.ebworld.com.
This press release contains "forward-looking statements." Electronics
Boutique ("EB") is including this statement for the express purpose of
availing itself of the protections of the safe harbor provided by the Private
Securities Litigation Reform Act of 1995 with respect to all such forward-
looking statements. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially. These
risks include, but are not limited to, EB's dependence on the continued
introduction of new and enhanced video games and PC hardware and software;
the cyclical nature of the video game market; the rapid technological changes
which occur in the video game and PC industry; EB's ability to open and
operate new stores on a profitable basis; the intensely competitive nature of
the electronic game industry and its rapid changes in consumer preferences and
frequent new product introductions; the seasonal nature of the retail
industry; EB's dependence on its suppliers for products; risks inherent to
conducting international operations; and consumer spending patterns and
prevailing economic conditions. Please refer to Electronics Boutique's Annual
Report on Form 10-K on file with the SEC for a more detailed discussion of
these and other risks that could cause results to differ materially.
Electronics Boutique Holdings Corp.
Consolidated Statements of Income
(Amounts in thousands, except share and per-share amounts)
Thirteen Weeks Ended Fifty-two Weeks Ended
(Unaudited) (Audited)
Jan. 29, Jan. 30, Jan. 29, Jan. 30,
2000 1999 2000 1999
Net Sales $312,216 $251,190 $723,801 $570,514
Management fees 2,348 1,669 4,873 3,405
Total Revenues 314,564 252,859 728,674 573,919
Costs and Expenses:
Cost of merchandise sold,
including freight 237,694 192,692 546,451 431,745
Selling, general and
administrative 48,514 30,985 133,534 99,972
Depreciation and
amortization 3,612 2,620 12,278 9,774
Operating Income 24,744 26,562 36,411 32,428
Equity in loss of affiliates -- -- -- (160)
Interest (income) expense,
net (1,111) (371) (1,428) 289
Income before income
tax expense 25,855 26,933 37,839 31,979
Income tax expense 10,310 10,457 15,008 11,693
Net income $15,545 $16,476 $22,831 $20,286
Net income per share - basic $0.72 $0.82 $1.11
Weighted average shares
outstanding - basic 21,710,087 20,169,200 20,559,100
Net income per share -
diluted $0.71 $0.81 $1.10
Weighted average shares
outstanding - diluted 21,980,064 20,386,530 20,762,249
Pro Forma Data (see note)
Pro forma income before
income tax expense 31,979
Pro forma income tax expense 11,866
Pro forma net income $20,113
Pro forma net income
per share - basic $1.12
Pro forma net income
per share - diluted $1.11
Pro forma weighted average
shares outstanding - basic 18,029,777
Pro forma weighted average
shares outstanding - diluted 18,084,109
Electronics Boutique Holdings Corp. (the "Company") completed its initial
public offering on July 28, 1998. Historical statements of income prior
to that date include the results of operations of the Company's
predecessors. Prior to Electronics Boutique's initial public offering,
its predecessors were taxed as an S Corporation and a partnership. As a
result, their taxable income passed through to their partners and
shareholders for federal and certain state income tax purposes.
Accordingly, for periods prior to the initial public offering, the
financial statements do not include a provision for federal and certain
state income taxes. The pro forma net income gives effect to the
application of the pro forma income tax expense that would have been
reported had the predecessors been subject to federal and all state income
taxes.
Electronics Boutique Holdings Corp.
Selected Consolidated Balance Sheet Data
(Amounts in thousands)
January 29, January 30,
2000 1999
Cash and cash equivalents $88,356 $42,006
Merchandise inventories 90,551 65,433
Total current assets 198,940 117,614
Total assets 275,513 172,047
Current liabilities 154,942 120,705
Total liabilities 159,026 123,205
Stockholders' equity 116,487 48,842
SOURCE Electronics Boutique Holdings Corp.
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Related links:
http://www.ebworld.com
CONTACT:
John R. Panichello, Chief Financial Officer
of Electronics Boutique, 610-430-8100; General, Kelly Lofts,
Media, Paul Del Colle, 212-661-8030, or Analyst, Michelle
Cicoria, 617-369-9240, all of The Financial Relations Board, for
Electronics Boutique Holdings Corp.
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