-- Gross Margin Improves 1.2%
-- Revenues Increase 10.4%
-- Net Income Per Share For First Six Months Up 89%
-- 9-9-99 Sales Expected To Be Largest Single Day In Company's History
WEST CHESTER, Pa., Aug. 19 /PRNewswire/ -- Electronics Boutique Holdings
Corp. (Nasdaq: ELBO), the world's largest specialty retailer of electronic
games, today reported record second quarter net income of $0.5 million, or
$0.03 per share fully diluted, for the second quarter of its fiscal 2000 year,
which ended July 31, 1999.
This compares with a pro forma net loss of ($0.4) million, or ($0.02) per
share fully diluted, for the second quarter of fiscal 1999. The pro forma
results assume that Electronics Boutique was a C corporation in the second
quarter of fiscal 1999. The company converted from S corporation to
C corporation status in July 1998 in connection with its initial public
offering. Shares outstanding totaled 20.4 million in the second quarter of
fiscal 2000, compared with pro forma shares of 16.0 million a year earlier.
Total revenues increased 10.4% to $113.1 million in the second quarter of
fiscal 2000, compared with $102.5 million in the prior-year period. The
growth in revenues was largely attributable to an increase in Electronics
Boutique's store base. The Company had 567 stores in operation as of
July 31, 1999, an increase from 474 stores a year earlier. Comparable store
sales decreased by 4%, compared with the year-ago quarter.
For the first six months of fiscal 2000, the Company reported a
140% increase in net income to $3.4 million, or $0.17 per share, compared with
pro forma net income of $1.4 million, or $0.09 per share, for the year-ago
period. Total revenues for the first six months of fiscal 2000 increased
12.8% to $236.7 million, compared with $209.8 million for the year-ago period.
Joseph J. Firestone, President and Chief Executive Officer, commented, "We
are extremely pleased with our results for the quarter and the outlook for the
remainder of the year. Although comparable store sales were down, we
attribute the modest decline to a relatively weak selection of new release
titles for Sony Playstation and Nintendo64 in the first half of the year.
Major titles for both these systems are expected during the third and fourth
quarters in time for the holiday season. Additionally, both Sony and Nintendo
have announced a price reduction in their hardware systems to $99 from $129,
which we expect will stimulate sales. We also continue to do strong business
in Gameboy products and PC entertainment software and can barely keep Pokemon
products in stock."
"Presales for the Sega Dreamcast system have, at this stage prior to the
unit's release, surpassed the pace of any previous hardware launch including
the Sony Playstation in 1995 and Nintendo64 in 1996," continued Mr. Firestone.
"We expect sales volume for September 9th to be our largest single day ever,
translating into record sales for the week and month in conjunction with the
release."
The gross margin on sales increased 120 basis points to 26.7% for the
second quarter of fiscal 2000, compared with 25.5% for the second quarter of
fiscal 1999. Similar to the first quarter of fiscal 2000, gross margin
improvement was primarily attributable to increased sales of Gameboy software
and hardware, toys and Pokemon related products that carry higher overall
margins than the console video game category. The Company expects gross
margin to be lower during the third quarter as a result of the magnitude of
sales anticipated for the Sega Dreamcast system.
Mr. Firestone said that net sales for EBWorld.com continue to be robust at
$1.1 million during the quarter and that the division's results are meeting
its expectations. During the second quarter, the http://www.ebworld.com site
attracted 3.6 million visits and the repeat customer percentage continues to
grow.
Electronics Boutique will conduct a conference call today at
10:00 a.m. EDT to discuss its second quarter financial results. Investors
will have the opportunity to listen to the conference call over the Internet
through Investor Broadcast Networks' Vcall website, located at
http://www.vcall.com . To listen to the live call, please go to the web site
at least fifteen minutes early to register, download, and install any
necessary audio software. For those who cannot listen to the live broadcast,
a replay will be available shortly after the call and a transcript will be
available 24 to 48 hours later.
Electronics Boutique is the leading specialty retailer of video and
computer games and also sells video game hardware, PC productivity software
and accessories. The company currently operates 567 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., to accelerate
the growth of its Internet business. 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
(Unaudited; Amounts in thousands, except share and per-share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
Net Sales $112,376 $101,930 $235,120 $208,660
Management fees 719 530 1,580 1,101
Total Revenues 113,095 102,460 236,700 209,761
Costs and Expenses:
Cost of merchandise
sold, including
freight 82,339 75,905 172,777 155,425
Selling, general
and administrative 26,975 24,060 53,000 46,330
Depreciation and
amortization 2,840 2,405 5,547 4,659
Operating Income 941 90 5,376 3,347
Equity in loss
of affiliates -- (80) -- (160)
Interest (income)
expense, net 38 595 (252) 809
Income (loss) before
income tax expense 903 (585) 5,628 2,378
Income tax expense 354 77 2,206 190
Net income (loss) $549 ($662) $3,422 $2,188
Net income per
share -- basic
and diluted $0.03 $0.17
Weighted average shares
outstanding --
diluted 20,355,595 20,334,126
Pro Forma Data
(see note)
Pro forma operating
income (loss) ($8) $3,151
Pro forma income (loss)
before income tax
expense (602) 2,342
Pro forma income tax
expense (benefit) (236) 919
Pro forma net
income (loss) ($366) $1,423
Pro forma net income
(loss) per share
-- basic and diluted ($0.02) $0.09
Pro forma weighted
average shares
outstanding
-- diluted 15,986,508 15,890,354
Electronics Boutique Holdings Corp. (the "Company") completed its initial
public offering on July 29, 1998. Historical statements of income prior
to that date include the results of operations of the Company's
predecessors. Immediately prior to the public offering a series of
reorganization transactions occurred in which the Company acquired
substantially all of the assets and liabilities of its predecessors and
The Electronics Boutique, Inc., a predecessor to the Company, retained
certain assets, including the West Chester distribution center and
headquarters and the shares of Electronics Boutique plc. The pro forma
data is presented in order to illustrate the effect on the consolidated
statements of income as if these assets were retained as of the beginning
of the fiscal year. Additionally, prior to the offering, The Electronics
Boutique, Inc. was taxed as an S Corporation for federal and certain state
income tax purposes. The pro forma data also reflects the adjustment to
record income taxes as if the company had been a C Corporation for federal
and state income tax purposes.
A more detailed explanation of the above pro forma adjustments can be
found in the company's registration statement relating to its initial
public offering filed with the Securities and Exchange Commission.
Electronics Boutique Holdings Corp.
Selected Consolidated Balance Sheet Data
(Unaudited; Amounts in thousands)
July 31, January 30,
1999 1999
Cash and cash equivalents $10,390 $42,006
Merchandise inventories 67,099 65,433
Total current assets 89,557 117,614
Total assets 152,436 172,047
Current liabilities 97,461 120,705
Total liabilities 99,450 123,205
Stockholders' equity 52,486 48,842
SOURCE Electronics Boutique Holdings Corp.
 back to top
Related links:
http://www.ebworld.com
CONTACT:
John R. Panichello, Chief Financial Officer
of Electronics Boutique, 610-430-8100; or General Info, Kelly
Lofts, Analyst Info, Lynn Sawyer-Landau, or Media Info, Jason
Rando, 212-661-8030, all of The Financial Relations Board for
Electronics Boutique
|
