-- Comparable Store Sales Up 37.5%
-- Revenues Increase 59%
-- Dreamcast, Gameboy & New PlayStation Titles All Drive Growth
-- Pokemon Craze Continues to Impact Sales and Margins
WEST CHESTER, Pa., Nov. 15 /PRNewswire/ -- Electronics Boutique Holdings
Corp. (Nasdaq: ELBO), among the world's largest specialty retailers of
electronic games, today reported results for the third quarter of its fiscal
2000 year, which ended October 30, 1999. Net income for the third quarter of
2000 totaled $3.9 million, or $0.19 per share fully diluted, compared with
$1.6 million, or $0.08 per share fully diluted, for the year-ago quarter.
Earnings per share for the third quarter of 2000 includes a $0.06 charge for
e-commerce related advertising expenses. Before these expenses, earnings
would have been $0.25 per share fully diluted.
Total revenues increased 59.4% to $177.4 million in the third quarter of
fiscal 2000, compared with $111.3 million in the prior-year period. Revenue
growth was driven by a 37.5% increase in comparable store sales, as well as an
increase in the retail store base. The Company had 595 stores in operation as
of October 30, 1999, compared with 500 stores a year earlier.
For the first nine months of fiscal 2000, the Company reported net income
of $7.3 million, or $0.36 per share fully diluted, compared with pro forma net
income of $3.0 million, or $0.18 per share fully diluted, for the year-ago
period. Per share earnings for the first nine months of fiscal 2000 are net
of third quarter e-commerce related advertising expenses. The pro forma
results for the nine-month period 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 the first nine months of fiscal
2000 totaled $414.1 million, compared with $321.1 million for the year-ago
period.
Joseph J. Firestone, President and Chief Executive Officer, commented, "We
are extremely proud and pleased to report a successful quarter, impacted by
continued success across all major game systems. Electronics Boutique was the
number one retailer on the release day of Sega's Dreamcast and had a 22%
market share in the US over the first three days of sales. The quarter was
also positively impacted by strong performance in the Nintendo Gameboy
category, new release titles for the Sony PlayStation and a strong surge in
toy categories including Pokemon trading cards."
The gross margin on sales of 22.9% for the third quarter of fiscal 2000
exceeded the Company's expectations. The gross margin declined by only 1.5%
compared with the year-ago quarter, despite the significant sales levels of
lower margin Sega Dreamcast hardware. "We are successful at selling multiple
pieces of software with each hardware system," continued Mr. Firestone. "This
coupled with sales of higher margin products such as Gameboys, toys and
trading cards, resulted in the better than expected gross margin."
During the third quarter, the Company initiated a marketing campaign for
its Internet subsidiary, EBWorld.com, Inc., which included print and media
advertising. Initial response to the campaign has been very strong. During
October 1999, the first month of the marketing campaign, visits to the
http://www.ebworld.com site increased more than 40% compared with September 1999.
During the third quarter the web site attracted 5.1 million visits and sales
totaled $2.7 million.
"We have indicated that during fiscal 2000, we intend to spend
approximately $12 million towards branding our e-commerce business. We are
pleased to report that we are currently on target with expectations and
anticipate keeping marketing expenditures within the planned range. During
the third quarter, our EPS was negatively impacted by $0.06 per share due to
advertising and promotional expenses primarily associated with our new
marketing campaign. We do not anticipate earnings to be negatively impacted
in fiscal 2001 by the continuation of this campaign. We believe the financial
results for the quarter further substantiate the strong fundamentals
supporting the electronic gaming industry and our leadership position,"
concluded Mr. Firestone.
Electronics Boutique is one of the leading specialty retailers of video
and computer games and also sells video game hardware, PC productivity
software and accessories. The company currently operates 595 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
(Unaudited; Amounts in thousands, except share and per-share amounts)
Thirteen Weeks Ended Thirty-nine Weeks Ended
Oct. 30, Oct. 31, Oct. 30, Oct. 31,
1999 1998 1999 1998
Net Sales $176,465 $110,664 $411,585 $319,324
Management fees 945 635 2,525 1,736
Total Revenues 177,410 111,299 414,110 321,060
Costs and Expenses:
Cost of merchandise sold,
including freight 135,980 83,628 308,757 239,053
Selling, general and
administrative 32,020 22,657 85,020 68,987
Depreciation and
amortization 3,119 2,495 8,666 7,154
Operating Income 6,291 2,519 11,667 5,866
Equity in loss of affiliates - - - (160)
Interest (income) expense,
net (65) (149) (317) 660
Income before income tax
expense 6,356 2,668 11,984 5,046
Income tax expense 2,492 1,046 4,698 1,236
Net income $3,864 1,622 $7,286 $3,810
Net income per share - basic
and diluted $0.19 $0.08 $0.36
Weighted average shares
outstanding - basic 20,187,898 20,169,200 20,175,438
Weighted average shares
outstanding - diluted 20,733,249 20,169,200 20,467,167
Pro Forma Data (see note)
Pro forma income before
income tax expense 5,046
Pro forma income tax expense 1,978
Pro forma net income $ 3,068
Pro forma net income per
share - basic and diluted $0.18
Pro forma weighted average
shares outstanding - diluted 17,316,636
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
(Unaudited; Amounts in thousands)
October 30, January 30,
1999 1999
Cash and cash equivalents $10,050 $42,006
Merchandise inventories 132,094 65,433
Total current assets 164,217 117,614
Total assets 233,749 172,047
Current liabilities 174,426 120,705
Total liabilities 177,030 123,205
Stockholders' equity 56,719 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, or General Info, Kelly
Lofts, Analyst Info, Michelle Cicoria, or Media Info, Jason Rando
of The Financial Relations Board, 212-661-8030, for Electronics
Boutique
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