Gamestop's Got Game: Fool by Numbers

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On Nov. 21, video game hardware, software, and accessories retailer GameStop (NYSE: GME) released fiscal third-quarter 2006 earnings for the period ended Oct. 28. Here are the quick and dirty details for the quarter.

• Sales grew 89.4% to $1 billion, as GameStop continued to benefit from last year's acquisition of archrival Electronics Boutique. Same-store sales advanced 8.8%. Video game software sales grew 14%, while hardware sales advanced 69%.
• Gross margins fell due to lower-margin hardware sales, but lower SG&A expenses from merger-related savings drove better operating margins.
• Net income came in at $0.17 per share, versus a loss last year; both periods contained merger-related charges.
• Management expects full-year 2006 diluted earnings of $1.98-$2.04 per share, total sales growth of 15%-17%, and comparable sales of 7%-9%.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Q3 2006	Q3 2005	Change
Sales	$1,011,560	$534,212	89.4%
Net Profit	$13,569	($2,460)	N/A
EPS	$0.17	($0.04)	N/A
Diluted Shares	79,291	56,630	40.0%

*13 weeks ended October 28, 2006 and October 29, 2005

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2006	Q3 2005	Change*
Gross Margin	31.2%	33.1%	(1.9)
Operating Margin	4.4%	1.9%	2.5
Net Margin	1.3%	(0.5%)	1.8

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2006	Q3 2005	Change
Cash + ST Invest.	$180,948	$81,031	123.3%
Accounts Rec.	$32,841	$34,662	(5.3%)
Inventory	$844,979	$746,653	13.2%

Liabilities	Q3 2006	Q3 2005	Change
Accounts Payable	$605,773	$519,972	16.5%
Long-Term Debt*	$12,652	$35,107	(63.9%)

*Includes current portion.

Learn the ways of the balance sheet.

Cash Flow Highlights

Fools will have to wait until GameStop files its 10-Q for juicy cash flow details.

Find out why Fools always follow the money.

Comparable companies:

• Circuit City (NYSE: CC)
• Conn 's (Nasdaq: CONN)
• Electronic Arts (Nasdaq: ERTS)
• Activision (Nasdaq: ATVI)

Related Foolishness:

• Foolish Fundamentals: Free Cash Flow
• Foolish Fundamentals: Return on Invested Capital

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Electronic Arts, GameStop, and Activision are Motley Fool Stock Advisor recommendations. Try Tom and David Gardner's flagship investing advice newsletter free for 30 days.

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.