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:

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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.