Video game retailer and Motley Fool Stock Advisor recommendation GameStop
Second-quarter results announced this morning saw total sales jump 38.9%, as same-store sales advanced an astounding 29.1% and GameStop opened 150 new stores across the globe. Management described the latest generation of video game consoles and related games as a "cycle within a cycle" as the customer base is as wide as ever, spanning from serious gamers to casual players, and it counted an impressive nine hardware platforms, stemming from an array of offerings from Sony's
For gaming neophytes, myself included, the consoles stem from PlayStation's PS3, PS2, PSP; the Nintendo Wii and DS; and Xbox 360. Nintendo's success with the Wii has been a surprise, and the advantage of investing in GameStop is that it benefits regardless of which console or game proves the most popular. For the coming quarter, it expects record-breaking sales from Xbox's Halo 3 and impressive results across Electronic Art's
Strong top-line trends continue to make their way to the bottom line, as second-quarter earnings grew almost sixfold to $0.13. That doesn't sound like much, but it beat analyst expectations by about $0.04. This implies that results are accelerating, which management confirmed by increasing full-year guidance to $1.45-$1.48 on total sales growth of 20%-22%.
The earnings conference call confirmed just why GameStop is succeeding despite serious competition from the electronics retailers, as well as Wal-Mart
So while higher-volume games and consoles can be had at giant retailers, GameStop is one of the few locations where dedicated gamers can find older systems and used games. The combination of product depth and early innings of the latest video-game cycle are doing wonders for the firm's growth, and the game appears far from over.
For related Foolishness:
Fool contributor Ryan Fuhrmann is long shares of Microsoft but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.