Recession? What recession?

If you're a GameStop (NYSE:GME) shareholder, and confused by all the talk of an economic recession going on, well, that's understandable. The rest of us can't pick up a newspaper these days without hearing of layoffs at Boeing (NYSE:BA), anemic sales at Hewlett-Packard (NYSE:HPQ), or bankruptcy rumblings at General Motors. But at GameStop, it's a whole different story.

The gaming retailer just published its forecast for the year to come, and fiscal 2009 looks like a winner as well. Management predicts something on the order of 5% same-store sales growth, a total sales growth of 11% or thereabouts, all of which could culminate in a crescendo of good news: 20% EPS growth for the year.

And at the risk of mixing a few metaphors, GameStop ain't just whistlin' pipe dreams past the graveyard, either. True, the company missed consensus estimates last quarter, but in a happy aside before plunging into its fiscal '09 forecast, GameStop confirmed that it blew the top off analyst estimates for the fourth quarter of 2008. Revenues of $3.5 billion beat the consensus handily. Earnings of $1.33 or better will either match or beat as well.

A few caveats
As for why 2009 will resemble Q4 2008 more than Q3, management predicates its predictions on three factors:

  • "The expectation that the recession will continue through the 2009 holiday season" and
  • "Existing sales and margin trends" continuing along their present path, regardless.
  • And here's the kicker: "Current estimates of new product launches."

The recession is, of course, out of GameStop's control. It can tweak its business model to accommodate the slowdown -- for example, by emphasizing sales of lower-priced used games over brand-new box-sets. But basically, it's at the mercy of consumer demand. Yes, Blockbuster's (NYSE:BBI) entry into the game-rental-by-mail market poses some risk of siphoning off demand, but I doubt it's more significant than the in-store business -- and anyway, Blockbuster's going bankrupt this year, right?

In any case, GameStop seems to be riding out the slump quite nicely so far. The firm's gross margins have risen in back-to-back quarters, and both operating and net margins seem stable.

Foolish takeaway
That leaves just one risk out of GameStop's control. One risk it cannot really control for: "New product launches" from game-makers like Electronic Arts (NASDAQ:ERTS), Activision Blizzard (NASDAQ:ATVI), and Take-Two Interactive (NASDAQ:TTWO). For this, GameStop must depend on its suppliers' enlightened self-interest in keeping their own revenues flowing. My hunch: It's a safe assumption that "if they can, then they will."

And if they do, GameStop will thrive.

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Take-Two Interactive is a Motley Fool Rule Breakers pick. GameStop, Electronic Arts, and Activision Blizzard are Motley Fool Stock Advisor picks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Smith owns shares of Boeing. Why do we tell you this? Because The Motley Fool has a disclosure policy.