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GameStop reports Q2 sales surge

US specialist retailer GameStop had released its financial report for the second quarter, noting an uncertainty over the available units for the launch of Nintendo's Wii and Sony's PS3.

US specialist retailer GameStop had released its financial report for the second quarter, noting an uncertainty over the available units for the launch of Nintendo's Wii and Sony's PS3.

The company posted profits of US$3.2 million (2.5 million Euro) for the quarter, down from US$7.9 million (6.2 million Euro) in the same quarter a year ago. The decline was primarily attributed to a substantial US$20.2 million (15.7 million Euro) in interest expenses relating to the company's merger with Electronic Boutique.

Sales for the quarter were up significantly on last year, reaching US$963.3 million (750.8 million Euro) compared to US$415.9 million (324.1 million Euro) in 2005.

Strong performances from EA's NCAA Football '07 and Nintendo's New Super Mario Bros. helped drive sales during the period, with GameStop noting that stores which have been open over a year showed a 3.9 per cent sales growth.

R. Richard Fontaine, GameStop chairman and CEO, commented: "A major milestone of the quarter was completing the integration of GameStop and Electronics Boutique. It is a testimony to the hard work and partnership of all our team members that, with the recently completed installation of a singular, unified POS system, we have completed the integration of two sizable companies, and did so on time and without any disruptions to our business nor deterioration in customer service."

Looking forward, the company is projecting a growth in total sales of between 15 and 17 per cent, but remains cautious over the amount of hardware units available in stores for both the launch of Nintendo's Wii and Sony's PlayStation 3 consoles later this year.

In a post results conference call, GameStop vice chairman and COO Dan DeMatteo stated the company's reluctance to commit to pre-order schemes until more solid launch information from the platform holders was forthcoming, in an effort to avoid the consumer disappointment that plagued Microsoft's Xbox 360 launch.

"We're not going to take pre-orders until we have some more and clearer information from both Nintendo and Sony in terms of likely launch quantities for GameStop," DeMatteo stated.

"We don't want to do what we did last year, which was to take way too many on the 360, and then under-deliver. We want to get closer to keeping a promise to the consumer."

Talking numbers, EVP and CFO David Carlson stated: "We're looking at around a million units of PS3 in the US, which is somewhere around half or less than what Sony has said [it will ship]. With the Wii, we're looking at around 750,000 in the US."

"We remain conservative until they actually show up at our warehouse," Carlson added.

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