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GameStop: yearly earnings down 5%; Q4 profit drops 7%

Q4 sales flat; retailer expects biggest growth in fiscal 2010 to come from used product

GameStop's fourth quarter financials have shown a drop in net earnings of 7.1 per cent to $215.9m.

Total sales for the quarter were flat on last year, increasing 0.9 per cent to $3.52bn, while comparable store sales decreased 7.9 per cent.

Net earnings were down 5.3 per cent over the whole of fiscal 2009, totalling $377.3m, while total sales increased 3.1 per cent to $9.08bn.

"GameStop delivered its second highest earnings year ever in fiscal 2009, in spite of the weak worldwide economic environment," said CEO Daniel DeMatteo. "We saw global market share growth as new software sales increased 1.2 per cent, proving once again that the great entertainment value and exceptional service GameStop delivers resonates with our customers.

"Each facet of our business has been evaluated in the past year and I am pleased that our team worldwide is working harder than ever to enhance our core competitive advantages and also build new, exciting growth drivers.

"GameStop remains committed to our long-range plans by prudently investing in new stores and strategic initiatives to strengthen our relationship with our customers. In 2010, we see great opportunity to deliver earnings growth by improving global operational efficiencies, expanding our leading market share and utilising the buy-sell-trade model to drive new and used software sales."

The company's outlook indicated sales growth of between 4-6 per cent for fiscal 2010, with sales growth of 5-10 per cent expected for used product and 2-5 per cent for new software, while new hardware sales were expected to decline by 5-15 per cent.

Previously announced plans to spend $75m on the opening of 400 new stores and $125m on improvements to stores, systems and other operations would go ahead as intended, it added.

New hardware sales dropped 9.2 per cent in Q4 in comparison to the previous year, while new software sales were up 5.2 per cent. Used product sales grew by 8.8 per cent.

For the whole of the fiscal year, new hardware sales were down 5.5 per cent, new software sales were down 1.2 per cent and used product sales grew 18.1 per cent.

Gross profit made over the entire year from used game products reached $1.12bn. For new game software profit was $795m and for new hardware $113.5m.