EXHIBIT 99.1
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FOR IMMEDIATE RELEASE |
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CONTACTS: |
James A. Smith |
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Chief Financial Officer |
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Electronics Boutique Holdings Corp. |
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(610) 430-8100 |
Electronics Boutique Reports Strong First Quarter Earnings of $0.12 Per Diluted Share
– Revenues increased 27.7 percent as
Electronics Boutique’s video
game sales continue to grow faster than the
industry –
–Reaffirms full year outlook–
WEST CHESTER, PA, May 22, 2003 – Electronics Boutique Holdings Corp. (Nasdaq: ELBO) today announced financial results for its first quarter ended May 3, 2003 highlighted by a 27.7 percent increase in revenues and a comparable store sales increase of 10.1 percent.
Total revenues for the fiscal 2004 first quarter increased to $303.5 million from $237.6 million in the prior fiscal year first quarter. Net income for the period was $3.2 million, or $0.12 per diluted share, compared with net income, before the cumulative effect of a change in accounting principle relating to the recognition of vendor allowances, of $1.5 million, or $0.06 per diluted share for the same quarter last year.
In the first quarter of fiscal 2003, the company’s non-GAAP adjusted revenues were $231.5 million and its adjusted net income, before the cumulative effect of a change in accounting principle, was $2.4 million, or $0.09 per diluted share. The prior year’s non-GAAP adjusted results exclude the results of operations and related expenses associated with the EB Kids and BC Sports Collectibles businesses which the company exited in fiscal 2003, together with the reversal of restructuring and asset impairment charges related to these businesses.
“Electronics Boutique continues to post exceptional top and bottom line results and our business continues to grow substantially faster than the industry,” said Jeffrey W. Griffiths, president and chief executive officer. “This growth is being driven by a combination of factors, including our complementary new and pre-owned software business, and a strong performance from both mall and strip center stores. We’ve structured our business to maximize performance throughout the entire video game cycle. The industry is in its most profitable peak software years and Electronics Boutique is well positioned to benefit from this phase of the cycle.”
Comparable store sales increased 10.1 percent for fiscal 2004 first quarter. The increase was driven by a 34.9 percent increase in domestic software sales and continued strong hardware unit sales. During the quarter, the company opened 75 new stores, increasing the total store count to 1,217 as of May 3, 2003. The company had 948 stores as of May 4, 2002.
Business Outlook
The company reaffirms its fiscal 2004 guidance for total revenues to increase in the range of 14 to 19 percent with a comparable store sales increase in the range of 4 to 6 percent. As a result, fiscal 2004 earnings are expected to be in the range of $1.70 to $1.77 per diluted share. EB Games store growth will continue, with a current plan to open approximately 275 new stores in fiscal 2004 in the United States and international markets.
Fiscal 2004 second quarter earnings are anticipated to be in the range of $0.02 to $0.05 per diluted share. This estimate is based on a decrease in comparable store sales in the range of 5 to 9 percent for the 13-week period ending August 2, 2003. Last year, hardware manufacturers aggressively cut prices on consoles, and this year’s more modest price cuts are not expected to materially increase the hardware unit sales activity that the company has been experiencing year to date.
“As our first quarter results reflect, our business is healthy and we continue to gain market share. With our solid business model and well-executed expansion strategy, we remain confident in our outlook for the balance of the year,” concluded Mr. Griffiths.
The company will host an investor conference call at 5:00 p.m. (EDT) today to review its financial results and operations. The call will be open to all interested investors through a simultaneous Internet broadcast at www.ebholdings.com. The call will be archived for two weeks on the website. A recording of the call will also be available May 22, 2003 at 8 p.m. (EDT) through May 29, 2003 at midnight (EDT). Listeners should call (800) 642-1687 (domestic) or (706) 645-9291 (international) and use access code: 466128
About Electronics Boutique Holdings Corp.
Electronics Boutique, a Fortune 1000 company, is among the world’s largest specialty retailers dedicated exclusively to video game hardware, software and PC entertainment software and accessories. The company currently operates 1,228 stores in the United States, Australia, Canada, Denmark, Germany, Italy, New Zealand, Norway, Puerto Rico, Sweden and South Korea — primarily under the names EB Games and Electronics Boutique. The company operates an e-commerce website at www.ebgames.com. Additional company information is available at www.ebholdings.com.
This release contains
forward-looking statements, including statements by Jeffrey Griffiths and in
our Business Outlook, related to the financial performance of Electronics
Boutique for the second quarter and full year for the fiscal year ending
January 31, 2004, to the growth prospects and opportunities for Electronics
Boutique, and to the growth prospects and projected sales for hardware,
software and for the video game industry in general. Forward-looking statements
refer to expectations, projections and other characterizations of future events
or circumstances and are often identified by the use of words such as “may,”
“will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimated,”
“continue” or comparable terminology. In addition to factors specified in
Electronics Boutique’s recent filings with the Securities and Exchange
Commission, there are other factors that could cause actual results to
materially differ from those expressed or implied in such forward looking
statements, such as the continued impact of a weak economy on Electronics
Boutique’s sales, the
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schedule for new software releases, consumer demand for video game hardware and software, pricing changes by key vendors for hardware and software, increased competition and promotional activity from other retailers, and the availability of suitable locations for new stores. In light of the risks and uncertainties inherent in the forward looking statements, such statements should not be regarded as a representation by Electronics Boutique or any other person that the projected results, objectives or plans will be achieved. Electronics Boutique undertakes no obligation to revise or update the forward-looking statements to reflect events or circumstances after the date hereof.
–Financial Tables Follow–
3
Electronics Boutique Holdings Corp.
Consolidated Statements of Income (unaudited)
(Amounts in thousands, except per-share amounts)
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13 Weeks Ended |
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May 3, |
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May 4, |
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Net sales |
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$ |
301,821 |
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$ |
236,272 |
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Management fees |
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1,643 |
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1,368 |
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Total revenues |
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303,464 |
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237,640 |
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Cost of goods sold |
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223,269 |
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174,596 |
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Gross profit |
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80,195 |
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63,044 |
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Costs and expenses: |
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Selling, general and administrative expense |
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69,302 |
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56,487 |
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Restructuring and asset impairment reversal |
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— |
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(508 |
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Depreciation and amortization |
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6,287 |
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5,147 |
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Operating income |
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4,606 |
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1,918 |
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Interest income, net |
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463 |
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461 |
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Income before income tax expense & cumulative |
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effect of change in accounting principle |
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5,069 |
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2,379 |
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Income tax expense |
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1,897 |
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908 |
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Income before cumulative effect of change in accounting principle |
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3,172 |
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1,471 |
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Cumulative effect of change in accounting principle, net of tax |
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— |
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(4,773 |
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Net income (loss) |
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$ |
3,172 |
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$ |
(3,302 |
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Earnings per share excluding the cumulative effect of change in accounting principle: |
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Basic |
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$ |
0.12 |
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$ |
0.06 |
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Diluted |
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$ |
0.12 |
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$ |
0.06 |
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Cumulative effect of change in accounting principle: |
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Basic |
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$ |
— |
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$ |
(0.18 |
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Diluted |
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$ |
— |
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$ |
(0.18 |
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Earnings per share including the cumulative effect of change in accounting principle: |
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Basic |
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$ |
0.12 |
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$ |
(0.12 |
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Diluted |
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$ |
0.12 |
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$ |
(0.12 |
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Weighted average shares outstanding: |
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Basic |
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25,884 |
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25,796 |
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Diluted |
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25,937 |
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26,364 |
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Electronics Boutique Holdings Corp.
Consolidated Statements of Income (unaudited)
(Amounts in thousands, except per-share amounts)
Results excluding EBK and BCSC(1):
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13 Weeks |
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May 4, |
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Total revenues |
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$ |
237,640 |
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Adjustment for EBK and BCSC(1) |
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(6,123 |
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Total revenues excluding EBK and BCSC |
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231,517 |
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Cost of goods sold |
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174,596 |
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Adjustment for EBK and BCSC(1) |
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(4,928 |
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Cost of goods sold excluding EBK and BCSC |
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169,668 |
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Selling, general and administrative expense |
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56,487 |
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Adjustment for EBK and BCSC(1) |
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(3,143 |
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Selling, general and administrative expense excluding EBK and BCSC |
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53,344 |
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Depreciation and amortization |
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5,147 |
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Adjustment for EBK and BCSC(1) |
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(73 |
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Depreciation and amortization excluding EBK and BCSC |
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5,074 |
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Operating income |
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1,918 |
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Adjustment for EBK and BCSC(1) |
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1,513 |
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Operating income excluding EBK and BCSC |
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3,431 |
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Income before cumulative effect of change in accounting principle |
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1,471 |
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Adjustment for EBK and BCSC(1) |
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934 |
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Income before cumulative effect of change in accounting principle excluding EBK and BCSC |
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$ |
2,405 |
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Income per share before cumulative effect of change in accounting principle - diluted |
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$ |
0.06 |
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Adjustment for EBK and BCSC(1) |
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$ |
0.03 |
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Income per share before cumulative effect of change in accounting principle excluding EBK and BCSC - diluted |
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$ |
0.09 |
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(1) The company decided to close its EB Kids (“EBK”) business and sell its BC Sports Collectibles (“BCSC”) business at the end of fiscal 2002. The company believes that the presentation of this information will better enable investors to analyze the results of operations of the continuing business for each period reflected. The adjusted amounts exclude the results of operations and related expenses associated with the company’s EBK and BCSC businesses in fiscal 2002 and the reversal of restructuring and asset impairment charges related to these businesses.
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Electronics Boutique Holdings Corp.
Selected Consolidated Balance Sheet Data (unaudited)
(Amounts in thousands)
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May 3, |
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May 4, |
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February 1, |
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Cash and cash equivalents |
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$ |
118,305 |
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$ |
78,458 |
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$ |
121,873 |
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Merchandise inventories |
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195,012 |
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147,955 |
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226,866 |
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Total current assets |
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344,786 |
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261,802 |
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382,480 |
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Total assets |
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485,880 |
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381,876 |
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521,614 |
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Accounts Payable |
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146,178 |
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113,060 |
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176,146 |
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Current liabilities |
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193,774 |
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143,684 |
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237,983 |
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Total liabilities |
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205,901 |
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147,334 |
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247,114 |
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Stockholders’ equity |
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279,979 |
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234,542 |
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274,500 |
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