GameStop Expects to Soar as Video Games Continue to Score

Game Stop's recent results demonstrate that the recession, despite its depth, is a selective thing and that consumers will spend on products that enhance their lifestyles even if they have scaled back.

The most extraordinary thing about the gaming market may not be the software sales â€" and it is interesting that many consumers who are supposed to be wary of spending money seem to regard a $59 video game as inexpensive â€" but what has happened with the much more expensive hardware. Recession or no, it continues to boom.

In a conference call, Daniel DeMatteo, Game Stop CEO said the enormous number of new console and hand held video game players sold last year and that, coupled with big increases in the two previous years, should drive this year's industry wide software sales "to an all-time high." In fact, 35 million console and hand held games sold last year after 31 million the year before, according to the NPD Group. Both totals broke volume records.

DeMatteo said U.S. software sales had advanced at a 10 percent pace for the first two months of this year. He added that GameStop anticipates the number of console and hand held units sold to approximate last year's numbers with price reductions and new products including the Nintendo DSi driving demand.

The demand for hardware and software buoyed GameStop fourth quarter results, which exceeded analysts estimates, and its earnings guidance for the first quarter of this year â€" at 40 cents to 42 cents per share â€" which surpassed the analysts' average forecast of 39 cents.

The retailer expects new video game software sales to gain between five and 10 percent in 2009 and estimates its result for the year will include revenue growth between 10 percent and 12 percent, comparable store sales growth of four percent to six percent and diluted earnings per share growth of 18 percent to 22 percent.