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GameStop Corp. Comparable Sales Up 28.7%; First Quarter 2002 EPS Exceeds Estimates; Guidance for Strong Second Quarter

May 20, 2002
GRAPEVINE, Texas, May 20, 2002 (BUSINESS WIRE) -- GameStop Corp. (NYSE:GME), the nation's largest video game and entertainment software specialty retailer, today reported sales and earnings for the first quarter ended May 4, 2002.

GameStop sales increased 34.8% to $271.4 million in the first quarter of 2002, compared with $201.4 million in the prior year quarter. Sales growth resulted from a 28.7% increase in comparable store sales, as well as the sales from 38 new stores added during the quarter. The increase in comparable store sales was due to solid performance throughout the video game category. It was fueled by the continued strength in existing Sony PlayStation 2 and Nintendo Game Boy Advance systems, as well as two new hardware systems, Microsoft's Xbox and Nintendo's GameCube, which both launched in November 2001.

Net earnings for the first quarter totaled $4.9 million, or $0.08 per share, compared with a net loss of $7.2 million, or ($0.20) per share, in the prior year quarter. On a pro forma basis, GameStop earned $0.09 per share in the first quarter, as compared to a net loss of ($0.03) per share in the prior year quarter, when considering adjustments for excluding interest on debt repaid with GameStop's initial public offering, $0.9 million and $5.8 million, respectively, and for ceasing to amortize its goodwill in the first quarter of 2002, in accordance with recently-issued accounting pronouncements, $2.8 million for the prior year quarter. These results for the quarter exceeded analyst consensus estimates.

For the quarter, EBITDA rose to $13.8 million from $1.8 million in the prior year quarter.

R. Richard Fontaine, Chairman & Chief Executive Officer, commented, "We are pleased with our exceptional first quarter results. As expected, strong software sales followed our fourth quarter record-setting hardware sales, as gamers sought out new additions to their growing collections. Fiscal 2002 continues to look very positive as the total installed hardware base continues to grow at an unprecedented rate with strong software titles anticipated on all platforms."

The outlook for the second quarter was strong even before the recently announced price reductions on hardware. As has been the case historically, the increase in hardware sales in the second quarter should improve results slightly, but mainly help drive software sales in the quarters which follow. Based on improved gross margins (owing to a better ratio of software to hardware sales) and better expense leverage, we expect second quarter earnings to be between $0.06 to $0.07 per share. Comparable sales are expected to be 15%.

Guidance for the third and fourth quarters remains unchanged and will be addressed again in August, when the company has more visibility into the new products, which will determine seasonal expectations.

A conference call with GameStop Corp.'s management will be simulcast on the Web at ( beginning at 5:00 p.m. ET on May 20, 2002, and will be accessible at (, where it will be archived until June 2, 2002.

    About GameStop Corp.
Headquartered in Grapevine, Texas, GameStop Corp. (NYSE:GME), is the nation's largest video game and entertainment software specialty retailer. The company operates 1,068 retail stores throughout 49 states, the District of Columbia and Puerto Rico, under the GameStop(R), Babbage's(R), Software Etc.(TM) and FuncoLand(R) brands. In addition, the company owns a commerce-enabled Web property,, and Game Informer magazine, a leading video and computer game publication.

GameStop Corp. sells the most popular new software, hardware and game accessories for the PC and next generation video game systems from Sony, Nintendo, and Microsoft, and is also the industry's largest reseller of used video games. In addition, the company sells computer and video game magazines and strategy guides, action figures, and other related merchandise to more than 30 million customers.

General information on GameStop Corp. can be obtained via the Internet by visiting the company's corporate Web site:

This press release (including the attached schedules) contains "forward-looking statements." GameStop Corp. is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company's products, possible disruptions in the company's computer or telephone systems, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the company's online and other initiatives, the successful integration of acquired businesses, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, product shortages, and other factors which may be outside of the company's control. Please refer to the company's reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially.

                            GameStop Corp.
                       Statements of Operations
           (in thousands of dollars, except per share data)
                                     13 weeks      13 weeks
                                       ended         ended
                                    May 4, 2002   May 5, 2001
                                    -----------   -----------
Sales                               $   271,405   $   201,355
Cost of sales                           202,314       153,347
                                    -----------   -----------
   Gross profit                          69,091        48,008
Selling, general and administrative
    expenses                             55,257        46,190
Depreciation and amortization             5,120         4,459
Amortization of goodwill                     --         2,781
                                    -----------   -----------
Operating earnings (loss)                 8,714        (5,422)
Interest expense, net                       493         5,803
                                    -----------   -----------
Earnings (loss) before income
     tax expense (benefit)                8,221       (11,225)
Income tax expense (benefit)              3,307        (3,995)
                                    -----------   -----------
Net earnings (loss)                 $     4,914   $    (7,230)
                                    ===========   ===========
Earnings (loss) per common share:
     Basic                          $      0.09   $     (0.20)
     Diluted                        $      0.08   $     (0.20)
Weighted average common shares
     Basic                           54,343,077    36,009,000
     Diluted                         58,702,663    36,009,000
Percentage of sales:
Sales                                    100.0%        100.0%
Cost of sales                             74.5%         76.2%
                                    -----------   -----------
Gross profit                              25.5%         23.8%
SG&A expenses                             20.4%         22.9%
Depreciation and amortization              1.9%          2.2%
Amortization of goodwill                   0.0%          1.4%
                                    -----------   -----------
Operating earnings (loss)                  3.2%         -2.7%
Interest expense, net                      0.2%          2.9%
                                    -----------   -----------
Earnings (loss) before income
     tax expense (benefit)                 3.0%         -5.6%
Income tax expense (benefit)               1.2%         -2.0%
                                    -----------   -----------
Net earnings (loss)                        1.8%         -3.6%
                                    ===========   ===========
                            GameStop Corp.
                            Balance Sheets
           (in thousands of dollars, except per share data)
                                    May 4, 2002   May 5, 2001
                                    -----------   -----------
Current assets:
 Cash and cash equivalents          $   113,397   $     6,136
 Receivables, net                         4,924         2,929
 Merchandise inventories                145,990       109,333
 Prepaid expenses and other
  current assets                          8,092        13,603
 Deferred taxes                           3,418         3,533
                                    -----------   -----------
  Total current assets                  275,821       135,534
                                    -----------   -----------
Property and equipment:
 Leasehold improvements                  29,352        21,525
 Fixtures and equipment                  61,974        46,201
                                    -----------   -----------
                                         91,326        67,726
 Less accumulated depreciation
  and amortization                       38,792        18,675
                                    -----------   -----------
  Net property and equipment             52,534        49,051
                                    -----------   -----------
Goodwill, net                           317,957       316,636
Other noncurrent assets                   1,235           536
                                    -----------   -----------
  Total assets                      $   647,547   $   501,757
                                    ===========   ===========
Current liabilities:
 Accounts payable                   $    94,938   $    81,740
 Accrued liabilities                     47,844        30,284
                                    -----------   -----------
  Total current liabilities             142,782       112,024
Payable to Barnes & Noble, Inc.             615       412,469
Deferred taxes                            3,065         2,861
Other long-term liabilities               2,615         2,243
                                    -----------   -----------
  Total liabilities                     149,077       529,597
                                    -----------   -----------
Stockholders' equity (deficit):
 Preferred stock - authorized 5,000
  shares; no shares issued or
  outstanding                                --            --
 Class A common stock - $.001
  par value; authorized 300,000
  shares; 20,821 shares issued
  and outstanding                            21            --
 Class B common stock - $.001
  par value; authorized 100,000
  shares; 36,009 shares issued
  and outstanding                            36            36
 Additional paid-in-capital             491,283       (15,902)
 Retained earnings (deficit)              7,130       (11,974)
                                    -----------   -----------
  Total stockholders' equity
   (deficit)                            498,470       (27,840)
                                    -----------   -----------
  Total liabilities and
   stockholders' equity (deficit)   $   647,547   $   501,757
                                    ===========   ===========
                            GameStop Corp.
                           Retail Sales Mix
                                     13 weeks      13 weeks
                                       Ended         ended
                                    May 4, 2002   May 5, 2001
                                    -----------   -----------
Video Game Hardware                         19%           23%
Video Game Software                         57%           47%
Video Game Accessories                      12%           12%
PC Software                                  8%           12%
PC Accessories and Other                     4%            6%
CONTACT:          GameStop Corp., Grapevine
                  Media Contact:                           
                  Lori M. Milovich, Director, Public & Investor Relations
                  Investor Contact:                     
                  David W. Carlson, Executive Vice President & 
                  Chief Financial Officer      

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