ELBO Electronics Boutique Hldgs (MM)

Electronics Boutique Reports Record First Quarter Sales, Increasing 23% -- Video Game Software Sales Grew 28% -- -- Global Store Base Increased to 1,623 -- WEST CHESTER, Pa., May 20 /PRNewswire-FirstCall/ -- Electronics Boutique Holdings Corp. today announced financial results for its fiscal first quarter ended May 1, 2004. The results were highlighted by a 23 percent increase in sales with strong growth in both new and pre-played video game software, as well as a continued increase in market share. For the thirteen-week period ended May 1, 2004, total revenues grew 23 percent to $372.4 million, compared with $303.5 million for the same period a year ago. This growth was driven by a 28 percent increase in total video game software sales and a 19 percent increase in total hardware sales, compared with the same quarter in fiscal 2004. Net income for the quarter was $3.0 million, or $0.12 per diluted share, compared with net income of $3.2 million, or $0.12 per diluted share, for the same quarter in fiscal 2004. Comparable store sales declined 2.5 percent, in line with our expectations. This decrease compares with exceptionally high comparable store sales in the first quarter of fiscal 2004, which were generated by the combined release of "The Legend of Zelda: The Wind Waker" for GameCube and the Game Boy Advance SP handheld. Despite this difficult comparison, the company achieved double-digit increases in its comparable store sales for both its U.S. strip center stores and its European stores for the first quarter of fiscal 2005, highlighting the positive impact of these locations. "Electronics Boutique had a great first quarter. We delivered strong software sales that outperformed our industry, and we posted solid pre-played sales. In particular, our U.S. strip center and international stores continue to deliver excellent results, underscoring the value of our store expansion strategy," said Jeffrey W. Griffiths, president and chief executive officer. "During the quarter, we continued to implement this strategy, opening 104 new stores. We plan to open an additional 300 new locations, bringing our total number of new stores to 400 for fiscal 2005. As these new stores mature over the next several quarters, we expect to achieve increased sales and operating margin." Business Outlook "Based on what we saw at the Electronic Entertainment Expo (E3), we have a very positive outlook for the remainder of the year. We believe that our industry will continue to grow in the coming quarters, fueled by the recent price drop of Sony's PlayStation 2 and Microsoft's Xbox, as well as an exciting lineup of new software titles in the latter half of the year," noted Mr. Griffiths. For the second quarter of fiscal 2005, the company anticipates earnings to be in the range of $0.06 to $0.08 per diluted share based on an average diluted share count of 24.3 million shares. This estimate is based on comparable store sales declining in the range of 3 to 5 percent for the 13- week period ending July 31, 2004. For the full fiscal year 2005, the company expects total sales to increase in the range of 17 to 21 percent. Based on this, the company reaffirms its previous annual earnings forecast. Due to the company's continued activity in its stock repurchase program, the company now expects full year earnings to be in the range of $1.90 to $2.00 per diluted share based on an average share count of 24.5 million. Previous guidance was for earnings in the range of $1.85 to $1.95 per share with the change due solely to the change in the share base. To date, the company has repurchased 1.2 million of the 2.0 million shares authorized by its board of directors in November 2003. The company will host an investor conference call at 5:00 p.m. (Eastern) today to review its financial results and operations. The call will be open to all interested investors through a simultaneous Internet broadcast at http://www.ebholdings.com/, and it will be archived for two weeks on the website. A recording of the call will also be available May 20, 2004 at 8:00 p.m. (Eastern) through May 27, 2004 at midnight (Eastern). Listeners should call (800) 642-1687 (domestic) or (706) 645-9291 (international), and use access code 7333377. About Electronics Boutique Holdings Corp. Electronics Boutique, a Fortune 1000 company, is the world's largest specialty retailer dedicated exclusively to video game hardware and software, PC entertainment software, accessories and related products. As of May 1, 2004, the company operated 1,623 stores in the United States, Australia, Canada, Denmark, Germany, Italy, New Zealand, Norway, Puerto Rico and Sweden -- primarily under the names EB Games and Electronics Boutique. The company operates an e-commerce website at http://www.ebgames.com/. Additional company information is available at http://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 29, 2005, 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 these forward-looking statements, such as the schedule for new software releases, consumer demand for video game hardware and software, the timing of the introduction of new generation hardware systems, pricing changes by key vendors for hardware and software and the timing of any such changes, the adequacy of supplies of new and pre-played product, costs associated with litigation, increased competition and promotional activity from other retailers, the availability of suitable locations for new stores and the timing of the opening of these stores. In light of the risks and uncertainties inherent in the forward-looking statements, these 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- Electronics Boutique Holdings Corp. Consolidated Statements of Income (unaudited) (Amounts in thousands, except per-share amounts) 13 Weeks Ended May 1, May 3, 2004 2003 Net sales $370,964 $301,821 Management fees 1,453 1,643 Total revenues 372,417 303,464 Cost of goods sold 271,154 223,269 Gross profit 101,263 80,195 Costs and expenses: Selling, general and administrative expense 88,922 69,302 Depreciation and amortization 7,956 6,287 Operating income 4,385 4,606 Interest income, net 452 463 Income before income tax expense 4,837 5,069 Income tax expense 1,791 1,897 Net income $3,046 $3,172 Net income per share: Basic $0.12 $0.12 Diluted $0.12 $0.12 Weighted average shares outstanding: Basic 24,526 25,884 Diluted 24,913 25,937 Electronics Boutique Holdings Corp. Selected Consolidated Balance Sheet Data (unaudited) (Amounts in thousands) May 1, May 3, January 31, 2004 2003 2004 Cash and cash equivalents $82,290 $118,305 $157,968 Merchandise inventories 265,529 195,012 253,577 Total current assets 385,946 344,786 477,687 Total assets 544,834 485,880 636,375 Accounts payable 165,231 146,178 220,481 Current liabilities 236,662 193,774 311,679 Total liabilities 255,159 205,901 332,395 Stockholders' equity 289,675 279,979 303,980 Schedule 1 Electronics Boutique Holdings Corp. Domestic Retail Sales Mix 13 Weeks Ended 13 Weeks Ended May 1, May 3, 2004 2003 Video Game Software 61% 60% Video Game Hardware 17% 15% PC Software 9% 10% Accessories 11% 12% Other 2% 3% DATASOURCE: Electronics Boutique Holdings Corp. CONTACT: James A. Smith, Chief Financial Officer, Electronics Boutique Holdings Corp., +1-610-430-8100 Web site: http://www.ebgames.com/ http://www.ebholdings.com/

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