GameStop 2004 Annual Report Download - page 2

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2004 proved to be another year of milestones
for GameStop. As we have been stating since
going public in February 2002, we believe it is
imperative that we not only perform fi nancially
every year, but that we build the company to take
advantage of the signifi cant growth opportunities
that a growing industry presents.
And with the launch in March 2005 of Sony’s
PlayStation Portable (PSP), scheduled to be
followed in November 2005 by Microsoft’s
Xbox 360, we are at the beginning stages
of another strong cycle of new hardware
products and software launches that will take
advantage of the ever-improving technology.
Furthermore, with GameStop’s merger with
Electronics Boutique moving forward on
schedule, we have positioned our company to
take maximum advantage of these emerging
growth trends.
Some of the 2004 highlights:
• Our revenues grew 16.7%, from
$1,579,000,000 to $1,843,000,000
• Earnings per share grew over 10%,
from $1.06 per diluted share to $1.17
per diluted share*
• Our stock price increased over 13%,
from $16.60 to $18.80
• We repurchased over 7 million
shares of our common stock
• We invested over $98 million in
new stores and infrastructure
• Our store count grew from 1,514
to 1,826
In addition, GameStop opened 338 stores
worldwide during 2004 - our most aggressive
expansion year ever. In December, we opened
our fi rst store in Wyoming, giving GameStop
a presence in all 50 states.
During the peak holiday season, GameStop
employed 23,000 people. Throughout the
year, we added 700 new full time positions
and 4,000 new part time associates across
the country.
In the course of this year we set sales records
with two titles, selling over 860,000 copies of
Halo 2 and over 780,000 copies of Grand Theft
Auto: San Andreas. Both titles have continued to sell
and are the all-time best sellers for GameStop.
In preparation for continued growth, and with
an eye on improving distribution effi ciency,
we purchased a new 420,000 square foot
general offi ce and distribution center in close
proximity to our old facility, with no resulting
disruption to the support of our stores and no
relocation issues for our people. We managed
to grow our company from approximately 500
stores in 1997 to over 1,900 stores today
without expanding our facilities; the new
distribution center is intended to ensure that
our rapid growth is not compromised, and that
our effi ciency goals will continue to be met.
Game Informer, GameStop’s magazine
division, grew to over 2,000,000 subscribers -
four times larger than our closest competitor.
According to Advertising Age, Game Informer
is now the 26th largest consumer publication
in the US and had the 3rd largest growth in
paid circulation in 2004.
As has been the case every year since we have
been a public company, GameStop’s market
share has grown; 2004 was no exception.
According to NPD Group data, our total share
of the growing video game market was 11.4%,
up from 9.8% in 2003. What is particularly
encouraging about our share growth is that
we have continuously found better ways to
serve new markets.
Dear Shareholders,
Letter to the Shareholders
* Before special charges of $0.12 per diluted share for California litigation settlement costs, professional fees relating to the spin-off by
Barnes & Noble, Inc. of our Class B common stock and the change in our method of accounting for leases.