GameStop 2008 Annual Report Download - page 32

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incremental content for their games through these and other sources, our customers may no longer choose to
purchase video games or PC entertainment software in our stores. As a result, sales and earnings could decline.
Restrictions on our ability to take trade-ins of and sell used video game products could negatively affect
our financial condition and results of operations.
Our financial results depend on our ability to take trade-ins of, and sell, used video game products within our
stores. Actions by manufacturers or publishers of video game products or governmental authorities to limit our
ability to take trade-ins or sell used video game products could have a negative impact on our sales and earnings.
If we fail to keep pace with changing industry technology, we will be at a competitive disadvantage.
The interactive entertainment industry is characterized by swiftly changing technology, evolving industry
standards, frequent new and enhanced product introductions and product obsolescence. These characteristics
require us to respond quickly to technological changes and to understand their impact on our customers’
preferences. If we fail to keep pace with these changes, our business may suffer.
An adverse trend in sales during the holiday selling season could impact our financial results.
Our business, like that of many retailers, is seasonal, with the major portion of our sales and operating profit
realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2008, we generated
approximately 40% of our sales and approximately 56% of our operating earnings during the fourth quarter. Any
adverse trend in sales during the holiday selling season could lower our results of operations for the fourth quarter
and the entire year.
Our results of operations may fluctuate from quarter to quarter, which could affect our business, finan-
cial condition and results of operations.
Our results of operations may fluctuate from quarter to quarter depending upon several factors, some of which
are beyond our control. These factors include:
• the timing and allocations of new product releases;
• the timing of new store openings; and
• shifts in the timing of certain promotions.
These and other factors could affect our business, financial condition and results of operations, and this makes
the prediction of our financial results on a quarterly basis difficult. Also, it is possible that our quarterly financial
results may be below the expectations of public market analysts.
Failure to effectively manage our new store openings could lower our sales and profitability.
Our growth strategy is largely dependent upon opening new stores and operating them profitably. We opened
674 stores in fiscal 2008 and expect to open approximately 400 new stores in fiscal 2009. Our ability to open new
stores and operate them profitably depends upon a number of factors, some of which may be beyond our control.
These factors include:
• the ability to identify new store locations, negotiate suitable leases and build out the stores in a timely and
cost efficient manner;
• the ability to hire and train skilled associates;
• the ability to integrate new stores into our existing operations; and
• the ability to increase sales at new store locations.
Our growth will also depend on our ability to process increased merchandise volume resulting from new store
openings through our inventory management systems and distribution facilities in a timely manner. If we fail to
manage new store openings in a timely and cost efficient manner, our growth may decrease.
17