GameStop 2009 Annual Report Download - page 32

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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.
Technological advances in the delivery and types of video games and PC entertainment software, as well
as changes in consumer behavior related to these new technologies, could lower our sales.
While it is currently only possible to download a limited amount of video game content to the next generation
video game systems, at some point in the future this technology may become more prevalent. If advances in
technology continue to expand our customers’ ability to access the current format of video games, PC entertainment
software and incremental content for their games, as well as new types of browser and casual 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. While the Company is currently pursuing various strategies
to integrate these new delivery methods and competing content into the Company’s business model, we can provide
no assurances that they will be successful or profitable.
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 2009, we generated
approximately 39% of our sales and approximately 55% 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 fiscal year.
Our results of operations may fluctuate from quarter to quarter, which could affect our business,
financial 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;
• shifts in the timing of certain promotions; and
• changes in foreign currency exchange rates.
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
388 stores in fiscal 2009 and expect to open approximately 400 new stores in fiscal 2010. Our ability to open new
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