Electronics Boutique misses 1Q forecasts

Electronics Boutique (Nasdaq: ELBO) missed estimates in the first quarter.

After market close Thursday, the retailer of game software reported fiscal first quarter net income of $2.4 million, or 11 cents per share. Analyst consensus predicted per-share earnings of 15 cents according to Zacks Investment Research, or 14 cents according to I/B/E/S International.

First quarter revenue increased 22 percent year-over-year to $151.1 million from $123.6 million. Video games and Pokemon trading cards fueled comparable store sales, which increased 11 percent.

Gross margin of 25.1 percent was down from 26.3 percent in the first quarter of fiscal 2000. Video games carry lower margins than PC games, accessories and toys.

Revenue in the first quarter from Electronics Boutique's EBWorld.com online store rose to $3.1 million, from $1.5 million a year earlier. Excluding the loss from EBWorld.com online store, the company earned $2.9 million, or 13 cents per share.

"We are pleased to start the year off with solid results," said Joseph J. Firestone, president and CEO. "We continue to demonstrate that in electronic gaming we are the number one specialty retailer, which puts us in a strong position to capitalize on the highly anticipated release of PlayStation 2 later this fall."

The company added 78 stores from a year ago. Electronics Boutique plans to focus on new stores outside of malls, especially in light of its decision not to top a Barnes & Noble (NYSE: BKS) bid to acquire another game software chain, Funco (Nasdaq: FNCO).

"We had put our plans to expand the non-mall store concept on hold as we evaluated the Funco transaction, because of the potential overlap in stores and the time needed to assess the most strategic locations," Firestone said. "We now expect to open 25 to 50 non-mall-based stores this year, bringing our goal of new store openings to approximately 150 to 175 including 10 to 15 EBKids stores."

Shares of Electronics Boutique fell 2 5/16 to 14 in Thursday's regular trading, prior to the earnings report.

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