GameStop shares up after profit jump

NEW YORK (Reuters) - GameStop Corp (GME.N) on Thursday posted a better-than-expected jump in quarterly profit and raised its full-year outlook on strong sales of games like Guitar Hero II and NCAA Football '08, sending its shares up as much as 8 percent.

The largest U.S. video game retailer said it had opened 150 new stores in the quarter and now operates close to 5,000 in 16 countries. It said it was on its way to meet a goal of opening 500 to 550 new stores this year.

"The strength of these results points to a company very well-positioned and benefiting from the strongest momentum in retail today," Credit Suisse analyst Gary Balter wrote in a research note.

Net profit for the second quarter ended on August 4 rose sevenfold to $21.8 million, or 13 cents per share, from $3.18 million, or 2 cents per share, a year earlier.

Excluding debt retirement costs, earnings were 14 cents per share, easily beating the 9 cents analysts had expected, according to Reuters Estimates.

Revenue increased 39 percent to $1.338 billion, topping the average analysts' forecast of $1.19 billion. Same-store sales, or stores open at least one year, rose 29 percent.

Shares of GameStop have risen more than elevenfold since 2003 and are up 67 percent so this year as the company secured its position as the last remaining major specialty chain in the $30 billion video game industry.

Its competitors include mainstream retailers like Wal-Mart Stores Inc (WMT.N) and Best Buy Co Inc (BBY.N), which also sell video games.

Balter said increased demand for video game consoles and improving console supply boosted GameStop results.

The company has benefited from the introduction late last year of Nintendo Co Ltd's (7974.OS) Wii console, which helped expand the video game market beyond young men to a broader consumer audience.

The top-selling video games include Activision Inc's (ATVI.O) Guitar Hero II, Electronic Arts Inc's (ERTS.O) NCAA Football '08, Nintendo's Mario Party 8, Pokemon Diamond and Pearl and Microsoft Corp's (MSFT.O) Forza Motorsport 2, GameStop said.

New video game software sales rose 49 percent in the quarter, while new hardware sales soared 87 percent.

Executives said they expected highly anticipated new games, including Activision's Guitar Hero III, Assassin's Creed from Ubisoft (UBIP.PA) and EA's "Rock Band," to buoy earnings in the latter half of the year.

The Grapevine, Texas-based retailer raised its fiscal-year earnings forecast to a range of $1.45 to $1.48 a share from a previous outlook of $1.39 to $1.42. Analysts were looking for $1.46, according to Reuters Estimates.

The company forecast full-year revenue growth at 20 percent to 22 percent, compared with its previous estimate of 19 percent to 21 percent. It expects same-store sales to rise 15 percent to 17 percent.

GameStop's shares were up $2.63, or 6.1 percent, at $46.05 in morning New York Stock Exchange trade after hitting a record of $46.84 earlier in the session.

(Reporting by Tiffany Wu and Kenneth Li)