Electronics Boutique Announces Second Quarter Financial Results

Electronics Boutique Announces Second Quarter Financial Results
- Total Revenue Increased 19.8% to $362.0 Million - - Net Income More Than
Doubled to $3.9 Million, or $0.16 Per Diluted Share - 


WEST CHESTER, Pa., Aug. 19  /PRNewswire-FirstCall/ -- Electronics Boutique
Holdings Corp. (NASDAQ:ELBO), the leading global specialty retailer of video
games and related products, today announced financial results for the second
quarter and 26 weeks ended July 31, 2004.

Financial Results

During the second quarter of fiscal 2005, total revenue increased 19.8% to
$362.0 million from $302.1 million in the comparable period last year.  The
solid top line growth was driven by a 29% increase in video game software sales
and strong hardware unit sales.  This broad-based strength enabled the Company
to exceed its original expectations for comparable store sales, which declined
2.2% for the quarter.

Second quarter gross margin as a percent of sales improved 250 basis points to
29.5% from 27.0% in the comparable period primarily reflecting an increased
contribution from the higher-margin pre-played category coupled with savings in
freight expense during the period.  Net income increased 132.4% to $3.9
million, or $0.16 per diluted share, exceeding previously announced
expectations.  This compares to net income of $1.7 million, or $0.07 per
diluted share, in the same period last year.

Commenting on the Company's results, Jeffrey Griffiths, President and Chief
Executive Officer, stated, "We are very pleased with our second quarter
performance, which reflects strength across all areas of our business and in
each of our markets.  Not only did we achieve double-digit sales growth, strong
margin expansion, and significant earnings acceleration, we also continued to
capture market share.  Importantly, we believe that these strong overall
results clearly demonstrate that our strategic initiatives to increase store
traffic, diversify our distribution and customer base, promote our brand on a
global scale, and provide excellent customer service are gaining traction and
have placed Electronics Boutique in a better position than ever before."

During the quarter, the Company opened 117 new stores, increasing the total
store count to 1,733 as of July 31, 2004.  The Company had 1,303 stores at the
end of the second quarter of fiscal 2004.

For the first six months of fiscal 2005, total revenue rose 21.3% to $734.4
million from $605.5 million in the comparable period last year.  Net income
increased 43.1% to $6.9 million, or $0.28 per diluted share, from $4.8 million,
or $0.19 per diluted share, last year.

Current Company Outlook

"We look forward to building on the momentum in the business achieved in the
first half of the year," added Mr. Griffiths.  "We have a strong operating
platform and our business plan is on track.  In addition, we anticipate strong
industry trends based on a growing installed base and several major software
launches that will take place in the coming months.  As such, we feel very
positive about our prospects for the balance of the year.  However, our
optimism is somewhat tempered by the many uncertainties currently impacting the
overall marketplace."

Taking into account the better than anticipated year to date performance and
based on current visibility for the second half of fiscal 2005, the Company
reaffirms its expectation for a total annual sales increase in the range of 17%
to 21%.  In addition, the Company is raising its expectations for annual
earnings to a range of $2.02 to $2.10 per diluted share, versus the previous
range of $1.90 to $2.00, based on an average share count of 24.5 million.

For the third quarter, the Company expects earnings will range between $0.15
and $0.19 per diluted share based on an average share count of 24.4 million and
reflecting an expected comparable stores sales increase of 4.0% to 6.0%.

Mr. Griffiths concluded, "As we move forward, we will remain focused on
executing the three key elements of our strategy to further strengthen the
business - growing our domestic strip center locations, further developing our
pre-played business, and expanding our international presence - as these are
clearly reaping rewards.  This, together with our solid financial foundation
and a positive industry outlook, leaves us well positioned to generate
industry-leading performance, achieve our ultimate goal of becoming the
destination of choice for gamers worldwide, and deliver strong shareholder
value over the long-term."

Conference Call Information

The Company will host an investor conference call today at 5 p.m. Eastern to
review its financial results.  The call will be open to all interested
investors through a simultaneous Internet broadcast at
http://www.ebholdings.com/, and it will be archived for two weeks on the
website.  A recording of the call will also be available at 8 p.m. Eastern on
August 19, 2004 through midnight on August 26, 2004.  Listeners should call
[phone] (domestic) or [phone] (international), and use access
code 9085085.

About Electronics Boutique Holdings Corp.

Electronics Boutique, a Fortune 1000 company, is the leading global specialty
retailer dedicated exclusively to video game hardware and software, PC
entertainment software, accessories and related products.  The company
currently operates over 1,733 stores in the United States, Australia, Canada,
Denmark, Germany, Italy, New Zealand, Norway, Puerto Rico and Sweden --
primarily under the names EB Games and Electronics Boutique.  The company
operates an e-commerce website at http://www.ebgames.com/.  Additional company
information is available at http://www.ebholdings.com/.

This release contains forward-looking statements, including statements by
Jeffrey Griffiths and in our Business Outlook, related to the financial
performance of Electronics Boutique for the third quarter and full year for the
fiscal year ending January 29, 2005, to the growth strategies, prospects and
opportunities for Electronics Boutique, and to the outlook for the video game
industry in general.  Forward-looking statements refer to expectations,
projections and other characterizations of future events or circumstances and
are often identified by the use of words such as "may," "will," "expect,"
"believe," "anticipate," "intend," "could," "estimated," "continue" or
comparable terminology.  In addition to factors specified in Electronics
Boutique's recent filings with the Securities and Exchange Commission, there
are other factors that could cause actual results to materially differ from
those expressed or implied in these forward-looking statements, such as the
schedule and sell-through for new software releases, consumer demand for video
game hardware and software, the timing of the introduction of new generation
hardware systems, pricing changes by key vendors for hardware and software and
the timing of any such changes, the adequacy of supplies of new and pre-played
product, increased competition and promotional activity from other retailers,
the availability of suitable locations for new stores and the timing of the
opening of these stores.  In light of the risks and uncertainties inherent in
the forward-looking statements, these statements should not be regarded as a
representation by Electronics Boutique or any other person that the projected
results, objectives or plans will be achieved.  Electronics Boutique undertakes
no obligation to revise or update the forward-looking statements to reflect
events or circumstances after the date hereof.

                     Electronics Boutique Holdings Corp.
                Consolidated Statements of Income (unaudited)
               (Amounts in thousands, except per-share amounts)

                                       13 Weeks Ended      26 Weeks Ended
                                     July 31, August 2,  July 31, August 2,
                                       2004      2003      2004      2003

  Net sales                          $360,487  $300,574  $731,451  $602,395
  Management fees                       1,466     1,509     2,919     3,152
  Total revenues                      361,953   302,083   734,370   605,547

  Cost of goods sold                  254,302   219,613   525,456   442,882

  Gross profit                        107,651    82,470   208,914   162,665

  Costs and expenses:
  Selling, general and
   administrative expense              93,431    73,536   182,353   142,838
  Depreciation and amortization         8,435     6,639    16,391    12,927

  Operating income                      5,785     2,295    10,170     6,900
  Interest income, net                    384       376       836       839

  Income before income tax expense      6,169     2,671    11,006     7,739
  Income tax expense                    2,285     1,000     4,076     2,897

  Net income                           $3,884    $1,671    $6,930    $4,842


  Net income per share:
  Basic                                 $0.16     $0.07     $0.29     $0.19
  Diluted                               $0.16     $0.07     $0.28     $0.19


  Weighted average shares outstanding:
  Basic                                23,840    24,982    24,183    25,433
  Diluted                              24,176    25,326    24,545    25,632



                     Electronics Boutique Holdings Corp.
             Selected Consolidated Balance Sheet Data (unaudited)
                            (Amounts in thousands)

                                          July 31,   August 2,   January 31,
                                            2004        2003        2004


  Cash and cash equivalents                $71,130     $90,378     $157,968

  Merchandise inventories                  220,748     173,951      253,577

  Total current assets                     332,332     301,712      477,687

  Total assets                             500,417     446,534      636,375


  Accounts payable                         134,874     139,219      220,481

  Total current liabilities                204,977     181,970      311,679

  Total liabilities                        220,423     193,199      332,395

  Total stockholders' equity               279,994     253,335      303,980



                                 Schedule 1
                     Electronics Boutique Holdings Corp.
                          Domestic Retail Sales Mix

                                         13 Weeks Ended    13 Weeks Ended
                                            July 31,         August 2,
                                              2004              2003

  Video Game Software                          62%               58%
  Video Game Hardware                          18%               17%
  PC Software                                   7%               11%
  Accessories                                  10%               11%
  Other                                         3%                3%


DATASOURCE: Electronics Boutique Holdings Corp.



CONTACT:  James A. Smith, Chief Financial Officer, Electronics Boutique

Holdings Corp., [phone]; or Cara O'Brien or Melissa Myron, Financial

Dynamics, [phone], for Electronics Boutique



Web site:  http://www.ebholdings.com/

http://www.ebgames.com/ 

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