Electronics Boutique Reports Record Fiscal 2004 Fourth Quarter and Full Year Results

Electronics Boutique Reports Record Fiscal 2004 Fourth Quarter and Full Year
Results
- Record Sales Increase 21.3 Percent for the Full Fiscal Year -


WEST CHESTER, Pa., March 11  /PRNewswire-FirstCall/ -- Electronics Boutique
Holdings Corp.  today announced record financial results for its fiscal fourth
quarter and year ended January 31, 2004.  The results were highlighted by strong
sales growth in new and pre-played video game software and an increase in market
share.

For the fiscal fourth quarter,total revenues increased 25.9 percent to $671.5
million, compared with $533.5 million for the same period a year ago. This
growth was driven by a 31 percent increase in software sales and a 22 percent
increase in hardware sales, compared with the same quarter in fiscal 2003.  The
company exceeded its projections for comparable store sales, posting a 2.0
percent increase in the fourth quarter.  Net income for the quarter was $39.4
million, or $1.57 per diluted share, which includes $2.9 million, or $0.12 per
diluted share, of management fee revenue recorded in connection with the
termination of the services agreement with Game Group Plc. This compares with
net income of $31.6 million, or $1.21 per diluted share, for the same quarter in
fiscal 2003.

For the full fiscal year, total revenues grew 21.6 percent to $1,601.8 million
from $1,316.8 million in fiscal 2003.  This was fueled by a 33 percent increase
in video game software sales and 17 percent growth in hardware sales, compared
with the priorfiscal year.  Comparable store sales for fiscal 2004 were even to
last year.  Net income was $45.7 million, or $1.80 per diluted share, which
includes $2.9 million, or $0.12 per diluted share, of management fee revenue
from the termination of the services agreement.  This compares with net income
of $37.4 million, or $1.42 per diluted share, reported in fiscal 2003, before
the cumulative effect of a change in accounting principle relating to the
recognition of vendor allowances, which lowered net income by $4.8 million, or
$0.18 per diluted share.

"Electronics Boutique had a great year in fiscal 2004, setting new company
records in revenue, profits and store growth.  We also continued to gain market
share in each quarter, demonstrating the abilityof our business model to meet
challenges and leverage opportunities within our industry," said Jeffrey W.
Griffiths, president and chief executive officer.  "Our software sales for the
year were particularly strong, increasing 33 percent compared with fiscal 2003,
driven by steady growth in the installed hardware base.  We expect these growth
trends to continue, fueled by an anticipated hardware price drop in fiscal 2005,
as well as an exciting lineup of new software titles."

On January 30, 2004, the company entered into an agreement to terminate its
services agreement with Game Group Plc, a specialty retailer based in the United
Kingdom.  Under the termination agreement, Electronics Boutique agreed to accept
a lump sum payment of $15.0 million inlieu of the remaining two years of
management fees required under the services agreement.  The termination
agreement eliminated certain restrictive covenants that impacted the company's
ability to expand in Europe.  The remaining covenants now expire over the next
two years.  As a result, the company recorded $10.3 million as deferred revenue,
which will be recognized over the terms of these covenants. The remaining $4.7
million was recorded as management fee revenue in the fourth quarter of fiscal
2004 and represents revenue that would have been recognized in fiscal 2005 had
the services agreement not been terminated.

During the year, the company opened a net of 383 stores, increasing the size of
its store base to 1,528 as of January 31, 2004.  As a result of these openings,
Electronics Boutique significantly expanded its presence in strip- centers in
the United States and Canada, strengthened its leadership position in Australia
and continued to build a foundation for future expansion in Europe.

Business Outlook

"Our outlook for the coming year is very positive.  The installed base continues
to grow, and we are preparing for several major software launches in the latter
half of the year, some of which are expected to set new sales records for our
industry," noted Mr. Griffiths.  "Electronics Boutique is now the world's
largest specialty retailer dedicated to video game software, hardware and
accessories.  As a result, we are uniquely positioned to benefit from this
strong software lineupand the growth of the installed base to capture greater
market share."

"Electronics Boutique expanded at an unprecedented rate in the past year,
growing our store base and our market share," added Mr. Griffiths.  "We plan to
open approximately 400 newlocations in fiscal 2005.  We expect this expansion,
which will focus on adding new strip-center locations in North America and on
building our position in international markets, will continue our proven growth
strategy."

For fiscal 2005, the company expects total sales to increase in the range of 17
to 21 percent, with comparable store sales increasing between 2 and 4 percent. 
Based on this, the company expects fiscal 2005 earnings to be in the range of
$1.85 to $1.95 per diluted share based on anaverage diluted share count of 25.2
million.  This forecast includes $5.8 million to be reported as management fee
revenue resulting from the termination of the services agreement with Game Group
Plc, which represents $0.14 per diluted share.

For the first quarter of fiscal 2005, the company anticipates earnings to be in
the range of $0.08 to $0.10 per diluted share.  This estimate is based on
comparable store sales being in the range of a 2 percent decline to flat for the
13-week period ending May 1, 2004.

The company will host an investor conference call at 5:00 p.m. (EST) today to
review its financial results and operations.  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 March 11, 2004 at 8:00
p.m. (EST) through March 18, 2004 at midnight (EST).  Listeners should call
[phone] (domestic) or [phone] (international), and use access code
5731368.

About Electronics Boutique Holdings Corp.

Electronics Boutique, a Fortune 1000 company, is the world's largest specialty
retailer dedicated exclusively to video game hardware, software and PC
entertainment software and accessories.  The company currently operates 1,528
stores in the United States, Australia, Canada, Denmark, Germany, Italy, New
Zealand, Norway, Puerto Rico, Sweden and South Korea -- 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 first quarter and full year for the
fiscal year ending January 29, 2005, to the growth prospects and opportunities
for Electronics Boutique, and to the growth prospects and projected sales for
hardware, software and 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 ofwords 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 for new software releases, consumer demand for
video game hardware and software, thetiming 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, unexpected litigation results, increasedcompetition and
promotional activity from other retailers, and the availability of suitable
locations for new 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.

                        -Financial Tables Follow-



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

                             13 Weeks Ended             52 Weeks Ended
                        January 31,   February 1,  January 31,  February 1,
                           2004          2003         2004         2003

  Net sales              $662,865      $530,189    $1,588,406   $1,309,226
  Management fees           8,653         3,355        13,375        7,553
  Total revenues          671,518       533,544     1,601,781    1,316,779

  Cost of goods sold      496,009       392,316     1,174,429      971,204

  Gross profit            175,509       141,228       427,352      345,575

  Costs and expenses:
  Selling, general and
   administrative
   expense                105,694        85,057       328,577      267,566
  Restructuring andasset
   impairment reversal          -             -             -       (2,611)
  Depreciation and
   amortization             7,927         6,224        27,894       22,524

  Operating income         61,888        49,947        70,881       58,096
Interest income, net        636           429         1,751        1,677

  Income before income tax
   expense & cumulative
   effect of change in
   accounting principle    62,524        50,376        72,632       59,773
  Income tax expense       23,120        18,783        26,903       22,373

  Income before cumulative
   effect of change in
   accounting principle    39,404        31,593        45,729       37,400

  Cumulative effect of
   change in accounting
   principle, net of
   tax     -             -             -       (4,773)

  Net income              $39,404       $31,593       $45,729      $32,627

  Income per share before
   cumulative effect of change
   in accounting principle:
  Basic                   $1.59         $1.22         $1.82        $1.44
  Diluted                   $1.57         $1.21         $1.80        $1.42

  Per share cumulative effect of
   change in accounting
   principle:
  Basic                                                  $(0.18)
  Diluted                                                           $(0.18)

  Net income per share:
  Basic                     $1.59        $1.22          $1.82        $1.26
  Diluted                   $1.57        $1.21          $1.80        $1.24

  Weighted average shares
   outstanding:
  Basic                    24,849       25,869         25,114       25,833
  Diluted                  25,161       26,130         25,417       26,247


                     Electronics BoutiqueHoldings Corp.
                  Selected Consolidated Balance Sheet Data
                           (Amounts in thousands)

                                          January 31,       February 1,
                                             2004      2003
  Cash and cash equivalents                $157,968          $121,873

  Merchandise inventories                   253,577           226,866

  Total current assets                      477,687           382,480

  Total assets             636,375           521,614


  Accounts payable                          220,481           176,146

  Current liabilities                       311,679           237,983

  Total liabilities                         332,395           247,114

  Stockholders' equity                      303,980           274,500


DATASOURCE: Electronics Boutique Holdings Corp.



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

Holdings Corp., [phone]



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

http://www.ebgames.com/ 

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