GameStop Q2 Profit Rises on Strong Sales

NEW YORK – Video game retailer GameStop Corp. on Thursday said quarterly profit rose 2.6 percent, helping to drive shares up nearly 5 percent.

In the second quarter, revenue driven by strong sales of games and hardware like Sony Corp.'s (SNE) PlayStation Portable overshadowed costs related to returns of "Grand Theft Auto: San Andreas (search)," which was pulled from shelves after hidden sex scenes in the game resulted in a rating change from "Mature" to "Adults Only."

Net income at GameStop (GME) increased to $7.9 million, or 14 cents a share, for the second quarter ended July 30, from $7.7 million, or 13 cents a share, a year earlier.

GameStop is merging with Electronics Boutique Holdings Corp. (ELBO) in a deal slated to close in late September or early October.

GameStop sales increased to $415.9 million compared with $345.6 million in the prior year. Video game software sales rose by 16 percent, led by titles such as "NCAAFootball 2006" from Electronic Arts Inc. (ERTS) and Nintendo Co. Ltd.'s "Pokemon Emerald."

GameStop said earnings included a charge of $1.1 million related to its inventory of "Grand Theft Auto: San Andreas," which was rerated by the Entertainment Software Rating Board after it found hidden sexual content that could be unlocked with a Web download.

Looking ahead, GameStop said it sees third-quarter earnings of 18 cents to 20 cents per share and full-year earnings of $1.30 to $1.40, excluding the impact of its planned merger.

Reuters Estimates does not have analysts' targets for GameStop.

GameStop shares were up 5 percent, or $1.48, to $30.93 on the New York Stock Exchange. Electronics Boutique shares rose $1, or almost 2 percent, to $61.87 on the Nasdaq.