Investment: PC game shops hit high scores

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The Independent Online
THE RECESSION seems to have passed the country's computer freaks by. While other retailers moan about lower spending, Electronics Boutique, the computer game specialist, continues to hit new high scores.

Pre-tax profits, revealed yesterday, almost trebled to pounds 1.5m in the six months to July on revenues up 25 per cent. Same-store sales jumped 10 per cent.

The second half has started even better, with like for like sales up an astounding 20 per cent - although this is compared to a weak period last year.

All this has been achieved in the absence of any new games consoles - the traditional driver of demand - hitting the shelves. But with an installed base approaching 5m consoles John Steinbrecher, EB's chief executive, reckons demand will continue to be strong.

The average EB customer now buys six or seven games a year. Several potential blockbusters due for release before Christmas - including Tomb Raider 3 and Mission Impossible - will offer an extra boost in the second half.

Meanwhile, EB continues to roll out its format. A further nine stores are planned for the second half while concessions in Debenhams - and possibly other retailers - will speed up expansion.

EB is also planning to open stores in the Netherlands and Scandinavia, and may use some of its cash pile to make acquisitions in France and Germany.

Full-year profit forecasts of about pounds 15m put the shares, up 4.5p to 80p yesterday, on a forward earnings multiple of 18. For a gilt-edged growth stock such as EB, that's cheap. Buy.