- Diluted earnings per share for the second quarter are expected at 7 cents to 8 cents, versus 2 cents per share in the prior year quarter.
- Full year 2007 EPS guidance has been increased to range from $1.39 to $1.42 per diluted share, with sales and comp expectations remaining at 19% to 21% and 14% to 16% respectively.

The company is on schedule to open 500 to 550 stores nationwide, with 325 of those coming in the US and 200 internationally. Afterwards the company will open new stores in every country where it operates.

The company will repurchase or call at least $250 million of notes in the aggregate in fiscal 2007.

Continued strength is expected in sales of next-generation systems. Reservations for the game Halo 3 that is scheduled for release on September 25th are at 360 gamers, and the number of reservations is expected to reach an all time high.

The company will be installing a warehouse management system in the US systems area, to aid its work-in process operations. It is continuing its implementation of DSL in all possible stores to improve its speed at the cash warp. During this quarter, GameStop will be implementing a new ERP system in Germany that will be the basis for its international operations. This system will run all facets of the operations from merchandizing, warehousing, to finance, giving the company the capabilities to seamlessly move into any country as it can adapt to any language, currency, local laws and regulations. The re-branding exercise is expected to be complete by the end of the third quarter.

Key questions from the first quarter earnings call conducted by GameStop, Corp. (GME: chart) on May 23, 2007.

Tony Gikas (Piper Jaffray): Are PS3 sales trends in Europe better than they are in the US?

Daniel Dematteo: The release was good and the follow-up sales have moderated to some degree. The price point impact in many of the European countries makes the perception of this price point much higher with the back expenses being added on. So, it’s fairly slow, but by no means a disaster.

Tony Gikas (Piper Jaffray): Are your consumers confused by the number of hardware systems available at different price points with price drops on some handheld systems?

Daniel Dematteo: No, there are not too many systems out there, in that every system delivers real value and great technology. As a matter of fact, I think it’s one of the strongest trends we could possibly hope for.

Benjamin Schachter (UBS Securities): What key milestones are you going to be tracking to determine your own success in international growth, and how can the investment community follow that? What do you expect to be the key drive titles for PS3 this year?

Daniel Dematteo: Madden could be one of the key milestones on the PS3. Grand Theft Auto should be the second biggest drive of the year on both the 360 and the PS3. The exclusive key drive titles coming out this summer are Layer and InterGuidan.

On the GameStop side we’ve been in this international business for 18 months now, and we’ve put a lot of focus and attention on the domestic side on strengthening our approach to real estate. We’re promoting the brand to all the mall developers throughout all the countries we operator in.

We’re also developing our broker network to look at potentials in the hyper markets. We’re identifying what works and what doesn’t work for us.

We’re also refining how well we can serve either central business district and/or neighborhood markets. The neighborhood concept we inherited in Spain proved to be brittle and we’ve shredded a number of the underperforming stores, but we still believe there is significant expansion opportunity in that.

Colin Sebastian (Lazard Capital Markets): Was the increase in inventory at the end of April from Nintendo platforms? What is the situation of used products ahead of the summer?

Daniel Dematteo: Yes, it was from Nintendo. Our inventory position is good as we’re always after used inventory.

Colin Sebastian (Lazard Capital Markets): Are you comfortable with the 15% to 17% software growth for the industry in 2007?

Daniel Dematteo: Yes.

William Armstrong (C.L.King & Associates): How come your gross margins were down year-over-year within the hardware and software used categories?