Video game retailer expands

7 EB GameWorld stores set for region, with more planned

October 09, 2001|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Electronics Boutique, a video game retailer, is opening the first seven of up to 20 stores planned in the Baltimore-Washington region under the name EB Game- World, the company said yesterday.

The new stores are part of a national expansion for the West Chester, Pa.-based chain, which is planning to add 175 stores this year and another 200 next year, starting in the mid-Atlantic market.

A majority of the new stores will be EB Game- Worlds, which are located in strip shopping centers instead of malls, and dedicate half their space to used games. The mall-based Electronics Boutiques carry more than 2,000 video game and computer game titles.

The retailer has signed leases in five Baltimore-area centers: Garrison Forest Shopping Center in Owings Mills, Middlesex Shopping Center in Essex, Putty Hill Plaza in Fullerton, The Shoppes at Dobbin Way in Columbia and Severna Park Marketplace in Severna Park. Two stores will open in Virginia, in Kingstowne Town Center in Springfield and in Smoketown Plaza in Potomac Mills. The Owings Mills and Columbia locations have opened; the rest will open in the next few weeks.

The chain is shifting to strip shopping center locations as it has reached saturation in malls, and fewer new malls are being built. Only six malls, including Arundel Mills in Hanover, opened in the United States last year.

"Strip centers is a market that's pretty wide open," said John Panichello, president of EB GameWorld and chief operating officer of Electronics Boutique.

Electronics Boutique has stores in White Marsh Mall, Eastpoint Mall, Westfield Shoppingtowne Annapolis, Harford Mall, Montgomery Mall, The Mall in Columbia, Marley Station, Arundel Mills, Owings Mills Mall and Towson Town Center. The chain has 40 stores nationwide under the EB GameWorld banner, though most of those were converted from Stop and Save software, a chain the company had acquired.

The company, which had a second-quarter net loss of $1.5 million, or 7 cents per share, reported a 24.8 percent jump in sales for the quarter at stores open at least a year, a key measure of a retailer's performance. The chain runs more than 830 stores in the United States, Australia, Canada, Denmark, Italy, South Korea, New Zealand, Norway and Puerto Rico.

In the Baltimore-Washington region, the retailer plans to open up to 20 stores in regional shopping centers that offer good roadside visibility and draw from a large trade area, said Michael L. Patz, a principal in real estate brokerage firm KLNB Inc., which is handling leasing for the chain.

The chain decided last spring to launch its strip-center expansion after it was outbid on its planned acquisition of Funcoland stores.

"We came to a point where we could buy a 400-store chain or aggressively open 400 stores on our own at a fraction of the price," Panichello said.

At a time when retail sales have slowed, "if the company competed in any other space than video games, [the expansion] may raise concerns," said Shelly Hale, a research analyst with Banc of America Securities.

"But given the tremendous demand for video games and hardware and software, and the fact that we're beginning a new generation of gaming, there's a great deal of growth ahead for the company, and it justifies adding new stores," Hale said.

The chain's sales should be driven by new gaming products being introduced this fall, including Microsoft's Xbox and its software, and Nintendo's Game Cube, she said. PlayStation 2, introduced last December, is also a big seller. Additionally, the company expects 30 percent of its revenue to come from used games sold at EB GameWorld stores, she said.

"In periods of recession and periods of low spending in the U.S., video is one area people pump money into," Panichello said. "They cancel the big trip or the big present, buy games and play at home. It's a cheap form of home entertainment."

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