Surprising Results

By Joseph C. Panettieri  |  Posted 2004-02-16 Print this article Print

Surprising Results

EBs supply chain success has surprised many Wall Street skeptics. This past December, U.S. Bancorp Piper Jaffray and J.P. Morgan Securities Inc. warned investors that the video game industry appeared sluggish. J.P. Morgan said half of EB and Wal-Mart stores had too much video game inventory.

Those warnings proved incorrect. In addition to EBs healthy year-over-year holiday sales, comparable store sales rose 2.5 percent during the period, beating the companys most optimistic forecasts. EB benefited from strong demand for PlayStation 2, Nintendo and Xbox video games. But EB also outmaneuvered a few of its rivals: Toys "R" Us delivered disappointing holiday sales results, while FAO and KB filed for bankruptcy protection.

For an even closer performance comparison, consider EB versus KB. During the 2003 holiday season, a third of KBs 1,300 stores abandoned the video game market and some KB stores wound up with stockpiles of unpopular games because of inefficient supply chain management. On Jan. 15 the company filed for bankruptcy protection. In stark contrast, EB recently increased its sales projections for 2004.

Despite positive forecasts, EB cant declare victory. In addition to competition from Wal-Mart, Target Corp. and other retailers, EB must contend with mall-centric rival GameStop Corp., which operates 1,300 retail locations.

Clearly, theres no rest for EBs supply chain.

Joseph C. Panettieri ( is editorial director of the New York Institute of Technology (


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