Gamestop leans harder into collectables

Video game retailer’s licensed merch business sees double-digit growth in Q3 report with plans for major future investment in collectables

Written by Rhys Thomas

Posted 04.12.2018 | Retail

Gamestop leans harder into collectables thumbnail

Gamestop’s better-than-expected Q3 results were not enough to avoid it softening its guidance for full-year 2018.

Net income for the quarter ended October 2018 soared 24 per cent to $68.3m, adjusted to remove a hefty impairment charge of $587m, while sales increased 4.8 per cent to $2.1bn compared with $1.98bn in the same period last year. 

The video game retailer has in recent years pivoted to focus on licensed merch as much as software and consoles, manifesting in three-month collectable sales totalling $154.6m, a 11.7 per cent to leap far outstripping the performance of pre-owned video games, which once drove the retailer’s bottom line. Second-hand software dropped 13.4 per cent.

Funko Pop! Fortnite collectables have been strong sellers

Gamestop will continue to adjust its business model to go where consumer spend is flowing. Most recently the board signed a definitive agreement to divest its Spring Mobile business, a fleet of more than 1,300 AT&T wireless stores, to Prime Communications. The sale is expected to close in January and will put $700 million in cash in the retailer's coffers.

In a Q3 earnings call, interim CEO Shane Kim said those earnings will be used to bolster the segments of the business that are making the most of shelf space – namely new video games and collectables, with Funko Pops! other toys and apparel the core categories.

"In the collectables business, we are continuing to see strong growth and great resonance with our core demographic as well as expansion into new demographics,” he said. “We believe the opportunity for continued growth in this business is tremendous as we seek to leverage our expansive global footprint including our video game stores around the world, ThinkGeek and Zing stores, and importantly our e-commerce platforms.”

Responding to a question from an investor, Gamestop CFO and COO Robert Lloyd said the company is “excited about the future prospects” of its collectables business, adding “overall, collectibles, we think, has a long runway. It's a growing business”.

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