GameStop reports record operating income driven by collectibles surge

GameStop Corp. is undergoing a strategic shift as its collectibles segment emerges as a primary growth engine. In its second quarter, collectibles revenue surged 57% year-over-year to approximately $356.3 million, now representing 45.1% of total sales. This shift in product mix helped increase gross margin to 43.7%, up from 29.1% the previous year.

Despite a decline in total revenue to $790.2 million, the company reported a second-quarter net income of $298.7 million, up from $168.6 million a year earlier. This profit was significantly supported by $238 million in net gains from its equity stake in eBay. Operating income reached $160.2 million, a record for a second quarter in the company's history. Consequently, management raised its full-year adjusted EBITDA outlook to more than $650 million.

The company is also focusing on its balance sheet, having retired approximately $1.4 billion in convertible notes to reduce long-term debt to about $2.8 billion. While the core video-game business continues to contract due to store closures and the divestiture of French operations, the company has authorized a $2 billion share-repurchase program.