Collectibles growth and higher operating income accompany substantial investment gains and an increased EBITDA target.
GameStop reported second-quarter results Tuesday showing lower sales but stronger earnings. Net sales fell to $790.2 million for the 13 weeks ended , down from $972.2 million a year earlier, continuing a long decline in the company's core video game and hardware retail business. Collectibles was the one bright spot within retail operations, with sales up 57% to $356.3 million, now representing 45.1% of total revenue, up sharply from 23.4% a year ago.
Operating profitability improved. GAAP operating income came in at $160.2 million, described in company materials as the highest second-quarter operating income in GameStop's history, up from $66.4 million a year earlier. GAAP net income rose about 77% to $298.7 million from $168.6 million, and diluted earnings per share rose to 51 cents from 31 cents.
Investment gains shape the headline
Investment gains also played a substantial role. GameStop holds roughly 43.4 million eBay shares, worth about $4.9 billion. The quarter included a $72.1 million unrealized gain on the equity stake and a $166.3 million gain on a related derivative asset, totaling $238.4 million before considering their tax effects and other income-statement items.
Those gains help explain why net income outpaced sales, but they should not be confused with the separate improvement in operating income. GameStop reported adjusted earnings of 27 cents a share and adjusted EBITDA of $174 million. These adjusted measures are distinct from GAAP net income.
GameStop ended the quarter with $4.85 billion in cash and equivalents plus $206 million in marketable securities, and raised its full-year adjusted EBITDA guidance to more than $650 million, up from a prior target of more than $600 million set in June.
An earnings call was scheduled for later Tuesday, after this report was prepared. Management’s comments could help investors assess the durability of collectibles growth and the role of the eBay investment in GameStop’s broader strategy.