GameStop is putting a hold on new acquisitions and is trying to build on the “strength and momentum” in the collectibles business, Executive Chairman Daniel DeMateo told analysts as the company released financial results for Q1 ended May 5.

Though still a relatively small part of the company’s business, collectibles sales rose 30% in the most recent fiscal year to $636.2 million, and jumped 25% in the quarter to $142.4 million. The increase came as the company increased the space dedicated to the category. At the same, it’s also working to “right-size” the category, said DeMateo, noting that the merchandise mix needs to be tailored to store size and the demographics of the markets/regions.

GameStop has had a tumultuous few months. CEO Paul Raines resigned in February (and later passed away); successor Michael Mauler departed after only three months. Board member Shane Kim is serving as interim CEO as the board searches for a replacement. Kim said he wouldn’t be a candidate for the permanent CEO position.

Among the new management’s charges will be to continue growing the collectibles business and improving the performance of its businesses in technology (AT&T and Simply Mac stores) and GameStop’s pre-owned videogames, DeMateo said.

Meanwhile, Q1 net profit declined 52% to $28.2 million as the company took a $12.6 million charge, including $11.2 million tied to the changes in management, Lloyd said. There also were $1.4 million in charges tied to closing 27 videogames and 33 technology stores.  There was no change in the number of ThinkGeek and Zing Pop Culture collectible stores, which stood at 103.

Q1 revenue fell 5.5% to $1.93 billion as same-store sales declined 5.3%. The videogames hardware revenue declined 7.9% to $359.2 million, with increased sales of Microsoft Xbox and Sony PlayStation 4 consoles and “stable” sales of Nintendo Switch, which was in the midst of its launch a year ago. Software sales dropped 10.3% to $466.7 million.

In contrast, the videogames accessories business jumped 13.1% to $199.1 million, driven largely by sales of controllers and other items tied to PCs and consoles and popularity of Epic Games’ “Fortnite” and Bluehole’s “PlayerUnknown’s Battlegrounds” (PUBG) titles, Lloyd said.

Contact:

GameStop, Robert Lloyd, CFO, 817-424-2000, robert.lloyd@gamestop.com