GameStop is weighing a potential sale of the company as part of a “comprehensive review” launched by its board to consider financial and strategic options, Executive Chairman Daniel DeMatteo said in a statement accompanying Q2 earnings.

The retailer “continues to engage with third parties” on potential deals, including a sale, he said.

Reuters reported that private equity firm Sycamore Partners is among those interested in buying GameStop and taking it private. GameStop shareholder Tiger Fund Management earlier this year urged the chain to review its business with an eye toward a potential sale. The retailer has been working with financial adviser Perella Weinberg. GameStop is unlikely to appoint a permanent CEO until after the review is completed, interim CEO Shane Kim told analysts. CEO Michael Mauler left the chain in May.

“We are reviewing various scenarios and alternatives, and I can assure you, the board is open-minded in considering the best path forward for GameStop and our shareholders,” Kim said.

As it considers its options, GameStop is “pursuing many opportunities” in collectibles, which in North America has grown to a market that generates $12 billion in annual retail sales and remains “very fragmented,” Kim said. GameStop operates 103 collectible stores, including ThinkGeek in the U.S. and Zing Pop Culture in other countries. It also sells some collectibles through its videogames stores.

In Q2 ended August 4, GameStop’s net income declined to $3.3 million from $81.2 million in the year-earlier quarter. Revenue fell 2.4 percent to $1.65 billion on a 0.5 percent drop in same-store sales — a 2.4 percent same-store increase in the U.S. offset by a 6.4 percent decline in international markets).

GameStop’s “collectables” business rose 15.7 percent to $141.7 million on a more than 35 percent increase in apparel – the second largest collectibles category, after toys. Gross margins for collectibles declined 3.5 percent to 35.1% as GameStop continued to “refine” the business’ “product mix and pricing strategy,” Lloyd said.

The gain in collectibles was offset by a slight decline in sales of new and pre-owned videogame software and hardware to $1.1 billion, tied largely to an 18.5 percent drop in new software to $300 million. Top-selling games included Sony Interactive Entertainment’s “God of War” and Nintendo’s “Mario Tennis Aces”, Lloyd said. New hardware sales rose 20.1 percent to $298.3 million driven by the launch of Microsoft’s Xbox One X. Headset sales rose 80 percent, tied in partly to the popularity of Fortnite, Lloyd said. He added that the collectibles business also will benefit from the arrival of Fortnite-licensed products this fall including Funko’s Pop! figures.

GameStop closed 16 videogames stores in the quarter, leaving it with 5,756 locations (3,806 in the U.S.; 1,951 elsewhere).

Contact:

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