Shares of GameStop (GME.US) experienced a notable rise in Wednesday's trading session. At the time of writing, the stock was up more than 7%, trading at $22.42.
The upward movement follows the release of the company's financial results for the first quarter of fiscal 2026, which concluded on May 2. The company reported a record net profit, and its board of directors has approved a substantial new share repurchase program.
For the quarter, GameStop's net sales increased by 14% year-over-year to $835.3 million, surpassing last year's $732.4 million. The performance was notably driven by its collectibles segment, where sales surged 65% to $348.9 million. This segment now represents nearly 42% of total revenue, up from approximately 29% a year ago, making it the company's largest revenue source.
In contrast, the traditional video game business faced some pressure. Sales of hardware and accessories declined to $333.7 million from $345.3 million in the prior-year period, while software sales fell to $152.7 million from $175.6 million.
Improved revenue and better cost management significantly enhanced profitability. The company reported operating income of $143.3 million for the quarter, a stark turnaround from an operating loss of $10.8 million a year ago. Selling, general and administrative expenses also decreased to $201.6 million from $228.1 million.
On the bottom line, GameStop achieved a net profit of $389.6 million, setting a new all-time high for quarterly earnings and far exceeding the $44.8 million profit reported a year earlier. It is important to note that this record profit was partially driven by investment gains. The financial report included $268.4 million in unrealized gains from derivative positions related to eBay stock and $83.7 million in interest income.
Excluding these items and other one-time factors, the company's adjusted net profit was $179.3 million, which remains well above the $73.1 million adjusted profit from the same period last year.
In a separate development, GameStop's board unanimously approved a new share repurchase authorization of up to $2 billion on June 2. This program is set to expire on June 2, 2029, and replaces a repurchase plan approved in March 2019. The company indicated that the specific timing and amount of share repurchases will depend on market conditions, the stock price, and capital allocation needs.
As of the end of the quarter, GameStop held approximately $9.7 billion in cash and cash equivalents, providing substantial flexibility for future capital deployment. However, the company's long-term debt also increased to $4.17 billion, up from $1.48 billion a year ago.
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