GameStop shares rose after the video-game retailer revised the terms of a convertible-note exchange that will eliminate about $1.4 billion of long-term debt while using relatively little of the company\u2019s cash.<\/p>\n
Under the amended agreement, noteholders will receive roughly 55.5 million shares of GameStop Class A common stock and about $358.4 million in cash. The original terms called for the exchange to be settled entirely in stock.<\/p>\n
The revised structure reduces GameStop\u2019s debt burden but will also increase the number of shares outstanding, creating additional dilution for existing shareholders.<\/p>\n
The move comes as GameStop continues to reshape its business around collectibles, investments and a smaller retail footprint.<\/p>\n
For the quarter ended May 2, the company reported revenue of $835.3 million, up 14% from a year earlier. Collectibles revenue jumped 65% to $348.9 million and became GameStop\u2019s largest business segment, accounting for nearly 42% of net sales.<\/p>\n
Hardware and accessories revenue declined 3.4% to $333.7 million, while software revenue fell 13% to $152.7 million.<\/p>\n
Gross profit rose 34.6% to $340.3 million, helped by the shift toward higher-margin collectibles. Net income climbed to $389.6 million, though a large portion of the gain came from unrealized gains tied to derivative investments linked to eBay.<\/p>\n
GameStop has continued to deepen its exposure to eBay after an unsuccessful takeover approach earlier in the year. The company converted its derivative position into a direct equity investment and held approximately 43.4 million eBay shares as of Aug. 1, valued at about $4.95 billion.<\/p>\n
For its second quarter, GameStop expects net sales of $780 million to $800 million, down from $972.2 million a year earlier. The company attributed the decline in part to the prior-year launch of the Nintendo Switch 2, its planned exit from France and continued store closures.<\/p>\n
Profit expectations remain stronger. GameStop expects operating income of $150 million to $170 million and net income of $290 million to $310 million, including gains tied to its eBay investment.<\/p>\n
The company\u2019s shares remain below year-ago levels, but the latest debt move was welcomed by investors as another step toward a cleaner balance sheet.<\/p>\n