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GameStop Offloads Spring Mobile Unit, Streamlines Operations

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GameStop Corp. (GME - Free Report) is on track to streamline its operating structure and recently concluded the sale of Spring Mobile business to this end. The mobile division, which owns and operates 1,284 AT&T wireless stores, was acquired by Prime Communications. The $700 million sale price excludes transaction charges, debt and working capital adjustments.

Management hinted that the net proceeds from the sale might be used to lower debt burden, reinvest in core video games and collectibles businesses, and conduct share repurchases. The Spring Mobile business, which formed part of the company’s Technology Brands segment, has been struggling for quite some time now. Last year, the company sold its Cricket Wireless business.

Notably, the decision to divest the Spring Mobile business is part of the company’s comprehensive review process as it continues to look for strategic alternatives to boost shareholder value. Management is satisfied to successfully finish the deal and will now focus on its core businesses of video games and fast rising collectibles business.

Meanwhile, GameStop’s collectibles sales category has been profitable for the past few quarters. In the fiscal third quarter, sales of collectibles rose 11.7%, following an increase of 15.7% and 24.4% in the second and first quarter of fiscal 2018. The company has been steadily gaining from robust footing in the collectible’s category backed by continuous growth in domestic and international collectibles businesses. Moreover, GameStop seeks to strengthen this unit by widening its global footprint in video game stores, ThinkGeek and Zing stores, as well as e-commerce platforms.



In the past month, shares of this Grapevine, TX-based company have gained approximately 23%, outperforming the industry’s growth of 7.4%.

GameStop, which operates more than 5,800 stores across 14 countries, carries a Zacks Rank #3 (Hold).

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