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GameStop reported $2.05 billion in sales today at the end of its first quarter of 2017, exceeding expectations due to the high sales of the Nintendo Switch hybrid home-portable console and collectibles like Pokémon cards.

Sales of new software dipped by 8.2 percent in contrast to the uptick of new hardware, which increased 24.6 percent to $389.9 million. New hardware sales were led by the Nintendo Switch, the top-selling console each month in the U.S. since its debut in March. GameStop noted that the Switch outperformed all previous console sales. Collectibles — which include toys and games, apparel, accessories, and others — also grew 39.1 percent to $114.5 million thanks to Pokémon products.

Now that more people are buying digital games and subscription services such as the upcoming Xbox Game Pass offer a way to download new software, physical products offer a large opportunity that the company is moving on. In 50 of their larger stores, they’ll be dedicated half the floor space to collectibles, and they’re planning on adding about 20 more ThinkGeek stores in the U.S. and 15 abroad. In addition to their current IP partners, such as Marvel, Harry Potter, Star Wars, and DC, GameStop is actively seeking additional IP partnerships for exclusive collectibles.

In an earnings call, GameStop noted that around half of the 53 million members of its PowerUp Rewards loyalty program — which is now 16 percent to 17 percent higher than last year — had purchased collectibles. GameStop predicts collectibles sales will grow by 30 percent to 40 percent this year and that the Nintendo Switch will continue to drive hardware growth through Q2.


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