GameStop’s collectibles business was the only real sales bright spot in its down fiscal Q1 ended May 4, as restructuring of the category continues.

The chain retailer reported a 13.3% overall decline in sales (11.5% in constant currency), driven by comp store sales declines of 10.2% in the U.S. (and 10.4% internationally).

Collectibles sales were up 10.5% to $157 million for the quarter.  The only other up category was accessories, which was up less than 1%.  New hardware was down 35%, software sales were down 4.3%, pre-owned sales were down 20.3%, and digital receipts were down 6.7%.

The troubled ThinkGeek online operation, which exhibited its first signs of trouble last quarter (see "GameStop Coillectibles Sales Up, But Overall Sales Decline"), continued to have problems.  Sales in the collectibles category would have been up 16% rather than 10.5% if not for, COO/CFO Rob Lloyd said in the conference call.

The company is consolidating the ThinkGeek web operation with GameStop’s, with a redirect for ThinkGeek maintaining the brand "at least initially, while we consolidate the backend operation," CEO George Sherman told analysts.

Top categories in the collectibles category are Funko POP! figures, statues, and t-shirts, Sherman said.

While the company underperformed on sales, it beat net profit projections with a $6.8 million profit (on its $1.5 billion in sales), still down substantially from $28.2 million in the year-ago quarter.

GameStop has a number of initiatives to try to continue to respond to the digitization of its core videogame software business, according to its executives in the conference call (transcript via Seeking Alpha).  It’s eliminated its dividend to conserve capital, has brought in a top tier consulting firm to help with restructuring, has begun expense reduction efforts, and deployed a special management team to manage the process.  It’s already begun expense reductions; tests of experiential retailing in a number of areas, including collectibles; focusing on decluttering stores to give more attention to the best sellers; and expanding its exclusive collectibles.

"The challenge is a significant one," Sherman told analysts.  "We must immediately address SG&A [sales, general, administrative expenses – ed.] that’s been allowed to deleverage, execute on opportunities to optimize the current business and develop new revenue streams for our future.  Doing so will require immediate action on our part and an ongoing sense of urgency that is off the chart."