Shares of GameStop (GME) were in focus after retail giant Walmart (WMT) announced that it is entering the collectibles sector.

WHAT'S NEW: Earlier today, Walmart said that it is "leveling up its pop culture merchandise", introducing a new, dedicated collectibles section in the entertainment department of more than 3,500 stores starting the week of October 15. The retailer said it would be the exclusive brick and mortar retail home of Loot Crate, a subscription box service that will now be available for Walmart customers to purchase in store. Walmart added that the new section will also include new and exclusive products from Funko (FNKO), McFarlane Toys, and CultureFly.

WHAT'S NOTABLE: In addition to selling video game software and hardware, GameStop is the owner of ThinkGeek, a retailer of collectibles pertaining to popular games, films, comic books, and television programs. According to its most recent earnings report, GameStop said that collectibles sales in the second quarter had increased 15.7% year-over-year to $141.7M, driven by continued expansion of licensed merchandise offerings, new and improved product offerings and a notable growth in apparel.

STREET RESEARCH: Following the Walmart announcement, Bank of America/Merill Lynch analyst Curtis Nagle maintained an Underperform rating and $10 price target on GameStop shares, saying that Walmart is trying to collect on the game retailer's best performing business. Nagle said the news is a negative for GameStop given that collectibles are the only category that is consistently growing for the company, that there were already concerns over how much collectibles distribution could move into mass channels, and that collectibles are already showing signs of deceleration. The analyst noted that GameStop will "no doubt" remain the destination for collectibles, but doesn't see how this announcement doesn't hurt growth and could likely be a headwind for overall traffic and game sales in GameStop stores.

PRICE ACTION: GameStop shares are up 1% to $15.03 in late afternoon trading, while Walmart shares are down almost 1% at $94.24.