This transaction, which attractively values the Spring Mobile business as $700 million and is expected to close in January, will generate significant cash proceeds and equally importantly, will enable us to increase our focus on serving our customers' entertainment needs across video games and collectibles. We are excited about this transaction and view it to be an enabling one for GameStop.

While we are still evaluating the specific use of the proceeds as part of the Board's ongoing strategic review, we expect the transaction to facilitate investment in our core businesses to drive growth and transform GameStop for the future, repayment of debt, return of capital to shareholders or most likely some combination of these opportunities.

Second, with respect to the Board's search for a permanent CEO, that process also remains ongoing. With the help of a leading executive search firm, we are having productive conversations with promising candidates and we are determined to find the best strategic leader for the Company. However, as I discussed on our last call, we are unlikely to name a new CEO until the Board's review process has concluded. As I also said in September, I'm committed to remaining in the Interim CEO role until we select the very best person to lead GameStop on a permanent basis.

Now, moving onto our core video game entertainment business. As you know, we are the market share leader in the video game industry and we have increased our focus on leveraging that position and our many competitive advantages to further grow our market share. We are very proud that the increased focus has paid off.

In October, the US physical video game industry saw several major title launches and according to The NPD Group experienced almost 50% year-over-year growth while GameStop grew its revenue by a significantly greater amount at 63%. We're able to grow our share of physical video games by 4% year-over-year with 5% share growth in software and 4% share growth in hardware during a huge month. This reflects the value that we offer to customers as well as our ability to drive our business through rigorous focus and discipline.

In addition to taking more share at launching of key titles, we are focused on developing plans and implementing strategies across all levels of our business to enable us to compete even harder than we have before for profitable market share throughout each title's lifecycle. For example, you've seen us begin to position our stores to not only highlight specific weekly title launches, but all recent title launches during key periods. This will reinforce with our customers that we are the destination for all things video games.

We have learned a dominating market share of top titles, leads to growth in other categories including accessories and collectibles. And as we saw over the Black Friday weekend, the increased foot traffic in our stores and strong e-commerce sales helped us to grow our PowerUp Rewards membership, customers who engage with us more deeply and spend the most money with us. And leading with new video game market share is critical for us as we believe it will ultimately lead to an increase in pre-owned video game inventory, enabling us to broaden our customer reach and drive more traffic to our stores.

In the collectibles business, we are continuing to see strong growth and great resonance with our core demographic as well as expansion into new demographics. We believe the opportunity for continued growth in this business is tremendous as we seek to leverage our expansive global footprint including our video game stores around the world, ThinkGeek and Zing stores, and importantly our e-commerce platforms.

Even as we continue to execute on our business objectives in the near term, we have been working hard on shaping GameStop for the future. The sale of Spring Mobile will create tremendous optionality for us in this regard. In addition to monetizing that asset, the team along with our Board is looking hard at how we can improve and evolve all aspects of our Company.

Representative opportunities include identifying ways to reduce our costs further, improving our technology and data analytics capabilities, optimizing our store experience and store fleet, evaluating strategic and economic partnerships with our publishing and platform partners, and evaluating our relationships with customers and the services that we offer to them. In short, we are evaluating everything. Despite our optimism about the future, we continue to face challenges in our traditional physical video game retail business model.

As you'll hear from Rob, we are lowering our fiscal 2018 earnings expectations in light of these headwinds. While this is disappointing, we understand we need to adapt our business model and find additional ways to leverage our customer relationships and competitive advantages. Importantly, the team here is optimistic about the future and already hard at work. In fact, we are very excited about what lies ahead for GameStop.

We have the unique and exciting opportunity to become the gaming and entertainment lifestyle brand for everybody. We can satisfy all of the gaming needs for our customers across platforms, across publishers and franchises, across physical and digital formats, and across new and pre-owned. In addition, we are progressing several other strategies that push us into new and different areas of gaming while evolving our current business model in capitalizing on our expertise in small format retail. As we continue to solidify and develop tactical plans to support these strategies, we look forward to sharing more details with you.

With that, I'd like to turn it over to Rob for a review of the quarter and our outlook. Before doing so though, I also want to take a moment to thank our associates all over the world for everything you've done so far in executing holiday 2018 and positioning GameStop for the future. We could not do this without you. Thank you very much.

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

Thank you, Shane. Good afternoon, everyone. I'll take this time to walk you through our third quarter results and then share with you our thoughts on the remainder of the year. As you know, we've been looking forward to the back half of 2018 given the strong title line up and the anticipation around marquee launches across several franchises.

For the third quarter, the October title launches drove double-digit growth in software and we also delivered double-digit growth in hardware, accessories, collectibles and digital. Overall for the quarter, we delivered a sales increase of nearly 5%, a strong performance across key categories that demonstrates our position as the leading authority in video games. From an earnings perspective, on an adjusted basis, we delivered operating earnings that increased 16% to $94 million from $80.8 million in the third quarter of fiscal 2017 and adjusted EPS of $0.67 per diluted share compared to $0.54 per diluted share last year.

I'll go into more detail shortly, but during the quarter we incurred a $587.5 million non-operating, non-cash intangible asset impairment charge primarily related to goodwill which was triggered by the sustained decline in the Company's share price and market value. While we were pleased with our share gains in the third quarter, not every title met our expected performance. And while we are also pleased with our sales performance over the Black Friday weekend and Cyber Monday, our overall third quarter and forecasted Q4 profitability is below our expectations and as a result we are revising our outlook for the fiscal year.

I'll go into more detail about the drivers behind reducing our earnings outlook in a moment, but I want to first discuss the third quarter. From a top line perspective, third quarter sales increased 4.8% and our comparable store sales increased 2.1%. The increase in comp sales was driven by a stronger software line up this quarter, including several marquee titles that released earlier in the calendar compared to last year.

In the US, comps increased 3.4%, while international comps decreased 0.5% with our domestic video game business outperforming our international video game business, primarily due to stronger software performance and collectibles growth. Our video game hardware business increased 12.8% primarily due to sales growth in PlayStation 4 and Xbox One, which was partially offset by a decrease in Nintendo Switch as we anniversary last year's launch. This represents consecutive quarters of double-digit increases in hardware sales as a result of the PS4 and Xbox One consoles.

New software sales increased 10.9% in the quarter given the launch of several highly anticipated titles. Contributors to the increase include Red Dead Redemption 2, Spider-Man and the October release of Call of Duty Black Ops 4. The PlayStation 4 platform was the primary driver behind the growth with the successful launch of the exclusive Spider-Man title. Red Dead Redemption 2 was the top-selling title despite only a few sales days being captured in our fiscal quarter. Black Ops 4 and the sports titles were not as successful as we had hoped.

Our accessories business grew 32.6% on the strength of headsets and controllers as we continued to be a destination for high-end ancillary products related primarily to the popularity of battle royale games such as Fortnite. Digital receipts grew 29.5% in the quarter primarily due to strength in digital currency with a large impact from Fortnite.

Our pre-owned business declined 13.4% in the quarter. We continued to see declines in pre-owned software, reflective of fewer title launches and a decline in physical software sales earlier in 2018 which affect inventory levels, weakening demand in the face of digital adoption, including digital access to older titles and fewer promotions offered to our customers in the quarter. We experienced growth in the pre-owned hardware category.

Switch pre-owned hardware and software grew meaningfully year-over-year although Switch continues to make up a smaller portion of the overall pre-owned sales. We grew the collectibles business by 11% for the quarter to $154.6 million with growth driven by toys, including Pop Vinyls and apparel.

Moving to tech brands segment, revenues were down 11.9% to $171.1 million, primarily due to the decrease in store count, while the gross margin rate increased to 80.4% compared to 72.8% last year as a result of a higher mix of commissioned device sales. Comp store traffic declined 7.5% and comp gross margin increased 5.1%. Reported operating earnings increased from $18 million last year to $23.3 million this year.

The prior year operating earnings included a one-time gain of $5.7 million related to the finalization of the Cellular World acquisition payments. On an adjusted basis, operating earnings increased by 108%. The improved operating earnings were primarily due to improvements in compensation terms, better operational execution and the closure of underperforming stores.

Shifting gears to gross margins; our gross margins declined 160 basis points for the quarter to 33.1%, primarily due to the growth in the sales of lower-margin categories. Gross margin as a percentage of sales increased in accessories, digital and technology brands while margin rate declined in new hardware, new software and collectibles. For collectibles, we increased both sales and gross profit dollars. However, gross margin rate declined 70 basis points to 37.4% for the quarter due to the mix of products sold.

Now moving to SG&A; total SG&A in the third quarter was $566.6 million comparable to $565.1 million last year. As a percentage of sales, SG&A decreased 130 basis points on a nearly 5% increase in the sales. We reported a total Company operating loss of $493.5 million, reflecting the impact of the impairment of our intangible assets compared to operating earnings of $87.6 million last year. On an adjusted basis, operating earnings were $94.0 million compared to $80.8 million last year, an increase of 13.2%.

Our effective tax rate on adjusted pre-tax earnings was 15.7% for the quarter. During the quarter, we recorded an approximately $7 million benefit related to an adjustment to our transition tax liability and other discrete items, which caused our tax rate to be abnormally low. The reported loss was $4.78 per diluted share compared to earnings of $0.59 per diluted share in the prior year.

Third quarter adjusted earnings per diluted share, excluding the impact of impairment charges, were $0.67 compared to $0.54 in the prior year period. We made the following changes to our store portfolio during the quarter: we closed a net of 15 video game stores around the world as our overall portfolio remains very healthy, ending with 3,798 video game stores in the US and 1,940 internationally; we closed a net of 5 AT&T stores, ending the quarter with 1,284 and we closed one Simply Mac store, ending the quarter with 46. We opened two collectible stores, ending the quarter with 105. Our current average lease life remaining for our video game stores is less than two years, which gives us tremendous flexibility related to managing our store base.

Moving to the balance sheet, we ended the quarter with $454.5 million in cash, in line with last year. Inventory was up 11% or $204.9 million with the increase primarily attributable to hardware, specifically Xbox One X and Nintendo Switch consoles which had either not launched or in short supply last year. We also accelerated some purchases this year compared to prior year as a result of the earlier launch of some of the bigger titles this year and expected shortages of hardware as we get further into the holiday season. From a capital allocation perspective, the Board declared a quarterly cash dividend of $0.38 per share that is payable on December 21st to shareholders of record on December 11th.

Shifting to our outlook for the remainder of fiscal 2018, as I mentioned earlier, our third quarter performance was better than last year and we drove strong sales performance over Black Friday weekend and Cyber Monday. However, the overall sales and margin performance are not as strong as we had expected and we are reducing our full year outlook given our expectation that fourth quarter sales will skew more toward hardware than initially planned, given what we saw in November. Additionally, underperformance of certain new software titles, including some November launches, weakness in pre-owned and recent sales promotions are all contributing to our expectation that fourth quarter earnings will be below what we anticipated coming into the back half of the year.

Fiscal 2018 full-year revenues continue to be forecasted in the range of down 6% to down 2% with same-store sales ranging from down 5% to flat. Promotions and category mix of sales are pressuring gross margin and profitability, but driving sales and store traffic. We believe that increased traffic and customer acquisition will benefit us in the long run. Our tax rate for the full year is now estimated at between 23% and 24% driven by the third quarter transition tax adjustments and other discrete items as well as the mix of earnings in the countries in which we operate.

We now expect earnings per diluted share in the range of $2.55 to $2.75. Given our lower earnings expectations for the year, combined with the resolution and payment of approximately $30 million on our French Tax matter and the earlier timing of inventory purchases, our full year free cash flow is now estimated to be closer to $200 million compared to the $300 million we anticipated earlier. Capital expenditures are now estimated to be between $100 million and $110 million.

As we move further into the holiday season, our stores and our associates around the world continue driving great customer service to keep us as the destination for gaming and collectibles. We remain very focused on improving our operations, gaining market share and driving profitability across our core businesses. We appreciate the support of our shareholders as we navigate our ongoing strategic review and changing video game market.

I'll now turn it back over to the moderator for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) We'll take our first question from Curtis Nagle with Bank of America.

Curtis Nagle -- Bank of America -- Analyst

So I guess the first one is, why you guys -- just not in the market in terms of buying back stock, but you guys have a pretty big cash position now, you're theoretically probably getting $700 million sometime this quarter. I guess is there anything preventing you from buying back stock, let's say, maybe selling of Spring not been completed?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

Given that we're in the middle of a strategic review, given that we were in the discussions surrounding the sale of the AT&T business and all of those kinds of factors, obviously we're in possession of information that would prevent us from being able to buy stock at this time.

Curtis Nagle -- Bank of America -- Analyst

So when Spring is completed, are you still prevented or -- because you're still technically and strategic review, would you still stay out of the market?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

We would stay out of the market until the strategic review process is complete, at which point we'll be able to report the results of that and that would then change our possession of material inside information.

Curtis Nagle -- Bank of America -- Analyst

Do you have any timeline when that could be?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

No.

Curtis Nagle -- Bank of America -- Analyst

And then my next question, just maybe walking through the puts and takes of guidance. So top line not really changed, it looks like mix is worse with used weaken and hardware stronger, you'll see a little bit of upside from tax. So what else is driving, what looks like, I don't know, maybe $60 million or $70 million tick down of EBIT. Is that just on promotions or is there something else we should be thinking of?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

I would say that the biggest drivers are the software performance, the pre-owned performance and then to a lesser degree, the promotional activity that we had. And then as I outlined in the script, yes, this shift toward hardware and what that does to margin.

Operator

Thank you. We'll take our next question from Cristina Fernandez with Telsey Advisory Group.

Joe Feldman -- Telsey Advisory Group -- Analyst

Hi guys, it's actually Joe Feldman on. Wanted to ask first about PowerUp Rewards. I know you guys are doing some work to revamp the membership program a little bit. I was hoping you could give a little update on that. And also, are you seeing any change in the membership levels? Is it going up still? Is it going to come down a little bit, maybe you could talk about that.

Shane Kim -- Interim CEO and Director

Yes, we have a lot of activity going on, not just around PowerUp Rewards, but overall in the marketing space and as we've talked a lot about back in the spring time, in the June timeframe when we were on the road, it has to do with the overall customer experience in our stores, understanding customer behaviors, what our customers expect out of the shopping experience at GameStop.

We've done a lot of customer segmentation studies, we've gotten a lot of market research and we've got firms now that are working very hard on helping us to reenvision that customer experience as we go forward. Inside of all of that activity would be an analysis of the PowerUp Rewards program and how we can drive better value for customers inside that. Overall, the program has grown this year.

Joe Feldman -- Telsey Advisory Group -- Analyst

And then I wanted to ask about pre-owned. Obviously I know that was a little weaker, you did explain I think pretty well as to why software was down. Should we think about is it -- I don't know first quarter, second quarter next year when we should expect the turn because it's finally kind of that six month lag, I guess when you'd finally start to see the games or is it a little sooner than that where the people that buy Red Dead Redemption right away are already coming in January or something?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

It takes a while for those newer released products to come back in trade and obviously the phenomenon we've seen there over the last few years is that the online play has the customers holding on to the games for longer period of time. We do expect that Switch will continue to grow as I mentioned, the growth there was pretty dramatic, but it is not yet a large enough part of the overall mix to make much of a difference on the rate. And we continue to see demand around the hardware side of the pre-owned business.

Joe Feldman -- Telsey Advisory Group -- Analyst

And then I could just sneak one more in. Just to be clear, which games where you guys surprised by, I think you've called out Black Ops maybe, I thought I heard sporting goods for instant. Was it (inaudible) or something that was a little weaker than normal or basketball?

Shane Kim -- Interim CEO & Director

I'd say, as I said in the comments, Black Ops and the sports titles that launched in the August-September timeframe were not up to our expectations, as well as a couple of November titles.

Operator

Thank you. We'll take our next question from Stephanie Wissink with Jefferies.

Ashley -- Jefferies -- Analyst

Hi, this is Ashley on for Steph. Thanks for taking our question. So regarding the collectibles business and your eSports march, we want to know how should we think about the gross sustainability and the penetration of mix over time?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

So the collectibles business continues to grow for us and we're excited about the future prospects of being able to grow that business. I'm not sure what you mean by the eSports march, we've done some testing with respect to some of that. But really overall collectibles, we think has a long runway, it's growing business. More of our competitors have increased their positions in that business. As we said in the past, the thing that we see that drives growth and differentiation for us is when we can get those unique and exclusive products or in the case where we don't get exclusive products, how we can be first to market for those things.

Ashley -- Jefferies -- Analyst

And then any feedback or initial takes from the eSports tests?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

I'm sorry, from what?

Ashley -- Jefferies -- Analyst

From testing the eSports --

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

Not much to report yet.

Operator

Thank you. We'll take our next question from Anthony Chukumba with Loop Capital Markets.

Anthony Chukumba -- Loop Capital Markets -- Analyst

In terms of my primary question, I thought you said something interesting in terms of the weakness in (inaudible) and that you specifically mentioned that digital access to older title is hurting your pre-owned software sales growth. Is that a more recent phenomenon because I know if I recall historically, new sales is really tied to the inventory. If you have the inventory you could sell it. And so, I'm just wondering how recent of a phenomenon this is?

Shane Kim -- Interim CEO & Director

We are seeing more of the impact of that in recent months and it does have to do with how customers can get some of those older titles, the very inexpensive titles that you can get through either subscription memberships or online in a pretty heavily discounted mode.

Anthony Chukumba -- Loop Capital Markets -- Analyst

And then my -- just a quick follow-up and apologies if you talked about in the first few minutes of the call, I would say I had some technical difficulties and called in few minutes after you had begun. But any update in terms of your CEO search?

Shane Kim -- Interim CEO & Director

No, you did miss that and I talked about that. The search is still ongoing. We're working with a leading executive search firm, but we're unlikely to name a new CEO until the Board's strategic review process is concluded.

Operator

Thank you. (Operator Instructions) We'll take our next question from Ben Schachter with Macquarie.

Ben Schachter -- Macquarie -- Analyst

So when you're looking at the strategic options, you didn't sell the whole Company, just to tech brands. Did you have offers for the whole business? Have you had any offers for the video game business and they're sticking points around valuation or other areas or just no offers yet on the video game business? And then I have a couple of follow-ups.

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

Sorry, we are not commenting on the process. So I can't really answer your question.

Ben Schachter -- Macquarie -- Analyst

On the CEO, when you're looking for a CEO, how do you interview anyone right now if you don't really know the outcome of the strategic review, like what actually would you be looking for at the moment?

Shane Kim -- Interim CEO and Director

Well, I think as I've said all along, we're looking for the best strategic leader for the business. As part of the strategic review, we have a very clear understanding of how we see the Company evolving moving forward. And so we're anticipating that we are going to -- well, not just anticipating but we are operating the Company as we need to as we move forward. So we are undertaking a lots of steps as clearly the sale of Spring Mobile is the best example of some of the outcomes of that strategic review.

So I think we have a pretty clear sense of how we need to evolve the Company and we're going to dovetail that with the search for the new CEO in terms of his or her vision for what they think the Company can and should do moving forward. But we have to continue to operate the Company and move the Company forward as well.

Ben Schachter -- Macquarie -- Analyst

Rob, just a couple of quick ones for you. So what titles actually underperformed in November and on Red Dead, did that outperformed your launch expectations and how is it doing post launch?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

We're very pleased with Red Dead. So that wasn't one of the ones. Obviously, you can see in the market what the Metacritic scores are around fallout and that's impacted its sell-through. I'll probably just leave it at that.

Ben Schachter -- Macquarie -- Analyst

And then just last one, can you remind me the difference between margins for used hardware and versus new hardware?

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

They're within a handful of points of each other, very close.

Operator

Thank you. At this time there are no further questions in the queue. I would like to turn the call over back to Interim CEO, Shane Kim, for closing remarks.

Shane Kim -- Interim CEO and Director

I'd like to thank everybody again for your time today and we look forward to continuing to update you on our progress in the future. Thank you very much.

Operator

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.

Duration: 35 minutes

Call participants:

Shane Kim -- Interim CEO and Director

Robert Lloyd -- Chief Financial Officer, Chief Operating Officer

Curtis Nagle -- Bank of America -- Analyst

Joe Feldman -- Telsey Advisory Group -- Analyst

Ashley -- Jefferies -- Analyst

Anthony Chukumba -- Loop Capital Markets -- Analyst

Ben Schachter -- Macquarie -- Analyst

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