Blockbuster Posts $13.3 Million Loss8 Aug, 2012 By: Erik Gruenwedel
Rental icon to up focus on Hispanic market going forward
Blockbuster LLC Aug. 8 reported a second-quarter (ended June 30) operating loss of $13.3 million compared with operating income of $10.4 million during the previous-year period.
Blockbuster, which is a unit of Dish Network, generated revenue of $253.3 million, down slightly from revenue of $253.9 million last year. Total assets for Englewood, Colo.-based Blockbuster topped $405 million compared to $453 million last year, underscoring ongoing store closures and changing consumer habits toward movie rentals.
The operating loss was primarily a result of lower monthly revenue and higher inventory costs per unit relative to the fair value of the inventory costs per unit acquired in the Blockbuster acquisition. In other words, it cost Blockbuster more to get new release titles in the quarter than it did when Dish bought the chain out of bankruptcy in April 2011.
During the first quarter, Blockbuster closed about 500 domestic stores and during the second quarter it closed 150 domestic stores, leaving the chain with about 900 domestic stores as of June 30.
“We continue to evaluate the impact of certain factors, including, among other things, competitive pressures, the scale of our Blockbuster retail operations and other issues impacting the store-level financial performance of our Blockbuster retail stores,” Dish said in a fiscal filing. “These factors, or other reasons, could lead us to close additional Blockbuster retail stores.”
In addition, to streamline administrative expenses, Dish moved Blockbuster’s headquarters to Denver in June.
In a call with analysts, Dish CEO Joe Clayton said Blockbuster has gone through significant transition, including a completely revamped management team, in-store signage and business offers. Clayton said Blockbuster, which markets Blockbuster@Home in-store and streaming rentals as a $10 monthly add-on to Dish subscribers, said the chain would aggressively up marketing efforts to Hispanic market through in-store signage and localized promotions.
"We are optimistic that the strategic changes that we have recently implemented will put us in a position for improvement," Clayton said.