Gallery Posts $70 Million Monthly Loss5 May, 2010 By: Erik Gruenwedel
It was perhaps the last straw for Movie Gallery.
The No. 2 DVD rental chain reported a net loss of $70.7 million for the one-month period from March 8 through April 4, according to a regulatory filing.
Wilsonville, Ore.-based Gallery, which owns Hollywood Video and in-store Game Crazy, April 30, notified stores nationwide it would cease operations this month after 25 years.
Gallery, which filed for bankruptcy a second time Feb. 3, generated $73.6 million in DVD and Bu-ray Disc rental revenue, in addition to $18.9 million in new and used disc sales in about 2,400 stores during the period.
While the margin on rental was an impressive 46.7% (and 10.6% on product sales), Gallery’s operating costs, which included stores, general and administrative (G&A) and amortization, topped $151 million – underscoring the industry (notably Blockbuster) push to downsize retail footprints in favor of kiosks, by-mail and electronic distribution.
Since filing bankruptcy, Gallery has posted a net loss of $25 million on revenue of $218 million.
The company listed total assets of $499 million and liabilities approaching $1 billion, much of it the result of the ill-advised $1.1 billion purchase of Hollywood Video in 2005.