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Movie Gallery to Shutter 450 stores by Year's End

29 Oct, 2009 By: Erik Gruenwedel

Movie Gallery reportedly will close 200 underperforming Gallery and Hollywood Video locations by the end of the year — bringing to 450 stores shuttered in 2009 by the No. 2 DVD rental chain.

Bloomberg News reported that privately held Wilsonville, Ore.-based Gallery has closed 250 stores since Sept.1, and plans to shutter from 150 to 200 additional locations, according to chief marketing officer Clifford Torng.

Gallery, which in September said it was closing 200 underperforming Game Crazy store-within-a-store locations, now operates about 2,900 Gallery and Hollywood Video stores.

“I don’t think it’s any secret that the industry is experiencing quite a radical shift,” Torng told Bloomberg. “We’re looking to position ourselves as best we can for the long term.”

Indeed, Movie Gallery recently had set up a toll-free hotline for landlords as it continued to streamline operations and close stores.

Establishment of the hotline came as Gallery escalated store closures, some with little advance notice to store managers, staff and customers.

The store manager of a Gallery in British Columbia told Home Media Magazine earlier this month the location was given scant notice and emptied of its contents within 24 hours. The manager said most marginally performing Gallery or Hollywood Video locations would likely be shuttered in the near future.

“I was contacted by the landlord and was told [Gallery] did not pay rent to them, and were unaware that they had any intention of upping and leaving,” said the BC manager, who wished to remain anonymous.

Edward Woo, analyst with Wedbush Morgan Securities in Los Angeles, which doesn’t cover Gallery, said the shuttering of Game Crazy, Gallery and Hollywood Video locations underscores burgeoning financial concerns.

“To shut stores in front of the holidays indicates a retailer is having big problems,” Woo said. “They are facing the same problems with rental kiosks as Blockbuster, so it’s not surprising.”

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