Blockbuster Trims Third-Quarter Loss2 Nov, 2006 By: Erik Gruenwedel
Citing a weak quarterly DVD release schedule that was down 19% from last year, Blockbuster Inc. Nov. 2 posted a third-quarter loss (ended Sept. 30) of $24.7 million, compared to a loss of $491.4 million during the same period last year.
The chain cited significant non-cash write-downs, goodwill charges and valuation allowances on select deferred tax assets for last year's outstanding loss.
The closure of 80 domestic stores and 39 international stores as well as a 1.4% decline in worldwide same-store rentals helped decrease quarterly revenue 2.9% to $1.33 billion, compared to $1.37 billion last year. The company incurred $8.8 million in severance and related store-closure costs, excluding a $4 million guaranteed debt repayment for an unidentified store franchisee.
Domestic same-store movie rentals increased 3.2%, a figure that includes online rentals. Blockbuster Online, the company's subscription-based online rental service, contributed a $23.7 million increase in revenue due to a 50% year-over-year increase in the service's subscriber base.
Worldwide video game rental revenue dropped nearly 19% to $89.1 million from $111.4 million last year.
The company said comparable domestic movie rental revenue through the first half of the year was up 1.8%, compared to competitor Movie Gallery, which it said was down 6.6%.
Blockbuster believes the launch of the new rental program, Total Access, which lets online subscribers return movies for new rentals at Blockbuster stores, combined with $130 million in free cash flow and no outstanding borrowing from its revolver, would make the company “bullish” in 2007.