Gallery Shutters 160 More Stores3 Apr, 2008 By: Erik Gruenwedel
Bankrupt Movie Gallery Inc. said through the end of the month it would shutter 160 underperforming Gallery and Hollywood Video stores — its third and final round of closures.
The shutdowns bring to more than 1,000 locations the Dothan, Ala.-based No. 2 DVD rental chain has eliminated since announcing 520 closures last September and another 400 in February.
“While the decision to close stores is never easy, this final consolidation will allow us to further focus our resources on those stores with the strongest operating performance and best prospects for growth after we emerge from bankruptcy,” said Joe Malugen, chairman, president and CEO of Gallery, in a statement. “This is another positive step forward in our restructuring to position the Company for profitability and long-term success.”
Following the closures, Gallery will have nearly 3,500 stores in North America under the Movie Gallery, Hollywood Video and Game Crazy brands.
Results have been mixed for both the Hollywood Video and Gallery franchises. Hollywood Video stores posted net income of $4.1 million in the period from Jan. 7 to Feb. 10, and a loss of $36.2 million in the previous period from Dec. 3, 2007, to Jan. 6, 2008, according to regulatory filings. Gallery stores reported a net loss of $4.5 million from Jan. 7 to Feb. 10 versus profit of $48.9 million in the previous period.
Gallery, which still faces a $7.5 million administrative expense charge from the Internal Revenue Service, hopes to emerge from bankruptcy protection in the second quarter.
A U.S. Bankruptcy Court hearing on Gallery's reorganization plan is slated for April 9.