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Game Crazy Ups Hollywood Video Q1 Net Income

22 Apr, 2004 By: Erik Gruenwedel

Buoyed by a 140 percent increase in revenue at its Game Crazy video game unit, Hollywood Entertainment Corp., parent to Hollywood Video, posted a 16 percent jump in net income for the first quarter ended March 31.

Net income for the Portland, Ore.-based chain of 1,920 outlets and 600 Game Crazy store-in-store units was $22.7 million on revenue of $442.7 million, or 36 cents per diluted share, compared to net income of $19.5 million on revenue of $417.5 million, or 31 cents per diluted share, during the same period last year.

Game Crazy, which does not rent video games, posted sales revenue of $57.3 million compared to $23.8 million last year.

The figure represents almost 69 percent of Hollywood's quarterly consolidated merchandise revenue of $83.2 million — up 57 percent from the same period last year.First-quarter DVD rentals at Hollywood increased almost 31 percent, to $237.6 million, while VHS rentals fell nearly 40 percent, to $91.5 million.

Overall rental revenue slipped 1.4 percent, to $359.5 million, compared to $364.5 million last year.

Video game rentals fell less than 4 percent, to $30.3 million, compared to $31.3 million last year.

Hollywood opened 19 new stores and 13 Game Crazy outlets in the quarter. It has stated plans to open 150 Game Crazy outlets in 2004.

In a statement, Hollywood said it would not release additional information or host an investor call on the first-quarter results.

Last month, the company's management announced that it would take Hollywood Video private in an $850 million deal with private investors that would pay shareholders $14 per share of outstanding common stock.

In response, groups of shareholders have filed seven class-action lawsuits alleging, among other claims, that the $14 per share offer was “unfair and inadequate.”

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