Movie Gallery Boosts Revenue6 Nov, 2002 By: Joan Villa
Movie Gallery significantly boosted net income to $9.4 million in the third quarter from $1.3 million in the year-ago period, as same-store sales grew 4.7 percent.
DVD composed 38 percent of rentals by quarter's end Sept. 30 and is expected to reach 50 percent by the end of the year, the company reported. Revenues climbed 50.8 percent to $130.4 million on 1,662 stores, 53.6 more than last year's tally that didn't include the Video Update acquisition completed last December.
Movie Gallery expanded game facings by 15 percent since the beginning of the year, and will put an extra $2 million into game purchases in the fourth quarter, said CEO Joe Malugen.
The retailer anticipates same-store sales in the fourth quarter in the “mid to high single-digit range” and raised full-year earnings expectations to a range of $1.25 to $1.28 per share versus original guidance of 90 cents to $1 per share.
“We believe the impact of DVD, retail movie sales and game rentals will all contribute to a very strong sales result,” Malugen said.
Sales of new movies driven by Monsters Inc. and Lord of the Rings climbed 88 percent, reaching 11 percent of total revenues for the quarter and driving incremental rentals. During the quarter, the chain added new retail sales of the top 25 to 30 titles per year that it believes consumers will want to own.
“That's the key to the whole strategy – if we get people into our store to buy Monsters Inc. they're at the same time picking up a rental title,” Malugen said.