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Movie Gallery Reduces Earnings Projections

8 Jul, 2004 By: Holly J. Wagner

Movie Gallery shares slipped 23 cents in early trading today after the company reported a 1 percent increase in same-store revenue for the second quarter — at the low end of the company's prior guidance — and reduced its earnings projections by a penny a share.

The share price hovered around $18.15 in morning trading, down from the previous night's close of $18.38, but up from its $17.75 open.

Executives blamed “the timing of expenses related to the company's investments in alternative delivery vehicles” for the reduced projection of earnings per share in the 32-cent to 34-cent range, down from previously expected 33-cent to 35-cent range. That reflects an investment of $2.3 million, or $0.04 per share, related to the new initiatives.

Executives said they expect the full-year investment to remain at $5 million or $6 million, but some costs expected to show up later in the year shifted back to the second quarter.

The company anticipated same-store revenue in the range of flat to positive 3 percent for the quarter. Revenue projections remained the same at $185 million to $195 million, which would be an increase of 15 percent to 21 percent over the comparable period last year.

"For the 12th consecutive quarter, Movie Gallery has produced positive same-store revenue," said chairman and CEO Joe Malugen. "We are pleased to have achieved a 1 percent increase in same- store revenue for the quarter, especially in light of the difficult comparison to a positive 6.5 percent comp in last year's second quarter. We also added a net total of 91 stores during the 2004 second quarter, with 75 new stores, 31 acquired stores and 15 store closures. As a result, at quarter end, we had a total of 2,331 stores throughout North America, with 2,148 stores in the United States, 180 stores in Canada and 3 stores in Mexico."

The chain plans to release its final quarterly results Aug. 4.

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