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Movie Gallery on Track for Q1

19 Apr, 2006 By: Jessica Wolf

Movie Gallery is in full rebound mode.

The No. 2 chain, which released fairly dismal fourth-quarter and 2005 financial results in March, April 19 announced the company will be in full compliance with its senior credit facility for the first quarter of 2006.

Thursday, March 16, the company announced an amendment to its senior credit facility having garnered relaxed terms on its financial covenants. Meanwhile, interest rate terms have been increased, and some mandatory prepayment provisions have been modified on the company's debts.

According to Movie Gallery's annual report filed last month, the company is carrying nearly $1.2 billion in debt.

The chain also announced it will restructure lease agreements for 1,100 existing locations through a new management agreement with Hilco Real Estate LLC.

This deal will not include stores already slated for previously announced plans to sublease space to other retailers or downsize square footage.

Movie Gallery execs also announced last month the chain will continue to close underperforming or redundant store locations.

Movie Gallery as expected posted a $552.7 million net loss for 2005. The net loss for the fourth quarter was $546.5 million.

Same-store revenue decreased 8.6% for the quarter, compared to the same quarter in 2004, on the continued decline in the home video rental industry. Same-store revenue for the year fell 4.7% from 2004.

Total 2005 revenue was $2 billion, including 35 weeks of sales from Hollywood Entertainment Corp., acquired April 27, 2005.

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