Coinstar: 28-Day Delayed Titles, Blu-ray Underperformed for Redbox in Q413 Jan, 2011 By: Chris Tribbey
Underperforming fourth-quarter titles and imbalances in available titles at kiosks hurt Redbox parent Coinstar’s fourth quarter results, causing the company to lower its full-year 2010 financial expectations Jan. 13.
The company said Blu-ray Discs and titles delayed 28 days from street date did not perform as well as hoped, and the anticipated demand for those titles caused Redbox to remove older inventory, impacting revenue and gross margin. Redbox’s “rent and return anywhere” offering was used by consumers at a rate higher than expected, causing shortages of titles at some kiosks.
“Overall, the performance of the Redbox business during the fourth quarter was not in line with our forecast,” said Coinstar CEO Paul Davis. “This was Redbox’s first holiday season with 28-day delayed titles, and we underestimated the impact that the delay would have on demand during the fourth quarter. We also expected much better performance from Blu-ray and had purchased to a higher level of demand.”
Consumers rented fewer titles per visit than expected, Davis added.
“Nevertheless, Redbox revenue grew 38% year over year in the fourth quarter,” he said. “Consumers rented over 144 million movies during the quarter and same-store sales increased 12.5% year over year in the fourth quarter.”
Coinstar lowered expected fourth quarter earnings per share from between 79 cents and 85 cents to between 65 cents and 69 cents. Full-year revenue is expected to be between $1.7 billion and $1.85 billion, and full-year earnings per share are expected to be between $2.60 and $3.10, based on a share count of 33.3 million. Fourth quarter revenue is expected to increase 31% year over year to $391 million, down from previous fourth quarter guidance of roughly $415 million.
Coinstar will report its full fourth quarter and full-year 2010 results Feb. 3.
“We were at the low end of guidance range, but they still came in below that and lowered full-year 2011 guidance,” said analyst Eric Wold with Merriman Curhan Ford in New York.
His firm Jan. 7 estimated Coinstar would report fourth quarter revenue of $416.3 million, and the consensus analyst estimate was around $426 million.