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Blockbuster more than doubles planned store closures to nearly 1,000

BlockbusterStore Facing increasing pressure from Redbox and Netflix and its own debt problems, Blockbuster is planning to more than double the number of stores it will close by the end of next year, the company revealed in a regulatory filing today.

Struggling Blockbuster was previously looking to shutter 410 to 450 of its most unprofitable stores this year and next. A series of "accelerated closures" will bring that number to between 810 and 960, however. 

In addition, Blockbuster is attempting to change or end leases on 275 to 300 stores and convert an additional 250 to 300 to outlets. That means 1,335 to 1,560 of Blockbuster's physical locations will likely be shut down or altered by 2010.

There are currently 4,356 Blockbuster locations around the country, meaning at least 22% could be closed down within 16 months and an additional 14% could close or change from their current state.

Blockbuster reports that 18% of its stores are unprofitable, while 47% more are only mildly profitable, according to the filing. A core 35% of the company's locations provide 80% of its retail profits.

The company estimates that it will save $30 million from avoiding ongoing losses at the stores it will close and that between $20 million and $30 million of existing revenue from those locations will transfer to others. In addition, Blockbuster anticipates it will get a one-time benefit to its working capital of $26 million. Terminating the leases will cost it $60 million, however.

The accelerated store closings are part of a plan by Blockbuster to alter its debt agreements that have so far this year squeezed the company's capital and forced it to hold back on investments in marketing and in-store stock.

The amendment to one of its loans, made on Monday, allows Blockbuster to extend the final repayment date from Aug. 20, 2011 to May 31, 2012, and it also increases the interest rate it must pay. It also allows the accelerated store closures disclosed today.

At the same time, Blockbuster is aiming to expand its rental businesses outside of the physical stores, including its Netflix-like mail rentals, retail kiosks that compete with Redbox and digital downloads. As part of a partnership with NCR Corp., Blockbuster is planning to expand from 497 to 2,500 kiosks by the end of this year and to 10,000 by 2010.

Blockbuster lost $39.7 million and saw its revenue decline by 22% last quarter, while Netflix and Redbox reported that their revenue grew 20% and 110%, respectively.

— Ben Fritz

Photo: A Blockbuster in Dallas. Credit: Ron Heflin / Associated Press.

 
Comments () | Archives (12)

I think they are seeing the effects of poor business strategy.
They made up a promotion to "end late fees" but all they did was charge you for the movie.
They doubled the price for their online subscription overnight.
They partnered with Circuit City when that ship was going down.
They weren't competitive with netflix, and they failed to forecast the success of Redbox.
Good riddance and they need to quit charging so much for candy and soda, they don't realize there is a grocery store in the same parking lot with that stuff for half of the price.

Doesn't surprise me ... their online customer support is about the worst I've ever encountered. Really doesn't matter how many stores they close, unless they begin to focus on improving their overall customer service they'll continue to loose business to those that know what customer service really is. imho ;)

Goodbye, and good riddance, Blockbuster Video. Your business plan was based around making certain no one would be offended by the movies you rented--heavily censored films are always the hallmark of a closed minded mentality that has no respect for consumers. Thank you for protecting us from The Passion of the Christ. Last time I checked, the Catholic Church was still going gangbusters and God was not Dead.

Your unforgiving late fees are soon to be a thing of the past. Was it wise to alienate your customers when you were the only game in town? I'll bet you wish you had some of that adult film rental money rolling in right now.

See you. Wouldn't want to be you.

For their mail service, they took a day longer to turn movies around than Netflix - the ability to exchange in the store compensated for this some (and would often rent an extra one or two) but when they raised the price and restricted "return to store", I switched to Netflix - when Netflix came out with the Roku box, I never went back.

blockbuster is still around?
been with netflix for years and never looked back.
no great loss to see them go away

Blockbuster does have the worst customer service. And why would I want to pay $4 for a DVD for two days and be checked out by someone who acts as if they have better things to do?

Is there some crappy stuff blockbuster has done yes, but all in all they aren't any different then netflix, redbox, and hollywood video. Yes we got rid of late fees and now you think you just get charged for the movie that is only if you don't bring it back in a reasonable time frame i.e. 37 days after its considered late. Its much more reasonable then they 37 dollars we used to charge in late fees and you didn't get to keep the movie. Also know your fax we NEVER partnered with circuit city, we were in talks to buy them out and it never came to pass. You say good ridance but your the type of people who run to blockbuster when you don't want to wait for you netflix or can't find what you want and that stupid redbox. All companies go through tough times and make crap decisions, but we are evolving every day and take it from and operational employee we work our tails off to make sure we keep our jobs and keep you happy.

I use Blockbuster total Access. Useing this plan allows me to return the movies that were mailed to my home to a nearby store in return for free movies at the store. The store credits my Toal Access acount and my next movie is mailed to my home. It's alot cheaper than cable movie channels and I watch what I want, when I want. Late fees
are not charged. If I return a store movie over 7 days after the requested return date. I am charged $1.25. If I were to keep a movie 30 days more I would be charge for the movie, but I can still return the movie and get my money back. I can't understand why anyone wants to use Net Flicks.

At $5.00 a rental no wonder they are losing business. They have outpriced themselves.

their prices are high not mentioning late fees and now there's REDBOX which is a buck per movie a night.

Sorry, but I love Blockbuster. I subscribe to Blockbuster Online, get the movies in the mail fast, then exchange them at the store for new ones. Can't do that with Netflix. Since they stopped charging for late fees, I don't mind renting from the stores because I can never get the movies back on time. Yes, I do own a lot of Blockbuster movies because I can't get them back on time, but it's better than paying $20 for late fees with nothing to show for it. Half of them are movies I would buy anyway. Reading the other blogs, it looks like I am in the minority. I would hate for them to go out of business like one of the other bloggers. Besides, I don't think we need to add anymore to the unemployment numbers. I hope they turn things around.

Very satisfied with their mail service that is very fast and at 9$ per month can easily rent 8-10 movies per Month. Disk usually are in excellent condition. Using this service for 2 yr with no problems. Used customer service on one occasion for disk that never arrived and problem was rectified quickly. IMO they are providing a great service.


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