Blockbuster's woes didn't let up in the third quarter
Blockbuster stock, which was already trading at under $1, plunged 13% in after-hours trading to 72 cents on the news.
The company had a net loss of $116.8 million for the third quarter, much of which was connected to one-time costs from the company's recent debt refinancing and the sale of an Irish subsidiary. Excluding those events, net loss was $38.3 million.
Total revenue for the quarter ended Sept. 30 was $910.5 million.
Blockbuster attributed its problems to cutbacks in marketing and inventory in order to conserve costs and pay debt, ongoing store closures and the "macroeconomic environment." The ongoing recession and particular weakness in the DVD market hit Blockbuster hard. Domestic same-store rental revenue fell 14.5%, compared with the year-earlier quarter, while same-store sales revenue plummeted 35.6%.
In the quarter that ended Sept. 30, Blockbuster closed 216 stores. The DVD retailer it said was expecting to shut as many as 115 in the current quarter. In September, the company said it would close nearly 1,000 locations by the end of 2010.
One of the few pieces of good news for Blockbuster was an increase in its gross profit margin to 57.3% from 53.7% a year earlier. The company said it has increased its revenue-sharing arrangement with movie studios for rentals of some top-selling DVDs and that it was shifting focus away from video games, a once-hot business that has slowed down this year and carries smaller profit margins.
In a statement, Blockbuster Chief Executive Jim Keyes said that with debt financing issues solved for the time being, he is aiming for growth this quarter. "In the fourth quarter we are adding inventory, expanding product assortment, increasing advertising and reaching out to our customers in new and exciting ways," he said.
The company is also rolling out Blockbuster-branded rental kiosks with partner NCR Corp. to compete with Redbox and is deploying its digital download and streaming service to new devices, including TiVo digital video recorders.
-- Ben Fritz
Photo: "Duplicity" DVDs at a Blockbuster store in Park Ridge, Ill. Credit: Tim Doyle / Bloomberg