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COMPANY TOWN : Blockbuster loss grows as revenue dives 21% : It blames the recession, cutbacks in marketing and inventory and ongoing store closures.

November 13, 2009|Ben Fritz

Beleaguered DVD chain Blockbuster Inc. got no respite from its problems last quarter as its revenue plunged 21% and its net loss widened.

The company lost $114.1 million in the third quarter, much of it the result of one-time costs from its recent debt refinancing and the sale of an Irish subsidiary. Excluding such items, the loss was $35.6 million. In the same quarter last year, the company lost $17.8 million.

Revenue was $910.5 million, down from $1.16 billion.

Blockbuster stock sank as much as 11 cents, or 13%, to 72 cents a share on the news in after-hours trading Thursday.

Blockbuster attributed its problems to cutbacks in marketing and inventory in order to conserve costs and pay debt, continuing store closures and the "macroeconomic environment" -- or, recession -- in which the DVD market has been hit especially hard.

Total domestic same-store revenue dropped 18.3% from a year earlier, with same-store revenue from rentals falling 14.5% and same-store revenue from product sales plummeting 35.6%.

The company closed 216 stores last quarter and said it was expecting to shut as many as 115 this 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 that it had 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 slowed down this year and carries smaller profit margins.

With debt financing issues solved for the time being, Blockbuster Chief Executive Jim Keyes said that he was aiming for growth.

"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 in a statement.

The company is also rolling out Blockbuster-brand rental kiosks with partner NCR Corp. to compete with kiosk pioneer Redbox and is deploying its digital download and streaming service to new devices, including TiVo digital video recorders.

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ben.fritz@latimes.com

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