Facing pressure from Redbox, Netflix and its own debt problems, video rental giant Blockbuster is doubling the number of stores it is likely to close by the end of next year, the company revealed in a regulatory filing. Blockbuster was previously aiming to shut 410 to 450 of its most unprofitable stores this year and next. A series of “accelerated closures” brings that target to 810 to 960. Blockbuster also said it might convert an additional 250 to 300 locations to outlets that focus on used DVDs. That means 1,060 to 1,260 of Blockbuster’s stores will probably be shut down or transformed by next year, reported the Los Angeles Times. There are 4,356 Blockbuster locations throughout the country, meaning 24 percent to 29 percent could be closed or altered within 16 months. About 18 percent of Blockbuster’s stores are unprofitable, and 47 percent are only mildly profitable. A core 35 percent of the company’s locations provide 80 percent of its retail profit. Blockbuster recently announced it was issuing $340 million of secured notes, most of which would be used to pay down an existing line of credit that carried more onerous short-term payments and help it operate its remaining stores more effectively. In the first half of this year the company was not able to make as many discs available in stores as it would have liked, chief executive Jim Keyes said last month. Blockbuster estimates that it will save $30 million from avoiding ongoing losses at the stores it is looking to close and that $20 million to $30 million of existing revenue from those locations will transfer to others.
Blockbuster Set to Shutter up to 960 Stores
There are 4,356 Blockbuster locations throughout the country, meaning 24 percent to 29 percent could be closed or altered within 16 months. About 18 percent of Blockbuster’s stores are unprofitable, and 47 percent are only mildly profitable.
September 16, 2009