Fourth-quarter earnings at Blockbuster Entertainment Corp. soared 71% on revenue growth of 66% as the company managed to rent more videos.
Rentals, which had grown at a sluggish 1% to 2% in the last few years, climbed 9% in 1993.
Rentals have huge margins and comprise about 70% of Blockbuster’s overall sales. That increase led to the jump in revenue and income.
But even Blockbuster’s other lines of business did well. Music and video sales both posted strong gains in revenue and operating income and Spelling Entertainment Group Inc., of which Blockbuster owns 70.5%, had a solid year.
“The company continued its record of profitable growth in all lines of our business during the quarter,” said H. Wayne Huizenga, Blockbuster’s chair/CEO.
For the quarter, Blockbuster earned $ 81.3 million (34 cents) vs. $ 47.6 million (24 cents) in the like period a year ago. Revenue was $ 723.7 million, up from $ 436.7 million. Systemwide revenue, which includes sales from franchise-owned stores, was $ 891.4 million, up from $ 599.6 million.
For the year, the company earned $ 243.6 million ($ 1.11) vs. $ 148.3 million (77 cents) in 1992. Revenue was $ 2.2 billion, up from $ 1.3 billion. Systemwide revenue was $ 2.9 billion, up from $ 2 million.
Blockbuster recently announced plans to merge with Viacom Inc., the communications conglomerate that has bid for Paramount Communications Inc. Paramount said it expected to lose $ 35 million to $ 40 million in the fiscal quarter ended Monday.
“If there were not any news on Paramount, Blockbuster’s stock would have moved up big time,” said Paul Marsh.
As it was, Blockbuster’s stock closed down 88 cents at $ 27 in New York Stock Exchange trading.