Homevid retailer takes heavy charges for inventory management
HOLLYWOOD — Blockbuster Entertainment posted a broadened third-quarter loss of $224.9 million on Tuesday as the homevid retailer took heavy charges for inventory management.
The Dallas-based company, 82%-owned by Viacom, reported $19.3 million in red ink in the same period last year. Since then, Blockbuster has announced a campaign to eliminate about one-quarter of its VHS inventory as the chain boosts its emphasis on DVD.
Revenue rose 6% to $1.26 billion in the latest quarter.
Execs said in an earnings conference call with press and analysts that Blockbuster may end additional revenue-sharing pacts with Hollywood studios. Company already has terminated an agreement with Disney, though it separately struck new revenue-sharing pacts for DVD titles with MGM and another unnamed movie studio.
Blockbuster said it would take inventory-management charges of $356 million in the third quarter and $50 million in the fourth quarter. Excluding such charges, the company saw $43.4 million in profit during the latest quarter.
The results outpaced analyst forecasts, and Blockbuster shares climbed 40¢ to $24.90.
“Blockbuster continued to generate solid operating results, and we took decisive steps including the acceleration of our DVD initiative (to) capitalize on new growth opportunities,” chairman-CEO John Antioco said. “For the balance of 2001 and into next year, we will continue to focus on top-line growth and increasing our gross margin, while leveraging our infrastructure to maximize profits.”
(Bloomberg News contributed to this report.)