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Redbox Parent Company’s Shares Plummet as President Exits

Shares of Outerwall got hammered Monday after the company lowered its earnings guidance due to a disappointing performance by its Redbox DVD kiosk business.

Outerwall also announced after the market closed Monday that Redbox’s president Mark Horak would leave the company after less than two years in the post. Outerwall shares fell 23% to $44.55 in afterhours trading.

Outerwall said Redbox’s third-quarter results were “the worst theatrical box office in Redbox kiosks in four years.” It also revealed that Redbox has improved from the third quarter but has not met expectations.

Outerwall also said it would take a $6.5 million fourth-quarter charge for the discontinuation of SampleIt, affecting core diluted earnings per share from continuing operations by about 16 cents a share. SampleIt kiosks offer consumers a sample size of skin-care, hair, fragrance and household products for $1 along with a coupon that can be used for purchasing the full-size product.

As a result, Outerwall lowered guidance for core earnings from continuing operations to $7.65 and $8.15 a share for the year, down from earlier guidance of $8.82 and $9.52. The company also said its revenue for the year would come in at $2.165 billion to $2.19 billion, down from its prior forecast of $2.205 billion to $2.24 billion.

Outerwall also said it expects Redbox revenue of $1.75 billion to $1.765 billion for the year, down from its prior range of $1.79 billion to $1.815 billion. Outerwall indicated that it has not changed guidance for its Coinstar business and for its ecoATM kiosks.

Horak, a former home entertainment executive at Warner Bros., joined Redbox in March, 2014. Outerwall Chief Executive Erik Prusch will be interim president of Redbox.

Redbox became the nation’s largest DVD renter after Blockbuster stores closed and Netflix shifted its focus to streaming.

 

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