August 9, 2005, 12:00 AM

Blockbuster reports Q2 loss of $57.2 million, raises subscription fees

Blockbuster Inc. today reported a greater-than-expected second quarter loss of $57.2 million, compared to net earnings of $48.6 million in 2004’s second quarter. It also raised online subscription fees.

 

Blockbuster Inc. today reported a greater-than-expected loss in the second quarter, due in part to a 6.6% drop in same-store rental revenue. The company ended the quarter with a net loss of $57.2 million, compared with net earnings of $48.6 million in 2004’s second quarter.

Blockbuster also announced it is raising prices for Blockbuster Online’s subscription service.

For the quarter, total revenues slid 1.6% to $1.4 billion from $1.42 billion a year earlier, largely due to the company’s elimination of late fees, a weak home video release schedule and increased competition for consumers’ leisure time. Analysts had been forecasting revenues of $1.45 billion for the quarter.

Total rental revenues, which represented 73% of total revenues for the second quarter, dropped 5.2% to $1.02 billion from $1.08 billion a year earlier, primarily due to the $138.1 million decrease in late fees. However, a large portion of the decrease was offset by an increase in base rental revenues due to the popularity of in-store and online subscription programs and increased visits to stores.

Total retail revenues, which represented 25.8% of total revenues for the quarter, increased 11.5% to $360.4 million from $323.2 million in 2004.

For the quarter, gross profit dropped 11.5% to $770.8 million from $871.4 million in 2004. Rental gross margin dropped 600 basis points to 66.4% from 72.4% a year earlier, in large part due to increased product purchases needed to grow business at Blockbuster Online.

Meanwhile, Blockbuster announced it is raising the price of Blockbuster Online’s three-movies-out rental plan to $17.99 from $14.99, effective Aug. 19. However, customers who signed up for the service prior to March 1 are guaranteed the $14.99 rate through Jan. 31, 2006.

Prices on the five-movies-out plan will increase to $29.99 from $27.49 and on its eight-movies-out plan to $47.99 from $37.49. The company says the increases reflect enhanced value and service levels for consumers.

 

comments powered by Disqus

Advertisement

Advertisement

Advertisement

From IR Blogs

FPO

Jock Purtle / E-Commerce

What is your e-commerce business worth?

The founder of a merger and acquisitions consulting firm examines how e-retailers can know the ...

FPO

Adrien Henni / E-Commerce

Alibaba and Chinese e-commerce rivals target Russia

Besides Alibaba, Chinese e-commerce companies like LightInTheBox and DinoDirect are seeking deals to get goods ...

Advertisement