Blockbuster Inc. is reporting more of the same financial news for the recently completed second quarter: more store closings, higher e-commerce revenue and overall lower sales as the company continues to invest in Total Access.
For the second quarter, Blockbuster, No. 51 in the Internet Retailer Top 500 Guide, reported online movie rental revenue of $132.7 million, an increase of 127.6% from online movie rental revenue of $58.3 million the prior year.
Blockbuster attributes sharply higher e-commerce revenue to Total Access, its online retailing program that gives subscribers the option of returning their online rental DVDs by mail or exchanging them at participating Blockbuster stores. But in Q2 the retailer also reported a net loss of $35.3 million on revenue of $1.263 billion vs. net income of $68.4 million on sales of $1.299 billion in Q2 of 2006.
"Our results this quarter clearly reflect continued investment in our online subscriber growth. Although Total Access allowed us to increase our subscriber base, the costs associated with the program affected our profitability," says Jim Keyes, Blockbuster chairman and CEO. "While we remain committed to capturing market share in the overall video rental market, we are absolutely focused on striking an appropriate balance between growth and enhanced profitability going forward.”
In Q2 Blockbuster's online rental subscriber base reached approximately 3.6 million, an increase of 157% from 1.4 million subscribers at the end of the second quarter of 2006.
The company also closed 217 Game Station stores. “Blockbuster is undergoing a comprehensive review of its business aimed at identifying and implementing initiatives designed to revitalize the company, enhance the organizational structure and improve profitability,” Keyes says.
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