BRIEF: Blockbuster sees sales, income drop

Fri. May 15, 2009; Posted: 02:11 AM

May 15, 2009 (The Dallas Morning News - McClatchy-Tribune Information Services via COMTEX) -- BBI | Quote | Chart | News | PowerRating -- Spending less on new releases ended up costing Blockbuster Inc. as it posted lower-than-expected first-quarter sales and a 39 percent decline in net income.

Blockbuster ended up stocking 20 percent fewer new copies while it preserved cash as it negotiated bank agreements.

Rental revenue fell 12.3 percent and merchandise sales fell 3.1 percent, the Dallas-based company said Thursday.

Chief executive Jim Keyes said Blockbuster has resumed buying 200 copies of new releases per store, but it will take time for customers to react and for sales to improve.

After years of declining rental revenue, Blockbuster sales rose in 2008 as it increased spending, said Arvind Bhatia, analyst at Sterne Agee & Leach Inc.: "There seems to be a direct correlation."

Shares fell in after-hours trading as investors saw weakness in the business fundamentals, Bhatia said.

First-quarter net income was $27.7 million, or 12 cents a share, on revenue of $1.12 billion, compared with net income of $45.4 million, or 20 cents, on revenue of $1.39 billion a year ago.

Excluding one-time items, adjusted net income was 19 cents, which was better than the 15 cents a share that analysts had expected.

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For full details on Blockbuster Inc (BBI) click here. Blockbuster Inc (BBI) has Short Term PowerRatings of 3. Details on Blockbuster Inc (BBI) Short Term PowerRatings is available at This Link.

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