Blockbuster

(BBI) - Get Report

swung to a first-quarter loss due to the cost of advertising its partial elimination of late fees on video rentals. The strategy led to a 0.4% decline in same-store sales.

Blockbuster lost $57.5 million, or 31 cents a share, in the quarter, compared with earnings of $114.4 million, or 63 cents a share, a year ago. Revenue rose 3% from a year ago to $1.55 billion.

Adjusted for the cost of its unsuccessful bid to acquire

Hollywood Entertainment

(HLYW)

, among other things, the company lost 23 cents a share in the quarter.

Analysts surveyed by Thomson First Call were expecting an adjusted loss of 28 cents a share on revenue of $1.49 billion. The shares added 6 cents to $10.36 on Instinet.

Blockbuster's quarter was salvaged by retail movie and game sales, which jumped 28.7% from a year ago to $$425.9 million. Rental revenue fell 4% from a year ago to $1.11 billion, reflecting the loss of about $145 million of late-fee revenue.