Blockbuster Loss Narrows

The company swings to profit on a pro forma basis.
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Movie rental chain

Blockbuster

(BBI) - Get Report

posted a narrower first-quarter loss Thursday.

Dallas-based Blockbuster posted a loss of $4.7 million, or 3 cents a share, for the quarter ended March 31. That compared favorably to a loss of $57.5 million, or 31 cents a share, a year ago. Revenue declined 7.7% to $1.43 billion.

On an adjusted basis, excluding certain costs, the latest-quarter profit was a nickel a share. Analysts surveyed by Thomson had expected the company to earn 2 cents a share on $1.47 billion in revenue.

"Our first quarter 2006 results reflect the actions we have taken to improve our overall profitability and cash flow," said Blockbuster Chairman John Antioco. "For the first time in three years we saw an increase in domestic same-store rental revenues and we believe that our combined in-store and online rental offering will allow us to further increase our market share and outperform the domestic rental industry in 2006."

The company attributed the revenue shortfall this quarter to lower margin retail sales and a 236-store decline in its base, along with less advertising activity. The company said those losses were partially offset by subscriber growth at Blockbuster online, which now totals 1.3 million subscribers.

Looking forward, the company said it continues to cut costs and expects to meet its target of 2 million online subscribers by year's end. Analysts polled by Thomson currently expect the company to lose 7 cents a share next quarter on revenue of $1.3 billion.

Early Thursday, Blockbuster shares were up 20 cents to $5.09.