fourth-quarter earnings fell 35% from a year earlier but met Wall Street estimates.
For its fourth quarter ended Jan. 2, the Dothan, Ala., video rental chain earned $11.4 million, or 36 cents a share, down from the year-ago $17.5 million, or 52 cents a share.
Movie Gallery attributed the decline to adjustments in accounting for leasehold improvements, as well as equity losses from investments in alternative delivery vehicles for movie content. Excluding these items, the company would have made 50 cents a share, in line with analyst estimates.
Revenue rose to $208 million from $195 million in the prior year. Same-store sales fell 6% year-on-year, which the company attributed to weaker releases in the home video market.
The company expects to make 56 cents to 60 cents a share on revenue of $228 million to $233 million for the first quarter. Those figures are in line with Wall Street expectations. For the year, though, the company expects to earn around $1.83 a share, below the $1.95 Thomson First Call target. Movie Gallery is targeting a top line of $875 million to $900 million.
Executives said today they were confident of prevailing in their takeover battle with
for the No. 2 video rental chain,
. While Hollywood has accepted Movie Gallery's $850 million bid, Blockbuster is trying to wedge in its own deal, though Blockbuster General Counsel Edward Stead told the
he expects the Federal Trade Commission to block his company's proposal.
The FTC is reviewing the deal to decide whether the marriage of the two largest U.S. movie-rental companies would create a behemoth with a lock on prices. Certainly No. 3 Movie Gallery seems to think so.
"A Blockbuster and Hollywood merger would create a monopoly in the rental business," Movie Gallery CEO Joe Malugen said in a conference call.
Meanwhile, Movie Gallery said it is on track to complete its acquisition of Canadian rentailer
for $16.5 million.
On Thursday, Movie Gallery added 68 cents to $23.82.