Movie Gallery

(MOVI)

posted a second-quarter loss after factoring in a number of items, and the company said rental demand in the latest three months was on the slow side.

The latest results include 10 weeks of the operations of Hollywood Entertainment, which Movie Gallery acquired April 27. Revenue totaled $504.7 million, compared with Movie Gallery's stand-alone revenue of $189.6 million in the second quarter of 2004.

Movie Gallery lost $12.2 million, or 39 cents a share, including items that together cut its bottom line by $16.4 million, or 52 cents a share. Excluding the items, the company would have earned $4.3 million, or 13 cents a share. In the year-ago quarter, the company earned $10.6 million, or 32 cents a share.

Shares of Movie Gallery were down 9% to $19.50 in trading before the opening bell.

The video-store operator said same-store revenue in both rural and urban markets was hurt "by what many experts are now characterizing as the worst box-office slump in more than two decades."

Coming into the quarter, Movie Gallery expected same-store revenue to be down slightly. However, June was worse than anticipated, and the company recorded a 5.5% decline in same-store sales for the second quarter.

"In this business, our results are driven largely by the quality and quantity of movie titles, which continue to be weaker than we would like. However, we believe that this softness is temporary and expect rental demand to rebound in the fourth quarter," Movie Gallery said in a press release Friday. "While we expect challenging conditions to persist in the third quarter, we are optimistic that conditions will improve by the end of the year."