Blockbuster May Close 960 Stores
NEW YORK (
) -- Is
Blockbuster
(BBI) - Get Report
going bust? While the video rental retailer has been denying these claims, in a regulatory filing on Tuesday it announced that it may close up to 960 stores by the end of 2010.
The move is designed to eliminate unprofitable stores from Blockbuster's portfolio, allowing the company to focus on fixing the company.
The company previously said it planned to shutter 410 to 450 of its most unprofitable stores this year and next.
There are currently 4,356 Blockbuster stores in the country.
Earlier in the year, Blockbuster denied that the company was filing for bankruptcy after hiring a consultant to evaluate restructuring.
It now appears as if this restructure might significantly shake things up at the company. Last month the company said it sold its Irish entertainment retailer Xtra-vision for about $45 million, in an effort to help boost its liquidity.
In its second quarter,
Blockbuster reported a loss of $39.7 million
, or 21 cents per share, improved from a loss of $44.7 million, or 23 cents, in the year-ago period. Domestic same-store sales tumbled 17.8%, while international sales declined 14.7%.
Blockbuster has been facing increased competition from online outlets like
Netflix
(NFLX) - Get Report
.
J.P. Morgan initiated coverage on Netflix today with an overweight rating, saying it is poised to continue to add subscribers in the near term and to successfully transition away from DVD-by-mail in the not so far future.
And the possibility that
YouTube
, which is owned by
,
(GOOG) - Get Report
may be
entering the world of streaming movie rentals
, could further strain Blockbuster's bottom line.
Still, investors apparently see this move as a chance for Blockbuster to switch gears from pause to fast forward, and sent shares of the company up 7% to $1.42 in afternoon trading.
-- Reported by Jeanine Poggi in New York
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