Blockbuster (BBI) reported results for Q4 and the full year today and we have more proof that they cannot close or sell the video stores fast enough.
The Numbers:
Total revenues increased 3.6% to $1.57 billion for the fourth quarter of 2007 from $1.51 billion for the fourth quarter of 2006. For the fourth quarter of 2007, net income was $38.1 million, or $0.18 per diluted share, an improvement of $29.8 million as compared with net income of $8.3 million, or $0.04 per diluted share, for the fourth quarter of 2006.
Great right? Like I always say, read the headline and then look closer for the real story.
Domestic same-store and by-mail revenues increased 6.1% reflecting an 11.7% increase in same-store merchandise sales and 5.3% growth in same-store and by-mail rental revenues. Good right? What happens if we take away the by-mail (Netflix (NFLX) type rentals)?
Domestic same-store revenues, excluding by-mail subscription revenues, decreased only 0.9% reflecting a 490 basis point improvement, as compared to the fourth quarter of 2006.
Bottom line, the company is still seeing lower sales at its video stores, a trend that has been happening quarter after quarter. Now, even this number is worse than it seems.
Blockbuster had a net loss of 500 stores during the year, 6% of the total. Retailers do not close performing stores, these 500 were under-performing locations meaning that the “same store” metric would have been far worse had they been included.
Since last summer I have been begging Blockbuster to increase the rate of store closures and todays results only go to show that would work. The company posted improved results with 6% fewer stores and the stores that remain, are still a drag on earnings.
The faster they are disposed of, shareholders may begin to actually see a future. Time is running out though as video downloads are proliferating and the next battleground is there, past even the current DVD by mail model. Netflix acknowledges this and is currently moving their business there.
If Blockbuster is still in a video store battle, all hope is lost.
Disclosure (“none” means no position):None
