Movie Gallery last week released preliminary 3rd and 4th quarter ...
Movie Gallery last week released preliminary 3rd and 4th quarter same-store sales estimates weaker than analysts had expected. The company, which recently acquired Hollywood Entertainment, said it expects Q3 comparable store sales to decline 8-10% from a year ago…
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as “the current slump” in theatrical box office revenue continues to affect “the entire home video industry.” Movie Gallery said it “continues to expect that the 4th quarter of 2005 will improve on a sequential basis, as some of the year’s biggest titles and likely best sellers are due for video release.” Upcoming major home video releases include Star Wars: Episode 3 -- Revenge of the Sith. But Movie Gallery said “the cumulative weakness of releases in the 2nd and 3rd quarters is expected to impact the 4th quarter results.” As a result, it expects to report comparable store revenue flat to down 6% from a year ago. The company might also see a slowdown in its videogame sales after closing 50 Game Crazy locations in June. The company, however, didn’t change its earnings estimate for the year. Movie Gallery also said it was “realizing synergies” from the Hollywood Entertainment acquisition that “exceeded [its] expectations.” The company said it expects to save about $20 million this year and up to about $50 million before 2008 from the purchase, “largely from the optimization of its new sellthrough inventory and the consolidation of its real estate and construction, distribution and executive management functions as well as other G&A [general & administrative] expense reduction opportunities.”