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The number two video rental company, Movie Gallery, who purchased Hollywood Entertainment in April, gave a weaker than expected sales forecast in an announcement today. As a result of the prospectus given, the company's stock dropped 15% today to $27.84, though it's recovered slightly in after hours trading.
As one remedy to address the weak outlook, the company said it would be shutting down 51 unprofitable locations of its Game Crazy chain by the end of June 2005. It will also be re-branding Movie Gallery's 23 Game Zone stores with the more recognized Game Crazy moniker.
Most publishers would agree that Game Crazy has historically been a valued customer, reaching a similar enthusiast demographic that EB and Gamestop do. Indeed Game Crazy's presales numbers on some titles have at times rivalled EB and Gamestop despite not having nearly the same number of storefronts.
Joe Malugen, Chairman, CEO and President of Movie Gallery issued the following statement with regard to the reasons for the softness: "For the second quarter of 2005, we were originally forecasting our same-store sales to be down slightly; however, the recent weakness in the home video release schedule is having a significant adverse impact on our results. In addition, with the theatrical box-office in its 17th week of a slowdown and enduring its worst slump in two decades, we believe that the flow-through of an unimpressive slate of titles will continue to adversely impact our stores in both the rural and urban markets over the next few months."
On a somewhat lighter note, the Movie Gallery promoted Tim Price to the position of EVP/CFO, which was the same position he occupied at Hollywood Entertainment before April's acquisition.
The number two video rental company, Movie Gallery, who purchased Hollywood Entertainment in April, gave a weaker than expected sales forecast in an announcement today. As a result of the prospectus given, the company's stock dropped 15% today to $27.84, though it's recovered slightly in after hours trading.
As one remedy to address the weak outlook, the company said it would be shutting down 51 unprofitable locations of its Game Crazy chain by the end of June 2005. It will also be re-branding Movie Gallery's 23 Game Zone stores with the more recognized Game Crazy moniker.
Most publishers would agree that Game Crazy has historically been a valued customer, reaching a similar enthusiast demographic that EB and Gamestop do. Indeed Game Crazy's presales numbers on some titles have at times rivalled EB and Gamestop despite not having nearly the same number of storefronts.
Joe Malugen, Chairman, CEO and President of Movie Gallery issued the following statement with regard to the reasons for the softness: "For the second quarter of 2005, we were originally forecasting our same-store sales to be down slightly; however, the recent weakness in the home video release schedule is having a significant adverse impact on our results. In addition, with the theatrical box-office in its 17th week of a slowdown and enduring its worst slump in two decades, we believe that the flow-through of an unimpressive slate of titles will continue to adversely impact our stores in both the rural and urban markets over the next few months."
On a somewhat lighter note, the Movie Gallery promoted Tim Price to the position of EVP/CFO, which was the same position he occupied at Hollywood Entertainment before April's acquisition.
