Blockbuster Closings Help

Blockbuster closed 427 stores worldwide during the quarter, including 217 domestic company-owned stores, 122 international company-owned stores and 88 franchised stores. The chain added 84 stores during the quarter, for a net reduction of 343 stores.

The quarterly results showed that the company earned net income of $68.4 million, or 31 cents per diluted common sharefor the second quarter of 2006 ended June 30, compared with a net loss of $57.2 million, 31 cents per share for the second quarter of 2005.

Blockbuster's net income for the period was affected by the impact of favorable tax audit settlements, costs incurred for store closures and discontinued operations in Spain. Excluding these items, adjusted net loss totaled $21.4 million, or 13 cents per common share, compared with adjusted net loss of $44.6 million, or 24 cents per common share, for the second quarter of 2005.

Blockbuster chairman and CEO John Antioco pointed out in the conference call that US same-store movie rental revenues increased 3.8%, although worldwide same-store retail revenues for the second quarter of 2006 declined 9.2% from the same period last year. The upshot of the sales and profit picture is that, "Our profitability and cash flow have improved significantly year-over-year," the Blockbuster chairman said.

Sales for the second quarter declined 5% to $1.32 billion compared with $1.39 billion for the second quarter of last year, primarily due to a reduction in revenues from the closings of stores and lower margin retail sales. These decreases were partially offset by an increase in revenues from the company's online operations.

Blockbuster operates more than 8,500 stores throughout the Americas, Europe, Asia and Australia. Part of the company's turnaround plan relies on building its online business, which grew to a subscriber base of approximately 1.4 million at the end of the quarter.