SAN DIEGO-A locally based chain’s latest financial results illustrate thetroubles that have accompanied the theater industry’s rapid expansion over the past few years.

CinemaStar Luxury Theaters Inc. announced an $848,000-loss for the quarterending June 30, nearly double the loss it also posted for the same time lastyear. Like other chains, CinemaStar has been forced to rethink its growthplans as hundreds of new Southern California movies screens have popped upover the last five years.

But a CinemaStar executive says the worst may be over. “We are successfully weathering a down-cycle in this industry,” says Jack Crosby, co-chief executive officer of CinemaStar. “We hope to improve margins by closing losing operations, avoiding excessive leverage, and capturing migrated audience flow from terminated theater operations in our markets.”

The movie house chain has grown especially fast in the Inland Empire, whereit finished a 20,000-sf expansion of its Mission Grove Theater in Riversidea few months ago. However, the company closed its six-screen theater onThird Avenue in the San Diego County city of Chula Vista at the end of Juneand is selling the property, company officials say.

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