Blockbuster Inc.'s (BBI) fourth-quarter losses reflected the increasing irrelevance of video rental stores more dramatically than ever as losses increased and huge write-downs plagued the chain.
Blockbuster recently hired advisers in the hopes their insight could help the business get in sync with present trends in at-home entertainment. Blockbuster announced very weak holiday sales in early January to the surprise of very few with recognition that their business model needed to change. Since then, Blockbuster has been moving the direction of rental kiosks similar to those offered by redbox and increasing digital options. That needs to happen sooner rather than later for the struggling enterprise, that revived itself by raising $675 million in a debt offering last year.
The company though will not close locations just yet, claiming the stores still make up a vital part of Blockbuster’s offering despite 16 percent losses in same-store sales. Instead they will add to the current business through the construction of 7,000 Blockbuster Express kiosks and the introduction of “Blockbuster on Demand.”
Additionally, they intend to reduce costs by $200 million through cut backs and the sale of international assets.
For the fourth-quarter, Blockbuster posted losses of $434.9 million, or $2.24 a share a further blow to last year’s fourth-quarter losses of $359.8 million, or $1.89 a share. Revenue slipped 18 percent to $1.08 billion.
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