Blockbuster to Close Up to 960 Stores By End of 2010
The Wall Street Journalreports that Blockbuster plans to close 810 to 960 stores by the end of 2010. The store closures were described as 280 to 300 "normal closures" and 300 to 385 "accelerated closures." The accelerated closures will take place before the end of this year.
The company expects to avert $30 million a year in losses, though it said it will likely incur $60 million in lease-termination costs from the accelerated store closings it has planned.
Store closures are smart, Needham & Co. analyst Charles Wolf said. If the company as a whole is operating at break-even or slightly above, that implies a "material percentage" of stores are losing money, he said. Closing those stores should improve profitability, and although it will likely hurt sales, "the game here is to become profitable, and if they do it on a lower revenue base, so be it," he added.
Blockbuster plans to deploy thousands of DVD rental kiosks. It was reported by Bloomberg that the company could expedite store closings because of the kiosks. That has turned out to be the case with these store closing plans. Blockbuster has over 7,100 stores in the U.S. and overseas.
