After three straight extensions to its credit terms, Movie Gallery
Some 520 stores among the 4,500 or so Movie Gallery and Hollywood Video locations have big bull's-eyes on their back walls. Management now hopes to turn a profit from the remaining core of roughly 4,000 stores. Somehow. Someday.
That's not easy, given the rise of online video rentals from the Blockbuster/Netflix
While I wish the best for Movie Gallery's employees and investors, Fools have seen this move coming for quite a while. It's been five quarters since Movie Gallery last turned a quarterly profit, and its last annual profit came in 2005. The company has lost $376 million over the last 12 months -- the $309.9 million loss in the previous quarter alone erased the combined $310 million in net earnings the company amassed from 1993 to 2005.
Movie Gallery is a sad shell of a business operation, with a $19.6 million market cap but $1.2 billion in enterprise value. Its debt load is crushing, and I doubt that a rather meek 11% reduction in stores and headcount can fix what ails these guys. Perhaps management should reload that gun and do another round in the shooting gallery soon.