Blockbuster loss narrows, but misses Street estimate

Dallas Blockbuster said Thursday its second-quarter loss narrowed as the struggling video-rental chain cut costs amid declines in revenue. The results, however, missed analyst estimates.

Blockbuster, which has come under heavy attack from such rivals as Netflix and DVD-rental kiosk operator Redbox, said it lost $39.7 million in the quarter that ended July 5, compared with $44.7 million in the same quarter last year.

Revenue fell nearly 22% to $1.02 billion, missing the $1.12 billion analysts were looking for. The company's revenue from rentals sank 19% to $789.2 million, while merchandise sales fell nearly 31% to $224.9 million.

Blockbuster said its same-store sales fell 17.8% during the quarter. This resulted from a 13.3% drop in video rentals and 37.9% drop in retail sales.

In a conference call with analysts, Blockbuster CEO James Keyes said that, as in the first quarter, the company kept on hold plans to boost the availability of DVDs it rents, despite the risk that this would benefit competitors.

"We believe our time and our resources are better deployed building the infrastructure that will allow us to compete more effectively over the long term," he said.

Keyes said the company plans to increase the number of DVDs available in stores during the current quarter.

Blockbuster cut expenses by 17% in the second quarter to $562.5 million, and the company said it is still on track to cut about $200 million in expenses this year.

The company has closed 276 stores so far this year, giving it a current total of 7,129 stores worldwide.