Blockbuster posts lower Q1 profits

Dallas Blockbuster reported late Thursday that its profits were $1.12 billion for the fiscal first quarter ended April 5, a slip from $1.39 billion for the same time frame last year.

The company’s net income fell to $27.7 million for the quarter, from $45.4 million a year ago. The company blamed weak DVD titles and competition from a strong box office. Same-store sales decreased 10.9%

The retailer is also being affected by an ever-expanding digital industry, forcing the company to retrench. To help it find its footing, Blockbuster is relying on various strategies including cost-saving initiatives such as refinancing, inventory reduction and decreased advertising spend. The company said this will free up monies to invest in its kiosk program. Based on its aggressive plan, the chain could support 3,000 stand-alone units by year-end, according to Jim Keyes, CEO.

In another move to free up funds, the company reported that its subsidiary, Blockbuster Canada Co., entered into an agreement with Callidus Capital Corp. The privately held Canadian lender will provide a non-revolving asset-based loan in the amount of $21.4 million (U.S. dollars). Proceeds of the loan, which matures on Sept. 30, 2010, will be used for general corporate purposes.