Blockbuster swings to quarterly loss, faces ‘challenging’ period

San Francisco Blockbuster reported late Thursday that it swung to a first-quarter loss of $65.4 million, compared with a net gain of $27.7 million in the year-ago period.

For the quarter ended April 4, revenue decreased to $939.4 million from $1.09 billion, topping Wall Street's forecasts but still representing a 13.5% decline from the prior year.

Same-store sales in the United States fell 7.8%, while international same-store sales decreased 5.8%.

"We expect the next 12 to 18 months will remain challenging,” said Tom Casey, CFO, in a statement. “For the full year of 2010, we remain focused on the following financial initiatives: lowering our debt service costs; aggressively reducing operating expenses; preserving liquidity through operational efficiencies; and focusing on improving top-line performance."

Casey added that the recent announcement that Movie Gallery, the owner of Hollywood Video and the No. 2 movie rental chain behind Blockbuster, is planning to close its remaining stores could funnel sales to hundreds of Blockbuster stores.

Blockbuster CEO Jim Keyes said that the retailer has had "encouraging" talks with investors and potential "strategic partners" that might help the company avoid having to file for Chapter 11 bankruptcy court protection, a possibility that has loomed over the company as its business has faltered.