Rumors of Blockbuster bankruptcy circulate

DALLAS Blockbuster has hired the law firm Kirkland & Ellis to explore a possible bankruptcy filing, according to reports.

Reports indicate the Blockbuster hired legal counsel to evaluate restructuring options for the company, which may include bankruptcy. According to Bloomberg, however, a Blockbuster spokesperson said that the company had no intention of filing for bankruptcy and hired the firm for refinancing and capital raising intitiatives.

Though Blockbuster has been struggling, its latest quarterly numbers show signs of improvement. For fourth quarter 2008, the company reported that domestic same-store sales increased 4.4%, representing a 5.3% increase when compared with a decline of 0.9% in the same period in 2007. The increase in same-store sales was comprised of a 2.6% decrease in domestic same-store rental comparables and a 36.5% increase in domestic same-store retail comparables, which largely was driven by increased sales of games, game merchandise and consumer electronics.

Whether Blockbuster will be the next CE retailer to go the way of Circuit City has yet to be seen, but with increased competition from online rental services and e-commerce sites, the company has a challenging road ahead.