Not a Blockbuster Quarter

Blockbuster Inc. (Dallas) reported a 1 percent decrease in total revenues for its first quarter of fiscal 2004, ended March 31, 2004.

Net income for the quarter was up 39.8 percent, but the retailer of movie videos and video games was quick to point out that those results include the recognition of a $37.1 million tax benefit, resulting from the resolution of a federal income tax audit for tax years January 1, 1997 through May 4, 2000. Excluding this tax benefit, adjusted net income dropped 6.2 percent.

“Our gross margin and profitability for the quarter continued to be strong although our revenues were impacted by an extremely challenging environment including a much lower box office and lighter-than-anticipated traffic industry-wide,” said chairman and ceo John Antioco. “Importantly, we made significant progress with several key business initiatives and are on track for the national launch of our rental subscription programs, both in-store and online, the roll-out of our movie trading initiative and the expansion of our store-in-store game concepts. We are making substantial investments in these programs this year and believe they position Blockbuster for future growth.”

For the quarter, same-store revenues dropped 7 percent and total rental revenues decreased 3.7 percent. Worldwide same-store rental revenues decreased 8.2 percent, primarily due to an unfavorable quarter-over-quarter U.S. box office comparison of home video titles released during the first quarter of 2004 and weaker than anticipated rental traffic industry-wide.