Blockbuster Outlines Circuit Plans

By Steve Smith On May 19 2008 - 6:00am




Jim Keyes, Blockbuster chairman/CEO, outlined some plans for its potential acquisition of Circuit City during a quarterly conference call.

Keyes said there is no timetable in place for a Circuit City acquisition, unlike Mark Wattles' two-month projection. Keyes did say, "The first part of the process will take weeks, not months, to do due diligence. At that point we need to see if we have a go, or no-go, decision to make."

After that, Keyes said, Blockbuster has to "dig deeper" to see it if a deal makes sense for his company and Circuit City so the process won't be a "distraction" to both chains.

When asked if a strategic partnership between both retailers is a possibility, all Keyes said was: "We are looking at all possibilities to see what may be of interest to us and to [Circuit City]."

When asked about his concept for Circuit City, Keyes mentioned Blockbuster's prototype Rock the Block stores. "Those stores have a gaming presence, present portable devices and are really an entertainment environment than a video store."

He noted that if Blockbuster acquires Circuit City, the stores may be transformed and be "less about selling electronics products, but to set an entertainment retail environment, and demonstrate digital download capabilities in the store. We see the line blurring in the retail environment when it comes to devices and content. We are doing that in the Rock to Block stores now and it gives us more products to display."

As for Blockbuster's fiscal first quarter, ended April 6, net income was $45.4 million, an improvement of $94.4 million, as compared with a net loss of $49.0 million for the same quarter last year.

Total revenues fell 5.4 percent to $1.39 billion for the first quarter, compared with $1.47 billion for the prior year's first quarter, as a result of last year's closing of 412 company-operated stores.

Domestic same-store revenues increased 2.9 percent as compared with the first quarter of 2007. This increase was driven by a 0.4 percent growth in same-store rental revenues and a 19.7 percent increase in same-store merchandise sales, the chain said.

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