Shares of Movie Gallery Inc., the nation's second-biggest video-rental chain, fell on Wednesday after the company forecast sluggish sales for the next few months, blaming a slowdown at movie theaters and weakness in the release schedule for upcoming home videos.
Its shares tumbled $3.88, or 12 percent, to $29.01 in afternoon trading on the Nasdaq Stock Market, where it was among the top percentage losers. The stock has surged nearly 56 percent so far this year, and is up about 23 percent since late March, when Blockbuster, the nation's largest video-rental chain, ended a hostile bid to acquire Hollywood Entertainment. Movie Gallery completed its $1.2 billion acquisition of Hollywood Entertainment in April.
Movie Gallery said Wednesday it was suffering while Hollywood is "enduring its worst slump in two decades." The company had previously expected sales at stores open at least one year — a key retail metric also known as same-store sales — would be down just slightly in the second quarter. However, recent weakness in the home-video release schedule is having "a significant adverse impact" on results, the retailer said.
Movie Gallery also said an "unimpressive slate of titles" coming from movie theaters will continue to hurt its stores in rural and urban markets over the next few months. The company operates 4,700 retail stores in North America.
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