DALLAS, Feb. 11 (UPI) -- Blockbuster Inc., the giant provider of in-home movie and game entertainment, posted a fourth-quarter net profit compared with a loss a year earlier as revenues jumped more than 16 percent to a record.
Blockbuster had fourth-quarter net income of $30.7 million, or 17 cents a diluted share, vs. a net loss of $4.5 million, or 3 cents a diluted share during the fourth quarter of 2001.
Analysts on Wall Street had expected the company to report a net income of 19 cents a share, according to Thomson First Call.
The company noted that as a result of Wherehouse Entertainment, Inc. filing for Chapter 11 bankruptcy protection in January of 2003, the fourth-quarter results include an $18.7 million expense to establish a reserve, or $11.4 million, net of tax, for guarantees of lease obligations associated with the sale of Blockbuster Music stores to Wherehouse in 1998.
Last year's results included a charge of $40.2 million, or $26 million net of tax.
Total revenues for the fourth quarter jumped 16.5 percent to $1.58 billion from $1.36 billion a year earlier, driven by a 9.1 percent increase in global same store revenues, resulting primarily from a more than 40 percent increase in worldwide same store retail revenues.
John Antioco, chairman and chief executive officer, said: "Despite the challenges we faced between Thanksgiving and Christmas, Blockbuster still posted record fourth quarter and year-end revenues.
"Prior to the holidays, we experienced significant increases in both the rental and retail segments of our business and, based on that, we invested in movie and game rental inventory, marketing and store staffing, designed to take advantage of a higher level of customer transactions than actually materialized. As a result, our profits were negatively impacted," Antioco said.
"The momentum returned to our business the week after Christmas and has continued into the first quarter, supporting our belief that the market dynamics of the fourth quarter were an anomaly. We will continue to pursue our strategy of capitalizing on both rental and retail opportunities and believe this is the right approach to maximize our growth opportunities for 2003 and beyond," Antioco added.
The company said it expects the percentage increase in global same store revenues to be in the mid-single digit range for the first quarter and the full year.
The company said it believes that it will achieve full-year 2003 earnings per share growth of at least 20 percent over 2002 diluted earnings per share of $1.04 and expects to add approximately 300 to 400 company-operated stores.
Blockbuster, a subsidiary of Viacom Inc., operates more than 8,500 stores throughout the Americas, Europe, Asia and Australia.
