US: Blockbuster to close 960 stores

Blockbuster said yesterday that it may be forced to close up to 960 outlets by the end of next year – a fifth of its overall store count.

However, the firm confirmed that it still plans to have 10,000 Blockbuster Express kiosks open in the same time. It currently has just 500 of the machines dotted around the US.

The store closures, disclosed in a regulatory filing to the Securities and Exchange Commission (SEC) filed yesterday, suggest that the company needs to cut more jobs than previously anticipated. It now expects to close between 810 and 960 of its 4,356 US stores by the end of next year, up from the 380 to 425 originally envisaged.

The company projected annual savings of $30 million from the closures, although it also expects that it will face up to $60 million in lease termination costs.

The rental company faces tough competition from mail-order rental services including Netflix, as well as rival rental kiosk firm Redbox and video-on-demand services.

The latest move is one of several financing steps taken to ease liquidity issues that threatened to send the company into bankruptcy earlier this year.

Nearly a fifth of its U.S. stores are losing money, and closing them would have a positive impact of $50 million to $60 million a year on earnings before income taxes, depreciation and amortization, the company said in the filing.