Blockbuster sees same-store sales gain

Rental giant to take goodwill impairment charge

NEW YORK -- Blockbuster saw fourth-quarter U.S. same-store sales rise 4.4% as stronger product sales outweighed weaker rental trends, the video rental giant said Thursday in an attempt to reassure investors.

The preliminary results came just days after concerns about a possible bankruptcy filing clobbered the stock at a time when many retailers report declining same-store sales. The company earlier in the week said it has hired an adviser to help it manage its upcoming debt maturities. It is set to report detailed financials on March 19.

Blockbuster's fourth-quarter increase in domestic same-store sales comprises a 2.6% decrease in rental revenue and a 36.5% gain in product sales, the firm said. It cited increased sales of games, game merchandise and consumer electronics.

For full year 2008, Blockbuster said it expects to report a 6.4% gain in domestic same-store sales compared with a decrease of 6.9% in 2007. The figure includes a 1.2% increase in the rental business and a 37.4% increase in sales figures.

Full-year operating cash flow exceeded Blockbuster's guidance range of $300 million-$315 million.

However, Blockbuster also said it expects to take a goodwill impairment charge whose size it is still determining.

"Cooler heads should prevail as (the) positive (earnings) preannouncement demonstrates solid execution," Wedbush Morgan analyst Michael Pachter said. "The sell-off in the stock due to recent rumors on a Blockbuster bankruptcy was overdone as we continue to believe that the company is not currently at risk of entering bankruptcy."
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