Shares of Redbox Parent Plunge 21 Percent on Weak Outlook
Outerwall said Redbox set a rental record in July, but that quarterly revenue and profit will fall short of previous expectations.
Outerwall said its Redbox DVD rental machines aren't performing as well as had been expected this quarter -- news that caused stock in the company, previously known as Coinstar, to tumble 21 percent during after-hours trading.
Outerwall said its revenue will be as high as $589 million this quarter, while it previously predicted as much as $630 million. Profit will be as high as 94 cents a share, down from a previous estimate of up to $1.51.
The announcement came just after the closing bell, causing the stock to be halted during the after-hours session. When the stock resumed trading, it quickly dropped almost $12 a share. During the regular session it was off 2 percent to $55.97.
The company said that Redbox rentals in July and August grew 13.4 percent and 15.7 percent year-over-year, respectively, and that July, with 74 million rentals, represented its best month in history. Still, expectations were higher.
"Heightened promotional discount activity, which added new customers during the quarter, had an adverse impact on the expected average transaction size, and, we believe, drove consumers toward more single-night rentals," Outerwall CEO Scott Di Valerio said Monday.