Movie Gallery expresses "substantial doubt" as to whether it can continue to operate

Movie Gallery, the game and video rental outlet, posted a large loss for the second quarter of 2007 and expressed �substantial doubt� as to whether it can continue operating.

The company said "that it is not in compliance with the terms of its loans, and that if it does not reach an amended agreement with its lenders by Aug. 14 or obtain an extended forbearance period, its lenders could start foreclosure proceedings immediately."

The filing also goes on to say that the company is losing working capital and without the additional capital the company can not continue operating.

Movie Gallery, which is the second largest US rental chain posted a $561 million USD revenue with a net loss of $310 million compared to a much less substantial $25 million USD net loss last year.

Source:
Video Business

Written by: Andre Yoskowitz @ 12 Aug 2007 16:54

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23 comments

H0bbes

This is no surpirse...

Can you say N-E-T-F-L-I-X??

12.8.2007 17:38 #1

ZippyDSM

No everyone has a computer or the internet,its a shame MG is having trouble unlike BB that sticks to cities they fill in the map where other rental places wont touch but I guess its the sign of the times rental stores need more than just videos to survive...

12.8.2007 18:06 #2

mspurloc

Never heard of them, but they're the second largest chain in the US!?!?

12.8.2007 19:02 #3

vinny13

That's horrible! Everytime I go to my uncle's cottage, we always rent a couple movies from there, and maybe a game. Now where am I going to go?

12.8.2007 19:07 #4

ZippyDSM

Originally posted by mspurloc: Never heard of them. Are they Canadian?they came abotu during the 90s like Turtles Music store(which BB bought out and it then became BB music for a time),just another movie rental store to be trashed by BB in larger areas.

12.8.2007 19:10 #5

ZippyDSM

Originally posted by vinny13: That's horrible! Everytime I go to my uncle's cottage, we always rent a couple movies from there, and maybe a game. Now where am I going to go?well they still have a chance to get out of it....nows a good time for netflix to partner with a local store and try and get more users,they come to the store set up a account and they have their movies mailed to them 5$ for 3,2 for 1 when you want new movies you go down and pay it again get them keep them for awhile send them back and repeat ,or for 20 you can get the normal 3 at a time plan and que your movies monthly.

12.8.2007 19:14 #6

Gottawin

ZIppy, that would'nt be a bad idea. I have a MG outlet in my area and I would hate to see them go. .. ..

12.8.2007 19:29 #7

DVDBack23

Originally posted by mspurloc: Never heard of them, but they're the second largest chain in the US!?!?Hollywood video is owned by them, perhaps youve heard of them? They are pretty large (nowhere near BB though)

12.8.2007 19:44 #8

ZippyDSM

Originally posted by Gottawin: ZIppy, that would'nt be a bad idea. I have a MG outlet in my area and I would hate to see them go. .. ..Ya basic lil things to get some fresh blood into both where they can share some money but not so much each others debt,corporate tends not to innovate enough and stays rotting in the gutter.

12.8.2007 20:02 #9

Gottawin

this is true.....

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12.8.2007 20:13 #10

zixiz

hopefully its closing in canada too cause i owe them $100 for some movie i returned but somehow they never got, and they want $100 for a damn dvd trying to recoup their losses by ripping me off.

12.8.2007 20:22 #11

vinny13

Originally posted by zixiz: hopefully its closing in canada too cause i owe them $100 for some movie i returned but somehow they never got, and they want $100 for a damn dvd trying to recoup their losses by ripping me off.lmao

Returned... Right ;)

12.8.2007 20:24 #12

Gottawin

Can u say collection agency.. . . ..

12.8.2007 20:42 #13

ZippyDSM

Originally posted by Gottawin: Can u say collection agency.. . . ..
all hail the collection agency and their 30% cut...and their trolls...LOL

FIGHT THE M.A.F.I.A.A.

12.8.2007 20:49 #14

SProdigy

Quote:Originally posted by mspurloc: Never heard of them, but they're the second largest chain in the US!?!?Hollywood video is owned by them, perhaps youve heard of them? They are pretty large (nowhere near BB though)The purchase of Hollywood is what most likely put them way over. Not to mention a chain called Family Video moves in next door to every Movie Gallery and/or Hollywood. Family Video has a bizarre rental strategy, where they rent movies from $1 - $2.50, and they can be 1-7 nights depending on how long you keep them. They are the Wal-Mart of rental chains and have no idea how they survive. As I've mentioned before, I've worked for Hollywood (and Family too) in the past, and they were bleeding money 5-6 years ago. I think the only way Family exists is because they are a private company and they own the companies that buy their property, build the stores and all the stores furnishings (counters, shelving, etc.)

Movie Gallery and Hollywood on the other hand, typically rent/lease property. Movie Gallery usually was situated in a plaza, but Hollywood has free-standing stores that were built too fast for them to keep up with the loans/debt. Before I left there in 2002, they couldn't build anymore stores because their lenders would not lend them anymore money. They expanded a little into plazas, etc.

Movie Gallery kept buying out smaller chains around throughout the Midwest US, and at times, even here where we have less than 100,000 people, they had over 2 dozen Movie Gallery stores, not including the 3 Hollywood Videos that covered the same area. There were literally 2 MG stores a block apart for almost 6 months during one of their buyouts of a smaller chain. If they would manage their property a little better, and close down at least 25% of their stores, maybe they wouldn't post such a large loss.

13.8.2007 04:38 #15

mspurloc

Originally posted by DVDBack23: Originally posted by mspurloc: Never heard of them, but they're the second largest chain in the US!?!?Hollywood video is owned by them, perhaps youve heard of them? They are pretty large (nowhere near BB though)Ah-ha! That cleared it up. Thanks. Buying Hollywood when the market's the way it is could be their problem.

13.8.2007 05:55 #16

tleewade

i get movies there the last one i got was tax and all was $4.09. they went up . ithought it was to high i quit renting from them . hate to hear they are about to close though.

13.8.2007 08:24 #17

MightyOne

Everything comes to and end sometime.

13.8.2007 11:55 #18

ZippyDSM

Quote:Quote:Originally posted by mspurloc: Never heard of them, but they're the second largest chain in the US!?!?Hollywood video is owned by them, perhaps youve heard of them? They are pretty large (nowhere near BB though)The purchase of Hollywood is what most likely put them way over. Not to mention a chain called Family Video moves in next door to every Movie Gallery and/or Hollywood. Family Video has a bizarre rental strategy, where they rent movies from $1 - $2.50, and they can be 1-7 nights depending on how long you keep them. They are the Wal-Mart of rental chains and have no idea how they survive. As I've mentioned before, I've worked for Hollywood (and Family too) in the past, and they were bleeding money 5-6 years ago. I think the only way Family exists is because they are a private company and they own the companies that buy their property, build the stores and all the stores furnishings (counters, shelving, etc.)

Movie Gallery and Hollywood on the other hand, typically rent/lease property. Movie Gallery usually was situated in a plaza, but Hollywood has free-standing stores that were built too fast for them to keep up with the loans/debt. Before I left there in 2002, they couldn't build anymore stores because their lenders would not lend them anymore money. They expanded a little into plazas, etc.

Movie Gallery kept buying out smaller chains around throughout the Midwest US, and at times, even here where we have less than 100,000 people, they had over 2 dozen Movie Gallery stores, not including the 3 Hollywood Videos that covered the same area. There were literally 2 MG stores a block apart for almost 6 months during one of their buyouts of a smaller chain. If they would manage their property a little better, and close down at least 25% of their stores, maybe they wouldn't post such a large loss.blockbusters did the same.....

13.8.2007 16:25 #19

Unfocused

It's the Pirates! Yeah, blame it on the Pirates and illegal downloaders!

13.8.2007 21:08 #20

borhan9

I think netflix or blockbuster should buy this company out eventually.

17.8.2007 18:55 #21

packrat1

The movie gallery for my neighborhood is down to a few shelves of videos left. They are having a massive "going out of business sale". I bought a few on the opening day of the sale, good prices. That was the third video store name for that location, but mg has been there the longest in the 10 years we have lived here. There is a Hollywood Video about 3 miles away. It is a free standing store in a large shopping plaza (MG was in a strip mall). I have never even been inside the Hollywood Video before, but the MG folks gave everyone coupons for free rentals there. So being as it is the only other rental store within 10 miles or so, I guess I'll be opening an account soon.

BTW, I don't use Netflix, and don't know anyone who does. I tried using movie downloads, once, but since it never worked (early days I'll admit) I never tried again.

With DRM the way it is, I'd rather purchase my DVD movies and have a physical copy. I sometimes get them used, otherwise on sale, occasionally close to full price for a Widescreen with lots of special features or something.

19.8.2007 17:53 #22

ZippyDSM

Originally posted by packrat1: The movie gallery for my neighborhood is down to a few shelves of videos left. They are having a massive "going out of business sale". I bought a few on the opening day of the sale, good prices. That was the third video store name for that location, but mg has been there the longest in the 10 years we have lived here. There is a Hollywood Video about 3 miles away. It is a free standing store in a large shopping plaza (MG was in a strip mall). I have never even been inside the Hollywood Video before, but the MG folks gave everyone coupons for free rentals there. So being as it is the only other rental store within 10 miles or so, I guess I'll be opening an account soon.

BTW, I don't use Netflix, and don't know anyone who does. I tried using movie downloads, once, but since it never worked (early days I'll admit) I never tried again.

With DRM the way it is, I'd rather purchase my DVD movies and have a physical copy. I sometimes get them used, otherwise on sale, occasionally close to full price for a Widescreen with lots of special features or something.Netflix is great was a god send when I was on dailup :X

19.8.2007 17:55 #23

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