SAN FRANCISCO – Blockbuster Inc. may close as many as 960 stores by the end of next year, shedding more dead weight as the struggling video rental chain tries to reverse its losses and fend off rapidly growing rivals Netflix Inc. and Redbox.
The cuts outlined in documents filed Tuesday would leave Blockbuster with about 20 percent fewer U.S. stores.
Blockbuster hasn’t yet conclusively decided to close all the stores mentioned in the previously confidential documents, Chief Executive James Keyes said in an interview Tuesday.
Keyes described the closures mentioned in previously confidential documents as something that Blockbuster is considering as it sets up more DVD-rental kiosks in the stores of other merchants. It’s a concept that has been popularized by Coinstar Inc.’s Redbox.
By the middle of next year, Blockbuster hopes to have 10,000 kiosks scattered around the country. It had just 500 kiosks at the end of August.
“We could have fewer physical stores and still have more rental points for our customers,” Keyes said.
Blockbuster’s shift serves as another reminder of video stores’ waning appeal as consumers buy and rent movies through the mail, on the Internet and through cable connections and standalone kiosks.
The shift has threatened to turn once-mighty Blockbuster into a dinosaur. The Dallas-based company has been trying to evolve by embracing kiosks and expanding into rentals delivered through the mail and the Internet.
But it hasn’t been enough to justify keeping so many stores open, prompting management to consider cutting much deeper than it anticipated to save money and keep its lenders happy. About 18 percent of Blockbuster’s stores aren’t making money, according to the documents filed with the Securities and Exchange Commission.
Blockbuster is thinking about closing 810 to 960 of its U.S. stores before 2011, up from the 380 to 425 stores that normally would be closed during that time span, according to Tuesday’s filing.
As of mid-August, Blockbuster had closed 276 stores so far this year.
Besides closing stores, Blockbuster indicated that it will convert at least 250 stores into smaller outlets.
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