Faced with ‘Unsustainable’ Debt, Movie Gallery Seeks Help
Bear Stearns analyst Glen Reid recently told investors that Movie Gallery’s recent 53% second quarter loss spells big time trouble for the video rental firm. Reid called MovieGallery’s debt burden “unsustainable” and warned that a complete “restructuring will ultimately be necessary.”
The company itself just announced that it is talking to restructuring firm Alvarez & Marsal to help determine its options. Apparently, the company’s acquisition of the Hollywood Video brand has hurt it badly, as Hollywood Video branded stores posted a 7.3% drop in sales last year while Movie Gallery branded stores posted a 1.6% gain.
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