Movie Gallery to shut as many as 450 stores

PHYSICAL: Video-rental chain has trouble paying rent

By Danny King -- Video Business, 10/29/2009

OCT. 29 | PHYSICAL: Movie Gallery might close as many as 450 of its eponymous and Hollywood Video stores, or about 14% of its total, by the end of the year, as the No. 2 U.S. movie-rental chain struggles against increasing kiosk and by-mail sales by competitors such as Redbox and Netflix.

Movie Gallery, which has about 2,900 units, has closed 250 stores since the beginning of last month and might close another 200 by year end, the company confirmed today. The company has said it would shut 200 of its Game Crazy stores this month.

Movie Gallery has faced growing competition from U.S. movie-rental kiosk leader Redbox and by-mail leader Netflix since emerging from Chapter 11 in May 2008. In the past few weeks, Movie Gallery set up a “real estate hotline” for its landlords that promised a 48-hour response to their inquiry, implying the chain has had trouble keeping up with its rent payments. One landlord told Video Business that the chain was 20 days late paying rent to him.

The closures were reported by Bloomberg News earlier today.