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March 31 , 2006

Movie Gallery seeks subleasors

March 31st, 2006 - Sandra Zaragoza Staff Writer Movie Gallery Inc., the second-largest movie rental chain in the country, is looking for a few good retailers to room with. In mid-March, Dothan, Ala.-based Movie Gallery Inc. announced that it is subleasing some 2,200 of its existing Movie Gallery and Hollywood Video locations in an effort to downsize and improve its bottom line. "In addition to the incremental revenue we expect to realize through subleasing portions of the stores, we look forward to the additional traffic that our retail partners will generate," said Keith Cousins, executive vice president and chief development officer of Movie Gallery. About 75 entire stores are available as well, according to an e-mail that was sent to a network of potential tenants and brokers. After a tough year in the evolving movie-rental business, major video chains have had to find ways to cut costs and recover sales. On March 23, Movie Gallery Inc. reported a half billion-dollar loss during the fourth quarter, in part due to its acquisition of the Hollywood Video chain which closed in January. It also attributed weak sales to lackluster interest in recent DVD releases and the cost of closing stores. The movie-rental chain expects would-be tenants to occupy about 2,500 square feet at each of the locations. New York-based Excess Space Retail Services Inc. is marketing the stores. See There are four Hollywood Video stores subleasing space in Dallas and three in Fort Worth. Other North Texas cities with video stores on the sublease market include Arlington, Garland, Grand Prairie, Hurst, Richardson and Plano. Steve Lieberman of Dallas-based The Retail Connection says that, in general, "the model for video stores is high-traffic, good access and high-visibility." These key components would make the spaces attractive to other retailers, he added. Dallas-based Blockbuster Inc. (NYSE: BBI) said it is closing about 100 to150 stores this year, which is in line with store closings in past years. "Our goal is to drive business and competitors' business to our other stores and Blockbuster Online," said Randy Hargrove, Blockbuster spokesman. "This transfer of revenue is great for our profitability." Blockbuster has also subleased space to other retailers and may consider subleasing space on a store-by-store basis in the future, Hargrove said.
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