Movie Gallery, Inc. agreed with Hilco Real Estate, LLC to launch a program to restructure the leases at more than 1,100 Movie Gallery and Hollywood Video stores. Terms of the lease deal were not disclosed.
The restructuring will impact about one-fourth of Movie Gallery's portfolio. Overall, Movie Gallery operates 4,800 stores in all 50 U.S. states, Canada and Mexico.
The move comes on the heels of Movie Gallery's previously announced plan to sublease and downsize underperforming and redundant stores. Rental houses have been hurt by the proliferation of DVD-by-mail programs run by competitors Netflix, Wal-Mart and Blockbuster.
“This program, together with our previously announced subleasing program, represents our ongoing initiative to restructure approximately 70 percent of the company's real estate portfolio,” said Keith A. Cousins, Movie Gallery's executive vice president and chief development officer.
Movie Gallery Inc. has posted losses for three straight quarters since its $1.25 billion purchase of Hollywood Video a year ago. Shares of Movie Gallery have fallen 90 percent in the past year as it's wrestled with losses in addition to carrying a huge amount of debt. Hilco Real Estate specializes in high-yield strategic retail real estate solutions including dispositions, terminations, renegotiations and other services.