Redbox parent Coinstar announced its second quarter financials today, and the results were a mixed bag. On the one hand, the company posted earnings of $13.4 million, nearly double Coinstar’s Q2 2009 earnings. Revenue from the company’s “DVD Services” segment, which includes Redbox, was up 44%.
Less encouraging were the numbers for same-store sales from Redbox kiosks, which rose a paltry 3.5%, a steep drop from the 21% increase in the first quarter of this year. Investors punished the company’s stock in after-hours trading, with Coinstar shares dropping nearly 7%.
Coinstar also lowered its revenue view for 2010 to $1.425 billion to $1.505 billion, down from from a May projection of $1.505 billion to $1.595 billion.
Redbox’s 28-day delay agreements with the Hollywood Three seemed to be a contributing factor to the company’s lower-than-expected performance. According to the Wall Street Journal, Coinstar CFO J. Scott Di Valerio “acknowledged the transition to the new arrangements pinched DVD rentals as kiosks for a few weeks didn’t have new releases and older titles didn’t make up the slack.”
Di Valerio believes this to be a temporary issue, saying:
“Having worked through the one-time transition to the [28-day] window, we expect our comps to move back to double-digit growth during the second half of the year,”
Is Di Valerio correct, and will the Redbox ship soon be completely righted again? Or, as some have predicted, is the company’s comeuppance for its industry-disrupting low price point finally arriving? Debate away in the comments.
(via the Wall Street Journal)