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Redbox Takes Home Video Market Share From Fading Blockbuster

Blockbuster’s (BBI) loss is Redbox’s gain.

Coinstar’s (CSTR) Redbox automated DVD rental business nabbed 23% of the U.S. home video rental market in the first quarter, up from 15.7% a year earlier.

“Virtually all of this market share came directly from the brick-and-mortar retailers,” Coinstar CEO Paul Davis said in a conference call Thursday. “We estimate that we have between three and four Redbox kiosks within five minutes of an existing or recently closed Blockbuster location.”

Blockbuster is closing hundreds of stores to stay afloat as it deals with declining sales and a heavy debt burden.

Strong Redbox sales helped Coinstar blow past Wall Street’s forecasts for the company’s first quarter. It reported Q1 earnings per share of 21 cents, up 200% from a year ago and 9 cents higher than the consensus of analysts polled by Thomson Reuters.
Coinstar, which also operates retail coin-counting machines, posted sales of $350 million, up 47% from a year ago and 7% higher than analysts had expected.

Coinstar also raised its guidance for the full year. It bumped up its sales target by 4% to a range of $1.53 billion to $1.63 billion. It hiked its EPS forecast by 19% at the midpoint of guidance to $1.82 to $1.94.

Coinstar shares jumped more than 20% in after-hours trading Thursday following the earnings news release. During the regular session, Coinstar closed up 3% to 38.21.

Coinstar’s Redbox business accounted for 75% of the Bellevue, Wash.-based company’s sales in the first quarter. Coinstar added 2,400 Redbox kiosks last quarter, bringing its total to 24,800 nationwide.

In another stab at Blockbuster, Coinstar Thursday announced a deal with Schnuck Markets to install Redbox machines in the more than 100 Schnucks locations across Missouri, Illinois, Indiana, Wisconsin, Iowa, Tennessee and Mississippi. It will replace Blockbuster-branded DVD vending machines in those stores. The Redbox rollout at Schnuck stores is expected to be complete by June.

“Coinstar’s vision is to become the leader in automated retail,” Davis said. “And based on our first-quarter performance, we’re making terrific progress.”

Source: http://blogs.investors.com/click/index.php/home/60-tech/1519-redbox-takes-home-video-market-share-from-fading-blockbuster