Blockbuster Inc.'s first-quarter profit sagged as fewer people came to its stores to rent videos, though the long-slumping company softened the blow by whittling the size of its chain and shedding other expenses.
The results released Thursday were the latest sign of the challenges facing Blockbuster as it struggles to attract customers who are increasingly getting their videos through the mail or high-speed Internet connections. Blockbuster shares plunged 27 cents -- nearly 24 percent -- in extended trading after finishing the regular session at $1.14.
The Dallas-based company earned $24.9 million, or 12 cents per share, for the three months ended April 5. That represented a 42 percent decline from $42.6 million, or 20 cents per share, at the same time last year. Excluding one-time charges and gains, Blockbuster said it would have earned 19 cents per share. But Blockbuster's revenue plunged nearly 20 percent to $1.12 billion -- nearly $200 million below analyst estimates.
Blockbuster's biggest problem was a familiar one -- its model of offering videos from brick-and-mortar stores while DVD-by-mail rival Netflix Inc. and pay-TV services offer more convenient and sometimes less expensive options.
Blockbuster's video rental revenue from U.S. stores open at least a year fell by 12 percent.
In past quarters, the company has been able to offset some of the erosion in video rentals by selling DVD players and other merchandise. But even those peripheral sales sank in the first quarter.
To bolster its finances, Blockbuster closed more stores and laid off more workers.
The company ended the quarter with 7,267 stores worldwide, 138 fewer than at the beginning of the year.
Blockbuster lowered its operating expenses to $541 million, a reduction of nearly 20 percent from the same time last year.