Hollywood Entertainment Corp.
Dow Jones Newswires -- January 7, 1999
Hollywood Entertain Up 12%; 4Q Same-Store Sales Strong>HLYW
By Dwight Oestricher
NEW YORK (Dow Jones)--Same-store sales at Hollywood Entertainment Corp. (HLYW) got a boost in the fourth quarter as customers rented more videos and paid more for the pleasure, analysts said Thursday.
Same-store sales at the Portland, Ore., video store chain - second only to Viacom Inc.'s (VIA, VIAB) Blockbuster stores - were in "the high-teens" during the quarter, the company said in a release Thursday.
The company is on track to post comparable sales in the 18% range compared with an earlier estimate of 15%, said Dain Rauscher Wessels analyst Mitch Bartlett in a research summary. The implementation of price increases at more company stores; wider availability of new titles under revenue sharing pacts with film studios; and an extension of the rental period on new releases to five days from one all made same-store sales stronger, he said.
Bartlett raised his fourth-quarter earnings estimate by two cents a share to a pro forma 15 cents and maintained his 1999 earnings projection of a pro forma 99 cents. The pro forma figures exclude operations losses from Reel.com, the Internet videotape company Hollywood Entertainment acquired in October.
The analyst also increased his price target on the shares to 35 from 32. Shares of Hollywood Entertainment were recently up 3 3/4, or 12.8%, at 33 on Nasdaq volume of 2 million shares, compared with average daily volume of 544,200. Earlier, the shares reached 34 1/8, surpassing the 52-week high of 29 11/16 set Dec. 18.
Digital video disks, or DVDs, have also been a driver of sales gains at Hollywood Entertainment. The company said DVD has been the most successful new format introduced in the video rental chain's history.
Reel.com generated about $6.5 million in sales during the quarter, with DVD sales contributing about 25% to 33% of that amount, said NationsBanc Montgomery Securities Inc. analyst Doug Gordon in a research summary Thursday.
Adding that the $6.5 million figure is "well above our expectations," Gordon added that his 1999 revenue estimate for Reel.com of $25 million "is very conservative and actual results may be nearly double that amount."
Gordon raised his earnings estimates to 23 cents a share from 20 cents for the fourth quarter; to $1.05 from $1 for 1999; and to $1.35 from $1.45 for 2000.
The company earned 15 cents a share in the year-ago quarter and 65 cents a share for 1997.
The sales momentum of the fourth quarter can continue into the first half of 1999, he said, with comparable sales in the high double-digit range.
- Dwight Oestricher; 201-938-5266
Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved
|
