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To: coopie who wrote (28621)	1/23/1998 4:57:00 PM
From: Ian deSouza	Respond to of 50808

Think they'll be any DVD commercials this Sun... news.com

To: coopie who wrote (28621)	1/23/1998 4:58:00 PM
From: BillyG	Read Replies (3) \| Respond to of 50808

Since Christmas, DVD disc sales have been 9% of total video sales in Musicland stores................. INTERVIEW-Musicland sees 30-40 1998 store closings By Gregory Crawford CHICAGO, Jan 23 (Reuters) - Musicland Stores Corp expects to close 30 to 40 stores this year, down sharply from the 106 stores closed last year as it struggled to return to profitability, senior vice president Marcia Appel said Friday. "It'll be a more normal store closing profile for us, which traditionally has run between 30 and 40 stores a year," she said in a telephone interview. As of December 31, 1997, the Minneapolis-based music, apparel and video game retailer operated 1,363 stores in the United States, United Kingdom, Puerto Rico and Virgin Islands. Appel, who runs the company's corporate advertising, partnership marketing and communications departments, said Musicland plans to spend around $20 million this year to update existing stores. "We'll be spending about $20 million in capital," she explained. "The great majority of which is going to go to update, remodel and refurbish our existing store base." On Thursday, Musicland reported fourth quarter net profit of $1.89 per diluted share compared with a loss of $2.77 per diluted share in the year-ago period. It said fourth quarter sales were driven by strong music sales and solid gains in apparel, digital video discs (DVD) and video games. Company-wide same-store sales rose 5.8 percent in the fourth quarter of 1997 and Appel characterized January same-store sales as "good," adding that DVD sales had increased since Christmas. "DVD sales since Christmas have gotten even stronger for us," she said. She said DVD sales have been running at about 9.0 percent of the total video category since Christmas. Overall, the company's financial performance in January has been "strong," Appel said, adding that the company expects some slowdown during the Winter Olympics, which open in Nagano, Japan on February 7 and run for about two weeks. "All retailers know that the Olympics have a 10-day period or two-week period when people are not shopping quite as much," she said. As the company recovered its financial footing in 1997, its liquidity improved, Appel said. "Liquidity improved to well over $100 million, perhaps as much as $120 million," she said. Merrill Lynch analyst Clare Schiedermayer said in a report she estimates Musicland will generate $99.1 million in cash flow this year. "Reflecting the company's success in meeting prior turnaround objectives, we believe Musicland can sustain the operating and financial momentum developed in 1997," she said. For 1998, Musicland will focus on aggressive advertising and marketing while attempting to maintain gross margins, Appel said. Gross margins rose by 2.7 percentage points in the fourth quarter and 1.2 percentage points over all of 1997. The company will also look at refinancing its debt holdings, she said, adding that refinancing will not be required until September 1999. At the end of 1997, Musicland had long-term debt of about $166.4 million, down from $394.5 million at the end of 1996.