Blockbuster UK is on the offensive following the Chapter 11 bankruptcy of its US parent.
The company says it is unaffected by the development and has revealed to MCV its business plan for the next five years, which includes selling TVs and relocating stores.
The firm’s commercial chief Gerry Butler also said the UK arm has seen its profits increase year-on-year and that there’s no need to close any stores.
Blockbuster isn’t a bad business, it just has a lot of debt,” Butler told MCV.
The debt got to $990 million and at some stage you’ve got to tackle that. Now the Chapter 11 allows the guys some opportunities to refinance the business.
Blockbuster US is likely to come out of Chapter 11, perhaps at the end of the year. But it will be a very different company than it is now with little or no debt.”
Things are very different on the other side of the Atlantic.
Now, its European subsidiaries have no debt. The UK business is substantially up year-on-year – the UK operation is sitting on over 50m of net assets. It is an extremely well-funded, cash-generative business. Our core rental business is up six per cent, primarily down to Blu-ray. The problem in the UK is that people mention Chapter 11 and they say ‘Are you closing down?’ No, it’s absolutely rubbish.”
As part of its new business plan, Blockbuster says it will begin selling mobiles, iPods and TVs. The retail giant also told MCV that it hopes to move many of its stores from secondary sites to prominent High Street locations.
We are becoming more than just a rental firm, we are becoming a company of supplying entertainment needs,” added Butler. At the moment we are testing sales of TVs in 35 shops.”
Earlier this year Blockbuster US put its international business up for sale to help generate funds. But Butler now feels that this might change when the retailer comes out of Chapter 11.
Selling the international assets was one of the options for Blockbuster,” he said.
But I don’t think they will make a decision on that until after they come out of Chapter 11, and if they do come out of Chapter 11 then I don’t think they need to sell the international assets. But it depends on what the long-term strategy of the company is.”