It wasn’t such a bright day for Movie Gallery (Nasdaq: MOVI) as shares continued to slide down the charts. At the close yesterday, shares were down $1.23, or 65 percent, to 66 cents on volume of 26 million.Shares of the second-largest store-based U.S. movie rental company began to slip near the end of June, taking a dive yesterday morning after the company announced that it is unable to meet some of its financial covenants and is talking with lenders to pursue options including a possible merger or sale of the company, or a strategic alliance.
Movie Gallery’s same-store sales have declined over the past year as the convenience of online DVD rentals has gained popularity.
“During the last four months, we, like most of the industry, have experienced a sharp decline in our rental business, which has put unexpected pressure on our financial performance,” Movie Gallery Chief Executive Joe Malugen said in a statement. “We are actively pursuing every avenue to restore the financial soundness of the company.”
The company said it intends to conduct business as normal as it mulls solutions and currently has liquidity of roughly $50 million cash on hand to allow it to continue operations “without interruption.”
MN1 attempted to contact Movie Gallery for further comment; calls have not yet been returned.