Movie Gallery Inc. has announced that it is cutting costs in the face of demand problems, including some significant changes to its North American video game retails stores, after blaming the state of the film industry, currently "enduring its worst slump in two decades" in cinemas.
The conglomerate, whose shares lost $5.05 to around 28 dollars immediately after the announcement, owns the Hollywood Video, Game Crazy, and Game Zone retail chains, and the movie decline will impact all three franchises. In many parts of the country, Game Crazy stores are sometimes housed within or expanded from existing Hollywood Video stores.
"Already in progress are key efficiencies for the game businesses of both companies, starting with the closure of 51 non-profitable Game Crazy stores," said Joe Malugen, chairman and CEO of Movie Gallery. The company will also be renaming the 23 Game Zone stores in its portfolio to bring them into the Game Crazy brand, which it believes is a better-established and recognized name.
In contrast, GameStop Inc., which recently purchased rival software retailer EB Games, recently posted an upswing in profits
, showing that Game Crazy's issues are not necessarily indicative of overall problems in the U.S. video game retail sector. The affected Game Crazy stores will cease operations at the end of June.