Blockbuster beats Street views, but warns of sales slide

By Sue Zeidler

LOS ANGELES (Reuters) - Blockbuster Inc (BBI.N) posted lower first-quarter earnings but beat expectations as the top U.S. movie rental chain reined in spending.

The company warned that same-store sales would continue to slip in 2009, but said it remained comfortable with its prior full-year outlook.

Blockbuster chief executive Jim Keyes said on a conference call he expects strong title releases to boost results in the summer, but said he remained cautious.

The company said it secured funding for a $250 million amended and extended credit facility and added that the new financing, combined with cost savings and additional cash, provided sufficient liquidity going forward.

On a call with analysts, Keyes said the company can reduce debt by $400 million in the next two years.

Blockbuster also said it was exploring asset sales in international markets to raise $100 million.

The company said first-quarter revenues fell to $1.12 billion from $1.39 billion, citing a reduction of inventory, lower advertising spending, weaker DVD titles and competition from strong theater box office traffic.

Net income for the first quarter of 2009 fell to $27.7 million, or 12 cents per diluted share, from $45.4 million, or 20 cents per diluted share year earlier.