Movie Gallery (MOVI) stock has been slashed by over 50% this week and is now trading in the mid-2s following disastrous Q2 results which showed a .47 EPS loss on negative 4.6% same store revenues (negative 5.3% video rental comps/negative 1.5% merchandise comps/Hollywood Video comps down 7.3%), laid upon a backdrop of a still horrific balance sheet ($21 mil. in cash/$1.1 billion debt).
While not providing guidance, management remains cautious about the the video rental market for the current quarter ending Sept.30th, and have now engaged Merrill Lynch to help "explore opportunities to strengthen the company's balance sheet", which is racing toward a violation of bank covenants come January. Turnaround advisory firm Alvarez & Marsal Inc. have also been engaged in an attempt by the company to plug holes into this sinking ship.
We cautioned readers and owners of MOVI stock in this initial report on June 12th.
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