Redbox Owner’s Shares Plummet After It Reports Disappointing Summer Sales

Stock prices for kiosk company Outerwall are down more than 20% in post-market trading after it lowered its financial projections for the year noting in a release that promotion discounts in July and August “drove consumers toward more single night [DVD] rentals.” As a result, the net revenue per rental in Q3 likely will fall as much as 9 cents vs last year. The company, formerly known as Coinstar, also says that it may see 6.5M fewer rentals than it expected in Q4 “as the number of titles has shifted to either later in the fourth quarter or into 2014.” The number of shifts “is greater than normal.” The Redbox owner had high hopes for Q3: Last year the company struggled to compete with the Summer Olympics, and the number of customers is up 5% in the first half of 2013 vs the period last year. Indeed, CEO J. Scott Di Valerio says that “both rentals and revenue for Redbox increased significantly in July and August” — even though they ultimately “were not to our expectations.” He vows to cut the number of consumer promotions, reduce content and operating costs, and repurchase an additional $100M of Outerwall shares in Q4. The company dropped the top of its Q3 revenue projection, made in July, by 6.5% to $589M with earnings per share down 37.8% to a maximum of 94 cents. For the full year, revenues are now projected as high as $2.34B, -5.5% from the previous estimate, with core diluted EPS as high as $5.12, -18.2%.

Related: Is Redbox’s Impact On Video Rentals About To Peak?

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