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Movie Gallery to close 400 more stores

/ Source: The Associated Press

Video rental company Movie Gallery, Inc. on Monday announced plans to close an additional 400 stores as part of its reorganization plan as it attempts to exit bankruptcy.

Movie Gallery, the nation's No. 2 video rental chain behind Blockbuster Inc., said it is closing underperforming and unprofitable stores that operate under the Movie Gallery and Hollywood Video names. The company in September announced the closure of 520 stores.

"The decision to close stores is always difficult, but we are confident that we are taking the right steps to emerge from bankruptcy as a stronger company, better positioned for long-term success," chief executive Joe Malugen said in a statement.

The Dothan-based company sought Chapter 11 bankruptcy protection in October after months of struggling with debt from its 2005 purchase of rival Hollywood Entertainment Corp. for $1 billion.

Movie Gallery said in January it will ask the bankruptcy court in Virginia to confirm its reorganization plan early in the second quarter and will look to exit bankruptcy shortly after confirmation.

The chain said Monday it has 3,890 stores throughout the U.S. and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy.