BANGOR, Maine — Movie Gallery Inc., a major DVD rental franchise in Maine, will close six locations statewide, including both Bangor stores, as part of a larger plan to shut down more than 800 locations across the country.
According to a statement, the Wilsonville, Ore.-based company recently filed for Chapter 11 bankruptcy protection. It’s the second time in less than three years that Movie Gallery has attempted to restructure amid financial turmoil and the second time in three years that it has been forced to close stores.
The locations that were targeted for closure were identified as underperforming and will be liquidated as soon as possible. The list represents roughly 30 percent of the company’s retail stores.
Aside from the Bangor stores on Broadway and Union Street, Movie Gallery locations will close in Lincoln, Millinocket, Farmington and Waterville, according to its Web site. Stores typically employ between 10 and 20 workers depending on location.
An employee at the Union Street store, who asked not to be named, said the store has been given four to eight weeks to close for good. He was hanging up “Everything Must Go” signs late Thursday afternoon.
After the closures, the franchise will have 10 stores remaining in Maine, including Old Town, Ellsworth, Belfast, Dover-Foxcroft, Bucksport and Pittsfield.
Movie Gallery, which also owns Hollywood Video and Game Crazy Stores, is second only to Blockbuster Inc. for movie rental volume in the U.S. A company spokesman said this week that it has been struggling because of stiff competition from the online rental company Netflix and from Redbox, which offers automated serv-ice at grocery stores and other retailers.
In 2009, Movie Gallery’s annual revenue dropped about 28 percent. More important, the privately held company said it owed more than $540 million to lenders and was behind or in default on loan payments.
“Absent the filing of these Chapter 11 cases and the corresponding ability to exit a substantial number of underperforming stores, and further de-leverage its capital structure, the company likely would not be able to continue as a going concern,” said Steve Moore, chief restructuring officer, in the filing.
Movie Gallery said it would continue to operate during the Chapter 11 process and will maintain its focus on providing ongoing value and service to its customers. After these initial store closings, the company still will operate 1,906 stores in the U.S., including 1,111 Movie Gallery, 545 Hollywood Video and 250 Game Crazy locations. Some of those may be considered for closure in the future, however.
More information about the closures and the company’s restructuring plan is available online at: www.moviegallery.com/restructure.