Outerwall Inc. (OUTR), owner of the Redbox DVD rental kiosks, cut its forecast for third-quarter and full-year sales and profit, citing more discounting and shorter rental periods. The stock fell as much as 23 percent.
Outerwall, based in Bellevue, Washington, fell to $44.79 in extended trading after dropping as low as $43 following a halt. Shares of the company, formerly known as Coinstar Inc., slid 2.3 percent to $55.97 at the close in New York and had risen 7.6 percent this year.
Sales this quarter will be $569 million to $589 million, below an earlier prediction of as much as $630 million, the company said today in a statement. Profit excluding items will be 82 cents to 94 cents a share, less than the $1.36 to $1.51 a share seen previously.
Outerwall’s DVD promotional strategy, while bringing in customers, led to more single-night rentals and lower-than-projected revenue, according to the statement. The Redbox vending machines posted their best month ever in July, with rentals increasing 13 percent from a year earlier to about 74 million. Shoppers kept movies out for fewer nights in August, too, Outerwall said.
The company is reducing its content costs and direct operating expenses to counter the change in consumer behavior, said Chief Executive Officer J. Scott Di Valerio.
“Redbox has numerous promotions and discounted offers at varying levels encouraging increased rental activity,” Marci Maule, a spokeswoman, said in an e-mail. “We’re not referring to a single promotion.”