Coinstar Announces Preliminary Guidance (CSTR)

Shares of Coinstar CSTR are halted after the company announced preliminary guidance for the fourth quarter. The company sharply lowered revenue forecast for the fourth quarter, to $391 million. This is much lower than the $415-$440 million it previously gave. The company expects fourth quarter earnings to be between 65-69 cents, much lower than the 79-85 cents it forecast previously. Paul Davis, chief executive officer of Coinstar, Inc., said, "Overall, the performance of the redbox business during the fourth quarter was not in line with our forecast. This was redbox's first holiday season with 28-day delayed titles, and we underestimated the impact that the delay would have on demand during the fourth quarter. We also expected much better performance from Blu-ray and had purchased to a higher level of demand. While consumer visits to the kiosks remained strong, the number of movies per visit, or basket size, was lower than planned. We have already taken a number of decisive steps to better align content purchases with our consumers' behavior, including offering more day and date titles and better allocating Blu-ray titles to high demand areas. In addition, since inventory migration reflects the popularity of our rent and return anywhere capability, we have made adjustments in our field processes to minimize the impact of higher levels of migration on overall rentals. While some measures such as changes in purchasing take longer to impact financial performance, early results give us confidence that we have begun taking the right steps to address these issues and position the business for further success, which we will discuss further on our earnings call on February 3." Shares closed the regular session at $56.95, down 28 cents or 0.5%. Coinstar, Inc. provides automated retail solutions primarily in the United States, Canada, Puerto Rico, the United Kingdom, Mexico, and Ireland.