Blockbuster says may add stores

By Sue Zeidler

NEW YORK (Reuters) - Blockbuster Inc (BBI.N: Quote, Profile, Research, Stock Buzz) Chief Executive Jim Keyes said on Tuesday he would consider expanding the video rental chain's base of 7,800 stores worldwide if his turnaround plan goes as expected over the next 12 months.

Outlining plans to return the ailing No. 1 U.S. movie rental chain to profitability, Keyes said he will reinstate an annual earnings forecast in the first quarter, simplify membership and pricing plans over the next 12 months and reconfigure stores. New stores should be smaller, added Keyes, a former 7-Eleven CEO who was brought on board in July to turn the company around.

"We must change our business model," Keyes told the Reuters Media Summit.

"We have a series of beta testing underway that will allow us to transform this business in whichever way the customer will allow us to take the brand."

Keyes admitted his efforts to communicate his vision for stemming losses backfired earlier this month with investors, who had wanted more specifics on when Blockbuster would become profitable.

"Some of the frustration the Street felt was our lack of guidance," he said on Tuesday.

Shares of Blockbuster have dropped about 26 percent since the investor meeting on November 8. The stock closed down 2 cents to $3.52 on the New York Stock Exchange on Tuesday.

Keyes said in addition to simpler pricing schemes and reformatting stores, he was encouraging store employees to play a bigger role in decision making.  Continued...