Dothan, Ala., Movie Gallery intends to eliminate the jobs of about 10% of its salaried and administrative office staff over the next 12 months. Most of the cuts will occur in the company’s Dothan, Ala. office. Pointing to industry challenges including “the worst box office slump in more than two decades” as one of the challenges facing the video rental industry,” Movie Gallery president, chairman and CEO Joe Malugen described the work-force reduction as the result of an effort to contain costs during its merger with Hollywood Video, which it acquired in April. The job cuts are in addition to the 80 positions that have been eliminated over the past six months, mostly from its Portland office.
The company expects the move to result in annualized pre-tax savings of approximately $2.1 million, which will advance its goal of achieving approximately $50 million in cash savings by the end of 2007.