Regal Entertainment Group will close another 175 theaters in the next few weeks as its CEO decides to redirect future spending to the company’s largest chain.
And now the nation’s largest movie theater chain may be headed towards bankruptcy. Regal said in its second-quarter earnings release Monday that it expects to close up to 18 percent of its theaters, bringing the number down to 800 in the next few years.
Two banks have already loaned the company $700 million to help pay down the debt. Bankruptcy has been rumored for weeks but comes as the company’s movie revenue continues to fall.
“We are in an environment of declining moviegoing attendance and expectations for long-term flat attendance levels, with lower concession spending generally,” said CEO Amy Miles, in a statement. “Based on this fundamental dynamic, we must align capital to the factors that can yield top-line revenue, operating margin and earnings growth and simplify our operations to realize further efficiency.”
The theater chain, which has 7,600 screens, has been closing dozens of screens each year since 2011. This summer, it closed 239 theaters, or 13 percent of its total. The company also bought up the remaining 22 percent stake in Carmike Cinemas, a smaller, private theater chain that was ultimately taken over by AMC Entertainment earlier this year.
For the second quarter, the chain reported earnings per share of 11 cents, excluding items, as revenue was $575.6 million, missing Wall Street estimates.
The company has had other recent issues. It became the lead plaintiff in a $29 million lawsuit by over a decade-old incident in Chicago, when its security guards used pepper spray on a man who was attempting to return his returnable plastic cup of soda. And in August, Regal CEO Amy Miles was reprimanded by the company’s board for saying that they didn’t want to “get involved in politics,” including the new Trump administration, in an internal memo.
Analysts said the CEO’s comments indicated some complacency by the company in a year when Trump took office and Democrats gained control of the House of Representatives.
Regal wouldn’t discuss the future of theaters in any detail Monday. But Amy Miles said earlier this year that the company planned to invest more in its theaters’ sales-based profit model.
“We need to ensure that the right location, the right amenities, the right investment and right execution … will be leveraged in a way that drives improved returns,” she said.