Top U.S. movie rental chain Blockbuster Inc, which is facing tough competition from Netflix Inc and Coinstar Inc's Redbox, plans to close up to 960 stores by the end of next year.

The company said in a regulatory filing on Tuesday that along with the conversion of certain stores to outlets and lease mitigation or termination efforts, total store closures would be in the range of 1,335 to 1,560.

The company expects a one-time net working capital benefit of $26 million from the store closures.

Blockbuster, a provider of retail movie and game entertainment, had over 7,100 stores in the United States and its territories and 20 other countries as of July 5.

The brick-and-mortar company has struggled to reposition itself while fending off increasing competition from Redbox, which rents films for $1 per night at automated kiosks, and Netflix's mail-order service.

Blockbuster's shares closed at $1.40 Tuesday on the New York Stock Exchange.

(Reporting by Purwa Naveen Raman in Bangalore; Editing by Anne Pallivathuckal)

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