Hastings in red for third quarter
DVD revenue drops 5%, videogames 14.8%
By Susanne Ault -- Video Business, 11/20/2008
NOV. 20 | Hastings Entertainment suffered a fiscal third-quarter loss, which the chain blamed on the troubled economy.
The retailer recorded a $3.7 million net loss for the three months ended Oct. 31. That compares to a $500,000 gain for the same period last year.
Revenue fell 6.5% to $114.3 million.
Across the board, many Hastings categories struggled, with comp-store revenue sliding for DVD, videogames and music. Plagued by a light third-quarter slate, according to chain management, DVD fell by the smallest margin of these three, down 5%.
Videogame performance, which slipped 14.8%, was hurt by tough comparisons to last year’s record-breaking release of Halo 3. Music decreased 19.5%, a loss Hastings attributed to the continuing decline of the entire CD business.
Hastings DVD rental comps fell 13.3% due to the weak feature slate as well as competing media during the quarter, which included Olympics and presidential campaign coverage. Breaking out that result, movie rentals fell 16.6%, which was offset by a 15% uptick for videogame rentals.
Bright spots for Hastings include its trend and electronics categories, which lifted 21.7% and 12.7%, respectively. Trend was boosted by strong sales of Webkinz plush toys, as well as healthy seasonal sales for Halloween-related merchandise. Electronics was robust due to the popularity of digital converter boxes, necessary for the February 2009 broadcasting switch to digital signals.
Despite the chain’s slowdown, Hastings CEO John Marmaduke said he believes the retailer’s business is generally solid and that fourth-quarter releases will excite holiday shoppers. Additionally, Marmaduke noted that Hastings’ $100 million credit facility with Bank of America remains secure and does not expire until 2011.
“Beginning with September, changes in consumer spending have created the most difficult retail environment we have ever seen,” said Marmaduke.
Following its soft third quarter, Hastings lowered its fiscal 2008 full year guidance to net earnings per share in a range of 50¢ to 55¢ for the period ending Jan. 31. The previously stated guidance forecast net earnings per share between 95¢ and $1.
