Blu-ray, DVD Boxed Sets Help Hastings Narrow Q3 Loss25 Nov, 2013 By: Erik Gruenwedel
Rental revenue declined 9% as kiosks and SVOD take their toll
Sales of Blu-ray Disc movies and DVD boxed sets helped Hastings Entertainment post a 1.5% increase in third-quarter (ended Oct. 31) same-store movies comps, compared with a 0.4% increase during the same period last year. Rental revenue dropped 9% to $12.1 million due to ongoing competition from Redbox and subscription video-on-demand services.
Through the first nine months of the year, movie comps were up 2.6% compared with a 1.5% decline last year. Rental revenue is down 9% to $39.2 million.
“I am pleased with the performance of our rental comps. With a relatively strong release schedule combined with certain initiatives, we have taken to increase rental revenues, our [Q3] rental movie comps only decreased 3%, which compares to a decrease of 7.8% for the first six months of fiscal 2013,” CEO John Marmaduke said in a statement. “We also saw an 8.6% increase in video game sales for the third quarter, which was driven by the strong release of Grand Theft Auto V."
Movies contributed to Hastings narrowing its quarterly loss to $6.2 million from a net loss of $8 million last year. Revenue declined 6.6% to $94.6 million. Through Oct. 31, the net loss throughout nine months increased 19% to $12.5 million, while revenue dropped 6% to $260 million.
Similar to Trans World Entertainment’s f.y.e. (For Your Entertainment) retail chain, Hastings said it saw increased sales in entertainment trends merchandise (up 11.9%) and consumer electronics (up 12.2%).
“As we have previously disclosed, one of our strategic initiatives is the introduction of new product categories, which includes consumer electronics, music electronics and accessories, vinyl, hobby, recreation and lifestyle and tablets,” Marmaduke said.
As a result, Hastings “reset” 39 stores with greater emphasis on the aforementioned product categories. Hastings operated 10 fewer stores in the quarter, compared with the same quarter in the prior year, leaving the company with 127 retail locations throughout the Southwest.