Blu-ray Movies, Rental Drive Hastings Q4 Profit22 Mar, 2010 By: Erik Gruenwedel
Increased sales and rentals of new and used Blu-ray Disc movies contributed to Hastings Entertainment March 22 reporting fourth-quarter (ended Jan. 31) net income of $9 million compared to net income of $4 million during the prior-year period.
In an age of big-box retailers offering loss leader pricing on entertainment, Amarillo, Texas-based Hastings has succeeded by pursuing a hybrid strategy offering competitively-priced entertainment, electronics, books and related consumer items across 147 stores throughout the Southwest.
Indeed, total revenue for quarter which included sales and rentals of music CDs, electronics, books and related consumer items, increased more than $9 million to $176.1 million compared to $169 million the previous year.
Same-store (open at least 12 months) movie comps in the quarter increased 2.5% from increased sales of new and used Blu-ray movies, partially offset by lower sales of new and used DVDs.
Blu-ray player unit sales increased for the quarter, while revenue dollars for Blu-ray players decreased, due to aggressive pricing during the quarter.
Rental revenue, which includes video games, decreased $1.5 million to $22 million. Rental comps decreased 5.2% due primarily to lower price points (stores are matching $1 per day kiosk fares), partially offset by fewer promotions.
Total movie and game discs rented increased about 3.8% in the quarter compared to the prior year. Video game rentals decreased 4% for the quarter; 5.4% decline for movie rentals.
Specifically, Hastings in the second half of 2009 began matching kiosk pricing on catalog titles, which resulted in a 6.6% increase in units rented, according to CEO John Marmaduke.
With more than 30 rental retailers shuttering operations in local markets, Marmaduke said he expects further fallout from Movie Gallery and Blockbuster downsizing to positively affect Hastings rental comps going forward.
“We will continue to test new pricing strategies and expect to gain additional [rental] market share in fiscal 2010," Marmaduke said.