Hastings Eyes 3% Uptick in Q2 Movie Sales19 Aug, 2013 By: Erik Gruenwedel
Southwest retailer cuts 50% of senior management in cost restructuring
Hastings Entertainment Aug. 19 posted a second-quarter (ended July 31) loss of $4.1 million — despite a 2.9% increase sales of DVD box sets and Blu-ray Disc titles. The Southwest retailer posted a loss of $3.2 million during the previous-year period.
Total revenue dropped $8.2 million to $95.7 million.
Amarillo, Texas-based Hastings said rental revenue from movie discs and video games dropped to $12.9 million from $15 million last year, with same-store rental comps declining 10.9%.
"Our revenue continues to be negatively impacted by the popularity of digital delivery, rental kiosks and subscription based services, as well as the longevity of the current video game console life-cycle," CEO John Marmaduke said in a statement. "Additionally, our second-quarter book and rental revenues were negatively impacted by a relatively weak new-release schedule.”
On the flipside, sales of DVD box sets, Blu-ray Disc movies and select consumer electronics devices increased in the quarter — underscoring Hastings' strategy of underscoring growth categories with additional product lines, including music electronics and accessories, hobby, recreation and lifestyle, vinyl and tablets.
The majority of these products contributed to a comparable sales increase of 17.2% in the quarter, which is on top of a 5.4% comparable sales increase for same period in 2012.
"With the current and expected future success of our new product categories, along with the expected launch of new game consoles in the latter half of our current fiscal year as well as an expected stronger release schedule for games and movies, we are encouraged with our earnings prospects for the second half of our current fiscal year,” Marmaduke said in a statement.
Meanwhile, the CEO said the retailer eliminated four (50%) of eight unnamed corporate officers as part of internal restructuring. In February, Hastings promoted Alan Van Ongevalle to president, while eliminating 14 other positions.
"In order to reduce our SG&A expenses in light of our lower revenue base, we underwent a restructuring of our corporate store support center, which included staff reduction, department consolidation and the termination of four of our eight corporate officers,” Marmaduke said.
The total cost of this restructuring was about $1.4 million. Hastings has closed eight underperforming stores thus far in fiscal 2013, with plans to close an additional store by the end of the fiscal year.