Hastings Posts $2.2 Million Q1 Loss20 May, 2013 By: Erik Gruenwedel
Southwest retailer cites digital distribution, kiosks and SVOD for decline in home entertainment rental revenue
Hastings Entertainment May 20 reported a first-quarter (ended April 30) net loss of $2.2 million, compared with net income of $800,000 during the previous-year period. Revenue dropped 5.5% to $109.1 million, compared with $115.5 million last year.
Same-store rental revenue dropped 9%, primarily due to fewer rentals of DVDs and video games, partially offset by an increase in rentals of Blu-ray movies. Rental video comps decreased 7.4% and continue to be impacted by rental kiosks and subscription-based rental services.
Meanwhile, same-store movie sales increased 3.9%, primarily due to strong sales in new DVDs, Blu-ray Disc and boxed sets and an overall stronger slate of new releases as compared with the first quarter of fiscal 2012.
Hastings, which operates 134 retail stores throughout the Southwest, said it restructured operations at the corporate level, which included staff reductions, department consolidation and the termination of four of its eight corporate officers. The total cost of this restructuring was about $1.4 million.
“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.
As a result Hastings is expanding rollout of new product categories, which include consumer electronics, music electronics and accessories, hobby, recreation and lifestyle, vinyl and tablet computers, according to Marmaduke.
The new products helped grow the electronics category’s same-store sales 18.4% in the quarter, compared with a 13.1% sales increase in the first quarter of fiscal 2012.
The sales increase in electronics was driven by the expansion (“reset”) of the category in select stores. To date, nearly 44 stores have expanded their electronics category.
“We are encouraged by the performance of these new products and plan to reset 60 stores during fiscal 2013, which will give us a total of 104 stores by the end of fiscal 2013,” Marmaduke said, adding that the chain continues to see sales increases in its trends and Hardback Cafe categories.