Hastings Widens Q2 Loss15 Aug, 2011 By: Erik Gruenwedel
Southwest entertainment retail chain cites dearth of new-release movies, rental kiosks, Netflix and economy for 15% drop in same-store disc rental revenue
Hastings Entertainment Inc. Aug. 15 reported a second-quarter (ended July 31) loss of $4.1 million, compared with a loss of $100,000 during the same period last year.
Rentals of DVD movies and video games dropped 15.1% to $17.4 million, compared with $20.3 million last year. The revenue decline was offset in part by a slight increase in Blu-ray Disc titles.
Same-store movie revenue, which includes sellthrough, decreased 11.4% for the quarter, primarily due to lower sales of new and used DVDs and DVD boxed sets, and partially offset by increased sales of new and used Blu-ray movies.
Rental video comps decreased 16.4% for the quarter and units rented decreased 16.9%. Video game rentals dropped 0.4%, with units rented declining 3.3%.
The lack of box office clout in home entertainment was underscored by the fact that Hastings’ top-three selling movies during the quarter generated approximately 20% less revenue than the top-three selling movies during the same period last year.
Lone bright spots included trends comps, which increased nearly 10%, driven by increased sales of apparel, action figures, comics, novelty items and collectible card games such as “Magic: The Gathering.” Key drivers in the apparel category included jewelry and hats. Key drivers in the novelty category included assorted tween merchandise, movie memorabilia items, and lighting and barware. Electronics comps increased 5.6% for the quarter, resulting from increased sales of refurbished iPods and headphones, partially offset by lower sales of other MP3 accessories.
“Our second-quarter results were impacted by a continued weak slate, as well as lower quality of new releases for movies, along with a weaker release slate of books,” said CEO John Marmaduke in a statement. “Furthermore, we continue to be impacted by the shift toward the digital delivery of books as well as the increasing growth of rental kiosks and subscription-based services in movie rentals.”
Meanwhile, Hastings Aug. 1 opened its first used product retail called Tradesmart in Littleton, Colo. Similar to Trans World Entertainment’s Second Spin stores and Amoeba Music stores, Tradesmart offers more than 400,000 predominantly used movies discs, books, music CDs, video games, consumer electronics and related merchandise.
Consumers receive cash or store credit for returned merchandise.
Hastings also is branching out into sports and outdoor products with the launch of Sun Adventure Sports retail store six months ago in Lubbuck, Texas.