Hastings Entertainment Posts $1.2 Million Q4 Profit18 Mar, 2013 By: Erik Gruenwedel
Southwest retailer reverses previous-year loss via increased disc sellthrough and new product categories
Hastings Entertainment March 18 reported fourth-quarter (ended Jan. 31) net income of $1.2 million, compared with a net loss of $8.4 million during the previous-year period.
Amarillo, Texas-based Hastings narrowed same-store movie sale declines to 0.8% for the quarter, compared with a 10.7% drop last year. This was primarily due to decreased sales in used and previously viewed movies, and partially offset by increased sales in new DVD and Blu-ray Disc titles, as well as DVD boxed sets.
Overall rental comps, which include video games, decreased 10.1% during the quarter, primarily due to fewer rentals of DVDs and video games, partially offset by an increase in rentals of Blu-ray movies. Movie rental comps dropped 7.7% for the fourth quarter, an improvement from the first three quarters of the year in which comps decreased 11.6%.
Video game comps, which are impacted by the longevity of the current console cycle, decreased 27%.
Rental revenue topped $15 million and represented 11% of total revenue, which was down $2 million (11.5%) from rental revenue of more than $17 million last year. Movie rentals continue to be negatively affected by Redbox kiosks and subscription-based rental services such as Netflix, Amazon Prime Instant Video and Hulu Plus.
Retail sales, which include discs, games, consumer electronics, music, café and trend, reached $126 million — down 6.8% from sales of $135 million during the previous-year quarter.
“Our revenue continues to be negatively impacted by the increasing popularity of digital delivery, rental kiosks and subscription-based services, as well as the longevity of the current video game console cycle,” founder and CEO John Marmaduke said in a statement. “In spite of lower revenues, our pre-tax profit for the fourth quarter increased over the fourth quarter of the prior year. Further, we reduced our pre-tax loss for the fiscal year by $3.7 million, or 29%, compared [with] the prior year.”
Hastings is added new product categories in 44 of its 137 superstores, including consumer electronics, music electronics and accessories, hobby, recreation and lifestyle, vinyl and tablets. These new categories helped drive fourth-quarter revenue 15.1% in consumer electronics.
“We are dedicating approximately 600 linear feet per store to these categories and also increasing linear footage for trends including apparel, kids and seasonal categories, along with a reduction in footprint dedicated to rental, music and books,” Marmaduke said.
Hastings plans to shutter eight underperforming stores when their leases expire in August.