Hastings Entertainment Narrows Q3 Net Loss; DVD Spurs 11.4% Increase in Rental Revenues20 Nov, 2001 By: Hive News
Amarillo, Texas-based entertainment retailer Hastings Entertainment Inc. on Tuesday reported that for the quarter and nine months ended Oct. 31, 2001, total revenues for the quarter increased $3.1 million, or 3.1%, to $103.2 million compared to $100.1 million for the same year-ago period last year.
Total comparable-store revenues rose 5.7% for the quarter and included comp increases in merchandise revenue of 4.3% and rental video revenue of 11.4%. Net loss for the current quarter was $5.5 million, or $0.46 per share, compared to a net loss of $12 million, or $1.03 per share, for the same period last year. The company operated an average of three fewer superstores during the quarter ending Oct. 31, 2001compared to the same quarter last year.
"Although revenues from our book category were negatively impacted by the tragic events of September 11, video for sale and rental and video games along with other categories performed better than anticipated resulting in our strong top-line performance," said John H. Marmaduke, chairman and c.e.o. "The diverse product offering of our superstore format provides a multitude of choices for our customers and allows us to focus ontheir current entertainment desires. In addition, our reputation for low-price entertainment continues to position Hastings well to withstand a downturn in the economy or consumer spending."
The increases in rental video and merchandise comps for the current quarter were primarily driven by the continuing growth of DVD for rental and sale. For the third quarter, rentals of DVD titles increased 160% over thesame period last year, reflecting an improvement over the 155% increase forthe six months ended July 31, 2001. Sale DVD titles including Mummy Returns, Hannibal and Star Wars Episode 1 and video games such as Pokemon Crystal and Madden NFL contributed to the increase in merchandise comps, the company said in a press release.
Total revenues for the nine months ended Oct. 31, 2001 were $322.5 million, up $5.5 million, or 1.7%, from $316.9 million for the same period last year. Total comps increased 3.3% for the nine-month period comprised of increases in merchandise and rental video comp revenues of 2.2% and 7.6%, respectively. Net loss for the first nine months was $5.5 million or $0.47 per share compared to a net loss of $14.8 millionor $1.27 per share, for the same period last year.
"The net loss of $0.46 per share for the quarter ended Oct. 31, 2001 was greater than expected based on our internal projections," said Dan Crow, v.p. and c.f.o., about FY2001 guidance. "As previously released the net loss for the quarter wasanticipated to be $0.22 per share. Contributing to this variance in loss per share was lower revenue than planned, higher expense associated with the return of inventory to our vendors, and increased use of ourdistribution center to supply product to our stores."
Book revenues were down 2.2% on a comp basis compared to a projected comp increase of 5.4%. The company said this variance is primarily attributable to the tragedy of September 11. Additionally, total revenue was negatively effectedas Hastings opened two new superstores during the quarter bringing the total to only three for the nine months ended Oct. 31, 2001 rather than the planned opening of six new superstores.
The company is projecting certain of these costs to continue into the fourth quarter, and consequently is revising fourth quarter guidance to a range of $0.60 to $0.76 per share and lowering guidance for the yearending Jan. 31, 2002 to a range of $0.25 to $0.30 per share.
On Sept. 18, 2001 the company announced a stock repurchase program of up to $5 million of common stock, added Crow. "As of Oct. 31, 2001, wehave purchased 116,700 shares at a cost of approximately $650,000, or $5.57 per share."
Hastings currently operates141 superstores, primarily insmall to medium-sized markets throughout the United States.