Hastings Profit, Stock Plunge21 Aug, 2006 By: Erik Gruenwedel
Despite 9.8% and 3.6% increases in same-store video sales and rentals, respectively, Hastings Entertainment Aug. 21 posted second-quarter (ended July 31) income of $179,000, compared to income of $671,000 during the same period last year.
The drop in profit sent shares of the Amarillo, Texas-based retail chain south almost 17% ($1.18) to $5.80.
DVD drivers included assorted front-line new releases, box sets and used product. Efforts to increase video rental marketshare through discount coupons resulted in a $1.6 million drop in gross profit to $43.5 million, from $45.1 million last year.
Total quarterly revenue increased to $123 million, from $122.7 million last year.
Same-store music and book sales fell 7.9% and 3.2%, respectively, while video game sales — spurred by sales of Microsoft's Xbox 360 and software — leaped 22.2%, compared to 14.6% last year.
Hastings opened a new store in Albuquerque, N.M., and operates more than 150 through the southwest.
The company did not hold an investor call to discuss results.
Hastings chairman and CEO John Marmaduke attributed the drop in profit to accelerated sales of clearance merchandise and the slowdown in book sales due to last year's highly anticipated release of Harry Potter and the Half-Blood Prince.
“We feel that our total and comparable revenue increase in spite of continued weakness in the music and in-store video rental industries … attests to the strength of our multi-media business model,” said Maramduke in a statement.