Hastings Sees Profit for First-Quarter FY 200424 May, 2004 By: Holly J. Wagner
Improved movie sales helped Hastings Entertainment, Inc. to a profit for the quarter ended April 30 and a brighter forecast for the rest of the year.
“We are extremely pleased with our results for the first quarter of fiscal 2004,” said chairman and CEO John H. Marmaduke. “In my letter to our shareholders contained in our Fiscal Year 2003 Summary Annual Report, I discussed management initiatives and system enhancements that, while completed in fiscal 2003, would show their first full year of benefit in fiscal 2004. We believe our focus in these areas is a significant contributor to increases in revenue and profits for the first quarter of fiscal 2004.”
The higher merchandise comps owed primarily to comp increases in our sellthrough video, book and music categories, a spokesman said.
Net income was $1.8 million, or 15 cents per diluted share, compared to a net loss of approximately $1.1 million, or 9 cents per share, for the first quarter of 2003. Pre-tax income was $3 million, or 25 cents per diluted share, for the 2004 first quarter compared to a pre-tax loss of $1.1 million, or 9 cents per share, for the first quarter of 2003.
For the first quarter, total gross profit dollars increased 15.8 percent, to $44.5 million from $38.5 million for the same period last year, primarily as a result of higher revenue and merchandise margins. As a percentage of total revenue, gross profit increased to 35.1 percent for the quarter, compared to 32.9 percent for the same quarter in 2003.
Hastings announced in 2001 a stock repurchase program of up to $5 million of its common stock. During the first quarter of 2004, the company bought 29,500 shares at a cost of approximately $191,000, or $6.48 per share. As of April 30, 825,923 shares had been purchased under the program at a cost of approximately $3.964 million, for an average cost of $4.80 per share.
“In our press release dated March 29, 2004, we issued guidance of $0.70 to $0.76 per diluted share on a pre-tax income basis and $0.44 to $0.48 per share on a diluted net income basis. Our revenue and gross profit rate for the first quarter exceeded our internal forecast, which is the basis for our guidance,” said Dan Crow, VP of finance and CFO. “Consequently, we are raising our guidance to a range of 80 cents to 85 cents per diluted share on a pre-tax income basis and a range of 50 cents to 53 cents per share on a diluted net income basis.”
Since its most recent superstore update last Sept. 17, the chain has opened superstores with their new 3-Across layout in Canyon, Texas; Clovis, N.M.; Canon City, Colo.; and Emporia, Kan. The store format is credited with improved merchandising, better customer service, broader appeal and “more logical product adjacencies” for improved customer traffic flow.