Hastings Entertainment posted net income of $2.5 million, or 22 cents per diluted share, on sales of $128 million in its fiscal first quarter, ended April 30, versus the $1.9 million, or 17 cents per diluted share it made last year when revenues were $131.4 million.

That means Hastings increased earnings by 29.4%, even though total revenues decreased by 2.6%. The company attributed the income gain to greater gross profit, while saying that the sales revenue drop was due to a 3.9% decrease in comparable-store revenue.

"We were able to increase net earnings ... in spite of an extremely difficult retail environment," Hastings CEO John Marmaduke said in a statement.

By product line, sales drops in video rental and music hurt the most, according to the company. Video rental revenue, which comprises about 18% of first quarter sales volume, dropped 6.2%, while music showed a 13% comparable-store decline.

Trend merchandise was also down 14.3%, and video games were down 5.8%. Meanwhile, sell-through movies increased 4.9%, electronics grew 17.5%, while books was down slightly at 1.3%.

The company is focusing on improving its merchandising and buying functions, Marmaduke added.

Hastings shares closed down 3 cents to $6.73.