Hastings Reduces Q3 Loss

Hastings Entertainment narrowed its loss during the fiscal third quarter, which ended Oct. 31.

Hastings Entertainment narrowed its loss during the fiscal third quarter, which ended Oct. 31.

The 152-unit chain reported a loss of $1.8 million, or 15 cents per diluted share, on sales up 5.9% to $119.6 million. In the fiscal third quarter in 2003, Hastings lost $3.8 million, or 34 cents per share, on sales of $112.8 million.

The increase in sales was attributed principally to a 3.8% comparable-store uptick. By product category, video sell-through was up 9.8%, and videogames were up 51.2%. Music sales were down 0.7%, and so too was video rental, but the latter trend is due to a consumer shift toward purchasing movies.

In a statement, Hastings forecasts that for the fiscal year ending Jan. 31, it will earn 90 cents-95 cents per diluted share; the company had previously offered guidance of 80 cents-85 cents per share.

The company’s gross margin declined to 33.6% from 34% during the third quarter, with part of that attributed to a decrease in revenues from the higher-margin video rental category. In a statement, Hastings chairman/CEO John Marmaduke also cites the conversion to a new warehouse management system, which led to higher distribution costs.

Selling, general and administrative expenses, meanwhile, declined to 35.5% from 36.9%, due to lower advertising costs and an increase in store labor productivity.

For the nine-month period to Oct. 31, Hastings has lost $549,000, or 5 cents per diluted share, on $294.8 million in volume. In the same period last year, it posted a loss of $4.7 billion, or 41 cents per share, on sales of $269.9 million.

Hastings stock was trading today (Nov. 22) after the announcement at $7.55, up 8.8% from yesterday's $6.94 close.
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