Hastings Entertainment had a disappointing second quarter for the period ended July 31 with total sales down 7.2%, to $110.5 million, and a net loss of $4 million compared to earnings of $82,000 in last year’s second quarter. Books were one of the weakest performing categories in the period, with comps down 9.4%. In a prepared statement, chairman John Marmaduke said that given the sluggish economy and uncertain future it “may” close underperforming stores in the second half of the fiscal year. The retailer operated two fewer superstores in the most recent quarter compared to a year ago.
In the book segment, Hastings attributed the sales decline in part to a weaker slate of new titles which led to an 8.1% drop in the sale of new books. The only book segments to post a gain in the quarter were value books and used hardcovers, although Hastings noted that sales of all used books decreased 12.1% for the quarter, and were also impacted by the weaker slate of new book release which in turn led to a less favorable inventory of used titles. In addition to a weak new title schedule, Hastings said the growing popularity of e-books impacted book sales. The company had no update on the progress of the launch of its e-bookstore which it said this spring would be up in the fall.
The day after the quarter closed, Hastings opened its new concept store--Tradesmart--in Littleton, Colo. The new outlet is over 40,000 square feet, features over 400,000 predominantly used and new books, CDs, DVDs, Blu-rays, video games, and video game systems, as well as consumer electronics, trends, skateboards and paintball merchandise. Hastings said that by opening in a metropolitan market, "we anticipate product buybacks originating at Tradesmart will help support used inventory levels in our Hastings superstores."
The retailer also said that due to the success of Sun Adventure Sports--which opened in July 2010 and was profitable for the first six months this year--it will open a second Sun Adventure Sports store in the Lubbock, Tex. market during the third quarter. Sun Adventure Sports offers a variety of sports and outdoors products such as bikes and accessories, skateboards, athletic apparel and shoes."
Despite the openings, Hastings said that with the weaker-than-expected second quarter, earnings per share will be below its forecast and that because of the uncertainty in the economy it will not be providing guidance for the remainder of the year. It had predicted earnings per share to be between 22 cents and 37 cents.
For the first six months of 2011, sales were down 5.4%, to $234.6 million, and Hastings had a net loss of $3.6 million compared to income of $936,000.
