After posting steady growth since the company went public last year, (News, June 15, 1998), Hastings Entertainment surprised investors late last month when it announced that it expects to post a loss of 17-19 cents per share for the third quarter ended October 31, 1999, compared to net income per share of 11 cents in last year's third quarter. Hastings stock plummeted 36% on the news, to close at $4.75 per share; its stock, which had a 52-week high of $25.36, closed at $4.94 on October 27. The company said sales in the quarter are projected to increase approximately 9% to $100 million.
The lower than expected results are also projected to carry into the fourth quarter, and thus Hastings said it will curtail its store-opening program next year. Hastings still will open 20 superstores this year, but expects to open only five to 10 stores in the fiscal year ending January 2001.
Company chairman John Marmaduke said the weak financial performance was due to lower than expected revenues and higher than expected expenses. He said growth in new stores opened in new locations had been slower than anticipated and that the rollout of a new rental video plan had been slower than forecast. Expenses were higher than anticipated due to higher product returns, higher advertising expenses and higher costs associated with the launch of its revamped Web site, www.gohastings.com.
