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Hastings Posts $2-Million Loss
Jim Milliot -- 6/26/00
After delaying the release of its year-end results because of accounting problems, Hastings Entertainment filed its 10-k form with the SEC last week, showing a 12% revenue gain, to $447.2 million. Net loss in the fiscal year ended January 31, 2000, was $2.2 million, compared to $4.3 million in the prior year. As previously reported, Hastings took $31.5 million in accounting adjustments in fiscal 1999 and 2000 (News, Mar. 13). Results for the most recent year also include a $5.1-million pretax charge related to the closing of seven stores and a charge of $3.5 million for the write-down of inventory.
John Marmaduke, Hastings's chairman and CEO, said that despite the loss in the year, the retailer was in good financial condition. Hastings has working capital of $67.3 million and generated cash flow of $39.3 million from operations in the year. The company was also successful in amending its credit facility to allow for maximum borrowing of $50 million. Hastings received more good news when NASDAQ reported that the company was now in compliance with its financial requirements and canceled a hearing to discuss delisting Hastings.
In the SEC filing, Hastings said it is slowing down its rate of adding new stores and will instead concentrate on remodeling existing stores and increasing comparable-store revenues. The chain plans to open eight superstores over the next two years and close four. Hastings is also hoping for a better performance from its e-commerce initiative, gohastings.com, which launched in May 1999. The site generated revenue of $145,000 last year and had an operating loss of $1.7 million. In its retail operations last year, merchandise revenues, which includes book sales, rose 13.7% to $364.0 million, while video rental revenues increased 5.2% to $83.1 million. The company's book inventory was $59 million at the end of the fiscal year.
For the first quarter ended April 30, 2000, sales increased 9.9%, to $110.5 million, with comparable-store sales up 1.6%. The net loss was $462,000, compared to net income of $2.7 million in last year's first period. Hastings said first-quarter earnings were hurt by lower rental video margins, increased professional fees, higher Internet costs and higher merchandise returns expense. Marmaduke said the results "only partially reflect the progress made since year-end."
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