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Hastings Entertainment, Inc. Reports Net Earnings of $0.41 per Diluted Share for the Fourth Quarter and Net Earnings of $0.39 per Diluted Share for Fiscal 2008.

Article Excerpt
Issues Guidance for Fiscal 2009

AMARILLO, Texas, March 23 /PRNewswire-FirstCall/ -- Hastings Entertainment, Inc. , a leading multimedia entertainment retailer, today reported results for the three months and fiscal year ended January 31, 2009. Net earnings were approximately $4.1 million, or $0.41 per diluted share, for the fourth quarter of fiscal 2008 compared to net earnings of approximately $5.8 million, or $0.54 per diluted share, for the fourth quarter of fiscal 2007. Net earnings were approximately $4.1 million, or $0.39 per diluted share, for the fiscal year ended January 31, 2009 compared to net earnings of $10.2 million, or $0.93 per diluted share for the same period in the prior year. Net earnings for the fiscal year ended January 31, 2009 include income tax expense of $0.8 million related to an Internal Revenue Service audit of the Company's previously filed tax returns. Net earnings for the fiscal year ended January 31, 2008 include a discrete tax benefit reducing income tax expense by approximately $0.9 million, or $0.08 per diluted share for the fiscal year ended January 31, 2008, related to a favorable settlement of a state tax liability.

John Marmaduke, Chief Executive Officer and Chairman, said, "As the economy weakened further in the fourth quarter, we continued to outperform most of our major competitors in same-store sales. This speaks well of our multimedia store model and the relatively low price points for our new and used merchandise and rental products."

"While fiscal 2008 results reflect the worst economic environment of our generation, we have taken aggressive action to drive sales, maintain profitability and pay down debt. This includes reducing expenses and capital expenditures and effectively managing inventory. For the fourth quarter, cash flow from operations totaled $19.4 million compared to $9.2 million for the same period in fiscal 2007. At the end of the fiscal year, merchandise inventories totaled $148.0 million which was $23.6 million less than the end of the prior fiscal year. Additionally, we reduced debt by $14.4 million during the fourth quarter whereas during the fourth quarter of last fiscal year we only reduced debt by $3.2 million."

"Hastings remains financially healthy, with strong cash flow and ample borrowing capacity. We believe we are well-positioned to continue to weather this downturn and to accelerate results once the economy begins to rebound."

Financial Results for the Fourth Quarter of Fiscal Year 2008

Revenues. Total revenues for the fourth quarter decreased approximately $4.6 million, or 2.7%, to $166.9 million compared to $171.5 million for the fourth quarter of fiscal 2007. The following is a summary of our revenues results (dollars in thousands):

Three Months Ended January 31, 2009 2008 (Decrease) Percent Percent of of Revenues Total Revenues Total Dollar Percent Merchandise revenue $143,324 85.9% $147,334 85.9% $(4,010) -2.7% Rental revenue 23,554 14.1% 24,159 14.1% (605) -2.5% Total revenues $166,878 100.0% $171,493 100.0% $(4,615) -2.7% Comparable-store revenues ("Comp"): Total -4.1% Merchandise -4.2% Rental -3.3%

Below is a summary of the Comp results for our major merchandise categories:

Three Months Ended January 31, 2009 2008 Consumables 21.8% 9.3% Trends 21.7% 8.2% Hardback Cafe 7.1% 15.0% Electronics 1.6% 13.5% Books 0.6% 0.9% Video Games -6.8% 24.5% Movies -8.1% -2.9% Music -17.8% -18.7%

Consumables Comps increased 21.8% for the quarter due to strong sales across all categories, including seasonal, novelty, and everyday candies. Consumables sales represent approximately 1.8% of total revenues for the quarter. Trends Comps increased 21.7% for the quarter driven by strong sales of Webkinz plush products and increased sales of sports products and apparel, T-shirts, movie memorabilia products, and...