Hastings Entertainment reported a revenue decline of 5% in the first quarter ended April 30 and a net loss of $2.2 million compared to net income of $833,000 in last year’s first quarter. To reduce losses, Hastings said it cut four of its eight corporate positions in the quarter and will continue its strategy of adding more consumer electronics, music electronics and accessories, hobby, recreation and lifestyle, vinyl and tablets to its product mix. The downsizing resulted in a $1.4 million one-time charge to earnings in the quarter.
Hastings said that in stores where it has already changed the product mix, sales in the electronics category have risen by about 40%. Hastings “reset” its electronics category in 44 stores in 2012 and five in April and has plans to change the inventory mix in 60 more stores during the remainder of the year.
Hastings is being forced to change its offerings because its traditional mix continues to be ”negatively impacted by the popularity of digital delivery, rental kiosks and subscription based services, as well as the longevity of the current video game console life-cycle," said John H. Marmaduke, CEO and chairman. One of the weakest performing categories in the quarter was books, where comp sales fell 8.4% which Hastings said was due in part to the strong showing of The Hunger Games in last year’s first quarter.
Marmaduke gave something of a mixed outlook, saying that while he expects new product offerings to cut the company’s pre-tax loss in the current year, he hopes Hastings will “return to profitability in the not too distant future."