Multimedia entertainment retailer Hastings Entertainment, Inc. (HAST) Monday reported a decline in second-quarter profit, as revenue decreased over the prior-year period, affected by the closure of a store and decrease in prices. However, comparable store sales rose 0.6%. The company also reaffirmed fiscal 2008 earnings per share guidance.
The Amarillo, Texas-headquartered company's second quarter net income decreased to $0.7 million or $0.06 per share from $1.9 million or $0.17 per share in the similar period of the previous year. The results of the year-ago quarter included a discrete tax benefit of $0.9 million or $0.08 per share, related to the favorable settlement of a prior year's state tax liability.
Total revenues for the quarter decreased 0.2% to $125.7 million from $125.9 million in the corresponding period last year. The company attributed the lower revenues to the closure of the Galveston store in the second quarter and a revision of prices.
The pre-tax cost of closing the store was $0.2 million and it reduced revenues by $0.4 million. The company incurred a markdown of $0.2 million as a result of the change in its pricing strategy.
Comparable store revenues increased 0.6% for the quarter compared to an increase of 2.2% for the second quarter of fiscal 2007.
Selling, general and administrative expenses increased 2.3% to $44.3 million due primarily to increased store occupancy costs and store labor expense. Operating income decreased to $1.5 million from $2.4 million in the second quarter of 2007.
Chief executive officer John Marmaduke said, "I feel comfortable that with the increase in store reformats in fiscal 2008, we will be able to merchandise more Seasonal, Trend, and allied product for the remainder of the year. Additionally, we are excited to see the results of our improved value and used book initiatives taken during the first half of fiscal 2008. I feel confident these initiatives will enhance sales and profits for the second half of this fiscal year."
For the first six months, net income decreased to $3.6 million or $0.34 per share from $4.4 million or $0.39 per share in the same period of the prior year. Operating income decreased to $6.8 million from $7.1 million in the first half of the previous year.
Revenues for the six-month period were $257.6 million, up 1.5% from $253.9 million for the same period in the prior year. Comparable store sales rose 2.3% for the first half of fiscal 2008.
The company said that it continues to expect earnings per share to be in the range of $0.95 - $1.00 for the full-year 2008.
HAST ended Friday regular trading on Nasdaq at $8.45.
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