Hastings Profit Dips

The net income was in line with the company's internal forecast, according to John Marmaduke, chairman and CEO, who commented that the company considers its business model strong despite the slip in profits. He pointed out that revenue increased to $123.1 million for the quarter, compared with $122.7 million for the comparable quarter last year.

"We feel that our total and comparable revenue increase, in spite of continued weakness in the music and in-store video rental industries and books having an unfavorable comparison against last year's release of Harry Potter and the Half-Blood Prince, attests to the strength of our multi-media business model," Marmaduke said.

The Hastings CEO blamed the profit decline on an acceleration of clearance merchandise to accommodate new merchandising initiatives in books and sidelines, as well as "aggressive marketing initiatives in video and game rentals." The company reports variety of comps, broken down according to music, books and other categories.

Music comps, for example, decreased 7.9%, which was primarily attributable to fewer premier artist CD releases, the company said. Book comps decreased 3.2% as a result of decreased sales of new release hardbacks and paperbacks, but the company said the decline "primarily resulted from last year's $1.7 million in sales of the sixth book in the Harry Potter series.

Video for sale comps increased 9.8% due to increased sales of front-line new release DVDs, DVD box sets, and used DVDs. Video game comps increased 22.2% via increased sales of Microsoft XBOX 360 hardware and games, as well as increased sales of video game accessories.