After several years of substantial losses, Hastings Entertainment, which operates 126 superstores in medium-sized markets that sell new and used books in the multimedia merchandise mix, has voluntarily filed for Chapter 11 bankruptcy protection with its parent company and several sister companies, the Wall Street Journal reported. Hastings is seeking a buyer for its stores.
Other companies that are part of Draw Another Circle, Hastings's owner, are also in trouble: MovieStop, Hastings's movie retailing division, is already in liquidation, and SP Images, which distributes merchandise licensed by Major League Baseball, the National Football League and other organizations, is for sale.
Hastings President Jim Litwak said in a release that the company needs "an additional cash infusion to complete our remerchandising strategy" and is hoping for "an asset sale to a well-capitalized purchaser," reportedly within 30 days. In a letter posted on the company's website, he added that Hastings has halted game rentals and its buyback program, and is no longer accepting or honoring customer deposits for future movie purchases. Its gift cards will expire on July 13.
In 2014, Hastings lost $10.9 million on revenue of $420 million. Last year, losses grew to $16.6 million and sales slumped to $401 million. The company's debts include some $80 million in secured loans and $59 million in trade bills.
The Journal commented: "A declining market for physical movies, music, books and games hurt Hastings's revenues, as online sources of entertainment began to dominate. A cost-cutting campaign and emphasis on product lines such as children's products, comics and hobbies weren't enough to reverse the trend."
Founded in 1968, Hastings merged in 2014 with subsidiaries of National Entertainment Collectibles Association, a major supplier to Hastings of movie, book and video game merchandise and collectibles that was wholly owned by Joel Weinshanker. With the merger, which created Draw Another Circle, longtime Hastings head John H. Marmaduke left the company.