Hastings and Indigo: Earnings Jump
In the first quarter ended April 30, total revenues at Hastings Entertainment dropped 2.6% to $128 million and net income rose 29% to $2.5 million. Sales of books at the company's 154 stores open at least a year dropped 1.3%. By comparison, comp-store music sales dropped 13% and video games fell 5.8% while movie sales rose 4.9% and electronics were up 17.5%. The company said the drop in comp-store book sales occurred "as a result of fewer sales in our value book offerings, offset partially by stronger sales of new release hardbacks."
CEO John Marmaduke attributed the earnings gains to the company's focus "on improving our merchandising and buying functions" and said that Hastings began to have "positive results in the first quarter in our product mix, markdown expense, and gross profit. We will continue this focus throughout the year and I anticipate that this and other performance measures will continue to improve."
In the past few months, Hastings's store in Conroe, Tex., relocated and now has 26,770 square feet of selling space.
The company stated that while it is confident that earnings will continue
to grow, "we are concerned about general economic conditions,
particularly the price of gasoline, which has a measurable negative
impact on retail sales."
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For the fiscal year ended March 31, total consolidated revenues at
Indigo Books & Music rose 2.7% to C$875 million (about US$807
million) and net earnings rose 18.4% to C$30 million (US$27.7 million).
Sales at superstores and small-format stores open at least a year rose
2.5% and 2.2%, respectively. Online sales grew 9.1% to C$86.7 million
(US$79.9 million).
Sales growth occurred despite "two challenging factors," the company
said: 2005 was "a Harry Potter year" and "the average price of
U.S.-published books slipped by 6% as a result of the strong Canadian
dollar against its American counterpart." Earnings grew, Indigo
continued, because of "strong fourth quarter revenue growth, improved
operating margins and lower interest costs."
In a statement, Indigo CEO Heather Reisman called the results "a
significant achievement considering the meaningful decrease in book
prices and the absence of any strong hits during the important holiday
season."