Borders, Hastings Report Flat First Half

A pair of multimedia retailers, Hastings Entertainment and Borders Group, are posting break-even/flat financial results on slightly improved sales performances through the first half of 2001. Both companies are in the midst of shoring up the bottom line in the wake of earlier profit struggles.

At Amarillo, Texas-based Hastings, net income for the first six months was $15,000, or $0.00 per share, up from a net loss of $2.8 million, or 24 cents per share, for the same period last year. Total revenue for the period that ended July 31 was $219.3 million, up $2.4 million, or 1.1%, from $216.9 million.

Meanwhile, Ann Arbor, Mich.-based Borders posted overall first-half net income of $700,000, or 1 cent per share—flat to the company's earnings of the same time a year ago. Revenue increased to $1.5 billion from $1.4 billion a year ago.

Performance at Borders' superstore division was stronger. First-half net income rose 49% to $17 million, up from $11.4 million in 2000. Superstore sales in the first half rose to $1.01 billion from $913.6 million.

Hastings credits its rebound from its losses last year to a strong DVD rental business and non-music product sales, including the launch of Game Boy Advanced hardware and software.

upgrading hastings

Hastings is in the midst of upgrading and expanding certain existing superstores and redesigning its small-market stores, which are adding in-store coffee bars. Additionally, Hastings plans to expand its high-margin sideline product business in 100 stores this year, with the addition of musical instruments, such home electronics as DVD players and stereos, and age-group-targeted novelty items.

But Hastings expects DVD rentals and sales to be the backbone of its business through the rest of the year. In the first two quarters of 2001, rentals were up 148% and 160%, respectively.

Hastings chairman/CEO John Marmaduke said in a statement, "With the current adoption rate of DVD in our markets, the momentum we have created through the first six months of the year, and the projected strength of titles to be released, we believe the second half of the year will continue to be strong for DVD rental and sales."

At Borders, category management initiatives contributed to double-digit comparable store sales growth for its DVD business. Meanwhile, its Title Sleuth computer search stations were credited with driving a double-digit comparable-store sales increase in special orders. The company also relaunched its e-commerce site, Borders.com, which is now run by Amazon.com.

SECOND-QUARTER RESULTS

For the second quarter, which ended in July, Borders posted essentially break-even net income—the same as a year ago. Sales increased $41 million to $739.8 million. Superstore net income increased to $8.4 million from $6.7 million last year. Sales increased $47 million to $511 million.

Hastings posted a second-quarter profit of $800,000, or 7 cents per share, vs. a net loss of $2.3 million, or 20 cents per share, last year. Revenue rose to $110.1 million from $106.8 million.