8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 18, 2009

HASTINGS ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

TEXAS

(State or other jurisdiction of incorporation or organization)

000-24381	75-1386375
(Commission File Number)	(I.R.S. Employer Identification Number)
3601 Plains Blvd, Amarillo, Texas	79102
(Address of principal executive offices)	(Zip Code)

(806) 351-2300

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year,

if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

HASTINGS ENTERTAINMENT, INC.

Section 2 — Financial Information

Item 2.02. Results of Operations and Financial Condition.

On May 18, 2009, Hastings Entertainment, Inc. issued a press release regarding its financial results for the fiscal quarter ended April 30, 2009. A copy of the press release is attached hereto as Exhibit 99.1.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

99.1 Press Release dated May 18, 2009.

HASTINGS ENTERTAINMENT, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 19, 2009	Hastings Entertainment, Inc.
	(Registrant)
	By:	/s/ Dan Crow
		Dan Crow
		Vice President,
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

HASTINGS ENTERTAINMENT, INC.

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release dated May 18, 2009

EX-99.1

Exhibit 99.1

NEWS RELEASE

Hastings Entertainment, Inc.	CONTACT:	Dan Crow            PR09-165
		Vice President and
		Chief Financial Officer
		(806) 677-1422
		www.gohastings.com

Hastings Entertainment, Inc. Reports Net Earnings of $0.17 per Diluted Share for the First Quarter

AMARILLO, Texas, May 18, 2009—Hastings Entertainment, Inc. (NASDAQ: HAST), a leading multimedia entertainment retailer, today reported results for the three months ended April 30, 2009. Net earnings were approximately $1.7 million, or $0.17 per diluted share, for the first quarter of fiscal 2009 compared to net earnings of approximately $3.0 million, or $0.28 per diluted share, for the first quarter of fiscal 2008.

“The recession continued to negatively impact retailers during the first quarter,” said John Marmaduke, Chief Executive Officer and Chairman. “We continue to focus on our balance sheet and reducing costs. Our inventory was approximately $13.3 million less than a year ago and we reduced long-term debt by approximately $9.2 million during the quarter. Additionally, cash flows from operations totaled approximately $13.4 million for the period which compares to approximately $4.1 for the comparable period last year.”

Financial Results for the First Quarter of Fiscal Year 2009

Revenues. Total revenues for the first quarter decreased approximately $6.2 million, or 4.7%, to $125.7 million compared to $131.9 million for the first quarter of fiscal 2008. Included in fiscal 2008 was approximately $2.0 million in revenues resulting from an additional day of sales due to leap year. Excluding this extra day of sales, total revenues for the first quarter decreased approximately $4.2 million, or 3.2%. The following is a summary of our revenues results (dollars in thousands):

	Three Months Ended April 30,
	2009					2008
			Percent of					Percent of			(Decrease)
	Revenues		Total			Revenues		Total			Dollar			Percent
Merchandise revenue	$	104,096		82.8	%	$	108,317		82.1	%	$	(4,221	)		-3.9	%
Rental revenue		21,597		17.2	%		23,619		17.9	%		(2,022	)		-8.6	%
Total revenues	$	125,693		100.0	%	$	131,936		100.0	%	$	(6,243	)		-4.7	%

Comparable-store revenues (“Comp”):

	Fiscal
				2009
	2009			(excludes leap day)
Total		-5.9	%		-4.4	%
Merchandise		-5.1	%		-3.7	%
Rental		-9.3	%		-7.6	%

Below is a summary of the Comp results for our major merchandise categories:

	Three Months Ended April 30,
							2009
	2009			2008			(excludes leap day)
Hardback Café		8.5	%		14.2	%		10.0	%
Electronics		5.5	%		26.8	%		7.1	%
Trends		5.1	%		36.8	%		6.6	%
Consumables		4.5	%		12.5	%		6.4	%
Books		0.2	%		5.6	%		1.7	%
Movies		-5.7	%		3.2	%		-4.3	%
Video Games		-10.4	%		29.8	%		-9.1	%
Music		-15.2	%		-16.0	%		-13.9	%

The following discussion of merchandise and rental Comp sales excludes the additional day of sales due to leap year.

Hardback Café Comps increased 10.0% primarily as a result of an additional four cafés open, in existing stores, during the quarter compared to the same period in the prior year and increased sales of specialty café drinks and mugs. Electronics Comps increased 7.1% for the quarter primarily due to strong sales of digital converter boxes, third-party gift cards and Blu-ray DVD players, partially offset by lower sales of portable electronic devices, including MP3 players. Trends Comps increased 6.6% for the quarter primarily due to strong sales of apparel and action figures, partially offset by lower sales of plush products and greeting cards. Key drivers in the apparel category included t-shirts, sports apparel, and bags. Consumables Comps increased 6.4% for the quarter, primarily due to strong sales of seasonal candy as well as candy and snacks cross-merchandised on our video rental wall. Book Comps increased 1.7% for the period. Strong sales of used and value books, as well as strong sales of new hardbacks were offset by lower sales of magazines. Strong performers during the quarter included the Twilight Saga Series by Stephenie Meyer and The Shack by William P. Young. Movie Comps decreased 4.3% for the quarter, primarily resulting from lower sales of new DVDs, partially offset by increased sales of Blu-ray DVDs and Used DVDs. Video Game Comps decreased 9.1% primarily due to lower sales of older generation video games and lower sales of video game consoles, partially offset by increased sales of used video games for the Microsoft XBOX 360, Sony Playstation 3, and Nintendo Wii. Music Comps decreased 13.9% for the quarter due to lower sales of new and used CDs, resulting directly from a continued industry decline as well as reduced footprint in thirty-one stores. Merchandise Comps, excluding the sale of music, decreased 1.3% for the quarter.

Rental Comps decreased 7.6% for the first quarter, primarily due to fewer rentals of new DVDs and increased promotions offered during the current quarter, partially offset by increased rentals of Blu-ray movies and video games. Rental Video Game Comps increased 4.3% for the period while Rental Movie Comps decreased 9.0%.

Gross Profit – Merchandise. For the first quarter, total merchandise gross profit dollars decreased approximately $0.3 million, or 0.9%, to $33.1 million from $33.4 million for the same period in the prior year primarily due to lower revenues, partially offset by increased margin rates. As a percentage of total merchandise revenue, merchandise gross profit increased to 31.8% for the quarter compared to 30.8% for the same period in the prior year, primarily resulting from lower markdown expense and costs to return product, partially offset by increased shrinkage expense.

Gross Profit – Rental. For the first quarter, total rental gross profit dollars decreased approximately $1.7 million, or 10.9%, to $13.9 million from $15.6 million for the same period in the prior year primarily due to lower rental revenues partially offset by lower rental shrinkage expense. As a percentage of total rental revenue, rental gross profit decreased to 64.3% for the quarter compared to 66.3% for the same period in the prior year primarily as a result of lower rental revenues.

Selling, General and Administrative Expenses (“SG&A”). As a percentage of total revenue, SG&A increased to 34.9% for the first quarter compared to 33.1% for the same quarter in the prior year, primarily as a result of lower revenues. SG&A increased approximately $0.2 million during the quarter, or 0.5%, to $43.9 million compared to $43.7 million for the same quarter last year.

Stock Repurchase

On September 18, 2001, we announced a stock repurchase program of up to $5.0 million of our common stock. Prior to fiscal 2008, the Board of Directors approved increases in the program totaling $17.5 million, and on December 8, 2008, they approved an additional increase of $5.0 million. During the first quarter of fiscal 2009, we purchased a total of 37,684 shares of common stock at a cost of $93,229, or $2.47 per share. As of April 30, 2009, a total of 3,457,633 shares had been repurchased under the program at a cost of approximately $21.7 million, for an average cost of approximately $6.27 per share. As of April 30, 2009, approximately $5.6 million remains available under the stock repurchase program.

Store Activity

Since March 23, 2009, which was the last date we reported store activity, we have not had any additional stores open or close.

Fiscal Year 2009 Guidance

“Net earnings for the quarter were better than our internal forecast, which is the basis for our guidance,” said Dan Crow, Vice President and Chief Financial Officer. “Due to continued uncertainty in the retail environment, particularly with respect to the holiday selling season, we are not changing our guidance for the full fiscal year. Consequently, we are reaffirming our guidance of net earnings per share ranging from $0.40 to $0.45 for the full fiscal year ended January 31, 2010.”

Safe Harbor Statement

This press release contains “forward-looking statements.” Hastings Entertainment, Inc. is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, consumer appeal of our existing and planned product offerings, and the related impact of competitor pricing and product offerings; overall industry performance and the accuracy of our estimates and judgments regarding trends; our ability to obtain favorable terms from suppliers; our ability to respond to changing consumer preferences, including with respect to new technologies and alternative methods of content delivery, and to effectively adjust our offerings if and as necessary; the application and impact of future accounting policies or interpretations of existing accounting policies; unanticipated adverse litigation results or effects; the effects of a continued deterioration in economic conditions in the U.S. or the markets in which we operate our stores; and other factors which may be outside of the company’s control. Please refer to the company’s annual, quarterly, and periodic reports on file with the Securities and Exchange Commission for a more detailed discussion of these and other risks that could cause results to differ materially.

About Hastings

Founded in 1968, Hastings Entertainment, Inc. is a leading multimedia entertainment retailer that combines the sale of new and used books, videos, video games and CDs, as well as trends merchandise, with the rental of videos and video games in a superstore format. We currently operate 153 superstores,

averaging approximately 21,000 square feet, primarily in medium-sized markets throughout the United States.

We also operate www.gohastings.com, an e-commerce Internet Web site that makes available to our customers new and used entertainment products and unique, contemporary gifts and toys. The site features exceptional product and pricing offers. The Investor Relations section of our web site contains press releases, a link to request financial and other literature and access our filings with the Securities and Exchange Commission.

Consolidated Balance Sheets
(Dollars in thousands)

	April 30,			April 30,			January 31,
	2009			2008			2009
	(unaudited)			(unaudited)
Assets
Current Assets
Cash and cash equivalents	$	3,754		$	4,003		$	7,449
Merchandise inventories, net		150,917			164,199			147,957
Deferred income taxes		10,660			3,590			11,180
Prepaid expenses and other current assets		10,791			10,384			11,224
Total current assets		176,122			182,176			177,810
Rental assets, net		13,295			13,613			15,463
Property and equipment, net		54,620			51,006			56,585
Deferred income taxes		3,461			2,831			2,434
Intangible assets, net		391			391			391
Other assets		1,051			1,143			1,020
Total assets	$	248,940		$	251,160		$	253,703
Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable	$	69,919		$	64,335		$	61,823
Accrued expenses and other liabilities		34,479			35,682			40,614
Total current liabilities		104,398			100,017			102,437
Long-term debt, excluding current maturities		35,270			42,686			44,507
Other liabilities		5,551			4,639			4,723
Shareholders’ equity
Preferred stock		—			—			—
Common stock		119			119			119
Additional paid-in capital		36,702			37,249			36,651
Retained earnings		81,653			78,881			79,951
Accumulated other comprehensive (loss) income		(41	)		3			(67	)
Treasury stock, at cost		(14,712	)		(12,434	)		(14,618	)
Total shareholders’ equity		103,721			103,818			102,036
Total liabilities and shareholders’ equity	$	248,940		$	251,160		$	253,703

Consolidated Statements of Earnings
(In thousands, except per share data)

	Three Months Ended
	April 30,
	2009			2008
	(unaudited)			(unaudited)
Merchandise revenue	$	104,096		$	108,317
Rental revenue		21,597			23,619
Total revenues		125,693			131,936
Merchandise cost of revenue		70,994			74,952
Rental cost of revenue		7,713			7,971
Total cost of revenues		78,707			82,923
Gross profit		46,986			49,013
Selling, general and administrative expenses		43,898			43,694
Pre-opening expenses		2			2
Operating income		3,086			5,317
Other income (expense):
Interest expense, net		(295	)		(472	)
Other, net		18			17
Income before income taxes		2,809			4,862
Income tax expense		1,107			1,873
Net income	$	1,702		$	2,989
Basic income per share	$	0.17		$	0.29
Diluted income per share	$	0.17		$	0.28
Weighted-average common shares outstanding:
Basic		9,729			10,362
Dilutive effect of stock awards		29			296
Diluted		9,758			10,658

Consolidated Statements of Cash Flows
(Dollars in thousands)

	April 30,			April 30,
	2009			2008
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	1,702		$	2,989
Adjustments to reconcile net income to net cash provided by operations:
Rental asset depreciation expense		3,610			4,037
Purchases of rental video		(4,459	)		(8,363	)
Property and equipment depreciation expense		4,850			4,867
Deferred income tax		(507	)		(224	)
Loss on rental videos lost, stolen and defective		202			297
Loss on disposal of other assets		169			188
Noncash stock-based compensation		51			164
Changes in operating assets and liabilities:
Merchandise inventory		(145	)		11,011
Other current assets		433			658
Trade accounts payable		12,775			(10,563	)
Accrued expenses and other liabilities		(6,135	)		(954	)
Excess tax benefit from stock based compensation		—			(39	)
Other assets and liabilities, net		823			—
Net cash provided by operating activities		13,369			4,068
Cash flows from investing activities:
Purchases of property, equipment and improvements		(3,054	)		(3,490	)
Net cash used in investing activities		(3,054	)		(3,490	)
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit facility		(9,237	)		2,070
Purchase of treasury stock		(94	)		(1,294	)
Change in cash overdraft		(4,679	)		(1,466	)
Proceeds from exercise of stock options		—			94
Excess tax benefit from stock based compensation		—			39
Net cash used in financing activities		(14,010	)		(557	)
Net (decrease) increase in cash and cash equivalents		(3,695	)		21
Cash and cash equivalents at beginning of period		7,449			3,982
Cash and cash equivalents at end of period	$	3,754		$	4,003

Balance Sheet and Other Ratios ( A )
(Dollars in thousands, except per share amounts)

	April 30,			April 30,
	2009			2008
Merchandise inventories, net	$	150,917		$	164,199
Inventory turns, trailing 12 months ( B )		1.81			1.73
Long-term debt	$	35,270		$	42,686
Long-term debt to total capitalization ( C )		25.4	%		29.1	%
Book value ( D )	$	103,721		$	103,818
Book value per share ( E )	$	10.63		$	9.74
Price to Earnings Ratio, trailing 12 months ( F )		13.3			8.4

	Three Months Ended April 30,
							2009
	2009			2008			(excludes leap day)
Comparable-store revenues ( G ):
Total		-5.9	%		4.2	%		-4.4	%
Merchandise		-5.1	%		4.3	%		-3.7	%
Rental		-9.3	%		3.8	%		-7.6	%

(A)	Calculations may differ in the method employed from similarly titled measures used by other companies.
(B)	Calculated as merchandise cost of goods sold for the period’s trailing twelve months divided by average merchandise inventory over the same period.
(C)	Defined as long-term debt divided by long-term debt plus total shareholders’ equity (book value).
(D)	Defined as total shareholders’ equity.
(E)	Defined as total shareholders’ equity divided by weighted average diluted shares outstanding for the three month period ended April 30, 2009 and 2008, respectively.
(F)	Defined as closing market value of the Company’s common stock on the last day of the period divided by fully diluted earnings per share for the period’s trailing twelve months.
(G)	Stores included in the comparable-store revenues calculation are those stores that have been open for a minimum of 60 weeks. Also included are stores that are remodeled or relocated during the comparable period. Sales via the Internet are included and closed stores are removed from each comparable period for the purpose of calculating comparable-store revenues.