These aren't golden days for classic entertainment outlets like bookstores and video game rental stores. It's hardly surprising to see a company that looks like a cross between Blockbuster
Hastings (no relation to Netflix
The breakdown of comparable store sales by segment shines some more light on the situation. The largest decline came from the music division, 7.9% lower than last year. Management blames a lack of blockbuster albums this year, but I have a sneaky suspicion that the Midwest might be waking up to Apple's
Now we're into black-ink territory. Video sales jumped 9.8% and video games took off to the tune of 22.2%. That heavy marketing that cut into margins and net earnings seems to have boosted sales significantly. Too bad it had to hurt the bottom line.
Hastings is trying to keep up the hunky-dory veneer, but the only way to keep sales from dropping was to overspend on marketing and hand out deep discounts to customers. If this trend continues -- and I really don't see why it wouldn't -- this company will sell its last DVD for a nickel just to meet revenue targets before too long. It's like that old saw about losing money on every unit sold but making it up in volume. When your competition looks as good as Netflix and Amazon
Further Foolishness:
- Two Fools recently butted heads over Netflix' chances.
- Even networking companies want to get into your living room now.
- Invest in what you know, Fool.
Netflix and Amazon are both Motley Fool Stock Advisor recommendations. Try a 30-day free trial to see what a real entertainment superstore looks like.
Fool contributor Anders Bylund is a Netflix shareholder but holds no other position in any of the companies discussed here. He thinks the Battle of Hastings was fought in 2002, not 1066. You can check out Anders' holdings if you like. Foolish disclosure can give you hours of enlightening entertainment anytime.