AMARILLO, Texas, Aug. 22, 2001-- Hastings Entertainment, Inc. (Nasdaq: HAST - news), a leading multimedia entertainment superstore retailer, today reported results for the quarter and six months ended July 31, 2001. Total revenues for the quarter increased $3.4 million, or 3.1%, to $110.1 million compared to $106.8 million for the second quarter of fiscal 2000. Total comparable store revenues (``Comps'') rose 4.2% for the quarter and included Comp increases in merchandise sales of 3.3% and rental video revenue of 7.7%. Net income for the current quarter was $0.8 million, or $0.07 per diluted share, compared to a net loss of ($2.3) million, or ($0.20) per share, for the same period last year. The Company operated an average of three fewer superstores during the quarter ending July 31, 2001 compared to the same quarter last year.

``Our 'back-to-basics' focus on the operational drivers of our business is having positive effects as evidenced by our results for the second quarter,'' commented John H. Marmaduke, Chairman and Chief Executive Officer. ``We are pleased with the Company's momentum as we enter the second half of the year and continue our strategies.

``One of our top priorities has been the upgrading and expanding of certain existing superstores to bring a fresher offering to our customers, drive sales and complement our core products,'' said Marmaduke. ``Our redesigned small-market store has performed beyond our expectations and we are adding coffee bars which provide our customers a space to relax and browse. Additionally, by the end of the year, we will have significantly upgraded our high-margin sideline product presentation in approximately 100 of our superstores to include a full assortment of musical instruments, home electronics such as DVD players and stereos, and an assortment of novelty items geared to attract customers in specific age ranges.''

The increase in rental video Comps for the current quarter was driven by a 160% increase in DVD rentals over the same period last year and reflected a significant improvement over the 148% increase in DVD rentals realized for the first quarter of fiscal 2001. Mr. Marmaduke commented, ``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.'' Contributing to the increase in merchandise Comps were book releases by authors Sue Grafton, Danielle Steel and Bruce Wilkinson along with the sale video releases of Miss Congeniality and Castaway and the launch of Game Boy Advanced hardware and software.

Total revenues for the six months ended July 31, 2001 were $219.3 million, up $2.4 million, or 1.1%, from $216.9 million for the same period last year. Total Comps increased 2.2% for the period comprised of increases in merchandise sales and rental video revenue of 1.3% and 5.9%, respectively. Net income for the first six months was $15,000 or $0.00 per diluted share, up from a net loss of ($2.8) million, or ($0.24) per share, for the same period last year.

Dan Crow, Vice President and Chief Financial Officer, in commenting on the FY2001 guidance stated, ``The original guidance of $0.40 per diluted share provided in our March 28, 2001 press release was based on our internal projections. Our actual results for the six months ended July 31, 2001 exceeded those projections and, with the continuing improvement of our business processes, we are raising our targeted earnings per share amount for the year ending January 31, 2002 to $0.46 per diluted share. Additionally, we are releasing guidance of a net loss of ($0.22) per share and net income of $0.68 per diluted share for the third and fourth quarters of fiscal 2001, respectively.'' Per share calculations are based on an estimated 11,800,000 diluted common shares outstanding.

About Hastings Entertainment

Founded in 1968, Hastings Entertainment, Inc. is a leading multimedia entertainment retailer that combines the sale of books, music, software, periodicals, new and used DVDs, videos and video games with the rental of videos, DVDs and video games in a superstore format. We currently operate 139 superstores, averaging approximately 22,000 square feet, primarily in small to medium-sized markets throughout the United States.

Hastings also operates www.gohastings.com , an e-commerce Internet Web site that makes available to its customers new and used entertainment products and unique, contemporary gifts and toys. The site features exceptional product and pricing offers.

    Consolidated Statement of Operations
    (Dollars in thousands, except per share data) (Unaudited)

                                     Three Months Ended     Six Months Ended
                                          July 31,              July 31,
                                        2001       2000       2001       2000


    Merchandise revenue            $  86,876  $  85,364  $ 173,491  $ 173,495

    Rental video revenue              23,253     21,407     45,779     43,361
    Total revenues                   110,129    106,771    219,270    216,856

    Merchandise cost of revenue       64,021     64,548    129,192    131,493

    Rental video cost of revenue      10,038      9,472     20,880     17,742
      Total cost of revenues          74,059     74,020    150,072    149,235

      Gross profit                    36,070     32,751     69,198     67,621

    Selling, general and
     administrative expenses          34,807     35,621     68,101     70,315
    Pre-opening expenses                  34         (2)        34         --

    Operating income (loss)            1,229     (2,868)     1,063     (2,694)

    Other income (expense):
      Interest expense                  (515)      (889)    (1,142)    (1,850)
      Other, net                          69         65         94        106

    Income (loss) before income taxes    783     (3,692)        15     (4,438)

    Income tax benefit                    --     (1,402)        --     (1,686)

      Net income (loss)               $  783  $  (2,290) $      15  $  (2,752)

    Basic earnings (loss) per share   $ 0.07  $   (0.20) $    0.00  $   (0.24)

    Diluted earnings (loss) per share $ 0.07  $   (0.20) $    0.00  $   (0.24)

    Weighted-average common
     shares outstanding:
      Basic                           11,840     11,643     11,797     11,636
      Diluted                         11,868     11,643     11,819     11,636




    Store Data
                                     For the three     For the six
                                     months ended      months ended
                                  July 31, July 31, July 31, July 31,
                                     2001     2000     2001     2000
    Superstores:
      Beginning number of stores      142      143      142      147
      Openings                          1       --        1       --
      Closings                         (4)      --       (4)      (4)
      Ending number of stores         139      143      139      143


    Other Information (1)
    (Dollars in thousands, except per share amounts) (Unaudited)

                                             July 31, 2001    July 31, 2000
    Merchandise inventories, net                 128,786          125,211

    Long-term debt                              $ 35,523         $ 38,377
    Long-term debt to total capitalization (2)      31.9%            30.5%

    Book value (3)                              $ 75,901         $ 87,384
    Book value per share                        $   6.43         $   7.51


                         For the three months ended   For the six months ended
                             July 31,    July 31,       July 31,    July 31,
                                2001        2000           2001        2000
    EBITDA (4)               $ 9,433     $ 4,895       $ 18,184    $ 13,302
    EBITDA per share            0.80        0.42           1.54        1.14

    Free cash flow (5)       $ 3,197     $   371       $  6,745    $  3,635

    Comparable store total
     revenues (6)                4.2%       -0.4%           2.2%        0.6%
    Comparable store
     merchandise revenues (6)    3.3%       -1.5%           1.3%       -0.3%
    Comparable store rental
     video revenues (6)          7.7%        3.8%           5.9%        4.0%

    (1) Calculations may differ in the method employed from similarly titled
        measures used by other companies.
    (2) Defined as long-term debt divided by long-term debt plus total
        shareholders' equity (book value)
    (3) Defined as total shareholders' equity.
    (4) Defined as net income (loss) before tax plus interest, depreciation
        and amortization expenses.
    (5) Defined as net income (loss) plus depreciation and amortization
        expenses less capital expenditures for rental video assets.
    (6) This represents the increase (decrease) over the prior comparable
        period.

Safe Harbor Statement

This document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. A number of factors could cause actual results, performance, achievements of the Company, or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, the competitive environment in the retail industries within which the Company operates in general and in the Company's specific market area; inflation; economic conditions in general and in the Company's specific market areas; the number of store openings and closings; the profitability of certain product lines, capital expenditures and future liquidity; liability and other claims asserted against the Company. In addition, such forward-looking statements are necessarily dependent upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties and other factors. Accordingly, any forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized. Given these uncertainties, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligations to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.