“Dan Crow was primarily responsible for the negotiation and establishment of Hastings’ new $70 million secured revolving credit agreement with Fleet Retail Finance recently and brings many years of valuable bottom line retail experience to the Company,” said John Marmaduke, chairman and chief executive officer. “We were fortunate in being able to call on Gaines Godfrey, long-time director of Hastings, to assist us during the recent issues surrounding our accounting adjustments for 1999 and prior years. Crow will provide our ongoing financial leadership as we focus on the upcoming holiday season and complete our operational initiatives to return to the basics of Hastings 30 year old operations.”

Dan Crow, newly promoted CFO announced, “The Hastings’ Board of Directors recently approved engaging Ernst & Young, LLP as the Company’s independent auditors. With our credit facility in place, the new association with Ernst & Young, in light of their extensive retail expertise in businesses similar to Hastings, will be valuable as we renew the Company’s orientation to basic store operations.”

Revenues for the third quarter ending October 31, 2000 were $100.4 million essentially flat with the $100.9 million reported for the third quarter of 1999. Comparable stores revenues were down 1.6% for the current quarter due primarily to lower rental video revenue as a result of weaker box office titles available during this quarter, fewer hit music releases and slower retail sales, in general, similar in nature to that exhibited by many of the Company’s competitors.

Total gross profit as a percent of total revenue decreased for the three months ended October 31, 2000 to 27.2% compared to 33.1% for the same period last year. Effective with the third quarter this year, and represented comparatively in prior periods, Hastings reclassified the total cost associated with the return of inventory as a cost of revenue instead of selling, general and administrative expenses where the expense had been shown in previous financial statements in order to present financials more comparable with general industry presentations. For the third quarter of fiscal 2000, merchandise gross profit was negatively impacted by $3.9 million primarily as a result of the Company’s initiative during fiscal 2000 to permanently reduce inventory by $14 million to improve asset performance. This initiative generated an increase in the volume of returns as well as compressed the timing of these returns thereby triggering higher return fees. In addition, the Company recorded $2.2 million in pre-tax charges related to inventory valuation following a decision to accelerate the disposition of aged inventory and the subsequent write-down of that inventory to the lower of cost or market. Gross margin prior to the charges detailed above would have been 33.3% for the three months ended October 31, 2000.

Selling, general and administrative expenses increased to 38.3% of total revenues for the three months ending October 31, 2000 from 35.7% for the same period last year. The increase was due primarily to a $2.7 million pre-tax charge for the cost associated with the closing of two superstores. Dan Crow, CFO commented, “The performance of all of Hastings’ stores will be reviewed following the fourth quarter to identify any others that may not be achieving acceptable profit levels. The startup success of the Company’s medium market stores reflects the opportunities for reinvestment of assets from lower performing closed stores.”

During the third quarter of fiscal 2000, the Company reviewed its net deferred tax assets under the provisions set forth in Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). While the Company believes the entire deferred tax asset will be realized by future operating results, due to the cumulative losses incurred in recent years a portion of the deferred tax asset does not currently meet the stringent criteria for recognition under SFAS 109. As a result, the Company did not recognize any income tax benefit in the third quarter. In the future, the Company will continue to evaluate the potential realization of its net deferred tax asset.

Net loss for the quarter ending October 31, 2000 increased to $12.0 million or $1.03 per share compared to the $2.7 million loss or $0.24 per share for the same quarter in 1999 primarily as a result of the inventory writedown, the superstore closing costs and the absence of income tax benefits. John Marmaduke commented, “Our implementation of operational initiatives has produced significant results. Inventories at $146 million have been reduced by $15.5 million from last year and offer an improved selection in desired customer categories from past years. Superstore inventory turns have responded positively increasing from 1.83 for the twelve months ending October 31, 1999 to 2.08 for the twelve months ending this quarter. Cash flow from operations for the nine months this year is a significant $28 million up by $2.3 million for the same period in 1999 and long-term debt has been reduced $15.5 million from $60.2 million to $44.7 million. We have a strong balance sheet and ample cash flow and financing for the new year. While we will continue to review store performance for remodeling, relocations and potential closings in addition to overall corporate operations for appropriate adjustments to enhance our ongoing business, we are very optimistic about our prospects in the medium market towns within the Company’s current operational areas where Hastings’ reputation is well established and appreciated.”

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. The Company currently operates 144 superstores, averaging 21,500 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.