Hastings Entertainment (HAST) 8-K Hastings Entertainment, Inc. Reports Net Income of $0.17 per Diluted Share for 1Q 2006 Compared to $0.06 per Diluted Share for 1Q 2005

Exhibit 99.1

Hastings	CONTACT:	Dan Crow	PR06-129
Entertainment, Inc.		Vice President and Chief Financial Officer (806) 677-1422 www.gohastings.com

Hastings Entertainment, Inc. Reports Net Income of $0.17 per Diluted Share
for 1Q 2006 Compared to $0.06 per Diluted Share for 1Q 2005

AMARILLO, Texas, May 22, 2006—Hastings Entertainment, Inc. (NASDAQ: HAST), a leading multimedia entertainment retailer, today reported results for the three months ended April 30, 2006. Net income was $1.9 million, or $0.17 per diluted share, for the first quarter of fiscal year 2006 compared to net income of approximately $0.8 million, or $0.06 per diluted share, for the first quarter of fiscal year 2005.

“We were very pleased with our operating results for the first quarter,” said John Marmaduke, Chairman and Chief Executive Officer. “Total revenues increased 1.8% and total comparable store sales increased 2.4% in spite of continued weakness in the music and in-store video rental industries, which speaks to the strength of our multi-media business model. This, along with our continued focus on reducing costs, enabled us to increase net income for the quarter from $0.8 million last year to $1.9 million this year. We will continue to focus on cost controls as well as new merchandising and branding initiatives, which we believe will enable us to achieve our guidance for the full fiscal year.”

Financial Results for the First Quarter of Fiscal Year 2006

Revenues.Total revenues for the first quarter increased $2.3 million, or 1.8%, to $131.4 million compared to $129.1 million for the first quarter of fiscal 2005. The following is a summary of our revenue results (dollars in thousands):

	Three Months Ended April 30,
	2006						2005					Increase/(Decrease)
				Percent of					Percent of
	Revenues			Total			Revenues		Total			Dollar		Percent
Merchandise revenue	$	106,952			81.4	%	$	104,864		81.2	%	$	2,088		2.0	%
Rental revenue		24,460			18.6	%		24,260		18.8	%		200		0.8	%
Total revenues	$	131,412			100.0	%	$	129,124		100.0	%	$	2,288		1.8	%
Comparable-store revenues:
Total		2.4	%
Merchandise		2.4	%
Rental		2.3	%

Below is a summary of the Comp results for those categories:

	Three Months Ended April 30,
	2006			2005
Music		-6.0	%		-1.3	%
Books		2.7	%		-3.4	%
Video for sale		13.8	%		2.4	%
Video games		6.3	%		30.6	%
Boutique		-0.3	%		17.1	%

Music Comps decreased 6.0%, which was primarily attributable to a weaker release schedule compared to the prior year’s quarter, partially offset by increased sales of music hardware. Book Comps increased 2.7% as a result of increased sales of new release paperbacks and used books, partially offset by decreased sales of hardback new releases. Video for sale Comps increased 13.8% due to increased sales of front-line new release DVDs, DVD box sets, as well as used DVDs. Video game Comps increased 6.3% due primarily to increased sales of Microsoft XBOX 360 games. Boutique Comps decreased 0.3%, primarily due to decreased sales of t-shirts, partially offset by increased sales of action figures and other collectible toys.

Rental video Comps increased 2.3% from the same period last year due to better box office titles and improved marketing initiatives.

Gross Profit.For the first quarter, total gross profit dollars increased approximately $2.6 million, or 5.9%, to $46.6 million from $44.0 million for the same period last year, primarily as a result of increased sales volume as well as lower freight, shrinkage and returns expense. As a percentage of total revenues, gross profit increased to 35.5% for the quarter compared to 34.1% for the same quarter in the prior year.

Selling, General and Administrative expenses (“SG&A”).SG&A increased approximately $0.6 million to $42.9 million for the current quarter compared to $42.3 million for the same quarter in the prior year. As a percentage of total revenues, SG&A decreased to 32.6% for the current quarter compared to 32.8% for the same quarter in the prior year.

Stock Repurchase

On September 18, 2001, we announced a stock repurchase program of up to $5.0 million of our common stock. On April 4, 2005, the Board of Directors approved an increase of $2.5 million to the program and on March 15, 2006, the Board of Directors approved an additional increase of $5.0 million. During the first quarter of fiscal year 2006, we did not repurchase any shares of our common stock. As of April 30, 2006, a total of 1,281,463 shares had been repurchased under the program at a cost of approximately $6.7 million, for an average cost of approximately $5.23 per share.

Store Activity

Since March 27, 2006, which was the date we last reported store activity, we have had additional store activity as follows:

			Selling Square
Community	Type	Population	Footage	Date Opened
Jonesboro, AR	Remodel	55,515	22,802	4/21/2006

Fiscal Year 2006 Guidance

“Net income for the quarter was in line with our internal forecast, which is the basis for our guidance,” said Dan Crow, Vice President and Chief Financial Officer. “Consequently we are reaffirming our guidance of net income per diluted share ranging from $0.58 to $0.63 for the full fiscal year ending January 31, 2007.”

Safe Harbor Statement

Certain written and oral statements set forth above or made by Hastings or with the approval of an authorized executive officer of the Company constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, the words “believe,” “expect,” “intend,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements which are not necessarily historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements regarding our future merchandise margins and our general guidance for fiscal year 2006, are forward-looking statements. Such statements are based upon Company management’s current estimates, assumptions and expectations, which are based on information available at the time of this disclosure, and are subject to a number of factors and uncertainties, including, but not limited to, our inability to attain such estimates, assumptions and expectations, a downturn in market conditions in any industry, including the current economic state of retailing (relating to the products we inventory, sell or rent) and the effects of or changes in economic conditions in the U.S. or the markets in which we operate. We undertake no obligation to affirm, publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Hastings

Founded in 1968, Hastings Entertainment, Inc. is a leading multimedia entertainment retailer that combines the sale of new and used CDs, books, videos and video games, as well as boutique merchandise, with the rental of videos and video games in a superstore format. We currently operate 153 superstores, averaging approximately 20,000 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 to filings with the Securities and Exchange Commission.

Consolidated Balance Sheets
(Dollars in thousands)

	April 30,			April 30,			January 31,
	2006			2005			2006
	(unaudited)			(unaudited)
Assets
Current Assets
Cash	$	6,979		$	6,274		$	3,617
Merchandise inventories, net		160,107			150,288			165,049
Deferred income taxes, current		4,692			3,017			4,234
Other current assets		7,380			6,752			7,016
Total current assets		179,158			166,331			179,916
Rental assets, net		12,729			12,409			12,606
Property and equipment, net		58,444			62,822			60,013
Deferred income taxes, non-current		1,751			1,600			1,492
Intangible assets, net		432			520			454
Other assets		189			17			180
Total assets	$	252,703		$	243,699		$	254,661
Liabilities and Shareholders’ Equity
Current liabilities
Current maturities on capital lease obligations	$	54		$	248		$	94
Trade accounts payable		71,971			76,247			88,991
Accrued expenses and other current liabilities		33,289			28,949			38,323
Total current liabilities		105,314			105,444			127,408
Long-term debt, excluding current maturities		46,140			43,008			28,057
Other liabilities		4,472			4,708			4,503
Shareholders’ equity
Preferred stock		—			—			—
Common stock		119			119			119
Additional paid-in capital		35,986			36,147			36,076
Retained earnings		63,391			56,525			61,466
Other comprehensive income		163			—			141
Treasury stock, at cost		(2,882	)		(2,252	)		(3,109	)
Total shareholders’ equity		96,777			90,539			94,693
Total liabilities and shareholders’ equity	$	252,703		$	243,699		$	254,661

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

	Three months ended
	April 30,
	2006			2005
	(unaudited)			(unaudited)
Merchandise revenue	$	106,952		$	104,864
Rental video revenue		24,460			24,260
Total revenues		131,412			129,124
Merchandise cost of revenue		75,569			76,703
Rental video cost of revenue		9,221			8,383
Total cost of revenues		84,790			85,086
Gross profit		46,622			44,038
Selling, general and administrative expenses		42,873			42,327
Pre-opening expenses		—			88
Operating income		3,749			1,623
Other income (expense):
Interest expense		(664	)		(493	)
Other, net		69			101
Income before income taxes		3,154			1,231
Income tax expense		1,229			477
Net income	$	1,925		$	754
Basic income per share	$	0.17		$	0.07
Diluted income per share	$	0.17		$	0.06

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

	April 30,			April 30,
	2006			2005
Merchandise inventories, net	$	160,107		$	150,288
Inventory turns, trailing 12 months (B)		1.78			1.82
Long-term debt	$	46,140		$	43,008
Long-term debt to total capitalization (C)		32.3	%		32.2	%
Book value (D)	$	96,777		$	90,539
Book value per share (E)	$	8.33		$	7.59

	Three Months Ended April 30,
	2006			2005
Comparable-store revenues (F):
Total		2.4	%		-0.1	%
Merchandise		2.4	%		1.5	%
Rental		2.3	%		-6.2	%

(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 as of period end.
(F)	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 not included and closed stores are removed from each comparable period for the purpose of calculating comparable-store revenues.

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