Hastings Entertainment (HAST) 8-K Hastings Entertainment, Inc. Raises Guidance for Fiscal Year 2006 on Improved Financial Performance

Exhibit 99.1

NEWS RELEASE

Hastings
Entertainment, Inc. CONTACT: Dan Crow
Vice President and
Chief Financial Officer
(806) 677-1422
www.gohastings.com PR06-136

Hastings Entertainment, Inc. Raises Guidance for Fiscal Year 2006 on
Improved Financial Performance

Reports Net Loss of $0.20 per Diluted Share for 3Q 2006 Compared to $0.24
per Diluted Share for 3Q 2005

AMARILLO, Texas, November 20, 2006—Hastings Entertainment, Inc. (NASDAQ: HAST), a leading multimedia entertainment retailer, today reported results for the three and nine months ended October 31, 2006. Net loss was $2.2 million, or $0.20 per diluted share, for the third quarter of fiscal year 2006 compared to net loss of approximately $2.7 million, or $0.24 per diluted share, for the third quarter of fiscal year 2005. For the first nine months of the fiscal year, net loss was approximately $0.1 million, or $0.01 per diluted share in fiscal 2006 compared to net loss of approximately $1.3 million, or $0.11 per share for the same period in 2005.

“Our financial results for the first nine months has exceeded our year-to-date forecast which has allowed us to raise our Fiscal 2006 guidance,” said John Marmaduke, Chairman and Chief Executive Officer. “Our decision to increase Boutique and Electronic merchandise markdowns in the second quarter let us accelerate a new merchandising plan which contributed to improved Comp sales during the third quarter. Many of our product categories posted quarterly Comp sales which exceeded industry averages and I feel we have positioned the Company for continued revenue and income growth in the fourth quarter.”

Financial Results for the Third Quarter of Fiscal Year 2006

Revenues.Total revenues for the third quarter increased $5.0 million, or 4.4%, to $119.6 million compared to $114.6 million for the third quarter of fiscal 2005. The following is a summary of our revenue results (dollars in thousands):

	Three Months Ended October 31,
	2006					2005					Increase/(Decrease)
			Percent of					Percent of
	Revenues		Total			Revenues		Total			Dollar		Percent
Merchandise revenue	$	98,221		82.1	%	$	93,581		81.7	%	$	4,640		5.0	%
Rental revenue		21,415		17.9	%		21,006		18.3	%		409		1.9	%
Total revenues	$	119,636		100.0	%	$	114,587		100.0	%	$	5,049		4.4	%

Comparable-store revenues (“Comps”):
Total	3.8	%
Merchandise	4.1	%
Rental	2.7	%

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

	Three Months Ended October 31,
	2006		2005
Music		-4.4%		-2.4%
Books		2.1%		-2.7%
Video for sale		16.9%		-1.4%
Video games		11.1%		-9.4%
Boutique		-0.3%		-1.7%

Music Comps decreased 4.4%, which was primarily attributable to fewer premier artist CD releases as well as decreased sales of used CDs. Book Comps increased 2.1% as a result of increased sales of new release hardbacks and new and used paperbacks. Video for sale Comps increased 16.9% due to increased sales of new release DVDs, DVD box sets and used DVDs. Video game Comps increased 11.1% due primarily to increased sales of Microsoft XBOX 360 hardware and games, as well as increased sales of video game accessories.

Rental Comps increased 2.7% from the same period last year due to improved marketing initiatives and a slate of stronger box office titles. Rental Comps were boosted by DVD Movies, which increased 11.8% from the same period last year.

Gross Profit.For the third quarter, total gross profit dollars increased approximately $0.8 million, or 2.0%, to $41.8 million from $41.0 million for the same period last year, primarily as a result of increased sales. As a percentage of total revenues, gross profit decreased to 34.9% for the quarter compared to 35.8% for the same quarter in the prior year. The decrease in margin rates was primarily attributable to increases in markdowns and shrinkage.

Selling, General and Administrative expenses (“SG&A”).SG&A decreased approximately $0.3 million to $44.6 million for the current quarter compared to $44.9 million for the same quarter in the prior year. As a percentage of total revenues, SG&A decreased to 37.3% for the current quarter compared to 39.2% for the same quarter in the prior year due to improved leveraging of expenses with higher revenues.

Financial Results for the Nine Months Ended October 31, 2006

Revenues.Total revenues for the first nine months of fiscal 2006 increased $7.7 million, or 2.1%, to $374.1 million compared to $366.4 million for the same period in the prior year, resulting primarily from the opening of new superstores. The following is a summary of our revenue results (dollars in thousands):

	Nine Months Ended October 31,
	2006					2005					Increase/(Decrease)
			Percent of					Percent of
	Revenues		Total			Revenues		Total			Dollar		Percent
Merchandise revenue	$	305,355		81.6	%	$	298,483		81.5	%	$	6,872		2.3	%
Rental revenue		68,787		18.4	%		67,954		18.5	%		833		1.2	%
Total revenues	$	374,142		100.0	%	$	366,437		100.0	%	$	7,705		2.1	%

Comparable-store revenues (“Comps”):
Total	2.2	%
Merchandise	2.1	%
Rental	2.8	%

The higher merchandise Comps were primarily the result of changes in the following categories:

	Nine Months Ended October 31,
	2006			2005
Music		-6.1	%		-1.5	%
Books		0.4	%		-1.6	%
Video for sale		13.5	%		0.3	%
Video games		12.8	%		10.9	%
Boutique		-1.9	%		8.8	%

Music Comps decreased 6.1%, which was primarily attributable to a weaker release schedule and fewer used CD sales compared to the same period in the prior year, partially offset by increased sales of music hardware. Book Comps increased 0.4% as a result of increased sales of used books, partially offset by decreased sales of new release hardbacks. Video for sale Comps increased 13.5% due to increased sales of new release DVDs, DVD box sets and used DVDs. Video game Comps increased 12.8% due primarily to increased sales of Microsoft XBOX 360 hardware and games, as well as increased sales of video game accessories. The Company is in the process of implementing new plan-o-gramming in our Boutique and Electronics departments, which involves selling through certain existing inventory to make room for new assortments. As a result, Boutique Comps decreased 1.9%, primarily due to decreased sales of t-shirts and footwear.

Rental Comps increased 2.8% from the same period last year due to improved marketing initiatives and a stronger slate of box office titles. Rental Comps were boosted by DVD Movies, which increased 14.3% from the same period last year.

Gross Profit.For the nine months ended October 31, 2006, total gross profit dollars increased approximately $1.7 million, or 1.3%, to $131.9 million from $130.2 million for the same period last year, primarily as a result of increased sales. As a percentage of total revenues, gross profit decreased to 35.2% for the nine months ended October 31, 2006 as compared to 35.5% for the same period in the prior year.

Selling, General and Administrative expenses (“SG&A”).SG&A decreased approximately $0.4 million to $130.2 million for the nine months ended October 31, 2006 compared to $130.6 million for the same period in the prior year. As a percentage of total revenues, SG&A decreased to 34.8% for the nine months ended October 31, 2006 as compared to 35.6% for the same period in the prior year due to improved leveraging of expenses with higher revenues.

Stock Repurchase

On September 18, 2001, we announced a stock repurchase program of up to $5.0 million of our common stock. Since that time, the Board of Directors has approved additional increases in the amounts of $2.5 million on April 4, 2005; $5.0 million on March 15, 2006; and $2.5 million on October 3, 2006. During the third quarter of fiscal year 2006, we purchased a total of 262,800 shares of common stock at a cost of approximately $1,773,800, for an average cost of approximately $6.75 per share. As of October 31, 2006, a total of 1,834,463 shares had been repurchased under the program at a cost of approximately $10.7 million, for an average cost of approximately $5.83 per share. As of October 31, 2006, approximately $4.3 million remains available for repurchases under the stock repurchase program.

Store Activity

Since August 21, 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
Lawrence, KS	Remodel		74,951		27,792		8/19/2006
Boise, ID	Remodel		191,667		17,640		10/7/2006
Amarillo, TX	Relocation		176,999		24,234		10/20/2006

Fiscal Year 2006 Guidance

“Our financial results for the first nine months are better than our internal forecast, which is the basis for our guidance,” said Dan Crow, Vice President and Chief Financial Officer. “Additionally, we are anticipating a positive retail environment for the holiday season. Consequently, we are raising our guidance of net income per diluted share for the full fiscal year ending January 31, 2007 from $0.58 to $0.63 to a range of $0.65 to $0.70.”

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

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 154 superstores, averaging approximately 20,000 square feet, primarily in medium-sized markets throughout the United States.

     We also operatewww.gohastings.com, an e-commerce Internet web site that makes available to our customers new and used entertainment products. 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 our filings with the Securities and Exchange Commission.

Consolidated Balance Sheets
(Dollars in thousands)

	October 31,			October 31,			January 31,
	2006			2005			2006
	(unaudited)			(unaudited)
Assets
Current Assets
Cash	$	3,072		$	5,477		$	3,617
Merchandise inventories, net		186,291			164,373			165,049
Deferred income taxes, current		4,105			3,322			4,234
Other current assets		6,780			6,569			7,016
Total current assets		200,248			179,741			179,916
Rental assets, net		12,615			13,223			12,606
Property and equipment, net		59,530			62,509			60,013
Deferred income taxes, non-current		2,175			2,315			1,492
Intangible assets, net		418			475			454
Other assets		118			51			180
Total assets	$	275,104		$	258,314		$	254,661
Liabilities and Shareholders’ Equity
Current liabilities
Current maturities on capital lease obligations	$	—		$	132		$	94
Trade accounts payable		87,350			84,471			88,991
Accrued expenses and other current liabilities		32,163			29,462			38,323
Total current liabilities		119,513			114,065			127,408
Long-term debt, excluding current maturities		59,656			51,954			28,057
Other liabilities		4,263			4,769			4,503
Shareholders’ equity
Preferred stock		—			—			—
Common stock		119			119			119
Additional paid-in capital		35,829			36,076			36,076
Retained earnings		61,370			54,465			61,466
Other comprehensive income		100			—			141
Treasury stock, at cost		(5,746	)		(3,134	)		(3,109	)
Total shareholders’ equity		91,672			87,526			94,693
Total liabilities and shareholders’ equity	$	275,104		$	258,314		$	254,661

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

	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2006			2005			2006			2005
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Merchandise revenue	$	98,221		$	93,581		$	305,355		$	298,483
Rental revenue		21,415			21,006			68,787			67,954
Total revenues		119,636			114,587			374,142			366,437
Merchandise cost of revenue		70,337			65,422			216,868			212,271
Rental cost of revenue		7,499			8,116			25,399			23,978
Total cost of revenues		77,836			73,538			242,267			236,249
Gross profit		41,800			41,049			131,875			130,188
Selling, general and administrative expenses		44,572			44,867			130,231			130,570
Pre-opening expenses		15			—			94			92
Operating income (loss)		(2,787	)		(3,818	)		1,550			(474	)
Other income (expense):
Interest expense, net		(900	)		(778	)		(2,304	)		(1,920	)
Other, net		55			66			599			209
Loss before income taxes		(3,632	)		(4,530	)		(155	)		(2,185	)
Income tax benefit		(1,432	)		(1,799	)		(59	)		(879	)
Net loss	$	(2,200	)	$	(2,731	)	$	(96	)	$	(1,306	)
Basic loss per share	$	(0.20	)	$	(0.24	)	$	(0.01	)	$	(0.11	)
Diluted loss per share	$	(0.20	)	$	(0.24	)	$	(0.01	)	$	(0.11	)
Weighted-average common shares outstanding:
Basic		11,176			11,367			11,312			11,426
Dilutive effect of stock options		—			—			—			—
Diluted		11,176			11,367			11,312			11,426

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

	October 31,			October 31,			January 31,
	2006			2005			2006
Merchandise inventories, net	$	186,291		$	164,373		$	165,049
Inventory turns, trailing 12 months (B)		1.74			1.84			1.83
Long-term debt	$	59,656		$	51,954		$	28,057
Long-term debt to total capitalization (C)		39.4	%		37.2	%		22.9	%
Book value (D)	$	91,672		$	87,526		$	94,693
Book value per share (E)	$	8.10		$	7.66		$	8.11

	Three Months Ended October 31,						Nine Months Ended October 31,
	2006			2005			2006			2005
Comparable-store revenues (F):
Total		3.8	%		-4.5	%		2.2	%		-1.8	%
Merchandise		4.1	%		-3.1	%		2.1	%		0.0	%
Rental		2.7	%		-10.1	%		2.8	%		-8.8	%

(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, as well as coupons, are not included, and closed stores are removed from each comparable period for the purpose of calculating comparable-store revenues.

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