Hastings Entertainment (HAST) 8-K Hastings Entertainment, Inc. Announces Record First Quarter Earnings

Exhibit 99.1

NEWS RELEASE

Hastings	CONTACT:	Dan Crow           PR08-153
Entertainment, Inc.		Vice President and
		Chief Financial Officer
		(806) 677-1422
		www.gohastings.com

Hastings Entertainment, Inc. Announces Record First Quarter
Earnings

• Net income growth over prior year, for the fifth consecutive quarter.

• Fully diluted EPS grew 27.3% for the quarter, to $0.28 per diluted share compared to $0.22 per diluted share for the first quarter of fiscal 2007.

• Total comparable store revenues increased 4.2% for the first quarter of fiscal 2008 compared to a Comp decrease of 3.9% during the same period in fiscal 2007.

• Maintaining guidance of net income per fully diluted share ranging from $0.95 to $1.00 for the full fiscal year ending January 31, 2009.

AMARILLO, Texas, May 19, 2008—Hastings Entertainment, Inc. (NASDAQ: HAST), a leading multimedia entertainment retailer, today reported results for the three months ended April 30, 2008. Net income was approximately $3.0 million, or $0.28 per diluted share, for the first quarter of fiscal 2008 compared to net income of $2.5 million, or $0.22 per diluted share, for the first quarter of fiscal 2007.

“I’m excited by the record profits our new management team delivered on top of a very strong first quarter during fiscal 2007,” said Chief Executive Officer John Marmaduke. “BUY, SELL, TRADE, RENT creates a new retailing synergy by offering greater value and selection from a seamless assortment of new and used products, while monetizing our customers’ unwanted entertainment. We have an opportunity to take advantage of weakened competitors with our new and used Entertainment Superstore, while additionally delivering exceptional value to our customers in a difficult economic environment.”

Financial Results for the First Quarter of Fiscal Year 2008

Revenues.Total revenues for the first quarter increased $3.9 million, or 3.1%, to $131.9 million compared to $128.0 million for the first quarter of fiscal 2007. The following is a summary of our revenues results (dollars in thousands):

	Three Months Ended April 30,
	2008					2007					Increase/(Decrease)
			Percent of					Percent of
	Revenues		Total			Revenues		Total			Dollar		Percent
Merchandise revenue	$	108,317		82.1	%	$	105,064		82.1	%	$	3,253		3.1	%
Rental revenue		23,619		17.9	%		22,948		17.9	%		671		2.9	%
Total revenues	$	131,936		100.0	%	$	128,012		100.0	%	$	3,924		3.1	%

Comparable-store revenues (“Comp”):

Total	4.2	%
Merchandise	4.3	%
Rental	3.8	%

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

	Three Months Ended April 30,
	2008			2007
Trends		36.8	%		-14.3	%
Video Games		29.8	%		-5.8	%
Electronics		26.8	%		17.5	%
Hardback Café		14.2	%		9.0	%
Consumables		12.5	%		0.6	%
Books		5.6	%		-1.3	%
Movies		3.2	%		4.9	%
Music		-16.0	%		-13.0	%

Trends Comps increased 36.8% primarily due to strong sales of Webkinz plush products, as well as strong apparel and seasonal sales. Key drivers in the apparel category included jewelry, bags, and hats. Key drivers in the seasonal category included Valentine’s Day and Easter products. Video Game Comps increased 29.8% primarily due to strong sales of new hit titles released during the first quarter, includingGrand Theft Auto IV,Mario Kart Wii,Super Smash Bros. Brawl,Army of Two, andTurok, as well as increased sales of used games, gaming systems and gaming accessories including Sony PS3 and Nintendo Wii controllers. Electronics department Comps increased 26.8% for the quarter, which was attributable to strong sales of refurbished iPods and MP3 player related accessories, as well as increased sales of third-party gift cards. Books Comps increased 5.6% during the first quarter, primarily due to increased sales of new trade paperback books, as well as strong sales of used hardback and trade paperback books. Hit titles driving book sales during the quarter includedNew Earth, by author Eckhart Tolle, andThe Last Lecture, by author Randy Pausch. Movie Comps increased 3.2%, primarily due to increased sales of both new and used DVDs, Blu-ray format movies, and used DVD box sets. Hit movies released during the quarter, includingI Am Legend,Alvin and the Chipmunks,American Gangster, andNo Country For Old Men, helped drive the sales of new DVDs and Blu-ray. These increases were partially offset by lower sales of new DVD boxed sets and previously-viewed titles. Music Comps fell 16.0% for the quarter directly as a result of continued industry declines as consumers looked to other forms of music alternatives, primarily through digital downloads. Merchandise Comps, excluding the sales of Music, increased 10.4% during the quarter.

Rental video Comps increased 3.8% from the same period last year primarily as a result of increased video game rentals resulting from the release of strong hit titles during the first quarter. We continue to respond to a shift of consumer preference towards buying DVDs and games instead of renting, and as a result, the combined sales and rental of movies and video games resulted in a Comp increase of 8.0%.

Gross Profit — Merchandise.For the first quarter, total merchandise gross profit dollars increased approximately $1.3 million, or 4.0%, to $33.4 million from $32.1 million for the same period last year, primarily as a result of higher revenues. As a percentage of total merchandise revenue, merchandise gross profit increased to 30.8% for the quarter compared to 30.5% for the same period in the prior year.

Gross Profit — Rental.For the first quarter, total rental gross profit dollars remained constant at $15.6 million. Higher rental revenues were offset by lower margin rates. As a percentage of total rental revenue, rental gross profit decreased to 66.3% for the quarter compared to 68.2% for the same period in the prior year, which was primarily due to increased rental asset depreciation expense for the quarter, as compared to the prior year.

Selling, General and Administrative Expenses (“SG&A”).As a percentage of total revenue, SG&A decreased to 33.1% for the first quarter compared to 33.5% for the same quarter in the prior year, primarily as a result of leverage from higher revenues. SG&A increased approximately $0.8 million during the first quarter, or 1.9%, to $43.7 million compared to $42.9 million for the same quarter last year. The increase in SG&A was primarily related to increased store labor costs and stock compensation expense.

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 increases in the program in the amounts of $2.5 million on April 4, 2005; $5.0 million on March 15, 2006; $2.5 million on October 3, 2006; and $7.5 million on November 20, 2007. During the first quarter of fiscal 2008, we purchased a total of 158,041 shares of common stock at a cost of approximately $1,289,796, or $8.16 per share. As of April 30, 2008, a total of 2,813,791 shares had been repurchased under the program at a cost of approximately $18.6 million, for an average cost of approximately $6.59 per share. As of April 30, 2008, approximately $3.9 million remains available under the stock repurchase program.

Fiscal Year 2008 Guidance

“Net income for the quarter was substantially better then our internal forecast, which is the basis for our guidance,” said Dan Crow, Vice President and Chief Financial Officer. “From an internal perspective, we are confident about our ability to grow our earnings for the remainder of the year; however, we are concerned about the uncertain economic outlook for the remainder of the year. Consequently, we are reaffirming our guidance of net income per diluted share ranging from $0.95 to $1.00 for the full fiscal year ended January 31, 2009.”

Safe Harbor Statement

This press release contains “forward-looking statements.” Hastings Entertainment, Inc. is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, consumer appeal of our existing and planned product offerings, and the related impact of competitor pricing and product offerings; overall industry performance and the accuracy of our estimates and judgments regarding trends; our ability to obtain favorable terms from suppliers; our ability to respond to changing consumer preferences, including with respect to new technologies and alternative methods of content delivery, and to effectively adjust our offerings if and as necessary; the application and impact of future accounting policies or interpretations of existing accounting policies; unanticipated adverse litigation results or effects; and other factors which may be outside of the company’s control. Please refer to the company’s annual, quarterly, and periodic reports on file with the Securities and Exchange Commission for a more detailed discussion of these and other risks that could cause results to differ materially.

About Hastings

Founded in 1968, Hastings Entertainment, Inc. is a leading multimedia entertainment retailer that combines the sale of new and used books, videos, video games and CDs, as well as trends 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 operatewww.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 our filings with the Securities and Exchange Commission.

Consolidated Balance Sheets
(Dollars in thousands)

	April 30,			April 30,			January 31,
	2008			2007			2008
	(unaudited)			(unaudited)
Assets
Current Assets
Cash	$	4,003		$	5,227		$	3,982
Merchandise inventories, net		164,199			164,437			171,958
Deferred income taxes, current		3,590			3,009			3,441
Other current assets		10,384			10,677			11,386
Total current assets		182,176			183,350			190,767
Rental assets, net		13,613			11,235			13,236
Property and equipment, net		51,006			54,958			52,572
Deferred income taxes		2,831			2,583			2,756
Intangible assets, net		391			403			391
Other assets		1,143			289			499
Total assets	$	251,160		$	252,818		$	260,221
Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable	$	64,335		$	68,224		$	76,364
Accrued expenses and other liabilities		35,682			34,688			36,675
Total current liabilities		100,017			102,912			113,039
Long-term debt, excluding current maturities		42,686			46,750			40,616
Other liabilities		4,639			4,466			4,758
Shareholders’ equity
Preferred stock		—			—			—
Common stock		119			119			119
Additional paid-in capital		37,249			36,845			37,125
Retained earnings		78,881			68,131			75,892
Other comprehensive income		3			35			(15	)
Treasury stock, at cost		(12,434	)		(6,440	)		(11,313	)
Total shareholders’ equity		103,818			98,690			101,808
Total liabilities and shareholders’ equity	$	251,160		$	252,818		$	260,221

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

	Three Months Ended
	April 30,
	2008			2007
	(unaudited)			(unaudited)
Merchandise revenue	$	108,317		$	105,064
Rental revenue		23,619			22,948
Total revenues		131,936			128,012
Merchandise cost of revenue		74,952			72,997
Rental cost of revenue		7,971			7,300
Total cost of revenues		82,923			80,297
Gross profit		49,013			47,715
Selling, general and administrative expenses		43,694			42,936
Pre-opening expenses		2			—
Operating income		5,317			4,779
Other income (expense):
Interest expense		(472	)		(714	)
Other, net		17			33
Income before income taxes		4,862			4,098
Income tax expense		1,873			1,614
Net income	$	2,989		$	2,484
Basic income per share	$	0.29		$	0.23
Diluted income per share	$	0.28		$	0.22
Weighted-average common shares outstanding:
Basic		10,362			11,007
Dilutive effect of stock awards		296			192
Diluted		10,658			11,199

Consolidated Statements of Cash Flows
(Dollars in thousands)

	April 30,			April 30,
	2008			2007
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	2,989		$	2,484
Adjustments to reconcile net income to net cash provided by operations:
Rental asset depreciation expense		4,037			2,780
Purchases of rental video		(8,363	)		(5,206	)
Property and equipment depreciation expense		4,867			4,876
Amortization		—			8
Deferred income tax		(224	)		64
Loss on rental videos lost, stolen and defective		297			292
Loss on disposal of other assets		188			11
Noncash stock-based compensation		164			15
Changes in operating assets and liabilities:
Merchandise inventory		11,412			5,669
Other current assets		1,002			(44	)
Trade accounts payable		(10,563	)		(4,182	)
Accrued expenses and other liabilities		(954	)		(3,329	)
Excess tax benefit from stock based compensation		(39	)		—
Other assets and liabilities, net		(745	)		150
Net cash provided by operating activities		4,068			3,588
Cash flows from investing activities:
Purchases of property, equipment and improvements		(3,490	)		(2,422	)
Net cash used in investing activities		(3,490	)		(2,422	)
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit facility		2,070			4,828
Purchase of treasury stock		(1,294	)		(729	)
Change in cash overdraft		(1,466	)		(4,112	)
Proceeds from exercise of stock options		94			237
Excess tax benefit from stock based compensation		39			—
Net cash provided by (used in) financing activities		(557	)		224
Net increase in cash		21			1,390
Cash at beginning of period		3,982			3,837
Cash at end of period	$	4,003		$	5,227

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

	April 30,			April 30,
	2008			2007
Merchandise inventories, net	$	164,199		$	164,437
Inventory turns, trailing 12 months (B)		1.73			1.73
Long-term debt	$	42,686		$	46,750
Long-term debt to total capitalization (C)		29.1	%		32.1	%
Book value (D)	$	103,818		$	98,690
Book value per share (E)	$	9.74		$	8.81
Price to Earnings Ratio, trailing 12 months (F)		8.4			14.2

	Three Months Ended April 30,
	2008			2007
Comparable-store revenues (G):
Total		4.2	%		-3.9	%
Merchandise		4.3	%		-3.2	%
Rental		3.8	%		-6.9	%

(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.
(F)	Defined as closing market value of the Company’s common stock on the last day of the period divided by fully diluted earnings per share for the period’s trailing twelve months.
(G)	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 included and closed stores are removed from each comparable period for the purpose of calculating comparable-store revenues.