Hastings Entertainment, Amarillo’s former success story of media merchandising, has seen better days.
The company declared Chapter 11 bankruptcy on June 13, and said it had enough capital left to continue operations for one month while it searched for a buyer.
Two weeks later, no news has surfaced on prospects for the company’s salvation.
Jim Litwak, who was named Hastings’ president in December, sat down for an interview with the Amarillo Globe-News on the subject of the entertainment chain’s future.
According to Litwak, interest from some potential buyers has increased since declaring bankruptcy.
“You’re out there for investors” he began.
And on top of that, Litwak said, some of the “refreshed” stores are seeing “strong double-digit profit increases.”
Initial reports said that if Hastings doesn’t find a buyer by July 13, the company would fold. A memo sent to employees warned that a mass layoff and/or shuttering of the distribution center on Plains Boulevard could cost them their jobs.
Hastings currently employs roughly 3,850 people. There are 36 locations in Texas, with about 12,000 jobs in the state. Litwak said that 411 of those jobs are in Amarillo.
Rumors had been floating that even if the company didn’t find a buyer, Hastings would try to keep 20 to 30 stores open. When asked about this, Litwak declined to respond directly, but said, “everything is on the table … I certainly think that would be a consideration” to potential investors.
When the news first broke about the bankruptcy, the business journal Publishers Weekly reported that the company had contacted 22 potential buyers, and had strong responses of interest from at least 10 companies.
While the interested investors did their due diligence towards a purchase, no deal was reached.
Asked if there had been more interest from buyers, Litwak said he couldn’t speak about the actual number or how many were interested, but confirmed that the company was becoming more “attractive” to investors.
“First thing, we’ve cut expenses by $12 million,” he explained.
This is a significant number.
Hastings posted a loss of $10.9 million on revenue of $420 million in 2014, and last year the loss jumped to $16.6 million and sales fell to $401.1 million. At this point, the company still has debts of $80 million in secured loans and $59 million in trade bills, so any reduction of expenses helps its cause.
Now, Litwak said, Hastings is already turning a profit, even though it won’t show up on paper until next year’s financial filings.
Fuel for this profitable fire is the transition from older forms of media — books, movies and CDs — to licensed products, collectibles, vinyl records, comic books and related merchandise, the things you can’t download.
Hastings currently has 123 stores, and 32 of those have been “refreshed” to accommodate this change in focus. A prime example is Amarillo’s Georgia Street Hastings, which has the books and CDs for which the brand was historically known relegated to the back of the store, with collectibles and vinyl near the entrance.
One of the most noticeable changes is the wide selection of new comic books, graphic novels and even back-issue runs from years past. Hastings partnered with Diamond Comic Distributors in 2012, making it the largest comic book retailer in the U.S.
Litwak said that the “strong statements” from Marvel and DC Comics, including the multibillion-dollar film franchises that dominate the box office, show that profitability from those products has the potential to grow.
While Litwak explained the “strong double-digit” profit increases in some of Hastings’ refreshed stores, he also said others were on track with increasing single-digit jumps.
But even the relationships that encouraged the increased profits have been strained by Hastings’ financial trouble. The company owes Diamond Comics Distributors $1.6 million, and Funko, a pop culture licensing-focused toy company that makes “pop vinyl” figures of well-known characters, is owed $2.5 million.
Litwak said the relationship between his company and its suppliers of pop-culture and comic items is ongoing.
“It’s in everyone’s interest that we continue,” he said, explaining that new products from Diamond and Funko are being delivered and sold to the benefit of all involved.
Founded in Amarillo in 1968, Hastings went through financial trouble previously and was bought from the Amarillo-based Marmaduke family in 2014 by Draw Another Circle LLC for a meager $21.4 million.
Many were surprised by the low sale price. A contributing factor could be that the company’s expansion in the 1990s involved leasing instead of buying properties, hoping for greater mobility, which lowers the company’s overall value. In Litwak’s view, the advantage of this setup is that Hastings has a lot of “attractive, low-rent leases.”
After declaring Chapter 11, Litwak said the company is now entitled to go back and renegotiate those leases to make “an OK deal good, and a good deal great.”
“I’m not here to say that Chapter 11 is a positive procedure,” he continued, but said the bankruptcy proceedings give the company “tools” to address its issues.
Litwak is confident Hastings will come out on top, and he should know. This isn’t his first time dealing with bankruptcy. He previously guided clothing retail giant Macy’s through Chapter 11 in the early 1990s, and the company emerged profitable (even if it was hit with some trouble over the past two years). After that, he was the president of Trans World Entertainment, which oversaw many big-box media chains like Sam Goody’s, which was rebranded as FYE and continues to operate today.
“My entire career has served to prepare me” for Hastings’ troubles, he said.
Though it has been a rough six months, Litwak concluded by saying the work ethic and “fortitude” of the employees at Hastings’ headquarters has been “beyond expectations.”
http://amarillo.com/news/latest-news/2016-06-29/hastings-president-everything-table
ing take care of himself, and he has THE DEATH!
