Hastings Entertainment, Inc.

History

Hastings ("the Company") was founded in 1968 as a retailing division of Western Merchandisers, Inc. ("Western"), a book and music wholesaler. Historically, the Company received corporate and support services from Western, including purchasing, distribution, information systems, accounting, payroll and advertising. In fiscal 1991, Western was acquired by Wal-Mart Stores, Inc. ("Wal-Mart"), and in connection with that transaction, the Company became an independent entity with all shares of the Company being distributed to the former shareholders of Western. Initially, the Company continued to rely on Western for certain corporate and support services, which were provided pursuant to a service agreement. In fiscal 1993, the Company determined that it was in its best interest to operate independently of the service agreement. As a result, the Company began to develop and expand a variety of corporate functions, including a proprietary, fully integrated information system designed to enhance its purchasing, inventory, personnel scheduling, distribution, planning and accounting functions. In fiscal 1994, Western was sold to Anderson News Corporation but continued to provide the Company with corporate and support services under its new name, Anderson Merchandisers, Inc. ("Anderson"). In fiscal 1995, the Company began implementing its information system and opened a new corporate headquarters and a 100,000 square foot distribution center, all in Amarillo, Texas. The Company reduced its use of Anderson's support services during fiscal 1995, and utilized no further services from Anderson after the service agreement expired effective January 31, 1996. As a result of developing and implementing its proprietary information system and corporate infrastructure, the Company spent $12.8 million from fiscal 1993 to fiscal 1997. The Company is committed to continually enhancing and improving its information systems and other corporate functions.

Superstores

In its early years, the Company focused on small markets and offered primarily books and music. In the 1980's, the Company's internal growth was supplemented by the acquisition of existing stores, most of which were located in malls. During the mid-1980's, the Company added videotape sales and rentals and complementary product categories to its selection of books and music and developed a larger superstore format to satisfy favorable consumer response to its multimedia retailing concept and provide more extensive product selection. As a result, beginning in the late 1980's the Company began focusing on opening superstores and on expanding, relocating, selling or closing its smaller mall-based stores. Today, the Company operates over 120 superstores in 16 states and is committed to further, profitable expansion.

Expansion

Hastings has identified hundreds of potential markets across the United States that meet its new-market criteria. It plans to open approximately 60 superstores over the next three years in certain of those markets for a total of approximately 170 superstores by the end of fiscal 2000. In addition to opening new superstores, the Company plans to continue expanding and remodeling its existing stores to meet customer demand. To assist in these expansion plans, the Company completed a $37 million public offering of 3,084,000 shares of common stock. The Company is traded on the Nasdaq National Market under the symbol "HAST".

Please visit our website at www.hastingsentertainment.com