Entertainment retailer Hastings reported improved Q4 earnings and slightly lower revenue for fiscal 2007. (Read 10-K filing.) Comp-store music revenue was down 15.3% in fiscal 2007 (compared to a 9.3% decline in fiscal 2006 and 2.9% decline is fiscal 2005). In fact, music was the only one of the top eight product categories to decline in fiscal 2007.

The bad news for labels is that falling CD sales will result in fewer titles being stocked -- a painful double whammy -- that will result in even lower CD sales. For fiscal 2008, the company has budgeted $5.3 million to reformat 35 stores to reduce the retail space dedicated to music by 15-20%.