Handleman Announces Loss, Crave Consolidation

In reporting quarterly and year end financial results, including an overall net loss of $6.5 million for the fourth quarter, music and game distributor the Handleman Company announced that it has consolidated Crave Entertainment Group's game distribution facility in California into Handleman's already existing facility in Indianapolis. Handleman, which acquired formerly Newport Beach, California headquartered Crave in October 2005, noted that the move was made to save on rent and freight costs. The overall Crave company includes game publisher Crave Entertainment and game distributor SVG Distribution, which distributes video game software, hardware and accessories to more than 30,000 retail stores in North America, but indications are that Crave will continue publishing and distributing as usual, despite the move. Crave Entertainment's publishing division, which exclusively publishes titles in the U.S., has recently released titles such as World Championship Poker 2, The Bible Game, and Pinball Hall Of Fame, as well as publishing titles from the Tokyo Xtreme Racer series in North America. The company also plans to release Dave Mirra BMX Challenge for the PSP later this year, according to its official website. Stephen Strome, the Handleman's chairman and CEO noted, "During the year, we acquired two businesses and began an integration process focusing on achieving the synergy potentials and leveraging sales opportunities. These acquisitions expand our customer base and product categories, while providing the company with a more diverse platform for growth. We are implementing our plan to leverage these opportunities and expect improved financial performance during fiscal 2007." Handleman's overall results were affected negatively by "overall weakness in U.S. music industry sales", as a major music CD distributor, and going forward, Handleman "....expects an operating loss for its first quarter greater than the loss it incurred during the same period of fiscal 2006. The first quarter is expected to be the weakest quarter of the Company's fiscal year. The Company expects to return to profitability during its second quarter."