Trans World Entertainment Opening Stores16 Aug, 2012 By: Erik Gruenwedel
Packaged-media retailer narrows Q2 loss 74% and posts 10th consecutive quarter of improved results
Trans World Entertainment Corp. Aug. 16 said it plans to open several new packaged-media retail stores entering the fourth quarter, including a high-profile location at Annapolis Mall in Maryland starting at the end of September.
Albany, N.Y.-based Trans World, which operates f.y.e. (For Your Entertainment), Suncoast and Second Spin packaged-media retail stores, and related websites nationwide, said the store openings reflect a willingness among landlords to place entertainment retail in their locations, according to founder and CEO Robert Higgins.
Speaking to analysts in a conference call, Higgins said there still exists a consumer need for entertainment retail in malls and shopping centers. He said landlords covet the category and Trans World is the only true entertainment retailer operating at the national level.
"We'll just do phenomenal in that mall, we got a great location … and I think we've made a good economic deal on the space," Higgins said. "We should do well there."
The CEO said the new stores should be profitable from the get-go according to pro-forma projections.
"One of the good things about opening late in the year is that the pro-forma projections in the next few months and into next year have to be profitable if we are going to sign off on them," Higgins said. "I'm not saying we aren't going to miss one now and then, but everything we're planning on opening will have good contributions to the company in the first full-year of operation."
He said video, which includes DVD and Blu-ray Disc movies, would feature prominently in the new stores and throughout the chain considering the category saw a 7% increase in sales in the Trans World's second quarter, ended July 28. Disc sales were primarily driven by catalog titles.
Meanwhile, Trans World reported a second-quarter net loss of $1.9 million — down 74% from a net loss of $7.3 million during the previous-year period. Through the first-half of the year, Trans World generated profit of $900,000 compared with a loss of nearly $10 million last year.
Revenue topped $91 million, compared with $108 million last year. The retailer operated an average of 379 stores in the period compared with 442 stores last year — a 14% decline. Same-store sales — open at least 12 months — were essentially flat.
Selling, general and administrative expenses decreased 19% to $36.3 million, compared with $44.8 million for the comparable period last year. The reduction in SG&A expenses was due to the closing of underperforming stores and continued effective expense management.
For the 26 weeks, total sales decreased 15% to $203.3 million, compared with $239.5 million for the same period in 2011.