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Trans World to Grow Video at Wherehouse

20 Dec, 2003 By: Erik Gruenwedel

Financially troubled Wherehouse in 2004 will add more VHS and DVD to its product mix as the 112-store chain attempts to resurrect its fortunes.

In addition, three key Wherehouse executives have been retained by parent company Trans World Entertainment, which acquired the bankrupt 148-store Carson, Calif.-based chain in October for $35.6 million in cash and $5 million in assumed debt. Trans World has since shuttered 36 non-performing stores.

“We are planning on letting [Wherehouse] keep [its] identity,” said Fred Fox, EVP of merchandising and marketing at Albany, N.Y.-based Trans World. “Obviously, we've got a lot of work to do to determine what long-term strategy is relevant to the brand.”

As part of ongoing restructuring, the purchasing and allocation functions for all Wherehouse inventory, with the exception of music and used product, will relocate to Albany. The other responsibilities will be managed in Carson.

In the short term, purchasing and allocations of video game product will be handled in New York.

“Eventually it will go [to Carson] as well,” said Fox.

Trans World, which lost $6.5 million on sales of $268.5 million in the third quarter ended Nov.1, had increased quarterly same-store sales by 5 percent compared with the same period last year.

Kevin Milligan, former head of music and video purchasing at Wherehouse, has been named VP of West Coast operations. Joining Milligan in Carson are music executives Violet Brown and Isabelle Salazar.

Trans World's portfolio, which includes FYE (For Your Entertainment), Coconuts Music & Movies, Strawberries Music & Movies, Spec's Music, Planet Music, and Saturday Matinee outlets, carries about 60 percent music and 40 percent videos and games. Wherehouse stores stock 80/20 percent music and video/video games.

“The prior management didn't have the resources or the inclination to grow the video business, which has been increasing [throughout Trans World's businesses] over the last two years in heavy double-digit increases,” Fox said.

“I think you will see a fairly significant shift [in product focus],” he said. “I've deployed a gross-margin-return-on-investment analysis on every inch of every [Wherehouse] store. While music has a higher margin, if [video] will turn faster, it can certainly win that game.”

Wherehouse also has employed a strategy to help stores in select markets better reflect the music and movie consumption habits of the local demographic, Fox said.

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