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Trans World Has New Game Plan

10 Nov, 2004 By: Holly J. Wagner

After a difficult third quarter, Trans World Entertainment executives expect the holidays to drive a breakout fourth quarter based on a strong release slate for video, music and particularly games.

Games are already a rising star category for Trans World, CEO Bob Higgins told analysts, starting with the third-quarter release of Grand Theft Auto — San Andreas. “Following the success of Grand Theft Auto in the third quarter are releases of Halo 2 and Metal Gear Solid 3,” Higgins said. “Based on yesterday's [street date] results, we expect Halo 2 to be our best game of the year and probably our biggest game ever.”

Games factor heavily into the chain's strategy going forward, Higgins said.

“We see games complimenting improvements in music and video in the fourth quarter. Last year, our comps in games were negative 9 percent in the fourth quarter, so we expect to blow away the games numbers this year,” he said. “The one good thing about the game category is that is a category that everybody is about the same price on something like Halo 2. That's going to be a real driver for us. It really points out how a category can turn around for us in a quarter. We tore the cover off that this year, and we are going to be a serious game player for next year.”

Sales of the Top 50 DVDs were down 12 percent in the third quarter, which Higgins attributed to a weak release slate. He compared those results to a 9 percent comp-store sales increase in the second quarter, which fueled a 10 percent increase in the video category overall.

Comp-store sales were down 2 percent in the third quarter, CFO John Sullivan said. Comp-store sales in the video category were up 4 percent, but total sales in the video category were down 3 percent. The category accounted for 27 percent of the chain's sales.

Executives anticipate a video rebound for the fourth quarter.

“In addition to a strong release slate, our holiday plan is to capitalize on every category of our business by highlighting great gift-giving values,” Higgins said.

“DVD looks very strong, led by Shrek 2, Harry Potter 3 and Spider-Man 2. Other titles include Elf, Lord of the Rings [The Return of the King], I, Robot and Princess Diaries 2. We also expect the World Series 2004 DVD to be strong for us due to our strong presence in the Northeast,” he said. “Post holiday-season releases are stronger than last year as well. Those releases include Troy, Friday Night Lights and The Village.

Executives expect the chain, which includes the mall-based FYE brand as well as freestanding brands Wherehouse, Strawberries, Coconuts and Spec's, to hold its own against mass merchants for the holidays.

“We don't think it will be more aggressive. With Shrek 2, a few people had a higher cost, so we brought up the price on that last week,” Higgins said, adding that for the Thanksgiving weekend, “I think Wal-Mart's comment that they expect to go a little more for margin than sales this year, I think that will be true of a number of people. I think you will see people repeat what they did last year.”

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