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Trans World Loss Widens, But DVD Sales Strong

18 May, 2006 By: Erik Gruenwedel



Strong DVD sales couldn't overcome sluggish music and video game business at Trans World Entertainment in the first quarter.

The chain posted an $8 million loss in the quarter ended April 29, compared to a $1 million loss during the same period last year.

Revenue for the quarter, which includes operations of the bankrupt Musicland stores acquired March 27, were $288.5 million, compared to $285.4 million last year.

Overall, same-store sales fell 7%, including 6% decline at mall-based f.y.e., Sam Goody and Suncoast locations and 9% drop at free-standing Coconuts Music and Movies, Strawberries Music, Wherehouse, Sam Goody, Spec's and Second Spin stores.

Comp-store DVD sales improved 9% and, combined with VHS, rose 3%, or 33% of total sales compared to 28% last year. Music sales dropped 13% (from 55% to 51% of total sales) due in part to comparisons with last year's successful 50 Cent CD release. Video game sales dropped 4%, or 7% of total sales.

Notable DVD sellers included Harry Potter and the Goblet of Fire, King Kong, The Chronicles of Narnia: The Lion, the Witch and the Wardrobe, Walk the Line, Saw II and Chicken Little.

“We did see a good performance in our DVD category helped by strong DVD releases and in other categories supported by improved merchandising initiatives in these businesses,” said Robert Higgins, chairman and CEO of Trans World, in a statement.

Higgins said he expects remerchandising efforts across all product categories, in addition to improved music offerings, DVD releases of High School Musical, Underworld: Evolution, The Pink Panther, Failure to Launch, Freedomland and Madea's Family Reunion to help increase total second quarter sales 20%.

“Our integration of the Musicland chain [about 335 Suncoast, Media Play, and Sam Goody locations] is on track and we expect the acquisition to be accretive in the third quarter,' Higgins said.

The 50,000 square foot Media Play locations will be re-opened in June as f.y.e. stores. The company will re-brand all Sam Goody stores to f.y.e. by the fourth quarter.

The company plans to have equal music and video sales by the end of the year.

“The [Musicland] acquisition strengthens our market share position in all categories, especially DVD,” Higgins said. “It reinforces our transition from a music retailer to a destination retailer of all things entertainment.”

Trans World during the quarter announced the acquisition of Mix & Burn, which allows consumers the ability to burn custom CDs and download music files to portable music players at the retail level. The company plans to offer video downloads by 2007.

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