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DVD Up, But Can't Make Up for Music Drop at Trans World

21 Aug, 2008 By: Erik Gruenwedel

The DVD cash cow couldn’t make up for music sales’ ongoing meltdown at Trans World Entertainment.

A 17% decline in same-store (open at least 12 months) music CD sales contributed to Trans World Entertainment posting a second quarter (ended Aug. 2) loss of $19.2 million, compared to a loss of $10.1 million during the same period last year.

Albany, N.Y.-based Trans World operates 789 mostly f.y.e. (for your entertainment), Suncoast and Second Spin retail stores, in addition to related Web sites.

DVD comp sales increased 1% due primarily to a weakness in new releases, according to company executives. Video represents nearly 40% of Trans World’s revenue, up from 36% last year.

“Our strength in DVD catalog continues to drive this business as the studios recognize our ability to differentiate ourselves … through expanded assortment and depth of product,” said Jim Litwak, president and COO, in a call with investors.

Bob Higgins, founder, chairman and CEO, said he expects a strong fourth quarter but remains cautious due to having had a disappointing fourth quarter last year.

“We feel pretty good about where the new releases are this year, but we feel even better about what we are going to be able to do with catalog for Q4,” Higgins said.

Comp video game sales fell 10%, due largely to a strategic decision implemented last September to reduce the number of stores carrying games and hardware from 600 to 400.

Litwak said the company remains committed to improving its game culture. Video games represented 8% of revenues.

Same-store sales of consumer electronics increased 6% and generated14% of Trans World’s revenues.

Operating 18% fewer stores contributed to total Trans World sales falling 19% to $215.2 million from $267.3 million last year. Same-store sales fell 7%. The company shuttered 10 stores.

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