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Trans World Entertainment Considering Store Expansions in 2012

18 Aug, 2011 By: Erik Gruenwedel

Higher margins on movies (notably Blu-ray Disc) and music inventory and closure of Carson, Calif. distribution center help reduce net loss

Trans World Entertainment Corp. Aug. 18 said it would consider opening new f.y.e. (For Your Entertainment) stores in 2012 and 2013 given the shrinking entertainment retail landscape and accompanying opportunities in select regions.

Albany, N.Y.-based Trans World operates f.y.e. and Suncoast retail stores nationwide, in addition to Second Spin used product locations and related websites.

In a call with analysts to discuss its quarterly results, CEO Robert Higgins said shrinking of retail shelfspace for DVD movies and music in big box stores offers growth potential for f.y.e. if approached correctly.

"We're getting close to that, [and] I think you'll see some of that in 2012 and probably more of it in 2013," Higgins said. "There are plenty of opportunities out there."

The company reported a second-quarter (ended July 30) loss of $7.3 million, down from a loss of $15.8 million during the previous-year period.

The company generated $108 million in sales, down 18% from sales of $135 million last year. It operated 442 stores during the quarter, compared with 538 stores during the same period last year.

In video, which includes Blu-ray Disc and DVD movies and TV shows, same-store sales declined 8%. Among the top 50 video product categories, comp sales dropped 20%. Video represented 41% of Trans World’s revenue compared to 42% during the same period last year.

In music, comp sales decreased 9% and 27% for the top 50 product categories. Overall same-store sales declined 6%.

Higgins attributed the declines to a weak slate of new releases in both music and video.

“We’ve been able to offset the negative comps with improved gross margins, [which includes Blu-ray],” he said.

Consumer electronics and trend sales increased 9% and 8%, respectively. Video game sale comp revenue dropped 14% and represented 5% of total revenue. Trans World sells games in just 121 stores.

Higgins said testing of self-serve disc rental kiosks in two California f.y.e. stores was ongoing and that results were too early to determine given their launch just four weeks ago.

“I’m pleased to announce that our trend in improving results has continued,” Higgins said. “We’re moving in the right direction.”

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