Trans World Entertainment Widens Q3 Loss21 Nov, 2013 By: Erik Gruenwedel
Entertainment retailer has opened 14 f.y.e. stores this year
Trans World Entertainment Nov. 21 posted a third-quarter (ended Nov. 2) net loss of $3.3 million, up 50% from a net loss of $2.2 million during the previous-year period. For the fiscal year, the operating loss is $4.4 million compared with a net loss of $1.3 million last year.
New York-based Trans World operates the f.y.e. (For Your Entertainment) retail chain, in addition to Second Spin used packaged media stores, and related websites.
Comparable store sales for the quarter were down 3.7%. Total sales for the quarter decreased 13.1% to about $80 million compared to $91.8 million in 2012. During the quarter, the Trans World operated an average of 356 stores, compared to 379 last year, a 6.1% decline.
Comp video sales declined 3% due to a softness in DVD sales, while Blu-ray Disc sales performed well. Video represented 46% of Trans World’s revenue compared to 45% last year.
Music comp sales declined 7%, representing 30% of revenue compared to 31% last year. Trend comp sales increased 11%, which CEO Bob Higgins said the retailer plans to increase from 12% of quarterly revenue by “taking advantage” of entertainment-related merchandise.
Video game sales increased 8% due to the release of Grand Theft Auto V, while consumer electronics dropped 16%, reflecting increased competition in the headset category.
“We’ve been disappointed in our results, needless to say,” Higgins said on the fiscal call. “Given the competitive changes occurring in our industry, the company is establishing strategic initiatives to combat industry issues due to technology changes and shifts in purchasing patterns by consumers in the broader entertainment industry.”
The initiatives include mixing up the product categories in stores and online to compliment f.y.e.’s core lines of video and music, and make them more appealing to consumers. Higgins said Trans World is in the process of evaluating retail options to consumers — a process he said that could include digital distribution going forward.
The CEO said lone retail bright spots included growing margins in most product categories, in addition to the opening of five stores. Trans World has opened 14 f.y.e. retail locations this year — an anomaly in entertainment retail. Trans World ended the quarter with $86 million in cash, and continues to buy back shares.