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Trans World Eyes Blu-ray, Games for 2009 Resurgence

5 Mar, 2009 By: Erik Gruenwedel

Trans World

Trans World Entertainment Corp. March 5 said it would aggressively push Blu-ray movies and video games in 2009 in an effort to re-establish itself in the challenged entertainment retail landscape.

The Albany, N.Y.-based parent of the f.y.e chain, Second Spin stores and related Web properties, said it would work with studios to develop additional in-store BD and DVD promotions, in addition to increasing store exposure to game hardware and software.

“We are only generating $75 million [in games] and in only 347 stores, or just 8% of total sales,” said founder and CEO Robert Higgins in an analyst call. “It represents a tremendous opportunity to increase sales and profit. We are no longer a music retailer.”

Indeed, Trans World reported a 21% decline in fourth-quarter (ended Jan. 31) same-store music CD sales; a 20% drop for the fiscal year. Music represented 35% of revenue, compared to 39% in fiscal 2007.

Same-store DVD video sales fell 9% in the quarter, but declined just 3% for the year due in large part to double-digit growth of Blu-ray. Movies represented 42% of Trans World’s business compared to 39% in 2007.

COO Jim Litwak said the company actually gained market share in fourth-quarter catalog DVD sales despite the category’s lackluster overall performance.

He said the company needed to build a sustainable business model that was less impacted by technological advances on physical product.

Litwak said Trans World would turn around underperforming businesses such as games, provide a stronger store presence in consumer electronics and expand space allocations for Blu-ray.

“Clearly, a stronger merchandising strategy is critical to our success,” he said.

Trans World posted a quarterly net loss of $9.4 million, compared to a loss of $66 million during the previous year period. Results included a non-cash impairment charge to write down certain assets totaling $15.2 million.

Quarterly sales fell to $344.7 million, compared to $451.5 million last year. Comparable-store sales for the quarter decreased 14%.

For the year, total sales fell 22% to $988 million, compared to $1.266 billion in 2007. Comp-store sales for the year dropped 11%. The net loss for 2008 was $69 million, compared to a loss of $99.4 million in fiscal 2007.

The chain closed 74 stores in the quarter to end 2008 with 712 stores, compared to 813 during the previous year period.


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