Trans World Q1 Video Sales Beat Industry Average21 May, 2009 By: Erik Gruenwedel
During a recession even downward results can be a positive.
That was the case for Trans World Entertainment Corp., which reported a 4% decline in same-store video sales in the first quarter (ended May 2), compared to a 4% increase during the previous year period.
Albany, N.Y.-based Trans World operates 704 f.y.e. (For Your Entertainment) and Second Spin used product retail stores, in addition to related Web sites.
“We continue to operate in a challenging environment, however, we have taken positive steps in the first quarter,” said founder and CEO Jim Higgins.
The company said sales of DVD and Blu-ray Disc titles generated about $82.3 million, representing 43% of overall revenue.
In a conference call with investors, Jim Litwak, president and COO, said he was pleased that video sales exceeded industry results, which were down 12%.
“Strong promotions, lower vendor costs and the performance of Twilight helped us outperform the industry,” Litwak said.
The executive said Blu-ray as a category continued to perform below expectations due to slower-than-expected penetration of hardware and higher prices on catalog titles. Litwak said BD new releases remained a bright spot to the category.
“Despite operating 12% fewer stores, we were able to gain market share in video,” he said.
Indeed, Trans World lowered inventory costs $84 million and shuttered eight stores. Sales, general and administrative (SG&A) costs declined 17.2%, reflective with a 17.7% sales decline.
“Reducing costs in relation to sales is a constant focus,” said CFO John Sullivan.
Music comp sales declined 13% to $68.9 million, representing 36% of revenue, compared to 37% last year. For the quarter, the music industry was down 19%, according to Litwak.
Comp games sales decreased 13%, to $15.3 million, or 8% of total revenue business, which was identical to last year. The game industry was down 8%.
Electronics, accessories and trend declined 11% to $24.8 million (13% of business), compared to 14% last year.
Overall, Trans World reported a net loss of $13.7 million, compared to a loss of $11.8 million last year. Total sales fell 18% to $191.4 million from $232.6 million. Same-store sales declined 9%.