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Trans World Entertainment Corp. Ups Fiscal-Year Profit

3 Mar, 2016 By: Erik Gruenwedel

Entertainment chain transitioning from ‘commodity retail’ to ‘lifestyle-oriented’ experience, says CEO

Who said entertainment retail is dead?

Trans World Entertainment Corp., which operates the f.y.e. (For Your Entertainment) packaged-media and trend retail chain, March 3 reported a 51% increase in fiscal-year (ended Jan. 30) income to $2.7 million, from $1.8 million during the previous-year period. Revenue topped $334.6 million from 309 stores, compared with $358.4 million in the previous period when it operated 329 stores.

Trans World Entertainment also operates select Suncoast stores and websites www.fye.com and www.secondspin.com.

For the quarter, TWEC reported income of $9.9 million, which was down from income of $11.7 million during the previous-year period. Same-store sales were flat (down 0.7%) with sales down 4.4% to $121.3 million, compared with $126.9 million in 2014. 

“We are pleased with the progress made in 2015, improvements in our merchandise assortment and presentation helped us deliver flat comp sales and historically high gross margins,” CEO Mike Feurer said on the company's fiscal call.

The key driver to quarterly and fiscal results was trend, which includes action figures, bobbleheads, T-shirts, posters and related collectibles. Comp sales increased 39% in the quarter. Sales were driven by both hardline and softline goods. Trend represented 29% of the business in the quarter, compared with 20% a year earlier. For the year, comp sales increased 40%. Trend represented 22% of fiscal-year business compared to 15% in the previous year.

Electronics comp sales increased 20%, driven by expansions in assortment and improved presentation. Electronics represented 13% of quarterly revenue, compared with 11% a year ago. For the year, comp sales increased 13%. Electronics represented a 11% of revenue compared to 10% a year ago.

Mirroring industry moves toward digital distribution and streaming, video comp sales declined 16% in the quarter. Video represented 33% of sales, compared with 40% a year ago. For the year, comp sales for video declined 11%. Video represented 40% of the business during the year, compared with 44% a year earlier.

“As discussed on the last call, we continue to see industry-wide declines in physical video due to non-physical options [i.e. subscription streaming] and we are adjusting our inventory position accordingly,” said Scott Hoffman, chief merchandising officer.

Music comp sales declined 6% in the quarter. Growth in vinyl is helping to offset declines in CDs. Music generated 22% of the quarter sales, compared with 24% a year ago. For the year, comp sales declined 6% and represented 25% of total sales compared with 27% in the previous year.

Video game comp sales fell 52% in the quarter. Games represented 2% of the business in the quarter compared to 4% a year ago. Game sales represented 2% of sales for the year compared to 4% a year ago.

“We continue to shift our inventory investments and space allocation away from games to our higher-margin growth categories,” Hoffman said.

CEO Feurer attributed the results to investments made throughout the year in merchandising infrastructure, organization and technology. Investments included rollout of new marketplace fixtures to support the shift in merchandise assortment and technology enhancements to improve analytics and increase efficiencies.

“We’re transforming, evolving from a company that was considerable destination commodity product and we’re leveraging 40 years of tremendous opportunity in the entertainment space now into a more lifestyle oriented experience,” Feurer said. 

About the Author: Erik Gruenwedel

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