Trans World Entertainment Ups Q1 Income on Deceased Founder's Insurance Payout22 May, 2017 By: Erik Gruenwedel
Life insurance payout on deceased founder Bob Higgins contributed to profit increase
Trans World Entertainment Corp. May 22 announced first-quarter (ended April 29) income of $3.5 million, compared with income of $27,000 during the previous-year period. Revenue increased 39% to $100 million, from $75 million a year ago.
TWEC attributed the increase to an $8.8 million life insurance payout (“other income”) on the death of founder/chairman Bob Higgins, who died March 1. Without the settlement, the company would have realized a $5.2 million loss in the quarter.
The New York-based company operates f.y.e. (Four Your Entertainment) home entertainment retail stores, in addition to e-commerce platform Etailz.com.
By segment, f.y.e. stores generated an operating loss of $4.4 million, compared with an operating loss of $700,000 a year ago. Revenue topped $65 million, which was down 14.2% from revenue of $75.7 million. Recent acquisition Etailz.com generated an operating loss of $821,000 on revenue of $37 million.
CEO Mike Feurer cited delays in federal tax refund checks in February for revenue declines, while March and April saw increased store traffic and sales.
“We were impacted by the well-publicized negative mall traffic trends and the continued expected disruption in our heritage physical media categories. I expect headwinds in the mall environment to persist to some degree,” Feurer said on the company's fiscal call.
Notably, video comp sales declined 17% in the quarter, representing 35% of revenue ($35 million) in the quarter, compared with 40% ($30.2 million) a year ago. Music sales declined 21%, representing 22% ($22 million) of sales, compared with ($18.9 million) a year earlier.
Combined, packaged media represented 57% ($57 million) of total revenue. The company is planning to expand consumer access to digital content on fye.com.
“We are still focused on providing our loyal customers an ample selection in these categories, while adjusting our inventory position accordingly,” said chief merchandising officer Scott Hoffman.