Trans World Entertainment Acquires Digital Retailer for $75 Million

19 Oct, 2016 By: Erik Gruenwedel

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Corporate owner of ‘For Your Entertainment’ (f.y.e.) stores seeks to up digital presence — on Amazon

Trans World Entertainment Corp., owner/operator of “For Your Entertainment” (f.y.e.) home entertainment retail stores, has acquired Etailz Inc., a Spokane, Wash.-based digital marketplace retailer, for $75 million in cash and stock. 

The price includes $4.2 million in bonuses to be paid to Etailz employees remaining with the company over the next two years. The company has 21 staffers listed on its website.

“This acquisition represents a significant step forward in the re-invention of Trans World Entertainment,” CEO Mike Feurer said on a conference call.

Indeed, with just 5% of sales generated online, TWEC eyes the transaction as a combination of 40 years of brick-and-mortar retail with direct-to-consumer online capability.

“In the past several years, the entertainment-based retail industry and the retail landscape in general have experienced tectonic shifts and disruptions necessitating creative and transformative collaborations in order to continue serving customers within such a dynamic and competitive environment,” Feurer said.

Etailz will continue to operate as a standalone entity led by co-founder/CEO Josh Neblett. TWEC will operate as the corporate umbrella.

Notably, Etailz primarily operates via the Amazon Marketplace, an online platform that enables third-party sellers to hawk new and used merchandise alongside Amazon’s own offerings. Feurer said the transaction was based on the “autonomous running” of f.y.e. and Etailz — the latter selling more than 30,000 product items with over 2,000 wholesalers.

“They’ve done well in their execution and we expect them to continue to do so. They are a true retailer,” Feurer said.

Trans World Entertainment is in the midst of re-allocating store space for trend and pop-culture merchandise at the expense of packaged media, including DVD/Blu-ray Disc and music CDs. It is opening 18 reformatted f.y.e. stores prior to the winter holidays.

Trend is a growing retail category — notably at video game retailer Game Stop — despite the fact rival home entertainment chains Hastings Entertainment and Movie Stop recently shuttered operations after redoubling efforts on the category.

Feurer said he believes Etailz can help f.y.e. grow its trend, lifestyle and pop culture merchandise revenue.

“We clearly see there are opportunities relative to synergies in a merchandise assortment and our emerging merchandise assortment as we’re learning about the customer needs and requirements,” he said.

Trans World Entertainment ended the most-recent fiscal period with a net loss of $4.7 million on revenue of $64.3 million, compared with a net loss of $3 million on revenue of $68.5 million during the previous-year period. The company operated 292 stores in the period, compared with 310 in the previous-year period.

From 2013 to 2015, Etailz saw revenue increase from $27 million to $93 million, with operating income growing from $800,000 to $3.4 million. For the past 12 months (ended Sept. 30), Etailz revenue was $116 million, up 40% from the previous period.

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