Trans World loss broadens in fiscal Q3
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DVD expands share in retailer's revenue
By Susanne Ault -- Video Business, 11/21/2007
NOV. 21 | Gains made in DVD, videogames and electronics still could not prevent Trans World Entertainment from reporting wider losses in its fiscal 2007 third quarter.
The retailer posted a $14.3 million net loss for the three months ended Nov. 3. That compares with the $11.4 million in red ink Trans World incurred for the same period last year. Revenue fell 12% to $260.6 million.
Trans World is succeeding in shifting its business model away from music to become a broader entertainment retailer, as DVD now nearly equals CD in revenue share. Management has long cited CD softness as its main Achilles’ heel in achieving profits.
Comp store sales of DVDs jumped 8%, with the format making up 38% of the chain’s sales in the quarter, up from 35% a year earlier.
The CD category dropped 21% in comparable store sales versus third-quarter 2006. Music represented 40% of the chain’s third-quarter 2007 business, scaled down from 48% last year.
Sales at Trans World’s electronics, accessories and boutique category rose 22% on a comp store basis, representing 13% of business. In third-quarter 2006, it totaled 10%.
Games lifted 29%, equaling 9% of business, which is up from 7% last year.
Overall, comparable store sales slid 4%, though that marks a shoring up of the 10% and 6% fall-offs experienced during Trans World’s first and second quarters, respectively.
In light of its financial struggles, Trans World CEO Robert Higgins is hoping to take the company private by offering to purchase all outstanding shares that he and his associates don’t already own. Trans World board of directors is allowing him to form a bid consortium of co-investors, but the company declined further comment during a Wednesday call with analysts.
“We continued to achieve positive comparable store sales in home video, videogames, electronics during the third quarter, however, these results did not offset the decline in music,” said Higgins. "Our third-quarter comparable store sales results did, however, show improvement over the first two quarters of 2007.”