Business Matters: Trans World's Music Sales Get a Boost From Healthy Catalog Performance
Business Matters: Trans World's Music Sales Get a Boost From Healthy Catalog Performance

Trans World Entertainment reported $12.4 million in net income, or 38 cents per diluted share on sales of $231.3 million for its fiscal fourth quarter ended Jan. 29, 2011. That marked an improvement by $1 million over the $11.4 million in net income the Albany, N.Y.-based company reported in the fourth quarter of the prior fiscal year when sales were $295.4 million.

During a conference call, Trans World chairman and CEO Bob Higgins reported comparable store sales were down 6%, while video sales were flat and music was down 5.

For the fiscal year ended Jan. 29, Trans World narrowed its loss by 27% to $31 million, or 99 cents per diluted share, on sales of $652.4 million, from the $42.4 million loss, or $1.35 per share it recorded in the prior fiscal year when sales were $814 million.

The 20% year-over-year decline in sales is largely due to store closures. During the fiscal year just completed, the company operated an average of 532 stores as compared to an average of 688 stores in the prior year. During the year, the company closed nearly 100 stores to finish with 460 locations.

For the year, the chain's loss before interest, taxes, depreciation and amortization totaled $14.2 million, as compared to a negative $34 million in EBITDA in the prior fiscal year. The narrower loss was due to an increase in profit margin to 33.6% of sales in the current fiscal year, versus 32.1% in the prior period; and due to better expense control, with selling general and administrative expenses comprising 35.8% of sales, versus the prior year when SG&A took up 36.3% of sales.

"2011 is a key year for us to improve our performance on a per store basis through capitalizing on the foundation we have built, to deliver better value, control expenses and drive additional bottom line contribution," Higgins said during a conference call with Wall Street analysts, according to a copy of the transcript at seekingalpha.com. He added that the company would continue to cntinue invest "in people, technology and merchandise to support our future."

For the year, the music category turned in a 4% comparable store decline on a dollar basis, versus the 12.8% album units sales decline Nielsen SoundScan reported for last year. Music sales comprised 36% of the chain's sales, up from 35% in fiscal 2009.

Elsewhere within the store, the chain posted a comparable-store decline of 4%. Within the store, video sales, which represented 44% of total sales, posted a 1% comparable-store increase. The other categories -- electronics, accessories and trend -- were flat for the year, and represented 15% of the chain's business.

Looking at select items from the company's year-end balance sheet, the company had $75 million in cash, compared to $72 million at the end of the prior fiscal year, while inventory stood at $234 million versus $267 million at the end of 2009.

Trans World shares closed at $1.94 on March 3, up 21 cents from the close of trade on March 21, which was the last day of trading before the company announced its fiscal results early on March 22.

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