Trans World lost $11.8 million, or 38 cents per diluted share, on sales of $232.6 million, for the fiscal first quarter ended April 30. That compares with a $9.1 million loss, or 29 cents per share, on sales of $286.3 million.

Sales were down 19% in a quarter-to-quarter comparison, including a 6% comparable store decline.

The loss would have been even wider, but the company sold its shuttered Canton, Ohio distribution center for $6.3 million, which resulted in a net gain of $3.1 million that was favorably recorded in sales, general, and administrative expenses.

Consequently, the company reported gross profit at 35.7%, and SG&A at 38%. The comparable-store sales decline was entirely attributed to the music category, which dropped 23% on a comp-store basis, Trans World president Jim Litwak reported during a conference call with Wall Street analysts, according to a transcript of that call.

Even though music sales are down, the company said it doesn't have any plans to reduce the category beyond the 10% decrease in space allocation that occurred last year. Company executive VP and CFO John Sullivan said the management team sees an opportunity to capture a greater market share in music as CD sales decline, through boosting its catalog assortment and improving its music presentation in stores in secondary and tertiary markets.

All other product categories posted a comparable-store increase. Video sales, which is now the largest product category accounting for 41% of sales during the quarter, versus music's 37%, posted a 4% comp-store increase, largely due to catalog strength, Litwak said.

Videogames, which now account for 8% of the chain's business, posted an 11% same-store increase. In order to convince game vendors to increase allocations of hot titles and newly launched hardware systems to the chain, Trans World has reduced the videogame presence to 400 stores from 600. The move allows the chain to increase product allocations and strengthen its game-selling culture.

"Once we have established ourselves as a force in this category, we plan on expanding it to other stores," Litwak said.

Meanwhile, comparable-store sales for electronics, accessories and trend, which comprises 14% of the chain's overall business, increased 17% on a comp-store basis.

The company finished the quarter with 799 stores, while it had drawn down $23 million from its revolving credit facility, versus the $55 million it had tapped at the same time in the prior year.

Going forward, chairman CEO Bob Higgins said the company plans to increase marketing efforts in 2008, including expanding the chain's use of television and radio.

The company's share price dropped to a $2.44 at close on May 22, down from the prior days $2.77 close. Trans World share price closed today at $2.51, down from $2.54 in the prior day.