Trans World Entertainment is expecting to end its fiscal year Feb. 3 with millions in losses, after a disappointing holiday sales season.

"With this season's holiday sales numbers being lower than our expectation, we now expect a net loss for fiscal 2007 in the range of 15 to $20 million, compared to our previously issued guidance of breakeven," Trans World executive VP and CFO John Sullivan told analysts during a conference call with Wall Street. "Our prior earnings forecast of breakeven for the year was predicated on a fourth quarter comp sales decrease in the low-single digits, based on an improving trend we had experienced through the first three quarters."

Trans World's comp sales decline in the first quarter was 10%, which improved to minus 6% in Q2, and moved to minus 4% in Q3.

"We are now forecasting our annual [earnings before interest, taxes, depreciation, and amortization] in the range of 15 to $20 million," said Sullivan. The company's prior expectation was about $40 million in EBITDA.

For the five-week period ended January 5, 2008, comparable store sales decreased 13%. Total sales for the five-week period decreased 24% to $264 million compared to $348 million for the same period last year. In addition to the same-store sales decline, Trans World operated 14% fewer stores, on average, during the period.

For the nine-week period, total sales were $378 million compared to $469 million for the same period last year, a decrease of 19%.

By category, comp sales were down 28% in music, and 7% in video, during the November/December period, reported Trans World president Jim Litwak. The video category represented 42% of Trans World's business, compared to 41% last year, while music represented 33% of the chain's business in the period, compared to 39% last year.

"Music continues to decline at an accelerated rate, due to the lack of good product and lower demand. Top 50 in this category was down," Litwak said. "The lack of any new product and new hits this fourth quarter, was just, was really astounding is what it was. I mean it was Josh Groban, it was Alicia Keys, it was Mary J. Blige, and I would think with the exception of Josh Groban, none of these really performed at the way that we or anybody thought that they would."

But Trans World still sees opportunity in music because it is the only player left in supporting catalog, which " may give us the ability to capture greater market in a smaller diminishing pie."

Meanwhile, video games posted a 6% comparable-store increase while other product lines including electronics, accessories and boutique items had a same-store increase of 9%. "Video games had positive comparable sales, due to improved hardware allocations of Wii, PS3, and Nintendo DS Light, as well as improved software sales," Litwak said.

During the quarter, Trans World ran liquidating sales at 138 stores that will close by its Feb. 3 year-end to leave the chain with 817 outlets.