Trans World Cuts Losses as FYE Store Closures Shrink Total Revenues 26%

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Trans World Entertainment lost $8.1 million, or $4.48 per diluted share, on revenues of $76 million for the fiscal quarter ended Aug. 3. That compares with net losses of $9.5 million, or $5.23 per share, on $102.2 million revenues over the previous year's corresponding period. 

The company's latest financial report shows it reduced red ink, even while revenue was decreasing dramatically by 25.6%, mainly due to store closures on the FYE side of the business, with the store count dropping to 206 outlets from 241 units. Comparable store sales declined 1.2% for the quarter, according to a comment from Trans World Entertainment CFO Ed Sapienza during a company conference call with investors. Within that, lifestyle saw comparable growth of 9.6% and, along with electronics, now comprise 58% of store revenue; while media suffered a comparable store decline of 12.8% and now comprise 42% of revenue. Within the latter segment, music sales were down 7.8%, while video sales fell 16.1%, Sapienza further reported.

Breaking out revenue by operation, FYE generated $41.7 million in revenue (down 17.4% from $50.55 million) and etailz revenue dropped to $34.3 million (down 33.6% from $51.6 million). For the latter drop in revenue, the company said it was due to a vendor rationalization initiative, which included eliminating unprofitable vendors.

For the 26-week period, the company lost $15.9 million, or $8.77 per share on revenue of $156.2 million -- less of a loss than the $17.66 million, or $9.73 per share, on $198.8 million revenue in the year earlier's six months results. 

During that period, the company saw a slight uptick in gross profit to 32.3% of revenue from 32.1% in the year earlier six-month period. But expenses swamped profit, accounting for 40.6% of revenue, up from 37.6% of revenue in the year-earlier period. 

Overall, the company posted an operating loss of $15 million, versus $17.5 million in the year earlier period, while adjusted earnings before interest, taxes, depreciation and amortization was $12.9 million -- up from $10.8 million in the first half of the prior year.

The company said that it's borrowing from the revolving credit facility almost doubled to $12.1 million from $6.3 million in the first half of 2018, with $16.1 million in availability remaining from the revolver. It closed the period with $9.92 million in cash on hand. 


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