Trans World Entertainment Posts Fifth Successive Year of Gains

FYE 2005
Theo Wargo/WireImage for xxDA1154

FYE storefront photographed in New York City on March 22, 2005. 

Trans World Entertainment reported $9.9 million in revenue to its fourth-quarter bottom line, which allowed the company to eke out $2.7 million, 9 cents per diluted share, on its 2015 annual sales of $358.5 million for the year ended Jan. 30, 2016.

This marks the fifth year in a row that the company has emerged in the black, after four years of red ink (from 2007 through 2010).

Trans World Entertainment Posts Lower Losses, Lower Sales

While sales were down 6.6 percent, net income was up 65 percent.

“Improvements in our merchandise assortment and presentation helped us deliver flat comparable store sales [in the fourth quarter] and historically high gross margins,” Trans World CEO Mike Feurer said in a statement. “While there is still work to be done, these results validate we are successfully leveraging our heritage, industry relationships and hard earned credibility with our customers to achieve our vision.  We emerge from 2015 with confidence in our path, as we continue to make progress in our evolution to become the leading entertainment and pop culture centric experience in the marketplace.” 

For the year, the company posted gross profit of 37.9 percent of revenue, while selling general and administrative expenses were 35.8 percent of revenue, which means the company posted $7.2 million in earnings before interest, taxes, depreciation and amortization.

Trans World “made investments throughout the year in merchandising infrastructure, organization and technology to support future growth and improve our store productivity," Fuerer told Wall Street analysts in a conference call, as recorded by Seeking Alpha. "These investments included the chain wide rollout of new marketplace fixtures to support the shift in our merchandise assortment and technology enhancements to improve analytics and increase efficiencies."

According to the chief merchandising officer Scott Hoffman, Trans World’s sales mix breaks out to 40 percent for video, 25 percent for music, 22 percent for trend, 11 percent for electronics, 2 percent for video games. Within that, music comparable-store sales decline 6 percent for the year, which is half the pace that overall music sales declined in the U.S. Trans World CFO John Anderson acknowledged during the conference call that while vinyl sales continue to grow, “its still a pretty small percent of our overall sales…about 2 percent.”

Trans World Entertainment Turns Profit as It Continues Shift From Music

The company finished the year with $104.3 million in cash and cash equivalents; and $120 million in inventory. The company’s shareholder equity will be reported when Trans World files its 10-K filing with the SEC, which is due by April 15.

During the Fourth Quarter, the company said it purchased 121,957 shares of common stock at an average price of $3.58 per share.  Since the inception of the program, the company has repurchased 1,872,043 shares of common stock at an average price of $3.82 per share. The company has approximately $14.8 million available for purchase under its repurchase program.

While the company opened 6 new stores and relocated four stores during the fourth quarter, the company finished the year with 299 stores, down from 309.


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