Trans World Entertainment losses widened in the third quarter, with the company showing $27.4 million (91 cents per diluted share) in red ink on sales of $195.2 million, compared to $14.3 million (46 cents per diluted share) in losses on sales of $260.6 million in the same quarter last year.
Trans World attributed the drop in sales to store closures-it averaged 786 stores in operations during this year's third quarter, versus the 962 in operation in the prior period-and a 14% decline in comparable-store sales for the three month period ended Nov. 1.
For the nine-month period ended Nov. 1, Trans World lost $59.5 million ($1.91 per share) on sales of $643 million, versus a $33.4 million loss ($1.08 per diluted share) on sales of $814.2 million. For the nine-month period, same-store sales were down 9%.
Despite an 18% reduction in overhead costs, selling, general and administrative expenses in the third quarter comprised 44.8% of sales, versus 40.8% in the corresponding period last year, while gross profit declined to 33.5% of revenue. As a result, the company's loss before interest, taxes, depreciation and amortization was $40.3 million.
In a statement, Trans World chairman and CEO Bob Higgins said that the company's operating results had been negatively impacted by the economy and to reflect lower expectations, the chain forecast an annual EBITDA loss of $10 million-$15 million, and a comparable store decline of 8%-10%.
Previously, the company said it expected EBITDA to be blank ink to the tune of $5 million-$10 million, while it was projected annual mid-single digit comparable-stores sales decline.
As of Nov. 1, the company's had drawn down $62.1 million from its revolving credit facility, versus the $81.8 million it had borrowed a year earlier. Cash stood at $9.1 million, inventory was $468.8 million and accounts payable were $193.3 million.
In related news, Barnes & Noble reported an $18.4 million loss (34 cents per diluted share) on sales of $1.1 billion for the three month period ended Nov. 1, versus net income of $4.4 million (7 cents per diluted share) on sales of $1.2 billion in the corresponding period of the prior year.
For the nine month period, Barnes & Noble lost $5.2 million (7 cents per diluted share) on sales of $3.5 billion, as compared with $20.8 million in net income (32 cents per diluted share) on sales of $3.6 billion in the prior year's corresponding period. As of November 1, 2008, the company operated 728 Barnes & Noble stores and 71 B. Dalton stores.
Earlier this week, Hastings Entertainment reported $3.6 million loss (36 cents per diluted share) on sales of $114.3 million, for the three month period ended Oct. 31. That compares with a $73,000 in net income (1 cent per share) on sales of $122.3 million in the prior third quarter.
For the nine month period, Amarillo, Texas-based Hastings lost $7,000 on $371.9 million, versus $4.4 million in net income (41 cents per share) on sales of $376.2 million in the corresponding period in the prior year.
Comparable store sales decline 6.5% for the period, with music the product category hurting the most with a 19.5% decline; video games down 14.8%; and rentals down 13.3%. All other product categories posted positive same-store sales.
Hastings previously projected net earning guidance in the range of
$0.95 to $1.00 for the full fiscal year ended January 31, 2009.
In light of the current financial crises and its impact on consumer spending, Hastings lowered its net earnings guidance to the range of 50 cents to 55 cents per share. Also, it changed its projection on comparable-store sales to a decline of mid-single digit from the previous estimate of a gain in the same range.
At mid-day, Trans World was trading at $1.61 down 14 cents from the previous day close; Hastings stood at $2.86, down 29 cents; and Barnes & Noble shares were $12.36, down 74 cents.