ALBANY, N.Y., May 24 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq National Market: TWMC) today announced total sales for the
first quarter ended May 5, 2007 decreased 1% to $286.3 million, compared to
$288.5 million in the first quarter of 2006. Comparable store sales in the
first quarter of 2007 decreased 10%. For the first quarter of 2007, net loss
was $9.1 million, or $0.29 per share. Loss before extraordinary gain for the
first quarter of 2006 was $8.0 million, or $0.26 per share. Net loss for the
first quarter of 2006 was $7.1 million, or $0.23 per share.
“Our first quarter sales remained difficult, while positive comparable
store sales in DVD, electronics, accessories and boutique could not offset
worsening music results,” said Robert J. Higgins, Chairman and Chief Executive
Officer of Trans World Entertainment.
Gross profit as a percentage of sales for the first quarter of 2007
improved to 36.5% from 34.8% in the first quarter of 2006, reflecting
increased margin in our core categories of music and movies. SG&A as a
percentage of sales increased to 38.3%, compared to 36.5% last year, primarily
due to direct store expenses against the lower sales productivity.
“We are pleased to announce that the re-branding of our freestanding
stores to f.y.e. for your entertainment remains on schedule and will be
completed by the end of the second quarter of 2007,” added Mr. Higgins.
Trans World Entertainment is a leading specialty retailer of entertainment
software, including music, home video and video games and related products.
The Company operates nearly 1,000 retail stores in the United States, the
District of Columbia, the U.S. Virgin Islands, and Puerto Rico under various
brands. The Company is in the process of consolidating the majority of its
stores (Coconuts Music and Movies, Strawberries Music, Wherehouse, Sam Goody
and Spec’s) under the name f.y.e. for your entertainment. Included among the
Company’s retail locations are 128 video only stores, primarily under the
Suncoast brand. The Company also operates on the web at www.fye.com,
www.wherehouse.com, www.secondspin.com, www.samgoody.com and www.suncoast.com.
Certain statements in this release set forth management’s intentions,
plans, beliefs, expectations or predictions of the future based on current
facts and analyses. Actual results may differ materially from those indicated
in such statements. Additional information on factors that may affect the
business and financial results of the Company can be found in filings of the
Company with the Securities and Exchange Commission.
TRANS WORLD ENTERTAINMENT CORPORATION Financial Results INCOME STATEMENTS: (in millions, except per share data) Thirteen Weeks Thirteen Weeks Ended Ended May 5, % to April 29, % to 2007 Sales 2006 Sales Sales $286.3 $288.5 Cost of sales 181.9 63.5% 188.1 65.2% Gross profit 104.4 36.5% 100.4 34.8% Selling, general and administrative expenses 109.6 38.3% 105.5 36.5% Depreciation and amortization 9.2 3.2% 8.6 3.1% Loss from operations (14.4) -5.0% (13.7) -4.8% Interest expense, net 1.4 0.5% 0.5 0.2% Loss before income taxes and extraordinary gain - unallocated negative goodwill (15.8) -5.5% (14.2) -5.0% Income tax benefit (6.7) -2.3% (6.2) -2.2% Loss before extraordinary gain - unallocated negative goodwill (9.1) -3.2% (8.0) -2.8% Extraordinary gain - unallocated negative goodwill, net of income taxes - 0.0% 0.9 0.3% NET LOSS $(9.1) -3.2% $(7.1) -2.5% Basic and diluted loss per share: Loss per share before extraordinary gain - unallocated negative goodwill $(0.29) $(0.26) Extraordinary gain - unallocated negative goodwill, net of income taxes - 0.03 Basic and diluted loss per share $(0.29) $(0.23) Weighted average number of common shares outstanding - basic and diluted 31.0 30.6 SELECTED BALANCE SHEET CAPTIONS: (in millions, except store data) May 5, 2007 April 29, 2006 Cash and cash equivalents $13.7 $17.9 Merchandise inventory 494.7 568.7 Fixed assets (net) 131.2 128.7 Accounts payable 171.1 232.1 Borrowings under line of credit 55.0 35.6 Long-term debt, less current portion 15.2 18.6 Stores in operation 972 1,107
Trans World Entertainment Corporation
John J. Sullivan
Chief Financial Officer