“The quarter was highlighted by the continued positive response by our customers to changes in our merchandise assortment and presentation,” commented
First Quarter Overview
- For the first quarter of 2016, the Company reported net income of
$27 thousand, or $0.00per diluted share, compared to a net income of $194 thousand, or $0.01per diluted share, for the same period last year.
- Comparable store sales for the first quarter were flat compared to the same quarter last year. Total revenue for the quarter decreased 4.3% to
$75.7 millioncompared to $79.2 millionfor the same period last year. At the end of the quarter, the Company operated 290 stores compared to 310 stores last year, a 6.5% decline.
- Gross profit for the quarter was
$30.8 million, or 40.7% of revenue, compared to $32.0 million, or 40.4%, of revenue for the same period last year. The increase in gross profit as a percentage of revenue was due to the increased revenue contribution from the higher margin trend category and increases across all of our merchandise categories.
- Selling, general and administrative (“SG&A”) expenses decreased
$0.3 millionfor the quarter to $30.1 million, or 39.7% of sales, compared to $30.4 million, or 38.4% of sales, for the same period last year. The increase in SG&A as a percentage of sales is primarily due to a 90 basis point increase in health care costs.
- Other income primarily consisted of a one-time gain of
$0.8 millionfrom the sale of an investment.
- Included in operating results is the impact of a new lease for the Company’s distribution facility and corporate offices. The new lease reduces annual payments by
$1 million. The new lease is accounted for as an operating lease with the distribution facility portion increasing cost of sales by $0.2 million, or 30 basis points, and corporate office portion increasing SG&A expenses by $0.1 millionor 10 basis points. The previous lease was accounted for as a capital lease with the payment recorded as interest expense and a reduction of short-term debt.
- Inventory was
$116.6 million, or $70per square foot, at the end of the quarter, versus $121.6 million, or $68per square foot, at the end of the first quarter last year. The increase in inventory per square foot is in-line with our strategy of shifting our mix to higher margin categories.
- Cash on hand at the end of the quarter was
$91 million, compared to $103 millionat the end of the first quarter last year. The decline was due to the repurchase of shares and investments in new and remodeled stores, the chain wide rollout of new marketplace fixtures to support the shift in our merchandise assortment and technology enhancements.
- During the first quarter, the Company repurchased 676,000 shares of common stock at an average price of
$3.85per share. Since the inception of the program, the Company has repurchased approximately 2.5 million shares of common stock at an average price of $3.82per share. The Company has approximately $12.2 million dollarsavailable for purchase under its repurchase program.
Certain statements in this release set forth management’s intentions, plans, beliefs, expectations or predictions of the future based on current facts and analyses. Actual results may differ materially from those indicated in such statements. Additional information on factors that may affect the business and financial results of the Company can be found in filings of the Company with the
|TRANS WORLD ENTERTAINMENT CORPORATION|
|STATEMENTS OF OPERATIONS:|
|(in thousands, except per share data)|
|Fiscal Quarter Ended|
|April 30,||% to||May 2,||% to|
|Cost of sales||44,904||59.3||%||47,161||59.6||%|
|Selling, general and|
|Depreciation and amortization||1,463||1.9||%||964||1.2||%|
|Income from operations||(685||)||-0.9||%||676||0.9||%|
|Income before income taxes||74||0.1||%||238||0.3||%|
|Income tax expense||47||0.1||%||44||0.1||%|
|Basic Income per common share:|
|Basic Income per share||$||0.00||$||0.01|
|Weighted average number of|
|common shares outstanding – basic||30,761||31,208|
|Diluted Income per common share:|
|Diluted Income per share||$||0.00||$||0.01|
|Weighted average number of|
|common shares outstanding – diluted||30,930||31,371|
|SELECTED BALANCE SHEET CAPTIONS:||April 30,||May 2,|
|(in thousands, except store data)||2016||2015|
|Cash and cash equivalents||$||90,856||$||102,539|
|Fixed assets, net||33,198||18,026|
|Borrowings under line of credit||–||–|
|Stores in operation, end of period||290||310|
|Average stores in operation, end of period||295||311|
Trans World Entertainment John AndersonChief Financial Officer (518) 452-1242 Financial Relations Board Marilynn Meek() (212) 827-3773