Comparable Sales Increase 5%; 2003 Projected EPS Increased to $0.25-$0.28
ALBANY, N.Y., Nov. 12 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales of $268.5 million for
its third quarter ended November 1, 2003, as compared to $251.2 million for
the corresponding period last year. Comparable store sales increased 5%.
Loss before extraordinary gain for the quarter was $8.1 million, or $0.22 per
share, and net loss after extraordinary gain was $6.5 million, or $0.18 per
share. The Company reported a net loss of $14.8 million, or $0.37 per share,
for the comparable period in 2002.
In the third quarter, gross profit as a percentage of sales decreased to
35.9% of sales compared to 36.3% in the third quarter of 2002. Selling,
general and administrative expenses (SG&A) decreased to 37.1% of sales as
compared to 42.9% of sales in the third quarter last year. Last year’s SG&A
includes a one time write-off of $5.5 million or 2.2% of sales.
The extraordinary gain, net of tax, of $1.6 million resulted from the
Company’s acquisition of Wherehouse Entertainment and CD World stores during
the quarter. The gain represents the excess of the fair value of the net
assets acquired over the purchase price.
“Our third quarter sales confirm the direction of our business and the
growing strength of our “FYE” (For Your Entertainment) brand,” commented
Robert J. Higgins, Trans World’s Chairman and Chief Executive Officer. “We
also benefited from improved product in several categories. With improved
sales in September and stronger sales in October, we are very encouraged with
our opportunity for strong financial results in the fourth quarter.”
Sales for the thirty-nine week period ended November 1, 2003 were $788.7
million, compared to $798.2 million for the same period last year. Comparable
store sales for the period were flat compared to last year. Loss before
extraordinary gain for the thirty-nine week period was $16.1 million, or $0.42
per share, compared to a loss before cumulative effect of a change in
accounting principle of $27.0 million, or $0.67 per share, in the comparable
2002 period. Net loss after the extraordinary gain for the thirty-nine week
period was $14.5 million, or $0.38 per share.
In fiscal 2002 the Company adopted EITF No. 02-16, Accounting by a
Customer (including a Reseller) for Consideration Received from a Vendor.
Consistent with the transition rules outlined in EITF No. 02-16, the Company
adopted the new accounting standards retroactive to the beginning of fiscal
year 2002. The effect of this retroactive treatment on year-to-date 2002
results included a one-time, non-cash, after-tax charge of $13.7 million, or
$0.34 per diluted share, which was recorded as the “cumulative effect of a
change in accounting principle.”
Mr. Higgins concluded, “During the upcoming holiday season, Trans World
will focus on supporting the continuing flow of quality products with a strong
merchandising and marketing program. The anticipated results of this program,
along with the positive impact from our recently acquired stores will allow us
to improve upon our earlier expectations for the fourth quarter and the year.
As a result, we are increasing our 2003 earnings per share projections without
the extraordinary gain from unallocated negative goodwill to $0.25 to $0.28
per share, compared to the Company’s previous guidance of $0.15 to $0.20 per
share. The earnings per share projections with the extraordinary gain from
unallocated negative goodwill will be in the range of $0.29 to $0.32 per
share.”
Trans World Entertainment is a leading specialty retailer of music and
video products. The Company operates 950 retail stores in 47 states, the
District of Columbia, the U.S. Virgin Islands, Puerto Rico and e-commerce
sites, www.fye.com and www.wherehouse.com . In addition to its mall
locations, operated primarily under the FYE brand, the Company also operates
freestanding locations under the names Coconuts Music and Movies, Strawberries
Music, Wherehouse, CD World, Spec’s and Planet Music.
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 Third Quarter 2003 and Nine-Month Financial
Statements
INCOME STATEMENTS:
(in millions, except
per share data)
Thirteen Weeks Ended Thirty-nine Weeks Ended
Nov 1, % of Nov 2, % of Nov 1, % of Nov 2, % of
2003 Sales 2002 Sales 2003 Sales 2002 Sales
Sales $ 268.5 $251.2 $ 788.7 $798.2
Cost of sales 172.2 64.1% 160.1 63.7% 498.2 63.2% 504.9 63.2%
Gross profit 96.3 35.9% 91.1 36.3% 290.5 36.8% 293.3 36.8%
Selling, general
and administrative
expenses 99.7 37.1% 107.7 42.9% 290.7 36.9% 311.0 39.0%
Depreciation and
amortization 9.5 3.5% 10.3 4.1% 29.1 3.7% 29.8 3.7%
Loss from
operations (12.9) -4.8% (26.9) -10.7% (29.3) -3.7% (47.5) -5.9%
Interest expense 0.5 0.2% 0.5 0.2% 1.1 0.1% 0.8 0.1%
Loss before income
taxes, cumulative
effect of change in
accounting principle
and extraordinary
gain (13.4) -5.0% (27.4) -10.9% (30.4) -3.9% (48.3) -6.0%
Income tax
benefit (5.3) -2.0% (12.6) -5.0% (14.3) -1.8% (21.3) -2.7%
Loss before
cumulative effect
of change in
accounting principle
and extraordinary
gain $(8.1) -3.0% $(14.8) -5.9% $(16.1) -2.1% $(27.0) -3.3%
Cumulative effect
of change in
accounting principle,
net of income
taxes $ -- 0.0% $ -- 0.0% $ -- 0.0% $(13.7) -1.7%
Extraordinary gain
- unallocated
negative goodwill,
net of income
taxes $1.6 0.0% $ -- 0.0% $1.6 0.0% $ -- 0.0%
NET LOSS $(6.5) -3.0% $(14.8) -5.9% $(14.5) -2.1% $(40.7) -5.0%
Basic loss per common share:
Loss per share before
cumulative effect of
change in accounting
principle $(0.22) $(0.37) $(0.42) $(0.67)
Cumulative effect
of change in
accounting principle,
net of income
taxes $ -- $ -- $ -- $(0.34)
Extraordinary gain
- unallocated
negative goodwill,
net of income
taxes $0.04 $ -- $0.04 $ --
Basic loss per
share $(0.18) $(0.37) $(0.38) $(1.01)
Weighted average
number of common
shares outstanding
- basic 36.6 40.1 37.8 40.5
Diluted loss per
common share:
Loss per share
before cumulative
effect of change
in accounting
principle $(0.22) $(0.37) $(0.42) $(0.67)
Cumulative effect
of change in
accounting principle,
net of income
taxes $ -- $ -- $ -- $(0.34)
Extraordinary gain
- unallocated
negative goodwill,
net of income
taxes $0.04 $ -- $0.04 $ --
Diluted loss per
share $(0.18) $(0.37) $(0.38) $(1.01)
Weighted average
number of common
shares
outstanding
-diluted 36.6 40.1 37.8 40.5
SELECTED BALANCE SHEET CAPTIONS:
(in millions, except store data)
Cash and cash equivalents $19.8 $20.6
Merchandise inventory 509.4 464.1
Fixed assets (net) 135.5 159.9
Accounts payable 277.3 264.0
Long-term debt, less current portion 7.6 8.0
Stores in operation 950 888
SOURCE Trans World Entertainment Corporation
11/12/2003
CONTACT: John Sullivan, Executive Vice President and Chief Financial
Officer of Trans World Entertainment, +1-518-452-1242, ext. 7400; or Kimberly
Storin of The MWW Group, +1-212-704-9727, , for Trans World
Entertainment
Web site: http://www.fye.com
http://www.wherehouse.com
(TWMC)