Total Sales Increase 12%
ALBANY, N.Y., Aug 12, 2004 /PRNewswire-FirstCall via Comtex/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales of $277.2 million in
the second quarter ended July 31, 2004, an increase of 12% over last year’s
$246.7 million for the same period. Comparable store sales for the quarter
increased 3%.
“We continue to see positive results due to our merchandising and
marketing initiatives which led to our fourth consecutive quarter of
comparable sales growth. Despite a general softening in the retail sector, we
are particularly pleased to achieve gains in comparable store sales in the
music category,” commented Robert J. Higgins, Trans World’s Chairman and Chief
Executive Officer. “Additionally, during the quarter, we completed the
repurchase of 1.7 million shares under our stock repurchase program. We
continue to feel our stock is attractive for buy-back at current market
levels.”
For the second quarter of 2004, net income was $9.3 million, or $0.25 per
diluted share, compared to a net loss of $2.9 million, or $0.08 per diluted
share, in the second quarter of 2003. Net income for the second quarter of
2004 includes an income tax benefit of $10.5 million or $0.28 per diluted
share. As previously announced, the benefit is the result of closing a
federal income tax examination, including all matters not previously settled
in relation to Company Owned Life Insurance (“COLI”) policies, which were part
of Trans World’s acquisition of Camelot Music in 1999. Net income for the
second quarter of 2004 also includes an extraordinary gain (net of income
taxes) of $2.2 million or $0.06 per diluted share as a result of the
adjustment of purchase accounting relating to the acquisition of Wherehouse
stores in the third fiscal quarter of 2003. Net loss for the second quarter
of 2003 included an income tax benefit of $2.1 million, or $0.05 per share,
arising from a settlement with the IRS relating to tax years ending before
1994.
Excluding the income tax benefits in both periods, the net loss before
extraordinary gain for the second quarter of 2004 was $3.4 million, or $0.10
per diluted share compared to a net loss of $5.0 million, or $0.13 per diluted
share for the same period last year. The gross profit rate for the quarter
decreased to 37.2% from 39.1% last year. SG&A as a percentage of sales was
36.2% versus 38.4% last year.
Mr. Higgins concluded, “We anticipate several new releases in both the
music and video categories to further drive sales in the third and fourth
quarters. We expect low, single-digit increases in comparable store sales for
the back half of the year and remain comfortable with our previously provided
annual guidance of $0.93 to $0.98 earnings per share.”
Sales for the twenty-six week period ended July 31, 2004 were $581.7
million, compared to $520.1 million for the same period last year. Net income
for the twenty-six week period was $11.7 million or $0.32 per diluted share
compared to a net loss of $8.0 million or $0.21 per diluted share in the
comparable period last year.
Trans World Entertainment is a leading specialty retailer of music and
video products. The Company operates over 850 retail stores in 47 states, the
District of Columbia, the U.S. Virgin Islands, Puerto Rico and e-commerce
sites, http://www.fye.com, http://www.coconuts.com and
http://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 CORPORATION
Financial Results
INCOME STATEMENTS:
(in millions, except
per share data)
Thirteen Weeks Ended Twenty-six Weeks Ended
July 31, % to Aug 2, % to July 31, % to Aug 2, % to
2004 Sales 2003 Sales 2004 Sales 2003 Sales
Sales $277.2 $246.7 $581.7 $520.1
Cost of sales 174.2 62.8% 150.2 60.9% 365.4 62.8% 326.0 62.7%
Gross profit 103.0 37.2% 96.5 39.1% 216.3 37.2% 194.1 37.3%
Selling, general
and
administrative
expenses 100.5 36.2% 94.8 38.4% 201.6 34.7% 190.9 36.7%
Depreciation
and
amortization 8.4 3.1% 9.8 4.0% 17.0 2.9% 19.7 3.8%
Loss from
operations (5.9) -2.1% (8.1) -3.3% (2.4) -0.4% (16.5) -3.2%
Interest expense 0.4 0.1% 0.3 0.1% 0.7 0.1% 0.5 0.1%
Loss before income
taxes and
extraordinary
gain -
unallocated
negative
goodwill (6.3) -2.2% (8.4) -3.4% (3.1) -0.5% (17.0) -3.3%
Income tax
benefit (13.4) -4.8% (5.5) -2.2% (12.1) -2.1% (9.0) -1.7%
Income (loss)
before
extraordinary
gain -
unallocated
negative
goodwill $7.1 2.6% $(2.9) -1.2% $9.1 1.6% $(8.0) -1.6%
Extraordinary
gain -
unallocated
negative
goodwill, net of
income taxes $2.2 0.8% $ -- 0.0% $2.6 0.4% $ -- 0.0%
NET INCOME (LOSS) $9.3 3.4% $(2.9) -1.2% $11.7 2.0% $(8.0) -1.6%
Basic income
(loss) per
common share:
Income (loss)
per share
before
extraordinary
gain -
unallocated
negative
goodwill $0.20 $(0.08) $0.26 $(0.21)
Extraordinary
gain -
unallocated
negative
goodwill, net
of income
taxes $0.06 $ -- $0.07 $ --
Basic income
(loss) per
share $0.26 $(0.08) $0.33 $(0.21)
Weighted
average number
of common
shares
outstanding -
basic 35.1 38.0 35.5 38.4
Diluted income
(loss) per
common share:
Income (loss)
per share
before
extraordinary
gain -
unallocated
negative
goodwill $0.19 $(0.08) $0.24 $(0.21)
Extraordinary
gain -
unallocated
negative
goodwill, net
of income
taxes $0.06 $ -- $0.07 $ --
Diluted income
(loss) per
share $0.25 $(0.08) $0.31 $(0.21)
Weighted
average number
of common
shares
outstanding
-diluted 36.9 38.0 37.2 38.4
SELECTED BALANCE
SHEET CAPTIONS:
(in millions,
except store data)
Cash and cash
equivalents $39.9 $44.9
Merchandise
inventory 422.2 371.4
Fixed assets
(net) 122.8 140.3
Accounts payable 196.5 189.0
Long-term debt,
less current
portion 12.5 7.7
Stores in
operation 853 826
SOURCE Trans World Entertainment Corporation
John Sullivan, Executive Vice President, Chief Financial Officer of Trans World Entertainment Corporation, +1-518-452-1242, ext. 7400; or Rich Tauberman of MWW Group, +1-201-507-9500, , for Trans World Entertainment Corporation
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