ALBANY, N.Y., Aug. 11 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales of $253.1 million for
the second quarter ended July 30, 2005, compared to $277.2 million in the
second quarter of 2004. In the second quarter, the Company operated 797
stores, 7% fewer than last year. For the second quarter of 2005, the Company
incurred a net loss of $7.0 million, or $0.21 per share. The net loss includes
a charge of $1.1 million or $0.03 per share for Ohio state tax changes enacted
late in the quarter that were not anticipated in the Company’s updated
guidance disclosed on July 7, 2005. Net income for the second quarter of 2004
was $9.3 million, or $0.25 per diluted share, including an income tax benefit
of $10.5 million, or $0.28 per diluted share, and an extraordinary gain of
$2.2 million, net of taxes, or $0.06 per share related to the acquisition of
the Wherehouse Entertainment Stores in 2003. Comparable store sales in the
second quarter of 2005 decreased 5%.
“After positive comparable store sales in May, we experienced a decline
during the remainder of the quarter. Demand for our core categories of music,
video and video games slowed in June and July,” said Robert J. Higgins,
Chairman and Chief Executive Officer of Trans World Entertainment.
Gross profit as a percentage of sales for the second quarter of 2005 was
36.7% versus 37.2% in the second quarter of 2004. SG&A as a percentage of
sales was 37.4% compared to 36.2% last year.
Sales for the twenty-six week period ended July 30, 2005 were $538.5
million, compared to $581.7 million in 2004. Net loss for the twenty-six week
period was $7.9 million or $0.24 per diluted share compared to net income of
$11.7 million or $0.31 per diluted share in 2004.
“The Company believes that the music releases that were delayed in the
second quarter, which negatively impacted our results, will be distributed
during the third quarter. However, based on the past quarter’s sales trends,
the Company is adopting a more conservative forecast and is reducing its
annual earnings guidance to between $0.65 and $0.70 for fiscal 2005. We
remain on track to introduce our next generation LVS3 and Backstage Pass
customer loyalty program later this year, and are working on a number of
enhancements to our digital music capabilities,” concluded Mr. Higgins.
Trans World Entertainment is a leading specialty retailer of music, video
and video game products. The Company operates 797 retail stores in 46 states,
the District of Columbia, the U.S. Virgin Islands, Puerto Rico and e-commerce
sites, http://www.fye.com, http://www.coconuts.com, http://www.wherehouse.com
and http://www.secondspin.com. In addition to its mall locations, operated
primarily under the f.y.e brand, the Company also operates freestanding
locations under the names Coconuts Music and Movies, Strawberries Music,
Wherehouse, CD World, Spec’s, Second Spin 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 30, % to July 31, % to July 30, % to July 31, % to
2005 Sales 2004 Sales 2005 Sales 2004 Sales
Sales $253.1 $277.2 $538.5 $581.7
Cost of sales 160.2 63.3% 174.2 62.8% 341.1 63.3% 365.4 62.8%
Gross profit 92.9 36.7% 103.0 37.2% 197.4 36.7% 216.3 37.2%
Selling, general
and administrative
expenses 94.8 37.4% 100.5 36.2% 192.4 35.7% 201.6 34.7%
Depreciation and
amortization 8.4 3.3% 8.4 3.0% 16.6 3.1% 17.0 2.9%
Loss from
operations (10.3) -4.0% (5.9) -2.1% (11.6) -2.1% (2.3) -0.4%
Other income
(net) (0.8) -0.3% - 0.0% (0.8) -0.1% - 0.0%
Interest expense 0.4 0.1% 0.4 0.1% 0.6 0.1% 0.7 0.1%
Loss before income
taxes and
extraordinary
gain - unallocated
negative
goodwill (9.9) -3.8% (6.3) -2.3% (11.4) -2.1% (3.0) -0.5%
Income tax
benefit (2.9) -1.1% (13.4) -4.8% (3.5) -0.6% (12.1) -2.1%
Income (loss)
before
extraordinary
gain -
unallocated
negative
goodwill $(7.0) -2.7% $7.1 2.6% $(7.9) -1.5% $9.1 1.6%
Extraordinary gain
- unallocated
negative
goodwill,
net of
income taxes $- 0.0% $2.2 0.8% $- 0.0% $2.6 0.4%
NET INCOME
(LOSS) $(7.0) -2.7% $9.3 3.4% $(7.9) -1.5% $11.7 2.0%
Basic income
(loss) per common
share:
Income (loss) per
share before
extraordinary
gain -
unallocated
negative
goodwill $(0.21) $0.20 $(0.24) $0.26
Extraordinary gain
- unallocated
negative
goodwill, net of
income taxes $- $0.06 $- $0.07
Basic income
(loss) per
share $(0.21) $0.26 $(0.24) $0.33
Weighted average
number of
common shares
outstanding -
basic 32.5 35.1 32.7 35.5
Diluted income
(loss) per common
share:
Income (loss) per
share before
extraordinary
gain -
unallocated
negative
goodwill $(0.21) $0.19 $(0.24) $0.24
Extraordinary gain
- unallocated
negative $- $0.06 $- $0.07
goodwill, net of
income taxes
Diluted income
(loss)
per share $(0.21) $0.25 $(0.24) $0.31
Weighted average
number of
common shares
outstanding -
diluted 32.5 36.9 32.7 37.2
SELECTED BALANCE
SHEET CAPTIONS:
(in millions,
except store
data)
Cash and cash
equivalents $50.9 $39.9
Merchandise
inventory 401.1 422.2
Fixed assets (net) 128.5 122.8
Accounts payable 182.2 196.5
Long-term debt,
less current
portion 20.9 12.5
Stores in
operation 797 853
SOURCE Trans World Entertainment Corporation
CONTACT: John J. Sullivan, EVP, Chief Financial Officer of Trans World
Entertainment, +1-518-452-1242; or Richard Tauberman of MWW Group,
, +1-201-507-9500