Trans World Entertainment Announces Second Quarter 2010 Results

ALBANY, N.Y., Aug 19, 2010 /PRNewswire via COMTEX/ — Trans World Entertainment Corporation (Nasdaq: TWMC) today announced total net sales for the second quarter ended July 31, 2010 decreased 18% to $135.8 million, compared to $165.7 million in the second quarter of 2009. Average stores in operation during the quarter were 543 compared to 705 last year, a 23% decline. Comparable store sales in the second quarter of 2010 decreased 2%. For the second quarter of 2010, the net loss was $15.8 million, or $0.50 per share compared to a net loss of $17.8 million, or $0.57 per share for the same period last year.

Gross profit as a percentage of sales for the second quarter of 2010 was 33.7% compared to 35.5% in the second quarter of 2009. The decrease in gross profit as a percentage of sales was due to lower vendor allowances and higher clearance markdowns. Selling, general and administrative expenses for the quarter were $57.8 million, a 20% reduction from $72.1 million in the comparable period last year. SG&A expenses were 42.5% of sales versus 43.5% of sales for the same period last year.


Total net sales for the twenty-six week period ended July 31, 2010 decreased 18% to $292.3 million, compared to $357.2 million in 2009. Comparable store sales for the twenty-six week period ended July 31, 2010 decreased 2%. Net loss for the twenty-six week period was $27.2 million or $0.87 per share versus $31.5 million or $1.00 per share last year.


The Company had a cash balance of $10.5 million and no borrowings outstanding on its credit facility at the end of the quarter as compared to a cash balance of $7.1 million and outstanding borrowings of $28.3 million last year. Inventory was $237.1 million, or $67 per square foot, at the end of the quarter versus $320.4 million or $72 per square foot for the same period last year.


Trans World Entertainment is a leading specialty retailer of entertainment software, including music, video and video games and related products. The Company operates retail stores in the United States, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico, primarily under the names f.y.e. for your entertainment and Suncoast and on the web at www.fye.com, www.wherehouse.com, www.secondspin.com, and www.suncoast.com. www.twec.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

STATEMENTS OF OPERATIONS:
(in thousands, except per share data)

                                            Thirteen Weeks Ended
——————–
August
July 31, % to 1, % to
2010 Sales 2009 Sales
—- —– —- —–

Net sales $135,804 $165,746

Cost of sales 90,075 66.3% 106,976 64.5%
—— —- ——- —-
Gross profit 45,729 33.7% 58,770 35.5%

Selling, general and
administrative expenses 57,766 42.5% 72,114 43.5%

Depreciation and amortization 2,788 2.1% 3,653 2.3%
—– — —– —
Loss from operations (14,825) -10.9% (16,997) -10.3%

Interest expense, net 815 0.6% 684 0.4%
— — — —

Loss before income taxes (15,640) -11.5% (17,681) -10.7%
Income tax expense (benefit) 141 0.1% 74 0.0%
— — — —

Net loss $(15,781) -11.6% $(17,755) -10.7%
======== ===== ======== =====

Basic and diluted loss per
common share:

Basic and diluted loss per
share $(0.50) $(0.57)
====== ======

Weighted average number of
common shares outstanding –
basic and diluted 31,424 31,394
====== ======

SELECTED BALANCE SHEET
CAPTIONS:
(in thousands, except store
data)

Cash and cash equivalents
Merchandise inventory
Fixed assets (net)
Accounts payable
Borrowings under line of
credit
Long-term debt, less current
portion

Stores in operation


Twenty-six Weeks Ended
———————-
July August
31, % to 1, % to
2010 Sales 2009 Sales
—- —– —- —–

Net sales $292,342 $357,179

Cost of sales 195,089 66.7% 232,658 65.1%
——- —- ——- —-
Gross profit 97,253 33.3% 124,521 34.9%

Selling, general and
administrative expenses 117,081 40.0% 147,812 41.3%

Depreciation and amortization 5,651 2.0% 7,314 2.0%
—– — —– —
Loss from operations (25,479) -8.7% (30,605) -8.5%

Interest expense, net 1,504 0.5% 1,387 0.4%
—– — —– —

Loss before income taxes (26,983) -9.2% (31,992) -8.9%
Income tax expense (benefit) 215 0.1% (499) 0.0%
— — —- —

Net loss $(27,198) -9.3% $(31,493) -8.9%
======== ==== ======== ====

Basic and diluted loss per
common share:

Basic and diluted loss per
share $(0.87) $(1.00)
====== ======

Weighted average number of
common shares outstanding –
basic and diluted 31,409 31,345
====== ======

SELECTED BALANCE SHEET July August
CAPTIONS: 31, 1,
(in thousands, except store
data) 2010 2009
—- —-

Cash and cash equivalents $10,505 $7,138
Merchandise inventory 237,141 320,413
Fixed assets (net) 29,074 44,458
Accounts payable 69,233 94,675
Borrowings under line of
credit – 28,328
Long-term debt, less current
portion 6,208 7,506

Stores in operation 534 697


SOURCE Trans World Entertainment