ALBANY, N.Y., Nov. 13 /PRNewswire-FirstCall/ — Trans World Entertainment Corporation (Nasdaq: TWMC – News) today announced total sales of $251.2 million for its third quarter ended November 2, 2002, as compared to $273.4 million for the same period last year. Comparable store sales decreased 5%. In line with previously announced expectations, the Company incurred a net loss for the quarter of $14.1 million or ($0.35) per share, including an after-tax charge of $5.3 million, or $0.13 per share, for the write down of its investment in Data Play Inc., a digital content recording and distribution media company for portable hand-held consumer entertainment devices. The Company reported a net loss of $11.6 million, or $(0.28) per share for the comparable period in 2001.
In the third quarter, gross profit as a percentage of sales increased to 32.9% of sales compared to 32.5% in the third quarter of 2001. Selling, general and administrative expenses, excluding the Data Play charge, decreased in total dollars by 6.4% versus the prior year, and were 36.8% of sales as compared to 36.1% of sales in the third quarter last year.
“Our third quarter results for sales and earnings were in-line with our previously stated expectations. Although the quarter overall was disappointing, results in recent weeks have been encouraging, including sales in the music category,” said Robert J. Higgins, Trans World’s Chairman and Chief Executive Officer. “Although cautious about consumer spending, we feel that the recent positive momentum will carry into the fourth quarter, due to the strong lineup of new releases in music, video and games. The continued installation of our listening and viewing stations will help us capitalize on this opportunity to improve our operating results.”
Sales for the thirty-nine week period ended November 2, 2002 were $798.2 million, compared to $877.0 million for the same period last year. Net loss for the thirty-nine week period was $26.8 million, or $0.66 per share, compared to a net loss of $17.7 million, or $0.42 per share, in the comparable 2001 period. Excluding the Data Play charge, net loss for the thirty-nine week period was $21.5 million, or $0.53 per share.
Trans World Entertainment is a leading specialty retailer of music and video products. The Company operates 888 retail stores in 46 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and an e-commerce site, http://www.fye.com. In addition to its 676 mall locations, operated primarily under the FYE brand, the Company also operates 212 freestanding locations under the names Coconuts Music and Movies, Strawberries Music, 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 November 2, % to Nov. 3, % to 2002 Sales 2001 Sales Sales $251.2 100.0% $273.4 100.0% Cost of sales 168.5 67.1% 184.5 67.5% Gross profit 82.7 32.9% 88.9 32.5% Selling, general and administrative expenses 97.9 (1) 39.0% 98.7 36.1% Depreciation and amortization 10.3 4.1% 10.9 4.0% Loss from operations (25.5) -10.2% (20.7) -7.6% Interest expense 0.5 0.2% 0.4 0.1% Loss before income taxes (26.0) -10.4% (21.1) -7.7% Income tax benefit (11.9) -4.7% (9.5) -3.5% NET LOSS ($14.1) -5.7% ($11.6) -4.2% Basic earnings per common share: Loss per share ($0.35) ($0.28) Weighted average number of common shares outstanding 40.1 41.8 Diluted earnings per common share: Loss per share ($0.35) ($0.28) Weighted average number of common shares outstanding 40.1 41.8 SELECTED BALANCE SHEET CAPTIONS: (in millions, except store data) Cash and cash equivalents Merchandise inventory Fixed assets (net) Accounts payable Long-term debt and capital lease obligations, less current portion Stores in operation (1) Includes the Data Play charge. Thirty Nine Weeks Ended November 2, % to Nov. 3, % to 2002 Sales 2001 Sales Sales $798.2 100.0% $877.0 100.0% Cost of sales 533.9 66.9% 586.3 66.9% Gross profit 264.3 33.1% 290.7 33.1% Selling, general and administrative expenses 281.6 (1) 35.3% 290.9 33.2% Depreciation and amortization 29.7 3.7% 30.2 3.4% Loss from operations (47.0) -5.9% (30.4) -3.5% Interest expense 0.8 0.1% 0.5 0.1% Loss before income taxes (47.8) -6.0% (30.9) -3.5% Income tax benefit (21.0) -2.6% (13.2) -1.5% NET LOSS ($26.8) -3.4% ($17.7) -2.0% Basic earnings per common share: Loss per share ($0.66) ($0.42) Weighted average number of common shares outstanding 40.5 42.1 Diluted earnings per common share: Loss per share ($0.66) ($0.42) Weighted average number of common shares outstanding 40.5 42.1 SELECTED BALANCE SHEET CAPTIONS: (in millions, except store data) Cash and cash equivalents $20.6 $45.6 Merchandise inventory 487.1 478.9 Fixed assets (net) 159.9 156.0 Accounts payable 264.0 293.2 Long-term debt and capital lease obligations, less current portion 8.0 10.3 Stores in operation 888 963 (1) Includes the Data Play charge.
Source: Trans World Entertainment Corporation