Net Income Increases 116%
ALBANY, NY–(BUSINESS WIRE)–Nov. 10, 1999–Trans World
Entertainment Corporation (Nasdaq National Market: TWMC) today
announced results for its third quarter and 39-week period ended
October 30, 1999.
Net income for the third quarter was $8.0 million, or $0.15 per
diluted share, compared to net income of $3.7 million, or $0.07 per
diluted share, for the third quarter of 1998.
Total sales for the third quarter increased to $276.0 million
compared to $270.7 million in the third quarter of 1998. Comparable
store sales increased 1% in the quarter. Comparable stores sales
included results for the acquired Camelot Music stores, which were
down 4% from the third quarter a year ago. Excluding Camelot stores,
comp sales increased 5%.
Gross profit, as a percent of sales, increased to 37.7% in the
third quarter of 1999 from 37.5% in 1998. Selling, general and
administrative expenses decreased to 29.4% of sales from 31.1% a year
ago.
Interest income improved to $108,000 for the quarter compared to
interest expense of $1.4 million in the third quarter of 1998. The
improvement is the result of zero outstanding balances under the
revolving line of credit and increased income from cash investments.
For the 39-week period ending October 30, 1999, the Company
reported net income of $5.0 million, or $0.09 per diluted share,
versus $9.4 million, or $0.18 per diluted share, for the comparable
period of 1998. Results in 1999 reflect a pre-tax charge of $25.7
million related to the Camelot merger. Excluding the one time charge,
earnings would have been $19.9 million or $0.37 per share.
Year-to-date total sales increased 7% to $840.3 million in 1999
compared to $784.6 million in the same period last year. Comparable
store sales increased 1% in the 39-week period of 1999. Comparable
store sales included results from the Camelot Music stores, which were
down 3% from last year. Excluding Camelot Music stores, comparable
sales increased 5%.
Gross profit, as a percent of sales, increased to 37.1% in the
39-week period of 1999 from 36.7% in 1998. Selling, general and
administrative expenses decreased to 29.7% of sales for the
year-to-date period, compared to 31.1% of sales in the same period
last year.
”In the third quarter, the Company continued to develop its
‘clicks and bricks’ strategy of creating synergy between the Internet
and our stores,” commented Robert J. Higgins, Chairman and Chief
Executive Officer of Trans World Entertainment.
”We have implemented several initiatives in the Camelot stores
that will improve store performance. Our main goals are to improve
in-store inventory positions and enhance the customer shopping
experience by incorporating marketing initiatives and exclusive
merchandise offerings that have been successful in our other stores.”
Mr. Higgins continued, ”In our e-commerce, we continue to see
improvement. Each week on www.twec.com, we host an exciting lineup of
on-line concerts, live chats, and promotional giveaways. This has
helped to establish www.twec.com as a weekly entertainment destination
for a growing number of users.”
”In addition, during the quarter we established key relationships
with web-radio leader, DiscJockey.com and digital download provider,
Amplified.com. We will continue to seek synergistic relationships in
the entertainment content space in an effort to constantly enhance
functionality, add value to our users and, of course, drive traffic to
the site and into our stores.”
”As our site evolves, we are confident that our e-commerce
strategy will make www.twec.com the site of choice for shoppers
seeking to purchase music, video and DVD on the Internet.”
Mr. Higgins concluded, ”We are excited about the Holiday season
with the quality of new releases by top artists scheduled for the
holidays, we are anticipating our third straight year of record sales
and earnings.”
Trans World Entertainment is a leading specialty retailer of
music and video products. The Company operates retail stores in 44
states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico
and an e-commerce site, www.twec.com. Mall locations include Record
Town, Camelot, The Wall, Saturday Matinee and F.Y.E. Freestanding
locations include Coconuts Music and Movies, Strawberries Music,
Spec’s and Planet Music.
Certain statements in this report 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 earnings per share)
Thirteen Weeks Ended
Oct 30, % to Oct 31, % to
1999 Sales 1998 Sales
---------- --------- --------- ---------
Sales $276.0 100.0% $270.7 100.0%
Cost of sales 171.8 62.3% 169.3 62.5%
---------- --------- --------- ---------
Gross profit 104.2 37.7% 101.4 37.5%
Selling, general and
administrative expenses 81.2 29.4% 84.3 31.1%
Costs related to the
Camelot merger -- -- -- --
Depreciation and amortization 9.3 3.4% 9.4 3.5%
---------- --------- --------- ---------
Income from operations 13.7 4.9% 7.7 2.9%
Interest expense (income) (0.1) -0.1% 1.4 0.5%
--------- --------- --------- ---------
Income before income taxes 13.8 5.0% 6.3 2.4%
Income tax expense 5.8 2.1% 2.6 1.0%
---------- --------- --------- ---------
NET INCOME $ 8.0 2.9% $ 3.7 1.4%
========== ========= ========= =========
Basic earnings per common share:
Earnings per share $0.15 $0.07
========== =========
Weighted average number of
Common shares outstanding 52.8 51.9
========== =========
Diluted earnings per common share:
Earnings per share $0.15 $0.07
========== =========
Weighted average number of
Common shares outstanding 54.0 54.0
========== =========
INCOME STATEMENTS:
(in millions, except earnings per share)
Thirty-Nine Weeks Ended
Oct 30, % to Oct 31, % to
1999 Sales 1998 Sales
---------- --------- --------- ---------
Sales $840.3 100.0% $784.6 100.0%
Cost of sales 528.6 62.9% 497.0 63.3%
---------- --------- --------- ---------
Gross profit 311.7 37.1% 287.6 36.7%
Selling, general and
administrative expenses 249.8 29.7% 244.3 31.1%
Costs related to the
Camelot merger 25.7 3.1% -- --
Depreciation and amortization 26.8 3.2% 23.9 3.1%
---------- --------- --------- ---------
Income from operations 9.4 1.1% 19.4 2.5%
Interest expense (income) 0.8 0.1% 2.2 0.3%
---------- --------- --------- ---------
Income before income taxes 8.6 1.0% 17.2 2.2%
Income tax expense 3.6 0.4% 7.8 1.0%
---------- --------- --------- ---------
NET INCOME $ 5.0 0.6% $ 9.4 1.2%
========== ========= ========= =========
Basic earnings
per common share:
Earnings per share $0.10 $0.19
========== =========
Weighted average number of
Common shares outstanding 52.3 50.8
========== =========
Diluted earnings
per common share:
Earnings per share $0.09 $0.18
========== =========
Weighted average number of
Common shares outstanding 53.2 53.3
========== =========
SELECTED BALANCE SHEET CAPTIONS:
(in millions, except store data)
Cash and cash equivalents $86.7 $24.3
Merchandise inventory 502.9 471.3
Fixed assets (net) 141.8 140.2
Accounts payable 313.5 243.6
Long-term debt,
less current portion 19.7 35.9
Shareholders' equity 445.4 373.1
Stores in operation 980 1,016
Contact:
Trans World Entertainment Corporation
John Sullivan
Chief Financial Officer
518/452-1242 ext. 7400
or
THE MWW GROUP
Investor Relations
Robert Ferris
212/704-9727