Trans World Entertainment Announces Second Quarter Results

Net Loss Reduced By 74%

Aug 16, 2012, 07:30 ET from Trans World Entertainment Corp.

ALBANY, N.Y., Aug. 16, 2012 /PRNewswire/ -- Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its second quarter ended July 28, 2012.  For the second quarter of 2012, the Company reported a $5.4 million decrease in its net loss to $1.9 million, or a loss of $0.06 per diluted share, compared to a net loss of $7.3 million, or a loss of $0.23 per diluted share, for the same period last year.    

Comparable store sales for the quarter were down 1% compared to the same quarter last year.  Total sales for the quarter decreased 16% to $91.0 million compared to $108.0 million in 2011.  During the quarter, the Company operated an average of 379 stores compared to 442 stores last year, a 14% decline. 

"The second quarter marked our tenth consecutive quarter of improved operating results." said Robert J. Higgins, Chairman and Chief Executive Officer of Trans World Entertainment.  "Our strategy for the balance of 2012 is to focus on continuing to challenge every aspect of our business to improve and delivering better value and an exceptional shopping experience to our customers.  In addition, we will continue to invest in our growth categories and to aggressively seize opportunities to drive sales and operating profits.  We're moving in the right direction and look forward to the remainder of 2012 and beyond."

Gross profit for the quarter was $35.8 million, or 39.3% of sales, as compared to $40.0 million, or 37.0%, of sales for the same period last year.  The 230 basis point increase in gross profit as a percentage of sales was due to higher margin rates across the majority of our product categories. 

Selling, general and administrative expenses decreased 19% for the quarter to $36.3 million compared to $44.8 million for the comparable period last year.  The reduction in SG&A expenses was due to the closing of underperforming stores and continued effective expense management.  As a percentage of sales, SG&A expenses improved 170 basis points to 39.8% in the quarter compared to 41.5% for the same period last year.

For the twenty six weeks ended July 28, 2012, the Company reported a $10.7 million increase in net income to $0.9 million, or $0.03 per diluted share, compared to a net loss of $9.8 million, or a loss of $0.31 per diluted share, for the same period last year. For the twenty six weeks ended July 28, 2012, total sales decreased 15% to $203.3 million, compared to $239.5 million for the same period in 2011. Comparable store sales for the twenty six weeks ended July 28, 2012 were flat. 

Gross profit for the twenty six weeks ended July 28, 2012 was $77.6 million, or 38.2% of sales, compared to $88.3 million, or 36.9%, of sales for the same period last year.  For the twenty six weeks ended July 28, 2012, Selling, general and administrative expenses decreased 21% to $73.5 million compared to $93.1 million in the comparable period last year.  As a percentage of sales, SG&A expenses improved by 270 basis points to 36.2% from 38.9% for the same period last year.

Cash on hand at the end of the quarter was $58.3 million, compared to $22.5 million at the end of the second quarter last year.  The Company did not require any borrowings under its line of credit at any point during all periods presented.  Inventory was $162.0 million at the end of the quarter, versus $205.5 million at the end of the second quarter last year, a decline of 21%. 

Trans World will host a teleconference call today, Thursday, August 16, 2012, at 10:00 AM ET to discuss its financial results. Interested parties can listen to the simultaneous webcast on the Company's corporate website, www.twec.com.

Trans World Entertainment is a leading specialty retailer of entertainment products, including video, music, electronics, trend, 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, and www.secondspin.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.

—      table to follow —

 

TRANS WORLD ENTERTAINMENT CORPORATION

Financial Results

STATEMENTS OF OPERATIONS:

(in thousands, except per share data)

Thirteen Weeks Ended

Twenty-six Weeks Ended

July 28,

% to

July 30,

% to

July 28,

% to

July 30,

% to

2012

Sales

2011

Sales

2012

Sales

2011

Sales

Net sales

$    91,038

$  107,990

$  203,325

$  239,486

Cost of sales

55,220

60.7%

67,999

63.0%

125,692

61.8%

151,206

63.1%

Gross profit

35,818

39.3%

39,991

37.0%

77,633

38.2%

88,280

36.9%

Selling, general and

   administrative expenses

36,250

39.8%

44,810

41.5%

73,511

36.2%

93,064

38.9%

Depreciation and amortization

885

0.9%

1,606

1.5%

1,826

0.9%

3,321

1.4%

Income (loss) from operations

(1,317)

-1.4%

(6,425)

-6.0%

2,296

1.1%

(8,105)

-3.4%

Interest expense, net

522

0.6%

793

0.7%

1,292

0.6%

1,624

0.7%

Income (loss) before income taxes

(1,839)

-2.0%

(7,218)

-6.7%

1,004

0.5%

(9,729)

-4.1%

Income tax expense

47

0.0%

60

0.1%

94

0.0%

96

0.0%

Net Income (loss)

$     (1,886)

-2.0%

$     (7,278)

-6.8%

$         910

0.5%

$     (9,825)

-4.1%

Basic income (loss) per common share:

Basic income (loss) per share

$       (0.06)

$       (0.23)

$        0.03

$       (0.31)

Weighted average number of

   common shares outstanding - basic

31,535

31,455

31,535

31,440

Diluted income (loss) per common share:

Diluted income (loss) per share

$       (0.06)

$       (0.23)

$        0.03

$       (0.31)

Weighted average number of

   common shares outstanding - diluted

31,535

31,455

32,240

31,440

SELECTED BALANCE SHEET CAPTIONS:

July 28,

July 30,

(in thousands, except store data)

2012

2011

Cash and cash equivalents

$    58,252

$    22,494

Merchandise inventory

161,972

205,452

Fixed assets (net)

15,368

18,816

Accounts payable

41,496

58,896

Borrowings under line of credit

-

-

Long-term debt, less current portion

2,488

4,778

Stores in operation, end of period

379

440

SOURCE Trans World Entertainment Corp.



RELATED LINKS

http://www.twec.com