TRANS WORLD ENTERTAINMENT CORPORATION ALBANY, N.Y., Aug. 21, 2014 /PRNewswire/ -- Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its second quarter ended August 2, 2014. For the second quarter of 2014, the Company reported a net loss of $5.1 million, or a loss of $0.16 per diluted share, compared to a net loss of $2.5 million, or a loss of $0.08 per diluted share, for the same period last year.
Comparable store sales for the quarter were down 3.4% compared to the same quarter last year. Total sales for the quarter decreased 11.0% to $71.9 million compared to $80.8 million in 2013. During the quarter, the Company operated an average of 328 stores compared to 353 last year, a 7.1% decline in store count which resulted in an 8.8% decline in total square footage in operation. During the quarter the Company opened or relocated 4 stores and closed 10 stores.
Gross profit for the quarter was $28.0 million, or 39.0% of sales, as compared to $32.0 million, or 39.6% of sales for the same period last year. The decrease in gross profit as a percentage of sales was due to distribution and freight expenses.
Selling, general and administrative ("SG&A") expenses decreased 4.2% for the quarter to $31.8 million compared to $33.2 million for the comparable period last year. The reduction in SG&A expenses was due to fewer stores in operation. As a percentage of sales, SG&A expenses were 44.2% versus 41.1% for the same period last year. The increase in SG&A as a percentage of sales is primarily due to fixed expenses on the sales decline.
For the twenty-six weeks ended August 2, 2014, total sales decreased 8.9% to $159.1 million, compared to $174.7 million for the same period in 2013. Comparable store sales for the twenty-six weeks ended August 2, 2014 decreased 1.4% compared to the same period last year. Net loss for the twenty-six week period was $5.5 million, or a loss of $0.17 per diluted share, compared to a net loss of $0.9 million, or $0.03 per diluted share, for the same period last year.
Gross profit for the twenty-six weeks ended August 2, 2014 was $60.8 million, or 38.2% of sales, compared to $67.8 million, or 38.8%, of sales for the same period last year.
For the twenty-six weeks ended August 2, 2014, SG&A expenses decreased 3.6% to $63.6 million compared to $66.0 million in the comparable period last year. As a percentage of sales, SG&A expenses were 40.0% versus 37.8% for the same period last year.
Cash on hand at the end of the quarter was $82.4 million, compared to $95.3 million at the end of the second quarter last year. Inventory was $134.6 million at the end of the quarter versus $151.5 million at the end of the second quarter last year, a decline of 11.1%.
"Despite the challenging results for the quarter, we are approaching the second half optimistically as we completed many of our merchandising initiatives which resulted in improved results in July. The Company continues to improve its cash flow from operations through disciplined inventory management and the Company has returned over $20 million to our shareholders over the last 12 months, including the payment of a $16 million special dividend in the first half this year," said Robert J. Higgins, Chairman and Chief Executive Officer.
"I'm also pleased to announce that last week we opened our new entertainment concept store in Woodbridge, New Jersey. We are excited by the concept which offers a much broader assortment of non-media product in a visually exciting layout and continues our transformation to a complete entertainment destination," Mr. Higgins concluded.
During the second quarter the Company repurchased approximately 318,000 shares of common stock at an average price of $3.42 per share, for an aggregate purchase price of approximately $1.1 million. Since the inception of the program, the Company has repurchased approximately 1.1 million shares of common stock at an average price of $4.03 per share, for an aggregate purchase price of approximately $4.5 million. The Company has approximately $17.5 million available for purchase under its repurchase program.
Trans World will host a teleconference call today, Thursday, August 21, 2014, 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 music, video, trend, electronics, video games and related products. The Company operates retail stores in the United States 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
August 2 % to August 3 % to August 2 % to August 3 % to
2014 Sales 2013 Sales 2014 Sales 2013 Sales
---- ----- ---- ----- ---- ----- ---- -----
Net sales $71,908 $80,768 $159,124 $174,702
Cost of sales 43,861 61.0% 48,754 60.4% 98,300 61.8% 106,899 61.2%
------ ---- ------ ---- ------ ---- ------- ----
Gross profit 28,047 39.0% 32,014 39.6% 60,824 38.2% 67,803 38.8%
Selling, general and
administrative expenses 31,762 44.2% 33,157 41.1% 63,612 40.0% 65,992 37.8%
Depreciation and amortization 858 1.1% 861 1.0% 1,640 1.0% 1,685 1.0%
--- --- --- --- ----- --- ----- ---
Income (loss) from operations (4,573) -6.3% (2,004) -2.5% (4,428) -2.8% 126 0.1%
Interest expense, net 476 0.7% 487 0.6% 960 0.6% 970 0.6%
--- --- --- --- --- --- --- ---
Income (loss) before income taxes (5,049) -7.0% (2,491) -3.1% (5,388) -3.4% (844) -0.5%
Income tax expense 47 0.1% 48 0.0% 94 0.1% 96 0.1%
--- --- --- --- --- --- --- ---
Net income (loss) $(5,096) -7.1% $(2,539) -3.1% $(5,482) -3.5% $(940) -0.6%
======= ==== ======= ==== ======= ==== ===== ====
Basic income (loss) per common share:
Basic income (loss) per share $(0.16) $(0.08) $(0.17) $(0.03)
====== ====== ====== ======
Weighted average number of
common shares outstanding - basic 31,831 33,147 31,961 32,717
====== ====== ====== ======
Diluted income (loss) per common share:
Diluted income (loss) per share $(0.16) $(0.08) $(0.17) $(0.03)
====== ====== ====== ======
Weighted average number of
common shares outstanding - diluted 31,831 33,147 31,961 32,717
====== ====== ====== ======
SELECTED BALANCE SHEET CAPTIONS: August 2 August 3
(in thousands, except store data) 2014 2013
---- ----
Cash and cash equivalents $82,401 $95,252
Merchandise inventory 134,600 151,451
Fixed assets (net) 15,821 11,654
Accounts payable 42,382 50,309
Borrowings under line of credit - -
Long-term capital lease, less current portion 351 1,488
Stores in operation, end of period 327 355
Stores in operation, average during the period 328 353
SOURCE Trans World Entertainment Corporation
