MUSIC NEWS - US music & video retailer, TransWorld, who operate stores mainly under the FYE banner had a terrible shopping season. Holiday sales were well below our expectations," Robert J. Higgins, founder, chief executive and chairman of the Albany-based company, said during a conference call Wednesday. Trans World reported same-store sales decreased 14 percent for the nine-week period that ended January 3, 2009 and total sales dropped 24 percent in the period. Some of the overall decline came as a result of closing 35 stores earlier in the year. Trans World was also in the process of closing another 69 stores during the holidays said Chief Financial Officer John J. Sullivan. We would expect more closures to be announced soon. Trans World's holiday sales projections already were glum, but with the actual results now in, company officials are projecting losses for fiscal 2008 in the range of $20 million to $25 million. That's up from the $10 million to $15 million estimate made in November. Their fiscal year ends on February 2. And of course, the whims of the entertainment industry played a role in Trans World's fortunes. President James A. Litwak said that anticipated music releases from U2, Dr. Dre, Eminem and 50 Cent did not materialize during the holidays. On the video front, sales of the Batman movie "Dark Knight" and "Mama Mia" were strong, but not enough to match the 2007 sales of more blockbusters that came out on video, including sequels in the Pirates of the Caribbean, Shrek and Harry Potter series.
During the conference call, several analysts pressed Trans World officials to provide more specifics about their plans to stem losses and explain why they remain optimistic about the company's survival as many consumers continue to turn from CDs and DVDs to digital download sources.
In Britain, music retailers are hurting too. See recent report on Zavvi's closure.
UPDATE 4/16/09- For fiscal year ending January, 2009, TWEC reported a 22% net sales decline from prior year. They state it was due to comparable store net sales decline of 11% coupled with an 18% decline in average store count. Total product units sold in Fiscal 2008 decreased 16% and the average retail price for units sold decreased 8%. see story at MarketWatch.com
UPDATE 3/5/09 - Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its fourth quarter and fiscal year ended January 31, 2009. For the fourth quarter, total sales decreased 24% to $344.7 million compared to $451.5 million in 2007. Comparable store sales for the quarter decreased 14%. During the quarter, the Company operated an average of 763 stores compared to 922 stores last year, a 17% decline.
UPDATE 1/21/09 - Trans World Entertainment will shut another 70 stores by the end of the month (January 2009), following a difficult holiday shopping period. In connection with the store closures, 700 employees will lose their jobs. At the same time, Trans World has laid off 25 corporate staff members. But, most of the chain’s senior mgmt remain, including president and chief operating officer Jim Litwak, chief financial officer John Sullivan and VP/divisional merchandising manager of video and videogames Mark Higgins. About the closures, Mr Sullivan said, “These are lease expirations where we couldn’t make the appropriate deal. And there was a reduction [in staff] in line with the reduction in stores.” For now, Trans World will operate 715 stores.
UPDATE 1/13/09 - In other US music retail news, it was announced today that Virgin Megastore in Times Square, NYC the highest volume music store in the US, will shut down in April '09. Virgin Entertainment Group North America was acquired by two real estate companies; the Related Cos. and Vornado, back in 2007. In June 2008, a Vornado rep said that the store would close in early 2009. It has to do with the current NYC real estate market and what revenue the owner can get for the space with Virgin out. It's been reported that Virgin pays a mere $54 per square-foot when the going rent in the area is about $700 a square foot ! Even though the store does $55 million (estimated) in annual volume, and is profitable to the tune of $6 million, the space can be even more profitable to its owners with a higher rent tenant. Closing the Times Square store leaves the Virgin chain with only five locations. This leaves the Union Square store in New York as the city's premiere record/video store, with an estimated $40 million annual volume. But, there are also rumors of that store closing [Billboard].
UPDATE 1/16/09 - Bankrupt Circuit City Stores Inc., unable to work out a sale of the company, said today it will go out of business , closing its 567 U.S. stores and cutting 30,000 jobs. Liquidation firms have been hired to run closing sales starting this Saturday thru the end of March 09. See Circuit City liquidates.
Comments