ALBANY, N.Y., Aug. 29, 2019 (GLOBE NEWSWIRE) -- Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its second quarter ended August 3, 2019.
“In the etailz segment, we saw the benefits of the performance improvement initiatives implemented in the Fourth Quarter of 2018, highlighted by improved gross margins, lower SG&A expenses and improved supply chain efficiency. This serves as a great foundation for our new etailz CEO, Kunal Chopra,” Trans World Entertainment CEO Mike Feurer stated. “We look forward to Kunal capitalizing upon etailz's position and opportunity as a proven leader in marketplace selling, service and expertise. As a result of these etailz initiatives and disciplined inventory management in the fye segment, we were able to reduce cash used in operations by approximately $18 million for the first twenty-six weeks as compared to the first twenty-six weeks of last year.” continued Mr. Feurer. “In the fye segment, a 9.6% increase in our lifestyle categories demonstrates the continued positive customer response to our engaging, exclusive merchandise,” concluded Mr. Feurer.
Second Quarter Overview - Consolidated
Twenty-six weeks ended August 3, 2019 Overview – Consolidated
Segment Highlights
Thirteen Weeks Ended | Twenty-six Weeks Ended | ||||||||||||
(amounts in thousands) | August 3, 2019 | August 4, 2018 | August 3, 2019 | August 4, 2018 | |||||||||
Total Revenue | |||||||||||||
fye | $ | 41,744 | $ | 50,545 | $ | 86,762 | $ | 104,608 | |||||
etailz | 34,260 | 51,629 | 69,392 | 94,169 | |||||||||
Total Company | $ | 76,004 | $ | 102,174 | $ | 156,154 | $ | 198,777 | |||||
Gross Profit | |||||||||||||
fye | $ | 17,013 | $ | 20,634 | $ | 34,515 | $ | 42,905 | |||||
etailz | 8,103 | 11,539 | 15,991 | 20,956 | |||||||||
Total Company | $ | 25,116 | $ | 32,173 | $ | 50,506 | $ | 63,861 | |||||
SG&A | |||||||||||||
fye | $ | 23,052 | $ | 26,103 | $ | 46,082 | $ | 52,592 | |||||
etailz | 8,413 | 12,067 | 17,368 | 22,070 | |||||||||
Total Company | $ | 31,465 | $ | 38,170 | $ | 63,450 | $ | 74,662 | |||||
Loss From Operations | |||||||||||||
fye | $ | (6,655 | ) | $ | (6,629 | ) | $ | (12,755 | ) | $ | (12,001 | ) | |
etailz | (746 | ) | (2,760 | ) | (2,287 | ) | (5,547 | ) | |||||
Total Company | $ | (7,401 | ) | $ | (9,389 | ) | $ | (15,042 | ) | $ | (17,548 | ) | |
Reconciliation of etailz Loss from Operations to etailz Adjusted Loss From Operations | |||||||||||||
etailz loss from operations | $ | (746 | ) | $ | (2,760 | ) | $ | (2,287 | ) | $ | (5,547 | ) | |
Acquisition related amortization expense | 286 | 972 | 572 | 1,944 | |||||||||
Acquisition related compensation expense, net of contingency benefit | - | 1,118 | 66 | 2,240 | |||||||||
etailz adjusted loss from operations | $ | (460 | ) | $ | (670 | ) | $ | (1,649 | ) | $ | (1,363 | ) | |
Second Quarter Overview - etailz
Twenty-six weeks ended August 3, 2019 Overview – etailz
Second Quarter Overview - fye
Twenty-six weeks ended August 3, 2019 Overview – fye
Trans World will host a teleconference call Thursday, August 29, 2019, 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 CORPORATION
Condensed Consolidated Financial Results
STATEMENTS OF OPERATIONS:
(in thousands, except per share data)
Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||||||||||||
August 3, | % to | August 4, | % to | August 3, | % to | August 4, | % to | |||||||||||||||
2019 | Revenue | 2018 | Revenue | 2019 | Revenue | 2018 | Revenue | |||||||||||||||
Net sales | $ | 75,152 | $ | 101,039 | $ | 154,508 | $ | 196,271 | ||||||||||||||
Other revenue | 852 | 1,135 | 1,646 | 2,506 | ||||||||||||||||||
Total revenue | $ | 76,004 | $ | 102,174 | $ | 156,154 | $ | 198,777 | ||||||||||||||
Cost of sales | 50,888 | 67.0 | % | 70,001 | 68.5 | % | 105,648 | 67.7 | % | 134,916 | 67.9 | % | ||||||||||
Gross profit | 25,116 | 33.0 | % | 32,173 | 31.5 | % | 50,506 | 32.3 | % | 63,861 | 32.1 | % | ||||||||||
Selling, general and administrative expenses | 31,465 | 41.4 | % | 38,170 | 37.4 | % | 63,450 | 40.6 | % | 74,662 | 37.6 | % | ||||||||||
Acquisition related compensation expenses | - | 0.0 | % | 1,118 | 1.1 | % | 66 | 0.0 | % | 2,240 | 1.1 | % | ||||||||||
Depreciation and amortization expenses | 1,052 | 1.3 | % | 2,274 | 2.2 | % | 2,032 | 1.3 | % | 4,507 | 2.3 | % | ||||||||||
Loss from operations | (7,401 | ) | -9.7 | % | (9,389 | ) | -9.2 | % | (15,042 | ) | -9.6 | % | (17,548 | ) | -8.8 | % | ||||||
Interest expense | 194 | 0.3 | % | 103 | 0.1 | % | 326 | 0.2 | % | 166 | 0.1 | % | ||||||||||
Other loss (income) | 462 | 0.6 | % | (49 | ) | 0.0 | % | 419 | 0.3 | % | (128 | ) | -0.1 | % | ||||||||
Loss before income taxes | (8,057 | ) | -10.6 | % | (9,443 | ) | -9.2 | % | (15,787 | ) | -10.1 | % | (17,586 | ) | -8.8 | % | ||||||
Income tax expense | 71 | 0.1 | % | 67 | 0.1 | % | 143 | 0.1 | % | 71 | 0.0 | % | ||||||||||
Net loss | $ | (8,128 | ) | -10.7 | % | $ | (9,510 | ) | -9.3 | % | $ | (15,930 | ) | -10.2 | % | $ | (17,657 | ) | -8.9 | % | ||
Basic and diluted loss per common share: | ||||||||||||||||||||||
Basic and diluted loss per share | $ | (4.48 | ) | $ | (5.23 | ) | $ | (8.77 | ) | $ | (9.73 | ) | ||||||||||
Weighted average number of common shares outstanding - basic and diluted | 1,816 | 1,818 | 1,816 | 1,815 | ||||||||||||||||||
Diluted Income per common share: | ||||||||||||||||||||||
SELECTED BALANCE SHEET CAPTIONS: | August 3, | August 4, | ||||||||||||||||||||
(in thousands, except store data) | 2019 | 2018 | ||||||||||||||||||||
Cash, cash equivalents, and restricted cash | $ | 9,930 | $ | 14,740 | ||||||||||||||||||
Merchandise inventory | 89,785 | 114,920 | ||||||||||||||||||||
Fixed assets (net) | 7,605 | 12,648 | ||||||||||||||||||||
Accounts payable | 29,065 | 34,200 | ||||||||||||||||||||
Borrowings under line of credit | 12,086 | 6,341 | ||||||||||||||||||||
Cash used in operations | 14,962 | 32,944 | ||||||||||||||||||||
Stores in operation, end of period | 206 | 241 | ||||||||||||||||||||
Notes:
Thirteen Weeks Ended | Twenty-six Weeks Ended | ||||||||||||
August 3, | August 4, | August 3, | August 4, | ||||||||||
(amounts in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||
Net loss | $ | (8,128 | ) | $ | (9,510 | ) | $ | (15,930 | ) | $ | (17,657 | ) | |
Income tax expense | 71 | 67 | 143 | 71 | |||||||||
Other loss (income) | 462 | (49 | ) | 419 | (128 | ) | |||||||
Interest expense | 194 | 103 | 326 | 166 | |||||||||
Operating loss | (7,401 | ) | (9,389 | ) | (15,042 | ) | (17,548 | ) | |||||
Depreciation expense | 766 | 1,302 | 1,460 | 2,563 | |||||||||
Acquisition related amortization expense | 286 | 972 | 572 | 1,944 | |||||||||
Acquisition related compensation expense, net of contingency adjustment | - | 1,118 | 66 | 2,240 | |||||||||
Adjusted EBITDA | $ | (6,349 | ) | $ | (5,997 | ) | $ | (12,944 | ) | $ | (10,801 | ) | |
The Company believes that etailz adjusted loss from operations, per the segment disclosure, when considered together with its GAAP financial results, provides management and investors with a more complete understanding of its business operating results, including underlying trends, by excluding the effects of certain charges. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings (losses), net earnings (loss) from continuing operations or cash flows from operating activities, as determined in accordance with GAAP.
Trans World Entertainment is a leading multi-channel retailer, blending a 40-year history of entertainment retail experience with digital marketplace expertise. Our brands seamlessly connect customers with the most comprehensive selection of music, movies, and pop culture products on the channel of their choice. For over 40 years, the Company has operated as a leading specialty retailer of entertainment and pop culture merchandise with stores in the United States and Puerto Rico, primarily under the name fye, for your entertainment, and on the web at www.fye.com and www.secondspin.com. In October 2016, the Company acquired etailz, Inc., a leading digital marketplace expert retailer, operating both domestically and internationally. etailz uses a data driven approach to digital marketplace retailing utilizing proprietary software and ecommerce insight coupled with a direct customer relationship engagement to identify new distributors and wholesalers, isolate emerging product trends, and optimize price positioning and inventory purchase decisions. Trans World Entertainment, which established itself as a public company in 1986, is traded on the Nasdaq National Market under the symbol “TWMC”.
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.
Contact: Trans World Entertainment Ed Sapienza Chief Financial Officer (518) 452-1242 | Contact: Financial Relations Board Marilynn Meek (mmeek@frbir.com) (212) 827-3773 | |