F.Y.E. Retail Stores Widen Q1 Operating Loss

Trans World Entertainment Corp. May 28 said its f.y.e. (For Your Entertainment) retail chain widened first-quarter (ended May 4) operating loss to $6.1 million compared to an operating loss of $5.4 million during the previous-year period.

Revenue dropped nearly 17% to $45 million from $54 million last year.

Comparable store sales were flat as a comparable store sales increase of 7.3% in the lifestyle category offset declines in packaged media. The lifestyle and electronics categories represented 53.9% of revenue for quarter as compared to 49.5% for the same period last year.

Gross profit was $17.5 million, or 38.9% of revenue, compared to $22.3 million, or 41.2% of revenue, for the same period last year. Gross margin improved throughout the quarter as stores refreshed trend merchandise following the holiday season.

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SG&A expenses decreased $3.5 million, or 13.1%, to $23 million, or 51.2% of revenue, compared to $26.5 million, or 49% of revenue, for the same period last year.

The decline was due to fewer stores in operation and other expense saving initiatives implemented in Q4 2018.  The increase in SG&A as a percentage of revenue was due to an increase in healthcare costs and outside consulting fees.

Meanwhile,, the ecommerce middleman acquired in 2016 for $75 million, narrowed its operating loss to $1.5 million from $2.8 million last year. Revenue fell 17.5% to $35.1 million from $42.5 million last year.

Regardless of continued downward financials, threat of Nasdaq delisting company shares, and a proxy attack from the son of late founder Robert Higgins, CEO Mike Feurer remains positive on the company’s future.

“Our customers continue to respond positively to our exclusive, unique and engaging merchandise,” Feurer said in a statement. “In the eTailz segment, we saw the benefits of the performance improvement initiatives, highlighted by improved gross margins, lower SG&A expenses and improved supply chain efficiency. We were able to reduce cash used in operations by over $10 million compared to Q1 of last year.”



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