Trans World Entertainment July 31 disclosed it lost $5.4 million in the second quarter (ended May 2) on revenue of $31.5 million. That compared with a loss of $7.8 million and revenue of $35.1 million during the previous-year period.
Notable for the narrowed loss: The Feb. 20 sale of home entertainment retail chain f.y.e. for $10 million to Canadian-based Sunrise Records, which owns music retailer chain HMV in Canada and London. Trans World Entertainment now focuses on eTailz.com, an e-commerce intermediary based in Spokane, Wash.
Trans World Entertainment said owning f.y.e. resulted in negative cash flows from operations during fiscal 2019 and 2018, and it expects to incur additional net losses in 2020. The company remains uncertain about the fiscal impact of the coronavirus pandemic on eTailz, which conducts much of its business on Amazon.
April 17 etailz received loan proceeds of $2 million as part of the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The PPP Loan matures April 17, 2022, bearing interest at a fixed rate of 1% per annum, and is payable in monthly installments of $112,975.55 commencing Nov. 10.
“Given the daily evolution of the COVID-19 outbreak and the response to curb its spread, currently we are not able to estimate the effects of the virus outbreak to our results of operations, financial condition, or liquidity,” the company said in a statement.
On the heels of selling its legacy home entertainment retailer, For Your Entertainment (f.y.e.), for $10 million, Trans World Entertainment Corp. has secured $25 million in funding for its eTailz.com e-commerce business.
TWEC acquired etailz for $75 million in 2016 as a means of jumpstarting an ecommerce business segment. The Spokane, Wash.-based company claims to use proprietary software and e-commerce insight to help third parties identify new distributors and wholesalers, discover emerging product trends, and optimize price positioning and inventory purchasing decisions.
The business largely (85%) does this through Amazon as a “marketplace retailer” partnering with brands to help them grow sales both domestically and internationally. Etailz also partners with companies to expand their brand on eBay, Jet and Walmart.
TWEC said it plans to use the $25 million loan facility to better capitalize etailz’ growth goals, which include further development of software and services offerings, supporting inventory expansion, and expanding into new marketplaces and geographies.
“The sale of our FYE segment has put our stores and employees in the best position to continue forward and build upon an almost 50 year legacy,” Michael Feurer, CEO of TWEC, said in a statement.
Feurer said securing of the credit facility for etailz is a “positive and important first step” for the subsidiary, which becomes the main focus of TWEC going forward.
No small task considering etailz has been largely unprofitable since the merger — a reality that saw co-founder and CEO Josh Neblett exit the company about a year ago.
Brock Kowalchuk is the new CFO and Lisa Wideman was hired last November as senior director of human resources. Mitchell Bailey remains as chief operating officer.
New CEO Kunal Chopra contends “100%” that the unit reportedly with 166 employees will grow in 2020. It employed 288 people in 2018.
Whether that growth is an operating loss or profit remains to be seen. In its most-recent fiscal period, etailz lost $1.3 million on revenue of $28.6 million, which was down 35% from revenue of $44.2 million during the previous-year period.
Through three fiscal quarters, revenue is down almost 30% at $98 million from $138 million. Operating loss has narrowed to $3.6 million from $9.8 million.
Shareholders of fiscally challenged Trans World Entertainment Corp. have overwhelmingly approved the sale of home entertainment retail chain For Your Entertainment (f.y.e.).
New York-based TWEC said a special shareholders meeting held on Feb. 17 saw more than two-thirds of shareholders approve the previously-announced sale of substantially all of the f.y.e. assets to a subsidiary of Sunrise Records and Entertainment Ltd., parent of Sunrise Records in Canada and HMV Records in the United Kingdom, for $10 million in cash.
The closing of the transaction is subject to the satisfaction or waiver of customary closing conditions set forth in the purchase agreement, including the receipt of certain third party consents which are expected shortly. All of the proceeds from the Transaction will be used to repay outstanding indebtedness and to satisfy other assumed liabilities.
Indeed, f.y.e., which operates more than 200 mall-based locations across the country, and has hailed itself as the last standalone packaged-media retailer, reported an operating loss of $21.5 million, with revenue down 14.7% to $40.8 million in the most-recent fiscal period. Comparable store sales declined 5.2% — the drop largely buttressed by gains in collectables revenue. And eTailz.com, the e-commerce middleman acquired in 2016 for $75 million, lost $1.4 million.
Trans World Entertainment, parent to mall-based home entertainment retailer f.y.e. (For Your Entertainment), Dec. 18 disclosed it would delay the release of its third-quarter 10-Q regulatory filing to Dec. 23.
The company, which did not submit the filing with its Dec. 17 fiscal release, said it needed additional time to compile required financial data to its accountant (KPMG).
Specifically, TWEC said its primary sources of liquidity include borrowing under its revolving credit facility, tapping available cash and cash equivalents, and cash generated from operations.
Yet f.y.e. reported an operating loss of $21.5 million, with revenue down 14.7% to $40.8 million. Comparable store sales declined 5.2% — the decline largely buttressed by gains in collectables revenue. And eTailz.com, the ecommerce middleman acquired in 2016 for $75 million, lost $1.4 million.
TWEC, in the filing, said the results “raises substantial doubt” about its ability to continue as a going concern for 12-month period following the Q3 fiscal period.
The operator of more than 200 f.y.e. stores, said it hopes to improve profitability, implement a performance improvement plan for eTailz and secure additional funding, among other strategic alternatives.
As expected, fiscally-challenged Trans World Entertainment Corp. is taking its stock from the Nasdaq Global Market to the Nasdaq Capital Market, effective July 18.
The corporate parent to home entertainment retailer For Your Entertainment (f.y.e.) made the switch to avoid exceeding a 180-day grace period granted by Nasdaq to bring its stock above the minimum $1-per-share threshold.
Trans World, which is affecting a 1-for-20 shares reverse stock split on Aug. 15, now has another 180-period until Jan. 13, 2020 to bring its share price above the $1 minimum valuation.
The reverse stock split is primarily intended to bring TWEC into compliance with the minimum average closing share price requirement for maintaining its listing on the Nasdaq Capital Market. The company’s common stock will continue to trade under the symbol “TWMC”.
The split will reduce the number of shares of outstanding common stock from approximately 36,258,839 million shares to approximately 1,812,941 million shares.
TWEC shares closed July 16 at 28 cents per share. The company has a market capitalization of just $10.3 million.
Trans World Entertainment Corp. July 10 announced that Kunal Chopra has been named CEO of eTailz.com, reporting directly to Mike Feurer, CEO of the parent company.
Acquired by Trans World Entertainment in 2016 for $75 million, eTailz acts as middleman seller on platforms such as Amazon and Walmart.com.
The Spokane, Wash.-based company, which was expected to help offset ongoing challenges at Trans World’s mall-based f.y.e. entertainment retail chain, reported a $62 million loss from operations in the most-recent fiscal period. That involved a $57 million impairment charge related to company restructuring and 30% workforce reduction – including CEO and co-founder Josh Neblett.
Chopra, who has a website touting his entrepreneurial/management skills, will be responsible for all operations and performance of etailz.
“I am extremely pleased to have someone with Kunal’s breadth and depth of experience and leadership join our team as CEO,” Feurer said in a statement. “Kunal brings a unique combination of technological expertise, entrepreneurial character and operational excellence.”
Indeed, Kunal has more than 15 years of executive experience working with companies such as Microsoft, Amazon, and Groupon. Throughout his professional career, Kunal has led organizational transformation, new business and product development, strategy formulation and execution, and product launch at scale.
Trans World Entertainment needs all the help it can find.
Retailer f.y.e., which operates more than 200 stores nationwide, has been pushing trend items, including collectibles, action figures, posters, T-shirts and related merchandise.
Regardless, store revenue dropped 15% to $78.8 million, while operating loss narrowed to $1 million. Fiscal-year store revenue declined 14% to $231.2 million.
The company’s board recently authorized a 1-for- 20 shares reverse stock split to keep it in compliance with Nasdaq requirements.
The board also added Jeff Hastings, a senior executive at Paramount Home Entertainment.
Mark Higgins, son of the late founder of Trans World Entertainment Corp. Robert Higgins, has withdrawn his slate of nominees to the board of directors.
The slate included Jeff Hastings, SVP, domestic sales, Paramount Home Entertainment, and Philip Knowles, former CEO of Trinity Home Entertainment and MVP Home Entertainment.
In a June 12 filing, Higgins withdrew his candidates for the June 27 shareholder meeting after TWEC — which operates the f.y.e. (For Your Entertainment) retail chain — formally added Hastings as a board nominee.
Higgins, who owns 1.2% of TWEC outstanding shares, also said he would not vote any proxies received from shareholders.
With TWEC shares in danger of being delisted as investors weary of brick-and-mortar entertainment retail, Higgins sought to diversify the board with fresh faces from the home video industry.
Mark Higgins, son of the late Robert Higgins who founded Tran World Entertainment Corp. and its f.y.e. (For Your Entertainment) home entertainment retail chain and related businesses, wants to shake up the company’s board of directors, among other actions.
Higgins has submitted the names of four nominees, including himself, for the six-person board.
Mark Higgins
Why? TWEC retail operations are hemorrhaging sales and widening losses as consumer indifference toward brick-and-mortar retail mushrooms.
The f.y.e. business upped 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.
Business trends at the retail level, including wholesale secular shifts in home entertainment consumption, beg for an intervention.
TWEC’s f.y.e. stores are one of the last pureplay home entertainment retail chains operating.
As consumers shift their home entertainment habits away from transactional purchases to subscription streaming, TWEC has sought to shake up f.y.e. inventory selections.
Packaged-media product, including DVD, Blu-ray Disc and music CDs, has slowly been downsized in favor of trend and lifestyle merchandise.
While the changes have offset declining disc sales, mall-based f.y.e. stores continue to swim upstream against a current of ecommerce and free shipping.
CNBC reports that U.S. retailers in 2019 will shutter 5,994 stores, while opening 2,641, according to real estate tracking done by Coresight Research.
Data analytics firm Thasos found that foot traffic at the nation’s largest malls peaked in August 2018 and has declined since — despite efforts to up promotions and change inventory.
“If you’re selling merchandise at a loss, you can only do that for so long,” John Collins, co-founder and chief product officer at Thasos, told CNBC.
TWEC’s board and management (i.e. CEO Mike Feurer and CFO Edwin Sapienza), in a May 29 filing, say they are “deeply committed” to enhancing value for all shareholders and overseeing the company’s strategy.
“Our board is comprised of six highly qualified directors who bring expansive experience concerning retail operations, accounting and finance, management and leadership, risk assessment and corporate governance,” read the filing.
The company claims its board has “extensive knowledge” of the challenges faced in the “turbulent” physical retail and physical media industries and has been instrumental in identifying opportunities to improve results.
“The board recognizes the importance of having the right mix of skills, expertise and experience to effectively oversee the company and regularly reviews the board’s composition and its refreshment to ensure alignment with the interests of shareholders,” read the filing.
TWEC says merchandizing changes at f.y.e. have been “well received” by customers and will drive the “continued reinvention of the fye brand throughout 2019.”
Indeed, the changes have resulted in lifestyle categories accounting for 55% of revenue in 2018 as compared to 25% in 2014.
TWEC says it has implemented “strategic initiatives, operational efficiencies and other considerations” at the eTailz segment, which caters to businesses and entrepreneurs seeking to establish an ecommerce strategy.
“In the first quarter, we saw the benefits of the strategic initiatives, highlighted by improved gross margins, lower SG&A expenses and improved supply chain efficiency,” read the filing. “As a result of these initiatives, we were able to reduce cash used in operations by over $10 million for [Q1] as compared to the first quarter of 2018.”
TWEC holds its annual shareholder meeting on June 27.
With shares of Trans World Entertainment Corp. (parent to home entertainment retailer f.y.e.) in danger of being delisted, fiscal profits plummeting into expanding losses, Mark Higgins, son of late founder Robert Higgins, wants to shake up the board of directors.
Mark Higgins
The younger Higgins, who owns 1.2% of the company’s shares, in a regulatory filing, submitted the names of four board nominees (including himself), for shareholders to vote on at the annual meeting on June 27.
Among the nominees, two home entertainment executives: Jeff Hastings, VP, sales planning and forecasting at Paramount Home Entertainment, and Philip Knowles, former CEO of Trinity Home Entertainment and MVP Home Entertainment.
Higgins, who began working at Trans World Entertainment in 1981, served as chief merchandising officer for two years until the appointment of Mike Feurer as CEO in 2014.
Founder Robert Higgins, who died in 2017 at the age of 75, oversaw a retail operation that at its peak (2001) operated about 1,000 stores generating $1.4 billion in revenue.
TWEC currently operates about 200 f.y.e. stores, which generated an operating loss of $24.5 million on revenue of $231.2 million in the most-recent fiscal year.
Independent auditor KPMG disclosed the retailer’s primary source of liquidity involves borrowing under a revolving credit facility, and that “substantial doubt exists about the company’s ability to continue as a going concern.”
“Shareholders have suffered from an extended period of stock price decline and poor operating results that I believe warrants an overhaul in the boardroom,” Higgins wrote. “Since early 2015, shareholders have suffered nearly a complete loss of value, experiencing total shareholder returns of negative (-90%) while the company’s market capitalization has declined by over $88 million.”
While TWEC has suffered due to changing consumer home entertainment habits and declining mall-based foot traffic, Higgins puts much of the blame on Feurer.
The CEO in 2016 pushed for the $75 million acquisition eTailz.com, an ecommerce middleman operating largely through Amazon. The Spokane, Wash.-based unit generated an operating loss of $62 million in the most-recent fiscal period.
“In fiscal 2017 alone, the company incurred losses of over ($42.5) million and had earnings-per-share of negative ($1.18); yet, for the same year, Feurer was awarded a bonus of $350,000 and an additional $260,890 of incentive compensation (not to mention $203,500 more in stock and option awards),” Higgins wrote.
“I believe the company has tremendous potential and a valuable and dedicated workforce of more than 2,200 employees that can thrive with the right board and management team in place. I believe that the nominees, if elected, will bring about changes that will benefit Trans World Entertainment and its shareholders.”
Fiscally-challenged Trans World Entertainment Corp., parent to home entertainment retail chain f.y.e. (For Your Entertainment) and e-commerce facilitator Etailz.com, is seeking shareholder approval for a reverse-stock split at the upcoming June 27 annual meeting.
In a filing, TWEC said it is looking to authorize a 1-for-20 shares reverse split to bring its stock in compliance with Nasdaq’s $1-per-share minimum valuation.
The Albany, N.Y.-based company’s stock, which closed May 13 at 35 cents per share, would be valued at $7-per-share following the split.
If approved by shareholders, TWEC outstanding shares of common stock would decrease to more than 1.8 million shares from 36.2 million shares.
TWEC operates more than 200 mall-based f.y.e. locations, down from 540 stores in 2010.
The chain saw store revenue drop 15% to $78.8 million from $92.4 million in the previous-year period. Operating loss narrowed to $1 million from a $2.4 million during the previous-year period.
Store revenue declined 14% to $231.2 million from $268.3 million during the previous-year period.
To offset ongoing declines in packaged media sales, including DVD/Blu-ray Disc movies and music CDs, f.y.e has pushed trend items such as collectibles, action figures, posters, T-shirts and related merchandise.
Meanwhile, Spokane, Wash.-based e-commerce middleman Etailz.com, which Trans World acquired in 2016 for $75 million, reported a $62 million loss from operations.
