Trans World Entertainment Switching Nasdaq Markets

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 Names New Etailz CEO

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.

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Kunal Chopra

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.

Trans World Entertainment Founder’s Son Pulls Board Slate Following Nomination of Paramount Home Entertainment’s Jeff Hastings

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.

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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.

 

Trans World Entertainment Corp. Board, Management Counter Mark Higgins’ Proxy Challenge

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.

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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.

Trans World Entertainment Corp. Founder’s Son Seeks Board Control

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.

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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.”

Trans World Entertainment Seeks Reverse Stock Split to Avoid Delisting

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.

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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.

F.Y.E. Parent Delays 10K Fiscal Report Filing, Cites Business Operation Concerns

The corporate parent of home entertainment retailer f.y.e. (For Your Entertainment) May 6 disclosed it has sought a delay in its 10K fiscal-year filing (ended Feb. 2) with the Securities and Exchange Commission (SEC).

In the filing, Trans World Entertainment Corp. said the delay from May 3 to May 20 was due in part to apprehensions by its accounting firm (KMPG) about the company’s ability to “continue as a going concern.”

The company ended the fiscal period with just $4.3 million in cash – down from more than $31 million a year ago.

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The company’s shares, which closed at 34 cents per share, are on notice of being delisted by Nasdaq for failing to meet the trading board’s $1-per-share minimum threshold.

New York-based TWEC operates more than 200 mall-based f.y.e. home entertainment retail stores – 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 losses 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.

 

Trans World Entertainment Corp. Given Nasdaq Delisting Warning

Trans World Entertainment Corp., parent of home entertainment retailer f.y.e. (For Your Entertainment), Jan. 17 disclosed it has been put on notice by Nasdaq regarding its stock not meeting the $1 minimum price-per-share valuation for publicly-traded companies.

The retailer, whose stock is trading at 61 cents per share, has until July 15 to elevate the stock price to the minimum amount.

If the company does not regain compliance during the initial period, it may be eligible for additional time to regain compliance. If TWEC is not eligible, its expects that Nasdaq will provide written notice that the company’s common stock will be subject to delisting.

Trans World Entertainment Widens Q3 Loss

Store-based home entertainment retail took another blow to the economic bottom line.

Trans World Entertainment Corp., parent of mall-based packaged media retailer f.y.e. (For Your Entertainment), Dec. 12 reported third-quarter (ended Nov. 3) net loss of $14 million – up 75% from a net loss of $8 million during the previous-year period. Revenue dipped slightly to $90.8 million from $91.8 million last year.

Albany, N.Y.-based Trans World Entertainment attributed the increased loss on the sluggish environment for mall-based retail, in addition to ongoing consumer shifts away from packaged media.

“For the f.y.e. segment, the steps we’ve taken, including changes in our merchandise assortment and presentation, to counter declining mall traffic and the ongoing declines in physical media are beginning to generate a positive response from our customers as we delivered a comparable store sales increase of 3.8% for the quarter,” CEOMike Feurersaid in a statement.

The increase was driven by sales in lifestyle (up 13.3% from the previous-year period) and electronics (up 3%). The segments represented 53% of store revenue compared to 48% last year.

Video and music comp sales declined 4% and 0.03%, respectively, with video decline offset by increases in horror movie DVD and Blu-ray Disc sales.

It was a pyrrhic victory as operating losses at f.y.e. increased nearly 21% to $9.5 million from $7.8 million last year. Revenue dropped about 8% to $47.8 million compared to $52.1 million. The company operated 227 stores in the quarter compared to 268 stores in the previous-year period.

Meanwhile, attempts to transform corporate revenue from brick-and-mortar entertainment to ecommerce remain challenged.

Trans World Entertainment acquired Etailz.com in 2016 to help it transition into ecommerce. The Spokane, Wash.-based subsidiary helps third-party businesses navigate online selling through channels such as Amazon, Walmart.com and eBay.

Etailz generated 48% of Trans World Entertainment’s Q3 revenue, up from 44% last year. It also increased segment operating losses exponentially to $4.2 million from $253,000 last year. Revenue increased 8% to $44.1 million from $40.8 million. Primary cost driver included sales, general and administrative costs that totaled $11.4 million, up 37% from $8.3 million.

Regardless, Feurer remains upbeat heading into the winter retail period — despite Wall Street’s growing lack of confidence. The company’s stock is trading below Nasdaq’s $1 minimum and in danger of being delisted.

“Although meaningful headwinds will continue, we have made real progress in our efforts to differentiate our position in this challenging retail environment,” he said.

 

 

Trans World Entertainment Promotes Edwin Sapienza to CFO

Trans World Entertainment Corp., parent of the F.Y.E. home entertainment retail chain, disclosed in an Oct. 29 regulatory filing the promotion of veteran executive Edwin Sapienza to the vacant CFO position following Oct. 10 passing of John Anderson.

Sapienza, 48, has been secretary and treasurer at TWEC since 2012 – positions he will continue going forward. He joined TWEC as a staff accountant in 1993.

In addition to a base salary of $280,000, Sapienza received stock options to purchase 50,000 shares of common stock, in addition to 20,000 shares of restricted stock.