Trans World Entertainment CEO, Board Out as Company Switches Focus to E-commerce

Trans World Entertainment Corp. March 31 announced the departure of CEO Mike Feurer and four other board members as the former parent to home entertainment retail chain f.y.e. (For Your Entertainment) switches focus to e-commerce facilitator eTailz.com. Feurer had been CEO and a director of the board since 2014.

Departing board members include chairman Michael Solow, Jeff Hastings (former head of DVD sales at Paramount), Rob Marks and Michael Nahl.

“Mike’s leadership was instrumental in the brand transformation and recent sale of our f.y.e. business and the financing of etailz,” Solow said in a statement. “In fact, it was Mike’s foresight regarding digital marketplace retailing that prompted the [TWEC] to reinvent itself with the purchase of etailz several years ago. The board thanks Mike for his contributions to the company and wish him the best in the future.”

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Mike Feurer

New York-based TWEC sold f.y.e. in January for $10 million, which included Second Spin used packaged-media stores. It acquired Spokane, Wash.-based etailz.com in 2016 for $75 million.

The latter bills itself as an online marketplace retail expert and software provider using proprietary data to help third-party digital marketplace retailing through Amazon, Jet, Walmart.com and eBay.

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Etailz.com has struggled since the acquisition. In the 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.

Regardless, TWEC secured an additional $30 million in financing for etailz from investors led by Alimco Financial Corp, together with the previously announced credit facility.

In connection with the financing, Tom Simpson and Jonathan Marcus join a reconstituted board. Simpson was co-founder and executive chairman of etailz up until TWEC’s acquisition in 2016, and currently serves as managing member of the Kick-Start funds.

Marcus is the CEO of Alimco and has over 30 years of experience as an investor, including numerous board roles. The financing will help etailz further develop its software and services offerings, supporting inventory expansion, and expanding into new marketplaces and geographies.

“Combined with our incredible team and partners and the exclusive focus of our board, etailz is well positioned to become the leader in marketplace software and services,” said Kunal Chopra, etailz CEO. Chopra joined etailz in August 2019 following previous experiences at Microsoft, Groupon and Amazon.

 

 

Trans World Entertainment’s Bruce Eisenberg Departs After 27 Years

Trans World Entertainment March 2 announced the departure of Bruce Eisenberg, EVP of real estate, effective immediately.

Eisenberg, who had been with the corporate parent of the f.y.e. (For Your Entertainment) home entertainment retail chain for nearly 27 years, saw his position eliminated following the $10 million sale of f.y.e. to the parent of Sunrise Records in Canada and HMV Records in the United Kingdom.

Per a regulatory filing, Eisenberg is set to receive more than $300,000 in so-called “golden parachute” compensation. His annual compensation had been $425,000. CEO Mike Feurer is on tap to receive more than $1 million in compensation should his position be eliminated.

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The 200 mall-based f.y.e. locations across the country 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.

Trans World Entertainment had warned in regulatory filings that its continued operation as a company was in doubt without deleveraging some of assets.

The company is now focused on its Etailz.com e-commerce subsidiary, based in Spokane, Wash., which has been losing money. TWEC recently took out a $25 million loan to shore up the subsidiary’s finances.

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Trans World Entertainment Narrows Q2 Loss

Trans World Entertainment, parent of home entertainment retailer f.y.e. (For Your Entertainment), Aug. 29 announced that its second-quarter (ended Aug. 3) net loss declined 22% to $7.4 million from a net loss of $9.4 million during the previous-year period.

Revenue for the period dropped nearly 26% to $76 million, from $103 million a year ago, as both f.y.e. and the company’s online middleman business, eTailz, experience ongoing “challenges,” the retailer said.

Indeed, f.y.e. revenue dropped 17.5% as consumers increasingly skip mall-based brick-and-mortar retailers for home entertainment. The chain’s operating loss remained relatively the same at $6.6 million.

But it is Trans World’s eTailz unit that continues to underwhelm after being acquired in 2016 for $75 million. The Spokane, Wash.-based business helps third-parties sell on the Internet, notably Amazon.

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Yet, while Amazon continues to flourish, eTailz saw quarterly revenue plummet 34% to $34.2 million from $51.6 million last year.

The unit was able to narrow its operating loss to $746,000 from an operating loss of $2.7 million — largely through downsizing, including the departure of CEO and co-founder Josh Neblett.

Kunal Chopra was brought in to reverse fiscal fortunes and has apparently done just that according to Trans World CEO Mike Feurer.

“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,” Feurer said in a statement.

“We look forward to Kunal capitalizing upon etailz’s position and opportunity as a proven leader in marketplace selling, service and expertise.”

In the meantime, Feurer said “disciplined” inventory management in the f.y.e. segment, contributed to a reduction in cash used in operations by approximately $18 million for the first twenty-six weeks of the fiscal period as compared to the first twenty-six weeks of last year.

Changes in inventory include supplanting packaged media shelf space with lifestyle merchandise, which includes T-shirts, action figures and related popular culture items.

“A 9.6% increase in our lifestyle categories demonstrates the continued positive customer response to our engaging, exclusive merchandise,” Feurer said.

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.

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, eTailz.com, 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.”

 

 

Trans World Entertainment Eyes Q4 Retail Rebound, Digital Decline

In a reversal of industry trends, Trans World Entertainment Corp. March 28 reported a 2.8% increase in fourth-quarter (ended Feb. 2) same-store sales in its f.y.e. (For Your Entertainment) mall-based packaged media retail stores.

At the same time, Etailz.com, the online retail subsidiary TWMC acquired in 2016 for $75 million, reported a $62 million loss from operations, which involved a $57 million impairment charge related to company restructuring and 30% workforce reduction – including some senior management.

“This [2.8%] marked the second consecutive quarter of positive [f.y.e.] comp sales,” CEO Mike Feurer said in a statement. “Our customers continue to respond positively to the changes in our merchandise assortment and presentation that were made to counter declining mall traffic and the ongoing declines in physical media.”

Indeed, 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 from $92.4 million from the previous-year period. Operating loss narrowed to $1 million from a loss of $2.4 million during the previous-year period.

Fiscal-year store revenue declined 14% to $231.2 million from $268.3 million during the previous-year period.

Meanwhile, Spokane, Wash.-based Etailz, which helps third parties monetize online sales through platforms such as Amazon, Walmart.com and eBay, posted revenue of $48.6 million, down almost 9% from revenue of $53 million last year.

For the year, revenue increased 7% to $186.9 million from $174.4 million.

“In response to the decline in operating results, we’ve engaged outside support and initiated certain strategic changes to create operational efficiencies directed towards improving [Etailz’s] performance and cash flow,” said Feurer. “We remain confident in the underlying opportunity afforded by etailz as a top marketplace retailer and service provider.”

Trans World Entertainment shares closed up 5.5% at 47 cents per share on March 27.

 

 

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.

 

 

F.Y.E. Q2 Fiscal Performance Undermined by Fidget Spinners

Trans World Entertainment Corp. Aug. 30 said its f.y.e. (For Your Entertainment) entertainment retail chain posted a second-quarter (ended Aug. 4) operating loss of $6.6 million, which was up 22% from an operating loss of $5.4 million during the previous-year period.

Revenue for one of the last nationwide chains primarily selling packaged media topped $50.5 million – down almost 15% from $58.9 million last year.

For the fiscal year through Aug.4, f.y.e. has upped its operating loss 22% to $12 million compared to an operating loss of $9.8 million last year. Revenue is down 15% to $104.6 million from $123.9 million.

Trans World attributed the Q2 decline in part to a 10.4% decline in total stores in operation (241 vs. 269) and a 6.7% decline in comparable store sales compared to the same quarter last year.

CEO Mike Feurer had another culprit for the revenue decline: fidget spinners. Toy gadgets comprised of a ball bearing in the center of a multi-lobed (typically two or three) flat structure made from metal or plastic designed to spin along its axis with little effort. Fidget spinners became popular in April 2017.

“Our sales results were impacted by tough comparisons due to the performance of fidget spinners, which represented 4% of sales in the second quarter of last year,” Feurer said in a statement.

Regardless, Feurer said efforts to change f.y.e.’s merchandise “point of view” from DVD, Blu-ray Disc movies, TV shows, video games and music CDs to “unique, relevant, collaborative and exclusive merchandise” has begun to yield results as sales improved Q2 throughout the quarter with July comp sales down just 0.7%.

Meanwhile, eTailz.com, the e-commerce platform Trans World Entertainment acquired in 2016 for $75 million, posted an operating loss of $2.7 million, compared to operating income of $98,000 last year. Revenue increased 18.6% to $51.6 million from $43.5 million.