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.

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