December 12, 2018
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.