Trans World looking forward

A year after Trans World Entertainment shuffled a majority of its music and video retail stores unde
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A year after Trans World Entertainment shuffled a majority of its music and video retail stores under its flagship f.y.e. brand, the entertainment retailer is preparing to launch its first regional brand-focused marketing campaign in the Albany and Harrisburg, Pa. markets.

At its annual meeting Tuesday at the Albany Country Club, Trans World Chairman and Chief Executive Officer Robert Higgins laid out his beleaguered business’ road map to profitability. It includes the pilot radio and television advertising brand campaign that starts this month in two markets.

The Guilderland music, video and video game retailer has spent the past two years strengthening its core brand, initially by converting its Coconuts, Strawberries, Warehouse and other stores into f.y.e. locations. It followed up on that conversion campaign in January by closing 149 mostly under-performing stores.

“Trans World in positioning itself for a return to profitability,” Higgins said.

Higgins said Trans World will likely shed an additional 75 to 100 unprofitable stores by next January, though none of them are expected to be in the Capital Region. The company ended its first quarter that concluded May 3 with 799 stores, compared to 972 a year earlier. Other than f.y.e, which is short for “for your entertainment,” the company’s remaining brands include Suncoast Video and Second Spin.

Rocked by slumping music sales and lackluster video releases, Trans World has not reported a quarterly net income since the fourth quarter of its 2006 fiscal year. It posted a net loss of $3.2 million for its 2007 fiscal year, compared to a net income of $11.7 million for the previous year.

To lessen the impact of music’s slump, Trans World has been diversifying its product mix, especially in the video and video game categories. The music category last year accounted for 39 percent of Trans World’s sales, compared to 46 percent in 2006.

Sales in June have Trans World executives viewing the second half of 2008 optimistically. For the first time since 2005, the music industry saw an album sell more than 1 million units in one week, with rapper Lil Wayne’s “The Carter.”

“This is starting to be an exciting time. I’m starting to be jazzed,” Trans World Entertainment President and Chief Operating Officer Jim Litwak said.

But Trans World investors were not too jazzed. By the close of trading Tuesday, the company’s stock was down 2 cents at $2.82 per share. That price a year earlier was $4.37 per share and $9.44 per share four years ago.

The annual meeting came less than two months after Higgins scrapped his bid to take Trans World private. The chief executive, who founded the entertainment giant in 1972, withdrew that offer, citing challenges posed by the nation’s credit crunch.

When asked if he would make another stab at taking Trans World private after the credit markets recover, Higgins said: “It’s something you think about, but right now we’re focused on building shareholder value.”

Categories: Business

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