Trans World Entertainment’s net loss doubled in the third quarter as retail sales seized up across the country.
Eight days away from Black Friday, the official start of the crucial holiday shopping season, the Guilderland retailer announced Thursday a net loss of $28.4 million for the quarter ending Nov. 1.
The bleak quarterly report is another reflection of the nationwide retail malaise that has retailers preparing for their worst holiday season in six years. In light of the worsening retail environment, Trans World lowered its outlook for the year and said comparable store sales will likely fall by 8 percent to 10 percent, compared with the previous forecast of a mid-single-digits decline.
Reflecting consumers’ growing wariness to spend during what increasingly looks like a national recession, the parent of the FYE chain saw third-quarter sales slump 25 percent over the year to $195.2 million. But during that period, the music, movie and video game retailer operated 786 stores, 18 percent fewer than a year earlier. Comparable-store sales were down only 14 percent.
“Our performance was well below our expectations,” Trans World Chairman and Chief Executive Officer Robert Higgins said in a Thursday conference call with analysts.
Despite the softening sales, Higgins said Trans World is a “solid company” and “positioned for the all-important holiday season.” The retailer, he said, will march into the new year with a better music lineup, more promotions and a stronger product value system.
During the quarter, the retailer also trimmed its merchandise inventory by 17.6 percent to $68.8 million. It also cut back on borrowings under its line of credit by 24 percent to $62.1 million and long-term debt by 27 percent to $9.8 million.
“We’re a very solid company from a financial point of view, which allows us to get through rocky times,” Higgins said.
But Morningstar, an independent investment research firm in Chicago, issued a report last week saying Trans World’s stock is junk and the retailer is headed toward bankruptcy. Trans World officials rejected that charge. On news of the steep quarterly loss, the company’s stock tumbled 6.3 percent Thursday morning, then edged down further during a bleak day on Wall Street, closing at $1.59 per share, a 9.1 percent drop.