Way back in the BC era (Before COVID), Trans World Entertainment Corp. sold its national chain of FYE stores to a Canadian company that also retails movies, music and pop-culture tchotchkes.
Between that February deal and now, as we were preoccupied with efforts to contain COVID-19, we lost bragging rights to Trans World as an Albany-based public company.
At its height, Trans World had nearly 1,000 stores and $1 billion in sales, and we benefited from the leadership, talent and corporate capital of hosting its headquarters.
Now, though, filings with regulators list Trans World’s home as Spokane, Wash., the location of its remaining business segment, etailz, an online marketplace retailer. What’s more, Trans World also has a new chief executive, a condensed board of directors, and a new certified public accounting firm.
The new corporate address appears at the top of the annual report filed last week with the U.S. Securities and Exchange Commission; it’s there, too, on a notice to the SEC a day later about the shift in accounting firms from national powerhouse KPMG to a regional firm in Spokane.
Other changes are outlined in March and April filings that note the departure of former CEO Mike Feurer and the elevation of etailz CEO Kunal Chopra to overall company head; the receipt of $2 million from the government under the COVID-inspired Paycheck Protection Program; a new $25 million revolving credit line for etailz; and reconstitution of the Trans World board to just three members – who also pooled resources to make a $5 million loan to the company.
Behind all the activity? Still-fragile finances.
The sale of FYE yielded $10 million to retire an old credit line, and off-loaded costs for leased properties, including the headquarters and warehouse in Albany that alone cost more than $1 million annually.
But as Trans World said in closing the sale, and reiterated again in its annual report, recurring losses and negative cash flow from operations “raise substantial doubt about [the company’s] ability to continue as a going concern.”
To that end, the annual report lists other possible avenues to reduce costs at the corporate level, such as deregistering Trans World’s stock, which would eliminate the regulatory costs of being a public company. (Incidentally, jettisoning KPMG will save on the auditing bill, which was over $1 million last year.)
The report also speaks of continuing efforts to push etailz’s customizable, proprietary platform of software and services, which is eyed as a potential source of recurring subscription revenue.
That would lessen etailz’s dependence on the Amazon Marketplace, where 96 percent of its revenue is generated as a third-party seller.
Such reliance is anathema to any business, and Trans World’s annual report recognizes the peril: “Any adverse change in our relationship with Amazon … could adversely affect the continued growth of our etailz segment and our financial condition and results of operations.”
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].