The future of the FYE entertainment store chain soon could be in the hands of a 35-year-old Canadian who rescued a similar business in Toronto on a bit of a whim, then rapidly expanded by doing the same with others.
Now, Doug Putman, CEO of Sunrise Records and Entertainment Ltd., runs 85 stores across Canada as Sunrise Records, 100 stores in the United Kingdom as HMV, and has his sights set on 200 FYE stores in the U.S.
Under the deal announced last week, Albany-based Trans World Entertainment Corp. will sell FYE for $10 million in cash, keeping etailz, its Amazon Marketplace retailer. Shareholders still have to give an official thumbs-up, but as of Feb. 1, buyer and seller will act as if the transaction has occurred.
That latter provision is due to Trans World’s fragile finances. Last month, in a late quarterly filing with regulators, the company, founded in 1972, revealed it had “substantial doubt” about being able to continue in business for another year.
Trans World reported an accumulated deficit of $89 million as of Nov. 2, and, on top of negative cash flow from operations in fiscal 2017 and 2018, anticipated more of the same for “the foreseeable future.”
That’s a far cry from the more than $1 billion in sales recorded 20 years ago, before new formats and technologies – including the now-ubiquitous smartphone – displaced Trans World’s core music and movie offerings.
Of course, similar retailers were bloodied, too.
In Toronto, Sunrise Records, founded in 1977 and once one of Canada’s major record store chains, was down to just a few locations in 2014 when Putman, running his family’s toy, game and gift distribution business in Ancaster, Ontario, about an hour’s drive west of Niagara Falls, stepped in.
He subsequently added a handful of new Sunrise locations in Ontario before taking on another rescue in 2017: HMV Canada, the 100-store music and entertainment retailer forced into receivership by a lender. Sunrise bought 70 stores, many of them mall-based, to spread its name across Canada.
But Putman wasn’t done: Early last year, he rescued HMV in the U.K., once the owner of HMV Canada, which also went into receivership. HMV, dating to 1921, kept its name.
(It was during the U.K. negotiations that Putman first approached Trans World, but a $35 million asking price for FYE was seen as too dear, new regulatory filings show.)
In an interview posted to HMV’s YouTube channel after the U.K. deal, Putman confessed his move into music retailing came by chance.
He said a buyer from Sunrise, which was stocking pop-culture products from his family’s business, encouraged him to take a look at the company before it wound down, suggesting “There’s nothing to running a record company – come in, buy it, it’s easy; you’ll love it.”
“It was definitely nothing of what he said,” Putman says with a big laugh. “It was not easy.”
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]