Trans World envisions a happy holiday season
Colonie-- 4th-quarter sales should soar, CEO tells shareholders
June 10, 1999
Music retailing company Trans World Entertainment Corp. is a now a national powerhouse and should reap plump holiday sales in the important fourth quarter, CEO Robert J. Higgins told shareholders Wednesday.
Sales should be up 9 percent to $1.4 billion this fiscal year, and the company's stock, which has been trading at about $12 a share, should increase to more attractive price levels in the coming months, Higgins predicted.
About 70 shareholders at the company's annual meeting at the Desmond hotel listened attentively as Higgins and other executives described their plans to capture more of the prerecorded music market in traditional storefronts and through the new Internet world of e-commerce.
Higgins focused first on the company's merger with former rival Camelot Music Holdings in late April. The merger made Trans World "the biggest music retailer in the United States in both sales and profit,'' Higgins said.
The network of nearly 1,000 traditional Trans World stores operates in malls under names such as Camelot and Strawberries and F.Y.E., and in strip plazas under names including Coconuts and Spec's Music. Trans World may streamline the number of store "brand'' names after a year or so.
The store holdings pit Trans World against competitor Minneapolis-based Musicland Stores Corp. -- owner of Sam Goody's and Media Play stores -- which operates in 49 states with more than 1,320 outlets.
Trans World stores offer wider selections of music, more gift items and strong promotions to compete with Musicland, said James Litwak, executive vice president of merchandising.
Come October, stores will be even better stocked, Higgins said, with technology that will allow customers in the store to download entire compact disc releases remotely, and have the music imprinted on a disc on site.
"We can produce a CD in the store in seven minutes,'' Higgins said. Customers still have to buy entire CDs as distributed by record companies, and won't be able to compile a unique collection from a sampling of different discs.
Still, this is a merchandising step forward, Higgins said. Customers will have ready access to more obscure titles the stores might not regularly carry, he said. The stores will be better off operationally, because they won't have to carry as much inventory and can replenish quickly if they aren't carrying enough titles by a touring artist whose appeal suddenly spikes.
Additionally, Trans World is selling product over the Internet from a Web site called twec.com -- short for The Web's Entertainment Center -- that tries to draw customers with exclusive interviews and "chat'' opportunities with artists and other entertainment coverage.
"Our overall Internet strategy is to develop an entertainment site that also sells products,'' said Higgins. A recent merchandising partnership with Internet portal Yahoo! is directing more customers to twec.com, Litwak said.
The e-commerce business will only be a slice of the market -- like record clubs that peaked at 14 percent market share, Higgins said.
And the distribution channel isn't yet profitable for Trans World, Higgins said. But, then again, he said, competitors such as Amazon.com that operate strictly online selling music and other merchandise at deep discounts aren't profitable yet either.
Although Wall Street traders have rewarded the hyped new online retailers with fat stock prices -- in spite of fiscal losses -- Higgins predicted that will end.
"Wall Street will only pay so long for companies that lose money,'' he said.
In three or four months, Higgins said, more traders and analysts will start to look more favorably at Trans World, and the stock price should rise, he said.
Trans World stock closed at $11.88, up $0.19 Wednesday. |
