Trans World Entertainment Reports Earnings for the Third Quarter; Net Income Increases 116%
ALBANY, NY--(BUSINESS WIRE)--Nov. 10, 1999--Trans World Entertainment Corporation
(Nasdaq National Market: TWMC) today announced results for its third quarter and 39-week
period ended October 30, 1999.
Net income for the third quarter was $8.0 million, or $0.15 per diluted share,
compared to net income of $3.7 million, or $0.07 per diluted share, for the third quarter
of 1998.
Total sales for the third quarter increased to $276.0 million compared to $270.7
million in the third quarter of 1998. Comparable store sales increased 1% in the quarter.
Comparable stores sales included results for the acquired Camelot Music stores, which
were down 4% from the third quarter a year ago. Excluding Camelot stores, comp sales
increased 5%.
Gross profit, as a percent of sales, increased to 37.7% in the third quarter of 1999
from 37.5% in 1998. Selling, general and administrative expenses decreased to 29.4% of
sales from 31.1% a year ago.
Interest income improved to $108,000 for the quarter compared to interest expense of
$1.4 million in the third quarter of 1998. The improvement is the result of zero
outstanding balances under the revolving line of credit and increased income from cash
investments.
For the 39-week period ending October 30, 1999, the Company reported net income of
$5.0 million, or $0.09 per diluted share, versus $9.4 million, or $0.18 per diluted
share, for the comparable period of 1998. Results in 1999 reflect a pre-tax charge of
$25.7 million related to the Camelot merger. Excluding the one time charge, earnings
would have been $19.9 million or $0.37 per share.
Year-to-date total sales increased 7% to $840.3 million in 1999 compared to $784.6
million in the same period last year. Comparable store sales increased 1% in the 39-week
period of 1999. Comparable store sales included results from the Camelot Music stores,
which were down 3% from last year. Excluding Camelot Music stores, comparable sales
increased 5%.
Gross profit, as a percent of sales, increased to 37.1% in the 39-week period of 1999
from 36.7% in 1998. Selling, general and administrative expenses decreased to 29.7% of
sales for the year-to-date period, compared to 31.1% of sales in the same period last
year.
"In the third quarter, the Company continued to develop its 'clicks and bricks'
strategy of creating synergy between the Internet and our stores," commented Robert J.
Higgins, Chairman and Chief Executive Officer of Trans World Entertainment.
"We have implemented several initiatives in the Camelot stores that will improve store
performance. Our main goals are to improve in-store inventory positions and enhance the
customer shopping experience by incorporating marketing initiatives and exclusive
merchandise offerings that have been successful in our other stores."
Mr. Higgins continued, "In our e-commerce, we continue to see improvement. Each week
on www.twec.com, we host an exciting lineup of on-line concerts, live chats, and
promotional giveaways. This has helped to establish www.twec.com as a weekly
entertainment destination for a growing number of users."
"In addition, during the quarter we established key relationships with web-radio
leader, DiscJockey.com and digital download provider, Amplified.com. We will continue to
seek synergistic relationships in the entertainment content space in an effort to
constantly enhance functionality, add value to our users and, of course, drive traffic to
the site and into our stores."
"As our site evolves, we are confident that our e-commerce strategy will make
www.twec.com the site of choice for shoppers seeking to purchase music, video and DVD on
the Internet."
Mr. Higgins concluded, "We are excited about the Holiday season with the quality of
new releases by top artists scheduled for the holidays, we are anticipating our third
straight year of record sales and earnings."
Trans World Entertainment is a leading specialty retailer of music and video products.
The Company operates retail stores in 44 states, the District of Columbia, the U.S.
Virgin Islands, Puerto Rico and an e-commerce site, www.twec.com. Mall locations include
Record Town, Camelot, The Wall, Saturday Matinee and F.Y.E. Freestanding locations
include Coconuts Music and Movies, Strawberries Music, Spec's and Planet Music.
Certain statements in this report set forth management's intentions, plans, beliefs,
expectations or predictions of the future based on current facts and analyses. Actual
results may differ materially from those indicated in such statements. Additional
information on factors that may affect the business and financial results of the Company
can be found in filings of the Company with the Securities and Exchange Commission.
Trans World Entertainment Corporation
Financial Results
INCOME STATEMENTS:
(in millions, except earnings per share)
Thirteen Weeks Ended
Oct 30, % to Oct 31, % to
1999 Sales 1998 Sales
---------- --------- --------- ---------
Sales $276.0 100.0% $270.7 100.0%
Cost of sales 171.8 62.3% 169.3 62.5%
---------- --------- --------- ---------
Gross profit 104.2 37.7% 101.4 37.5%
Selling, general and
administrative expenses 81.2 29.4% 84.3 31.1%
Costs related to the
Camelot merger -- -- -- --
Depreciation and amortization 9.3 3.4% 9.4 3.5%
---------- --------- --------- ---------
Income from operations 13.7 4.9% 7.7 2.9%
Interest expense (income) (0.1) -0.1% 1.4 0.5%
--------- --------- --------- ---------
Income before income taxes 13.8 5.0% 6.3 2.4%
Income tax expense 5.8 2.1% 2.6 1.0%
---------- --------- --------- ---------
NET INCOME $ 8.0 2.9% $ 3.7 1.4%
========== ========= ========= =========
Basic earnings per common share:
Earnings per share $0.15 $0.07
========== =========
Weighted average number of
Common shares outstanding 52.8 51.9
========== =========
Diluted earnings per common share:
Earnings per share $0.15 $0.07
========== =========
Weighted average number of
Common shares outstanding 54.0 54.0
========== =========
INCOME STATEMENTS:
(in millions, except earnings per share)
Thirty-Nine Weeks Ended
Oct 30, % to Oct 31, % to
1999 Sales 1998 Sales
---------- --------- --------- ---------
Sales $840.3 100.0% $784.6 100.0%
Cost of sales 528.6 62.9% 497.0 63.3%
---------- --------- --------- ---------
Gross profit 311.7 37.1% 287.6 36.7%
Selling, general and
administrative expenses 249.8 29.7% 244.3 31.1%
Costs related to the
Camelot merger 25.7 3.1% -- --
Depreciation and amortization 26.8 3.2% 23.9 3.1%
---------- --------- --------- ---------
Income from operations 9.4 1.1% 19.4 2.5%
Interest expense (income) 0.8 0.1% 2.2 0.3%
---------- --------- --------- ---------
Income before income taxes 8.6 1.0% 17.2 2.2%
Income tax expense 3.6 0.4% 7.8 1.0%
---------- --------- --------- ---------
NET INCOME $ 5.0 0.6% $ 9.4 1.2%
========== ========= ========= =========
Basic earnings
per common share:
Earnings per share $0.10 $0.19
========== =========
Weighted average number of
Common shares outstanding 52.3 50.8
========== =========
Diluted earnings
per common share:
Earnings per share $0.09 $0.18
========== =========
Weighted average number of
Common shares outstanding 53.2 53.3
========== =========
SELECTED BALANCE SHEET CAPTIONS:
(in millions, except store data)
Cash and cash equivalents $86.7 $24.3
Merchandise inventory 502.9 471.3
Fixed assets (net) 141.8 140.2
Accounts payable 313.5 243.6
Long-term debt,
less current portion 19.7 35.9
Shareholders' equity 445.4 373.1
Stores in operation 980 1,016
CONTACT: Trans World Entertainment Corporation
John Sullivan
Chief Financial Officer
518/452-1242 ext. 7400
or
THE MWW GROUP
Investor Relations
Robert Ferris
rferris@mww.com
212/704-9727
16:07 EST NOVEMBER 10, 1999 |
