0000930413-15-002590.txt : 20150522 0000930413-15-002590.hdr.sgml : 20150522 20150522153231 ACCESSION NUMBER: 0000930413-15-002590 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20150521 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20150522 DATE AS OF CHANGE: 20150522 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS WORLD ENTERTAINMENT CORP CENTRAL INDEX KEY: 0000795212 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL- COMPUTER & PRERECORDED TAPE STORES [5735] IRS NUMBER: 141541629 STATE OF INCORPORATION: NY FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14818 FILM NUMBER: 15886401 BUSINESS ADDRESS: STREET 1: 38 CORPORATE CIRCLE CITY: ALBANY STATE: NY ZIP: 12203 BUSINESS PHONE: 5184521242 MAIL ADDRESS: STREET 1: 38 CORPORATE CIRCLE CITY: ALBANY STATE: NY ZIP: 12203 FORMER COMPANY: FORMER CONFORMED NAME: TRANS WORLD MUSIC CORP DATE OF NAME CHANGE: 19920703 8-K 1 c81495_8k.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 21, 2015

TRANS WORLD ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)


New York	0-14818	14-1541629

(State or other jurisdiction of incorporation or organization)	(Commission file number)	(I.R.S. Employer Identification No.)

38 Corporate Circle,
Albany, New York 12203
(Address of principal executive offices)

(518) 452-1242
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 21, 2015, Trans World Entertainment Corporation issued a press release announcing its financial results for its fiscal first quarter ended May 2, 2015. A copy of Trans World Entertainment Corporation’s press release is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K is being furnished under Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

ITEM 7.01. REGULATION FD DISCLOSURE

Attached hereto as Exhibit 99.2 is the transcript for the earnings conference call of Trans World Entertainment Corporation held on May 21, 2015. The information in this Current Report on Form 8-K, including the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibit attached hereto, shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Certain information contained in this Current Report on Form 8-K, including information in Exhibit 99.2 hereto, is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning results of operations and Trans World Entertainment Corporation’s strategies. Trans World Entertainment Corporation cautions that there are factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Trans World Entertainment Corporation; accordingly, there can be no assurance that such suggested results will be realized. For a list of Trans World Entertainment Corporation’s risk factors, see the Company’s Annual Filing on Form 10-K with the Securities and Exchange Commission for the year ended January 31, 2015.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

Exhibit No.			Description

99.1			Trans World Entertainment Corporation Press Release dated May 21, 2015.

99.2			Trans World Entertainment Corporation Transcript for Earnings Call held on May 21, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TRANS WORLD ENTERTAINMENT CORPORATION

Date: May 22, 2015	/s/ John Anderson
	John Anderson
	Chief Financial Officer

EXHIBIT INDEX

Exhibit
No.		Description

99.1			Trans World Entertainment Corporation Press Release dated May 21, 2015.

99.2			Trans World Entertainment Corporation Transcript of Earnings Call held on May 21, 2015.

EX-99.1 2 c81495_ex99-1.htm

Exhibit 99.1





	Contact:	*Contact:*
	Trans World Entertainment	Financial Relations Board
	John Anderson	Marilynn Meek
	Chief Financial Officer	(mmeek@frbir.com)
	(518) 452-1242	(212) 827-3773
38 Corporate Circle
Albany, NY 12203
www.twec.com	NEWS RELEASE

TRANS WORLD ENTERTAINMENT ANNOUNCES FIRST QUARTER RESULTS

Albany, NY, May 21, 2015 -- Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its first quarter ended May 2, 2015. For the first quarter of 2015, the Company reported net income of $0.2 million, or $0.01 per diluted share, compared to a net loss of $0.4 million, or $0.01 per diluted share, for the same period last year.

Comparable store sales for the first quarter decreased 3.0% compared to the same quarter last year. Total sales for the quarter decreased 10.6% to $78.0 million compared to $87.2 million for the same period last year. At the end of the quarter, the Company operated 310 stores compared to 333 stores last year, a 6.9% decline.

Gross profit for the quarter was $30.8 million, or 39.5% of sales, compared to $32.8 million, or 37.6%, of sales for the same period last year. The increase in gross profit as a percentage of sales was due to increases across all of our merchandise categories.

Selling, general and administrative (“SG&A”) expenses decreased $2.7 million, or 8.4%, for the quarter to $29.2 million, or 37.4% of sales, compared to $31.9 million, or 36.5% of sales for the same period last year. The reduction in SG&A expenses was primarily due to fewer stores in operation.

Inventory was $121.6 million, or $68 per square foot, at the end of the quarter, versus $140.1 million, or $71 per square foot, at the end of the first quarter last year, a decline of 13.2%. Cash on hand at the end of the quarter was $103 million, compared to $90 million at the end of the first quarter last year.

During the First Quarter, the Company repurchased approximately 88,000 shares of common stock at an average price of $3.57 per share. Since the inception of the program, the Company has repurchased 1,662,563 shares of common stock at an average price of $3.84 per share. The Company has approximately $15.6 million available for purchase under its repurchase program.

“The quarter was highlighted by a comparable store sales increase of 18% in our emerging trend and electronics categories and a 190 basis point increase in gross margin,” commented Mike Feurer, Company CEO. “The improvement in gross margin, which was achieved through disciplined inventory control, better price management and a shift in mix to higher margin categories, helped us deliver a year

over year improvement in net income. In addition, we increased our cash on hand at the end of the quarter by $13 million driven by a $19 million reduction in inventory.” Mr. Feurer added.

Trans World will host a teleconference call today, Thursday, May 21, 2015, at 10:00 AM ET to discuss its financial results. Interested parties can listen to the simultaneous webcast on the Company’s corporate website, www.twec.com.

Trans World Entertainment is a leading specialty retailer of entertainment products, including video, music, trend, electronics, video games and related products. The Company operates retail stores in the United States and Puerto Rico, primarily under the names f.y.e. for your entertainment and Suncoast and on the web at www.fye.com, www.wherehouse.com, and www.secondspin.com.

Certain statements in this release 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.

— table to follow —

TRANS WORLD ENTERTAINMENT CORPORATION

Financial Results

STATEMENTS OF OPERATIONS:
(in thousands, except per share data)
	Fiscal Quarter Ended
	May 2,		% to			May 3,			% to
	2015		Sales			2014			Sales

Net sales	$	77,963				$	87,216

Cost of sales		47,161		60.5	%		54,439			62.4	%
Gross profit		30,802		39.5	%		32,777			37.6	%

Selling, general and administrative expenses		29,162		37.4	%		31,851			36.5	%

Depreciation and amortization		964		1.2	%		782			0.9	%
Income from operations		676		0.9	%		144			0.2	%

Interest expense, net		438		0.6	%		483			0.6	%

Income (Loss) before income taxes		238		0.3	%		(339	)		-0.4	%
Income tax expense		44		0.1	%		47			0.1	%

Net Income (Loss)	$	194		0.2	%	$	(386	)		-0.5	%

Basic Income (Loss) per common share:

Basic Income (Loss) per share	$	0.01				$	(0.01	)

Weighted average number of common shares outstanding - basic		31,208					32,089

Diluted Income (Loss) per common share:

Diluted Income (Loss) per share	$	0.01				$	(0.01	)

Weighted average number of common shares outstanding - diluted		31,371					32,089


SELECTED BALANCE SHEET CAPTIONS:	May 2,					May 3,
(in thousands, except store data)	2015					2014

Cash and cash equivalents	$	102,539				$	90,088
Merchandise inventory		121,577					140,138
Fixed assets, net		18,026					14,944
Accounts payable		44,592					46,999
Borrowings under line of credit		—					—

Stores in operation		310					333

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Exhibit 99.2

Trans World Entertainment’s (TWMC) CEO Michael Feurer on Q1 2015 Results - Earnings Call Transcript

Trans World Entertainment Corp. (NASDAQ:TWMC)

Q1 2015 Earnings Conference Call

May 21, 2015 10:00 AM ET

Executives

Michael Feurer - CEO

John Anderson - CFO

Analysts

William Myers - Miller Asset Management

Operator

Good day ladies and gentlemen and welcome to the Trans World Entertainment Corporation’s First Quarter 2015 Results Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call is being recorded I would now like to introduce your host for today’s conference Mr. Michael Feurer, Chief Executive Officer. Sir, you may begin.

Michael Feurer - CEO

Good morning, thank you for joining us as we discuss our first quarter results. On the call with me today is John Anderson, our Chief Financial Officer. Before John reviews our results I would like to share some positives from the quarter. Our emerging categories of trends and electronics continue to be well received by our customers and deliver positive comps, combined these categories had an 18% comp increase.

As these categories become a larger portion of our business they’ll have a positive impact on both total comparable store sales and margin. Our customers continue to react positively to the changes we’re making to our product lines and the presentation in our stores.

EBITDA for the quarter increased 77% to $1.6 million as compared to last year’s EBITDA of $926,000. Our gross margin rate improved 190 basis points driven by increases across all of our merchandise categories achieved through disciplined inventory control, better price management and a shift in mix to higher margin categories.

This disciplined inventory management led to a 13% decline in overall inventory and reduced inventory to $68 per square foot from $71 per square foot at the end of the first quarter last year. This further strengthened our balance sheet as we ended the quarter with cash of $103 million compared to $90 million last year.

Now, John will take you through financial highlights for the quarter.

John Anderson - CFO

Thanks, Mike. Good morning. For the first quarter comparable sales decreased 3% driven primarily by slower mall traffic which was impacted by poor weather early in the quarter, weakness in video new releases compared to last year’s first quarter and a significant reduction in low margin game hardware sales.

Total sales for the quarter were $78 million a decrease of 10.6% compared to last year. Stores in operation decreased 6.9%. Our gross margin rate for the quarter increased to 190 basis points to 39.5% of sales from 37.6% last year and represents the strongest reported first quarter margin rate in many years. SG&A expense were $29.2 million a reduction of approximately $2.7 million or 8.4% from last year’s first quarter. SG&A expenses as a percent of sales were 37.4% as compared to 36.5% for the same period last year. The increase in SG&A as a percent of sales is due to lost leverage on the comp sales decline.

EBITDA for the quarter increased 77% to $1.6 million as compared to last year’s EBITDA of $926,000. Net interest expense was $438,000 in the quarter versus $483,000 last year. For the first quarter our net income was $195,000 or $0.01 per diluted share as compared to a net loss of $386,000 or loss of $0.01 per share in the first quarter of 2014.

Now let me touch on our sales performance by category for the quarter. Video comp sales decreased 7.4% for the quarter, video represented 46% of our business during the quarter versus 48% last year. Video comp sales were negatively impacted by stronger new releases during last year’s first quarter led by Frozen.

Music comp sales declined 7.1%, within the music category we’re seeing continued growth in vinyl which is helping offset the declines in CDs. The music category represented 27% of our business for the quarter compared to 28% last year.

In our trend category, comp sales increased 26.5%. We continue to take advantage of opportunities to strengthen our selection and shift our mix to growing categories of entertainment and pop culture related merchandise. Trend sales represented 15% of our sales for the quarter compared to 11% last year.

Electronic comp sales increased 6.1% driven by expansions in our assortment. Electronic sales represented 9% of our business for the quarter compared to 8% last year.

Video game comp sales were down 23% as hardware sales declined approximately 50%. Game sales represented 3% of our business for the quarter compared to 5% last year.

We ended the quarter with a $103 million in cash, compared to $90 million last year. During the first quarter, the company repurchased 88,000 shares of common stock at an average price of $3.57 per share. Since the inception of the program the company has repurchased approximately 1.7 million shares of common stock at an average price of $3.84 per share. The company has approximately $15.6 million available for purchase under its repurchase program.

Also, year-over-year we have lowered our inventory by $18.6 million and finished the quarter with $121.6 million in inventory, 13% below last year’s $140 million. On a per square foot basis inventory was $68 compared to $71 per square foot at the end of the first quarter last year.

We ended the quarter with 310 stores as compared to 333 stores last year, a reduction of 6.9%, square footage in operation declined 8.7% to 1.8 million square feet versus 2 million square feet.

Now I will turn it back over to Mike.

Michael Feurer - CEO

Thanks, John. Our first quarter was highlighted by our ongoing ability to enhance our financial strength, the continued strong performance in our emerging categories, our ability to drive our gross margin rate higher and improved inventory management.

Our financial strength, real estate footprint, unique and wide ranging demographic and long-term relationships with the best brands in the entertainment industry uniquely position us to provide our customers the most compelling entertainment pop culture centric experience in the marketplace.

During the first quarter we continue to expand the foundation on which we will build this experience by making investments in people, process, merchandise and presentation. Our focus continues to build on the following priorities as we work to deliver our vision.

Champion a culture of innovation, experimentation and driving the business,

engage complementary world class talent to capitalize on strategic opportunities,

focus on a unique and profitable merchandise point of view leveraging our heritage industry relationships in this effort,

improve the brand and customer experience,

embrace the opportunity of the omni-channel marketplace and

align in a portion SG&A resources commensurately.

Now I’d like to open the call for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And we will take our first question from William Myers with Miller Asset Management.

William Myers - Miller Asset Management

Hi, congratulations on the quarter. I think it seems like that’s the first time you’ve had a profit in this quarter in a while if I’m not mistaken.

John Anderson - CFO

Yes, actually we were profitable in both ’12 and ’13 but before that it had been quite a while since we had profit in Q1.

William Myers - Miller Asset Management

Okay. So you were profitable in ’12 and ’13. Okay, could I ask about, you’ve mentioned strategic opportunities and I hadn’t really heard talk about that before so could you elaborate on that at all?

Michael Feurer - CEO

Yes, it’s in line with what we’ve been talking about in the strategic opportunities of all of the aspects of the overall business review that has been going on since I got here and that includes such things as the learnings from the Woodbridge store that we’ve spoken about and also, a primary focus on the merchandise mix. And the changes relative to that merchandise mix conversation but also related to that as I’m finding and discovering the strengths of this brand, it’s related to the unique position that this company is in, specifically with the relationships and the heritage of this company with those best entertainment brands in the world and our unique ability and position to be able to capitalize that more going forward not just from a physical artifact standpoint but from an overall lifestyle engagement experience strategy.

William Myers - Miller Asset Management

Okay, so nothing like acquisitions or anything like that?

Michael Feurer - CEO

No.

William Myers - Miller Asset Management

Okay, and then one more question if I might? We’ve been hearing news about various places Los Angeles just has to plan to increase the minimum wage to $15 over number of years. Would you expect any of these minimum wage increases that are being passed to have a material impact on your business?

John Anderson - CFO

Yes, thanks William, this is John Anderson. We’re constantly evaluating our position relative to the marketplace, and based on where wages are today, we’re not expecting a material impact in

2015 but as those escalations get higher in future years, there could start to be some impact on the SG&A related to the wage increases.

Operator

We have no further questions in the queue, I’ll turn the conference back over to management for any additional or closing remarks.

Michael Feurer - CEO

I’d like to take this opportunity to thank everyone for their time today and we look forward to talking to you about our second quarter results on Aug 20th.

Operator

And ladies and gentlemen, that thus concludes our conference for today. We thank you for your participation.