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): August 29, 2019
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) |
(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 (see General Instruction A.2. below):
☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common shares, $0.01 par value per share | TWMC | NASDAQ Stock Market (Common Shares) |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 29, 2019, Trans World Entertainment Corporation issued a press release announcing its financial results for its second quarter ended August 3, 2019. 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 August 29, 2019. 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 February 2, 2019.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) EXHIBITS. The following are furnished as Exhibits to this Report:
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: August 30, 2019 | /s/ Edwin Sapienza |
Edwin Sapienza | |
Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | Trans World Entertainment Corporation Press Release dated August 29, 2019. | |
99.2 | Trans World Entertainment Corporation Transcript for Earnings Call held on August 29, 2019. |
Exhibit 99.1
Contact: Trans World Entertainment Ed Sapienza Chief Financial Officer (518) 452-1242 |
Contact: Financial Relations Board Marilynn Meek (mmeek@frbir.com) (212) 827-3773 | |
38 Corporate Circle Albany, NY 12203 |
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www.twec.com | NEWS RELEASE |
TRANS WORLD ENTERTAINMENT ANNOUNCES SECOND QUARTER RESULTS
Albany, NY, August 29, 2019-- Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its second quarter ended August 3, 2019.
“In the etailz segment, we saw the benefits of the performance improvement initiatives implemented in the Fourth Quarter of 2018, highlighted by improved gross margins, lower SG&A expenses and improved supply chain efficiency. This serves as a great foundation for our new etailz CEO, Kunal Chopra,” Trans World Entertainment CEO Mike Feurer stated. “We look forward to Kunal capitalizing upon etailz’s position and opportunity as a proven leader in marketplace selling, service and expertise. As a result of these etailz initiatives and disciplined inventory management in the fye segment, we were able to reduce cash used in operations by approximately $18 million for the first twenty-six weeks as compared to the first twenty-six weeks of last year.” continued Mr. Feurer. “In the fye segment, a 9.6% increase in our lifestyle categories demonstrates the continued positive customer response to our engaging, exclusive merchandise.” concluded Mr. Feurer.
Second Quarter Overview - Consolidated
• | Total revenue decreased 25.6% to $76.0 million compared to $102.2 million in the second quarter of fiscal 2018. | |
• | Net loss was $8.1 million, or $4.48 per share, for the 13 weeks ended August 3, 2019, compared to a net loss of $9.5 million, or $5.23 per share, for the same period last year (see note 1). | |
• | Loss from operations was $7.4 million compared to an operating loss of $9.4 million for the second quarter of fiscal 2018. | |
• | Adjusted EBITDA (a non-GAAP measure) was a loss of $6.4 million compared to a loss of $6.0 million for the second quarter of fiscal 2018 (see note 2). |
Twenty-six weeks ended August 3, 2019 Overview – Consolidated
• | Total revenue for the twenty-six weeks ended August 3, 2019 decreased 21.4% to $156.2 million, compared to $198.8 million for the same period last year. |
• | Net loss was $15.9 million, or $8.77 per share, for the twenty-six weeks ended August 3, 2019, compared to a net loss of $17.7 million, or $9.73 per share, for the same period last year (see note 1). | |
• | Loss from operations was $15.0 million compared to an operating loss of $17.5 million for the twenty-six weeks ended August 4, 2018. | |
• | Adjusted EBITDA (a non-GAAP measure) was a loss of $12.9 million compared to a loss of $10.8 million for the second quarter of fiscal 2018 (see note 2). | |
• | Cash used in operations during the first twenty–six weeks of fiscal 2019 was $15.0 million compared to $32.9 million for the same period last year. | |
• | Cash, cash equivalents and restricted cash as of August 3, 2019 was $9.9 million, compared to $14.7 million as of August 4, 2018. | |
• | Borrowings under the credit facility at the end of the second quarter were $12.1 million compared to $6.3 million at the end of the second quarter last year. As of August 3, 2019, $16.1 million was available for borrowing. | |
• | Inventory was $89.8 million at the end of second quarter of 2019 as compared to $114.9 million at the end of the second quarter of 2018. |
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Segment Highlights
Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||||||
(amounts in thousands) | August 3, 2019 | August 4, 2018 | August 3, 2019 | August 4, 2018 | ||||||||||||
Total Revenue | ||||||||||||||||
fye | $ | 41,744 | $ | 50,545 | $ | 86,762 | $ | 104,608 | ||||||||
etailz | 34,260 | 51,629 | 69,392 | 94,169 | ||||||||||||
Total Company | $ | 76,004 | $ | 102,174 | $ | 156,154 | $ | 198,777 | ||||||||
Gross Profit | ||||||||||||||||
fye | $ | 17,013 | $ | 20,634 | $ | 34,515 | $ | 42,905 | ||||||||
etailz | 8,103 | 11,539 | 15,991 | 20,956 | ||||||||||||
Total Company | $ | 25,116 | $ | 32,173 | $ | 50,506 | $ | 63,861 | ||||||||
SG&A | ||||||||||||||||
fye | $ | 23,052 | $ | 26,103 | $ | 46,082 | $ | 52,592 | ||||||||
etailz | 8,413 | 12,067 | 17,368 | 22,070 | ||||||||||||
Total Company | $ | 31,465 | $ | 38,170 | $ | 63,450 | $ | 74,662 | ||||||||
Loss From Operations | ||||||||||||||||
fye | $ | (6,655 | ) | $ | (6,629 | ) | $ | (12,755 | ) | $ | (12,001 | ) | ||||
etailz | (746 | ) | (2,760 | ) | (2,287 | ) | (5,547 | ) | ||||||||
Total Company | $ | (7,401 | ) | $ | (9,389 | ) | $ | (15,042 | ) | $ | (17,548 | ) | ||||
Reconciliation of etailz Loss from Operations to etailz Adjusted Loss From Operations | ||||||||||||||||
etailz loss from operations | $ | (746 | ) | $ | (2,760 | ) | $ | (2,287 | ) | $ | (5,547 | ) | ||||
Acquisition related amortization expense | 286 | 972 | 572 | 1,944 | ||||||||||||
Acquisition related compensation expense, net of contingency benefit | — | 1,118 | 66 | 2,240 | ||||||||||||
etailz adjusted loss from operations | $ | (460 | ) | $ | (670 | ) | $ | (1,649 | ) | $ | (1,363 | ) |
Second Quarter Overview - etailz
• | Revenue for the second quarter was $34.3 million, compared to $51.6 million for the same period last year. The decline in revenue was due to the vendor rationalization and remediation initiative. Rationalization and remediation activities included terminating unprofitable vendors and improving vendor relationships through negotiations focused on improvements to gross margins and supply chain efficiencies. | |
• | Gross profit for the second quarter was $8.1 million, or 23.7% of revenue, as compared to $11.5 million, or 22.3% of revenue, for the same period last year. | |
• | Selling, general and administrative (“SG&A”) expenses for the second quarter were $8.4 million, or 24.6% of revenue, compared to $12.1 million, or 23.4% of revenue, for the same period last year. The decline in SG&A expenses was due to expense reduction initiatives implemented in the fourth quarter of fiscal 2018. | |
• | etailz loss from operations was $0.8 million for the second quarter versus $2.8 million for the same period last year. |
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• | etailz adjusted loss from operations (a non-GAAP measure) was $0.5 million for the second quarter of fiscal 2019 compared to $0.7 million for the second quarter of fiscal 2018 (see note 2). |
Twenty-six weeks ended August 3, 2019 Overview – etailz
• | Revenue for the twenty-six weeks ended August 3, 2019 was $69.4 million compared to $94.2 million for the same period last year. Gross profit for the twenty-six weeks ended August 3, 2019 was $16.0 million, or 23.0% of revenue, compared to $21.0 million, or 22.3% of revenue, for the same period last year. | |
• | SG&A expenses for the twenty-six weeks ended August 3, 2019 were $17.4 million, or 25.0% of revenue, compared to $22.1 million, or 23.4% of revenue, for the same period last year. | |
• | etailz adjusted loss from operations (a non-GAAP measure) was $1.6 million for the first half of fiscal 2019 compared to a loss of $1.4 million for the same period last year (see note 2). |
Second Quarter Overview - fye
• | For the quarter ended August 3, 2019, revenue decreased 17.4% to $41.7 million, compared to $50.5 million for the same period last year. Comparable store sales were down 1.2% compared to the same quarter last year, as a comparable store sales increase of 9.6% in the lifestyle category offset declines in the media categories. The lifestyle and electronics categories represented 60.3% of revenue for the quarter as compared to 53.9% for the same period last year. | |
• | Gross profit for the second quarter was $17.0 million, or 40.8% of revenue, compared to $20.6 million, or 40.8% of revenue, for the same period last year. | |
• | SG&A expenses decreased $3.1 million, or 11.7%, for the second quarter to $23.1 million, or 55.2% of fye revenue, compared to $26.1 million, or 51.6% of fye revenue, for the same period last year. The decline in SG&A expenses was due to fewer stores in operation. The increase in SG&A expenses as a percentage of revenue was due to an increase in outside consulting and professional fees. | |
• | The fye segment recorded an operating loss of $6.7 million for the 13 weeks ended August 3, 2019, compared to an operating loss of $6.6 million for same period last year. | |
• | As of August 3, 2019, fye segment inventory was $61 per square foot as compared to $62 per square foot as of August 4, 2018. |
Twenty-six weeks ended August 3, 2019 Overview – fye
• | For the twenty-six weeks ended August 3, 2019, revenue decreased 17.1% to $86.8 million, compared to $104.6 million for the same period last year. |
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• | Gross profit for the twenty-six weeks ended August 3, 2019 was $34.5 million, or 39.8% of revenue, compared to $42.9 million, or 41.0% of revenue, for the same period last year. | |
• | For the twenty-six weeks ended August 3, 2019, SG&A expenses decreased $6.5 million, or 12.4%, to $46.1 million compared to $52.6 million in the comparable period last year. As a percentage of revenue, SG&A expenses were 53.1% versus 50.3% for the same period last year. The decline in SG&A expenses was due to fewer stores in operation. | |
• | The fye segment recorded an operating loss of $12.8 million for the twenty-six weeks ended August 3, 2019, compared to an operating loss of $12.0 million for same period last year. |
Trans World will host a teleconference call Thursday, August 29, 2019, 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.
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TRANS WORLD ENTERTAINMENT CORPORATION
Condensed Consolidated Financial Results
STATEMENTS OF OPERATIONS:
(in thousands, except per share data)
Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||||||||||||||||||||||
August 3, | % to | August 4, | % to | August 3, | % to | August 4, | % to | |||||||||||||||||||||||||
2019 | Revenue | 2018 | Revenue | 2019 | Revenue | 2018 | Revenue | |||||||||||||||||||||||||
Net sales | $ | 75,152 | $ | 101,039 | $ | 154,508 | $ | 196,271 | ||||||||||||||||||||||||
Other revenue | 852 | 1,135 | 1,646 | 2,506 | ||||||||||||||||||||||||||||
Total revenue | $ | 76,004 | $ | 102,174 | $ | 156,154 | $ | 198,777 | ||||||||||||||||||||||||
Cost of sales | 50,888 | 67.0 | % | 70,001 | 68.5 | % | 105,648 | 67.7 | % | 134,916 | 67.9 | % | ||||||||||||||||||||
Gross profit | 25,116 | 33.0 | % | 32,173 | 31.5 | % | 50,506 | 32.3 | % | 63,861 | 32.1 | % | ||||||||||||||||||||
Selling, general and administrative expenses | 31,465 | 41.4 | % | 38,170 | 37.4 | % | 63,450 | 40.6 | % | 74,662 | 37.6 | % | ||||||||||||||||||||
Acquisition related compensation expenses | — | 0.0 | % | 1,118 | 1.1 | % | 66 | 0.0 | % | 2,240 | 1.1 | % | ||||||||||||||||||||
Depreciation and amortization expenses | 1,052 | 1.3 | % | 2,274 | 2.2 | % | 2,032 | 1.3 | % | 4,507 | 2.3 | % | ||||||||||||||||||||
Loss from operations | (7,401 | ) | -9.7 | % | (9,389 | ) | -9.2 | % | (15,042 | ) | -9.6 | % | (17,548 | ) | -8.8 | % | ||||||||||||||||
Interest expense | 194 | 0.3 | % | 103 | 0.1 | % | 326 | 0.2 | % | 166 | 0.1 | % | ||||||||||||||||||||
Other loss (income) | 462 | 0.6 | % | (49 | ) | 0.0 | % | 419 | 0.3 | % | (128 | ) | -0.1 | % | ||||||||||||||||||
Loss before income taxes | (8,057 | ) | -10.6 | % | (9,443 | ) | -9.2 | % | (15,787 | ) | -10.1 | % | (17,586 | ) | -8.8 | % | ||||||||||||||||
Income tax expense | 71 | 0.1 | % | 67 | 0.1 | % | 143 | 0.1 | % | 71 | 0.0 | % | ||||||||||||||||||||
Net loss | $ | (8,128 | ) | -10.7 | % | $ | (9,510 | ) | -9.3 | % | $ | (15,930 | ) | -10.2 | % | $ | (17,657 | ) | -8.9 | % | ||||||||||||
Basic and diluted loss per common share: | ||||||||||||||||||||||||||||||||
Basic and diluted loss per share | $ | (4.48 | ) | $ | (5.23 | ) | $ | (8.77 | ) | $ | (9.73 | ) | ||||||||||||||||||||
Weighted average number of common shares outstanding - basic and diluted | 1,816 | 1,818 | 1,816 | 1,815 | ||||||||||||||||||||||||||||
Diluted Income per common share: | ||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET CAPTIONS: (in thousands, except store data) | August 3, 2019 | August 4, 2018 | ||||||||||||||||||||||||||||||
Cash, cash equivalents, and restricted cash | $ | 9,930 | $ | 14,740 | ||||||||||||||||||||||||||||
Merchandise inventory | 89,785 | 114,920 | ||||||||||||||||||||||||||||||
Fixed assets (net) | 7,605 | 12,648 | ||||||||||||||||||||||||||||||
Accounts payable | 29,065 | 34,200 | ||||||||||||||||||||||||||||||
Borrowings under line of credit | 12,086 | 6,341 | ||||||||||||||||||||||||||||||
Cash used in operations | 14,962 | 32,944 | ||||||||||||||||||||||||||||||
Stores in operation, end of period | 206 | 241 |
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Notes:
1. | Reverse Stock Split: |
As previously reported, effective August 15th, 2019, the Company effected a 1-20 reverse stock split of its common stock. All share and earnings per share information have been retroactively adjusted to reflect this reverse stock split.
2. | Reconciliation of net loss to adjusted EBITDA: |
Adjusted EBITDA is defined as net loss, adjusted to exclude: (i) income tax expense; (ii) other (loss) income, which includes the write-down of an investment; (iii) interest expense; (iv) depreciation expense; (v) acquisition related amortization expense; and (vi) acquisition related compensation expense, which includes retention bonuses and restricted stock. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. We use adjusted EBITDA to evaluate our own operating performance and as an integral part of our planning process. We present adjusted EBITDA as a supplemental measure because we believe such measure is useful to investors as a reasonable indicator of operating performance. We believe this measure is a financial metric used by many investors to compare companies. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings (losses), net earnings (loss) from continuing operations or cash flows from operating activities, as determined in accordance with GAAP.
Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||||||
August 3, | August 4, | August 3, | August 4, | |||||||||||||
(amounts in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net loss | $ | (8,128 | ) | $ | (9,510 | ) | $ | (15,930 | ) | $ | (17,657 | ) | ||||
Income tax expense | 71 | 67 | 143 | 71 | ||||||||||||
Other loss (income) | 462 | (49 | ) | 419 | (128 | ) | ||||||||||
Interest expense | 194 | 103 | 326 | 166 | ||||||||||||
Operating loss | (7,401 | ) | (9,389 | ) | (15,042 | ) | (17,548 | ) | ||||||||
Depreciation expense | 766 | 1,302 | 1,460 | 2,563 | ||||||||||||
Acquisition related amortization expense | 286 | 972 | 572 | 1,944 | ||||||||||||
Acquisition related compensation expense, net of contingency adjustment | — | 1,118 | 66 | 2,240 | ||||||||||||
Adjusted EBITDA | $ | (6,349 | ) | $ | (5,997 | ) | $ | (12,944 | ) | $ | (10,801 | ) |
The Company believes that etailz adjusted loss from operations, per the segment disclosure, when considered together with its GAAP financial results, provides management and investors with a more complete understanding of its business operating results, including underlying trends, by excluding the effects of certain charges. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings (losses), net earnings (loss) from continuing operations or cash flows from operating activities, as determined in accordance with GAAP.
Trans World Entertainment is a leading multi-channel retailer, blending a 40-year history of entertainment retail experience with digital marketplace expertise. Our brands seamlessly connect
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customers with the most comprehensive selection of music, movies, and pop culture products on the channel of their choice. For over 40 years, the Company has operated as a leading specialty retailer of entertainment and pop culture merchandise with stores in the United States and Puerto Rico, primarily under the name fye, for your entertainment, and on the web at www.fye.com and www.secondspin.com. In October 2016, the Company acquired etailz, Inc., a leading digital marketplace expert retailer, operating both domestically and internationally. etailz uses a data driven approach to digital marketplace retailing utilizing proprietary software and ecommerce insight coupled with a direct customer relationship engagement to identify new distributors and wholesalers, isolate emerging product trends, and optimize price positioning and inventory purchase decisions. Trans World Entertainment, which established itself as a public company in 1986, is traded on the Nasdaq National Market under the symbol “TWMC”.
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.
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Exhibit 99.2
TWMC - Q2 2019 Trans World Entertainment Corp Earnings Call
PARTICIPANTS
Edwin J. Sapienza Trans World Entertainment Corporation - CFO & Secretary
Michael Feurer Trans World Entertainment Corporation - CEO & Director
PRESENTATION
Operator
Good day, ladies and gentlemen, and welcome to your Trans World Entertainment Second Quarter 2019 Results Conference call. (Operator
Instructions) At this time, it is my pleasure to turn the floor over to Mike Feurer, CEO of Trans World Entertainment. Sir, the floor is yours.
Michael Feurer - Trans World Entertainment Corporation - CEO & Director
Thank you, Christie. It’s Mike Feurer, CEO of Trans World Entertainment Corporation.
For the fye segments, comparable store sales decreased 1.2% compared to the second quarter of last year, aided by a strong 9.6% positive comp increase in our lifestyle categories. Our customers continue to respond positively to our exclusive, unique and engaging merchandise point of view.
In the etailz segment, we saw the benefit of the performance improvement initiatives begun in the fourth quarter of 2018, highlighted by improved gross margins, lower SG&A expenses, improved supply chain efficiency and operating process improvements. And again, this serves as a great foundation for our new etailz CEO, Kunal Chopra. We look forward to Kunal capitalizing upon etailz’s position and opportunity as a proven leader in marketplace selling, service and expertise. As a result of the etailz’s initiatives and disciplined inventory management in the fye segment, we were able to reduce cash used in operations by over $17.9 million for the first half as compared to the first half of last year. And again, now Ed will take you through financial highlights for the second quarter and first half.
Edwin J. Sapienza - Trans World Entertainment Corporation - CFO & Secretary
Thank you Mike. Good morning.
Consolidated revenue for the quarter was $76 million compared to $102.2 million for the same period last year. In the fye segment, comparable store sales decreased 1.2% compared to last year as a comp increase of 9.6% in our lifestyle categories was offset by declines in electronics and media. Comp revenue and electronics category decreased 0.1%. Lifestyle and electronics categories represented 58% of revenue for the second quarter as compared to 53% last year. Media category comp sales declined 12.8% for the quarter and represented 42% of the fye segment sales compared to 47% last year.
Music sales were down 7.8%. We continue to see strong sales of K-pop merchandise. Video sales were down 16.1% due to the underperformance of new releases impacted by soft theatrical releases, a headwind that will continue to influence this category in the second half of the year. In the etailz segment, revenue for the second quarter was $34.3 million as compared to $51.6 million during the comparable second quarter last year. The decline in revenue was due to the planned vendor remediation and rationalization initiative. Rationalization and remediation activities included eliminating and transitioning unprofitable vendors and improving vendor relationships through negotiations focused on improvements to gross margins and supply chain efficiency.\
Consolidated gross profit for the quarter was $25.1 million or 33% compared to $32.2 million or 31.5% last year. In the fye segment, gross margin rate was 40.8%, the same level as last year. In the etailz segment, gross profit for the second quarter was $8.1 million or 23.7% of revenue versus $11.5 million or 22.3% last year. Consolidated SG&A expenses for the quarter were $31.5 million or 41.4% of revenue compared to $38.2 million or 37.4% last year.
In the fye segment, SG&A expenses decreased $3 million or 11.7% to $23.1 million.
In the etailz segment, SG&A expenses for the second quarter were $8.4 million compared to $12.1 million for the same period last year. The decline in SG&A expenses was due to expense reduction initiatives implemented in the fourth quarter of 2018.
Consolidated operating loss for the quarter narrowed to $7.4 million compared to an operating loss of $9.4 million last year. The fye segment recorded an operating loss of $6.7 million compared to an operating loss of $6.6 million last year. Etailz adjusted operating loss narrowed to $500,000 as compared to $700,000 last year as an improvement in gross margin and reductions in SG&A expenses offset the sales decline.
Through the second quarter, our net loss was $8.1 million or $4.48 per share as compared to a net loss of $15.9 million or $8.77 per diluted share in the second quarter of 2018. On August 15, the company effected a 1 for 20 reverse stock split of its common stock. All earnings per share information have been retroactively adjusted to reflect the reverse stock split.
Consolidated adjusted EBITDA for the second quarter was a loss of $6.3 million as compared to a loss of $6 million last year.
Now let me touch on our results for the first half of the year. Consolidated revenue for the first half was $156.2 million compared to $198.8 million for the same period last year.
Operating loss for the first half was $15 million compared to an operating loss of $17.5 million last year.
Consolidated net loss was $15.9 million or $8.77 per diluted share for the first half compared to a net loss of $17.7 million or $9.73 per diluted share for the same period last year. Consolidated adjusted EBITDA was a loss of $12.9 million for the first half compared to a loss of $10.8 million last year.
Outstanding borrowings under our credit facility at the end of the second quarter were $12.1 million compared to $6.3 million at the end of the second quarter last year. As of August 3, 2019, $16.1 million was available for borrowing.
Cash, cash equivalents and restricted cash at the end of second quarter were $10 million compared to $15 million last year.
Consolidated inventory was $90 million at the end of the second quarter versus $115 million at the end of the second quarter last year.
In the etailz segment, inventory was $20 million versus $31 million last year, a decline of 35%.
In the fye segment, inventory was $61 per square foot at the end of the second quarter versus $62 per square foot last year, a 2% decrease. We ended the quarter with 206 stores and 1.1 million square feet in operation versus last year’s 241 stores and 1.3 million square feet. Now I’ll turn it back over to Mike.
Michael Feurer - Trans World Entertainment Corporation - CEO & Director
Okay. Thanks, Ed. In the fye segment, we continue to see progress from our ongoing efforts to provide a merchandise point of view based on unique, relevant, collaborative as well as exclusive merchandise with our vendor partners. Etailz represents a top marketplace retailer at scale. Our recent initiatives and long-term strategic plan are focused on strengthening the core business and improving profitability, which will be used to fund growth initiatives and innovation for the future. I’d like to thank you for your time again today. And we look forward to talking to you about our third quarter 2019 results in November.
Operator
Thank you very much, Mike. And that does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time, and have a wonderful day.