Trans World holiday sales plunge on economy, weather

Q4 earnings lagged November forecast

By Danny King -- Video Business, 1/7/2009

JAN. 6 | Trans World Entertainment said today that its same-store sales for the holidays declined 14% as the combination of a slowing U.S. economy, bad weather and delayed music releases reduced foot traffic to the company's more than 800 stores. The owner of F.Y.E. mall-based stores also said fourth-quarter earnings were less than it previously forecast.

Comparable-store sales for videos decreased 9% for the nine weeks ended Jan. 3, while same-store sales of CDs plunged 22%, the company said on a conference call with analysts this morning. November same-store sales declined more than for December, as many shoppers waited until further into the holiday season to start shopping for gifts.

"Holiday sales were well below our expectations," Trans World CEO Bob Higgins said on the call today. "The shopper was late, and the snowstorms didn't help us at all."

Demand for best-selling DVD titles The Dark Knight and Mamma Mia! failed to keep pace with such year-earlier releases as Pirates of the Caribbean: At World's End, Spider-Man 3 and Harry Potter and the Order of the Phoenix, Trans World president Jim Litwak said.

Dark Knight has been an all-time bestseller at other retailers, such as Best Buy and Virgin Megastores.

Meanwhile, delays in new releases from such music acts as U2 and Dr. Dre cut demand for CDs, an industry that was already experiencing substantial declines because of the consumer switch to digital downloads from services such as Apple's iTunes.

Trans World's same-store sales for videogames fell 16%, Litwak said.

Overall, holiday sales for the company, which cut its store count by 18% from a year earlier, fell 24% to $287 million, Trans World said in a statement today. With the drop in holiday sales, chief financial officer John Sullivan estimated the company's fourth-quarter loss, excluding some items, at between $15 million and $20 million. Trans World in November forecast its fourth-quarter loss at between $10 million and $15 million.

U.S. retailers experienced lower holiday sales because of the combination of the U.S. economic downturn, bad weather and the need to discount items in order to move inventory. The International Council of Shopping Centers last week said holiday sales at U.S. chain retailers fell 1.8% from a year earlier, marking their worst holiday season since at least 1970.