Trans World Entertainment Announces Fourth Quarter and Fiscal Year Results

Net Income for the Quarter Increased By 34%

Reports $33 Million Year-Over-Year Improvement in Net Income

ALBANY, N.Y., March 1, 2012 /PRNewswire/ -- Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its fourth quarter ended January 28, 2012.  For the fourth quarter of 2011, the Company reported a 34% increase in net income to $16.5 million, or $0.51 per diluted share, compared to net income of $12.4 million, or $0.38 per diluted share, for the same period last year.    

Comparable store sales for the quarter were down 1% compared to the same quarter last year.  For the quarter, total sales decreased 17% to $193.1 million compared to $231.3 million in 2010.  During the quarter, the Company operated an average of 427 stores compared to 514 stores last year, a 17% decline.  

"The fourth quarter marked our eighth consecutive quarter of improved operating results," said Robert J. Higgins, Chairman and Chief Executive Officer of Trans World Entertainment.  "Our strong fourth quarter results drove the Company's return to profitability in fiscal 2011.  These results reflect the commitment, hard work and dedication of our associates, who provide our customers with a strong selection, value and exceptional customer service.  We look forward to continued success in fiscal 2012."

Gross profit for the quarter was $69.2 million, or 35.8% of sales, as compared to $78.2 million, or 33.8%, of sales for the same period last year.  The 200 basis point increase in gross profit as a percentage of sales was due to higher margin rates across all product categories.  

Selling, general and administrative expenses decreased 16% for the quarter to $50.5 million or 26.2% of sales, compared to $60.3 million, or 26.1% of sales in the comparable period last year.  The reduction in SG&A expenses was due to the closing of underperforming stores and continued effective expense management.

For fiscal year 2011, the Company reported net income of $2.2 million, or $0.07 per diluted share, compared to a net loss of $31.0 million, or a $0.99 loss per share last year.

For fiscal year 2011, total sales decreased 17% to $542.6 million, compared to $652.4 million in 2010. Comparable store sales for fiscal year 2011 decreased 2%.  

Gross profit for the fiscal year was $198.2 million, or 36.5% of sales, as compared to $219.4 million, or 33.6%, of sales for the same period last year.  Selling, general and administrative expenses decreased 20% for the fiscal year to $186.7 million or 34.4% of sales, compared to $233.7 million, or 35.8% of sales in the comparable period last year.    

The Company did not borrow under its line of credit in fiscal 2011.  Cash on hand at the end of the quarter was $88.5 million, compared to $75.2 million at January 29, 2011.  Inventory was $191.3 million at the end of the quarter versus $234.2 million at the end of the fourth quarter of last year, a decline of 18%.  

Trans World will host a teleconference call today, Thursday, March 1, 2012, 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 music, video, video games, trend, electronics, and related products.  The Company operates retail stores in the United States, the District of Columbia, the U.S. Virgin Islands, 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.

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TRANS WORLD ENTERTAINMENT CORPORATION

Financial Results


















STATEMENTS OF OPERATIONS:










(in thousands, except per share data)











Thirteen Weeks Ended


Fiscal Year Ended


January 28,

% to

January 29,

% to


January 28,

% to

January 29,

% to


2012

Sales

2011

Sales


2012

Sales

2011

Sales











Net sales

$    193,106


$    231,287



$    542,589


$    652,416












Cost of sales

123,885

64.2%

153,077

66.2%


344,435

63.5%

433,036

66.4%

Gross profit

69,221

35.8%

78,210

33.8%


198,154

36.5%

219,380

33.6%











Selling, general and










  administrative expenses

50,538

26.2%

60,333

26.1%


186,650

34.4%

233,696

35.8%











Impairment charges

-


1,973

0.9%


-


1,973

0.3%











Depreciation and amortization

1,337

0.7%

2,633

1.1%


6,003

1.1%

11,053

1.7%

Income (loss) from operations

17,346

8.9%

13,271

5.7%


5,500

1.0%

(27,342)

-4.2%











Interest expense, net

790

0.4%

915

0.4%


3,189

0.6%

3,346

0.5%











Income (loss) before income taxes

16,556

8.5%

12,356

5.3%


2,311

0.4%

(30,688)

-4.7%

Income tax expense

59

0.0%

6

0.0%


149

0.0%

275

0.0%





















Net Income (loss)

$      16,497

8.5%

$      12,350

5.3%


$        2,162

0.4%

$    (30,963)

-4.7%











Basic income (loss) per common share:




















Basic income (loss) per share

$          0.52


$          0.39



$          0.07


$        (0.99)












Weighted average number of










  common shares outstanding - basic

31,527


31,395



31,520


31,415












Diluted income (loss) per common share:




















Diluted income (loss) per share

$          0.51


$          0.38



$          0.07


$        (0.99)












Weighted average number of










  common shares outstanding - diluted

32,090


32,431



32,036


31,415






















SELECTED BALANCE SHEET CAPTIONS:






January 28,


January 29,


(in thousands, except store data)






2012


2011












Cash and cash equivalents






$      88,515


$      75,212


Merchandise inventory






191,327


234,164


Fixed assets (net)






16,651


21,478


Accounts payable






93,141


130,007


Borrowings under line of credit






-


-


Long-term debt, less current portion






4,009


5,511












Stores in operation






390


460




SOURCE Trans World Entertainment Corporation