Conference Call Transcript
TWMC - Q2 2008 Trans World Entertainment Corp. Earnings Conference Call
E V E N T D A T E / T I M E : A U G . 2 1 . 2 0 0 8 / 1 0 : 0 0 A M E T
C O R P O R A T E P A R T I C I P A N T S
Trans World Entertainment Corp. - Chairman and CEO
Trans World Entertainment Corp. - President and COO
Trans World Entertainment Corp. - EVP, CFO and Secretary
C O N F E R E N C E C A L L P A R T I C I P A N T S
Wedbush Morgan - Analyst
B. Riley & Co. - Analyst
P R E S E N T A T I O N
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Trans World Entertainment second-quarter 2008 earnings 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 be given at that time. (Operator Instructions) As a reminder, today's conference is being recorded. I would now like to turn the program over to your host,
Mr. Bob Higgins, Chairman and CEO of Trans World Entertainment. Mr. Higgins, please begin.
Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO
Thank you, Christopher. And good morning, everyone. On the call with me today are Jim Litwak, our President and Chief Operating Officer and John Sullivan, our Chief Financial Officer. Thank you for joining
us today as we discuss our second-quarter results. We will take questions following our comments. Total sales in the second quarter decreased 19% to $215 million. Comp store sales decreased 7%. Our pretax loss for the second quarter was $19.6
million compared to $18.6 million last year. Our performance was on plan for the quarter. Jim will now take you through the sales highlights for the quarter.
Jim Litwak - Trans World Entertainment Corp. - President and COO
Thank you, Bob. Good morning. As Bob mentioned, overall Q2 comp sales declined 7%. This was primarily driven by the continued declines in the music category, which was down 17% on a comp basis. However,
this was an improvement over the first-quarter decline of a -23%. This was held by a strong performance of two titles released in the quarter, Lil Wayne, which nationally did one million units in the first week, and Coldplay, which did 750,000 units
in its first week.
Also during the quarter we did a store-by-store review of the catalog titles we carry and remixed our selection to better meet the demands of the customer. We are already seeing an improvement in our catalog sales
performance. As the music business continues to decline nationally, we are committed to improving our market share.
Video sales increased 1% on a comparable basis with a weakness in new releases. This lack of new releases caused Top 50 to decline 11%. Video now represents 39% of our business, up from 36% last year. Our strength in
catalog continues to drive this business as the studios recognize our ability to differentiate ourselves versus the competition through expanded assortment and depth of product.
Comparable store sales in our video game category decreased 10% and represented 8% of our business, the same as last year. Last September we reduced the number of stores carrying video games to 400 from 600 with a strategy
to build this business on the allocations of product at fewer stores and strengthening our game selling culture. While we experienced better results in these 400 stores, the allocation of hardware continues to hamper our overall growth and hurt our
ability to attach more software. We remain committed to improving the business.