March 08, 2010

By By Glenn Peoples, L.A.

Entertainment retailer Trans World reported net income of $11.4 million in its fiscal fourth quarter ending January 30, 2010. Total sales dropped 14% to $295.4 million from $344.7 million in the prior year.

For the fiscal year, total sales dropped 18% to $814 million and net loss was $42.4 million, an improvement from the $69 million loss in fiscal 2008.

Comp store sales dropped 7%, meaning part of the company?s lower sales came from its continued store closings. During its fourth quarter, Trans World operated an average of 655 stores, 14% fewer stores than in the year-ago period. During fiscal 2009, it operated an average of 688 stores, a 12% year-over-year decline.

?To turn around our operating results we will focus on four key initiatives for 2010,? said chairman and CEO Bob Higgins during Thursday?s earnings call. ?We will drive sales and strengthen the FYE brand through offering better value in our core music and video categories. We will leverage expenses against sales. We will continue to increase inventory turns and accounts payable leverage to generate cash and decrease working capital needs. We will capitalize on the real estate environment to maximize our footprint of productive locations.?

The company?s cash position improved as a result of generating cash from inventory of closed stores. Cash at the end of fiscal 2009 was $71.5 million, a big improvement from $30 at the end of fiscal 2008.

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