Trans World Q4 profit up for first time in three years on reduced expense
Albany, N.Y. Trans World Corp. earned a profit of $11.4 million in its 2009 fiscal fourth quarter, breaking its three-year long string of unprofitable quarters.
The company, which owns the f.y.e. (For Your Entertainment) chain of stores, was profitable even though total sales in the quarter fell 14% to $295.4 million. Same-store sales fell 7% in the quarter.
Trans World president and CEO Robert Higgins said that the company cut costs and generated revenue by renegotiating rents or closing stores and selling the inventory.
The drop in sales matched the percentage decline in the number of stores that Trans World operated in the fourth quarter. The company ran 655 stores during the quarter, compared with 763 in fourth quarter 2008.
The company continues to refine its sales strategy in response to competition from big-box discounters, specialty stores and online retailers. For instance, video games were dropped from more than 100 stores.
For the year, Trans World lost $42.4 million in fiscal 2009, compared with a net loss of $69 million in the year before. Total sales in 2009 declined 18% to $814 million, while same-store sales fell 10%.
“2009 was another challenging year in terms of comp sales and operating results,” Higgins said. “However, our financial position is stronger now than at the end of last year.”
The company ended the fiscal year with $71.5 million in cash, compared with $30 million last year.
“With a core group of stores, we are in a position to turn around results,” Higgins said.
Retail rebound accelerates after two years of pent-up demand
By Craig Johnson, [email protected]
After the steepest sales slump in decades, the once-sputtering retail economy is coming back to life. And it may be coming back most strongly closest to home: the home-furnishings and home-improvement sectors.
Based on its weekly store checks across the country, and results recently reported by home-related retailers, Customer Growth Partners (CPG) analysis shows that the retail sector in general, and the home-focused retailers in particular, may be at the outset of an exceptionally strong rebound.
After a four-year slump, home furnishings and home-improvement retailers — now that housing turnover is picking up — are beginning what may be quite a solid recovery. As we saw with major appliances on Black Friday, and as we’re seeing now in furniture, all it takes to ignite years of pent-up demand is sunny skies and a percent-off coupon.
In fact, after a 2009 retail economy that declined by 5.7%, and 2.3% excluding gasoline, the worst year since at least the 1970s, the only reason we aren’t seeing even stronger home-related retail growth is the near 10% unemployment, and still stagnant housing markets in Arizona, California and Nevada. But across sectors — including apparel, consumer electronics, sporting goods, toys and other general merchandise — and at both the discount and luxury ends of the price spectrum, retail is emerging after a long hibernation.
Based on its historical database, CGP analysis shows that the home-furnishings and home-improvement sectors last year suffered the greatest declines, of 20% and 18% respectively, from their sales peaks last decade, over four years ago.
Home-furnishings retailers reporting this week, including Ethan Allen and Haverty, each reported rising sales year-to-date after many years of decline, and Williams-Sonoma — which doesn’t report until later this month — sharply raised guidance at the end of January. CGP store checks have indicated stronger traffic and conversion levels at other home-furnishings players this winter, including at Bed Bath Beyond, Crate & Barrel, TJX’s HomeGoods division, and the home departments of broadline retailers such as Costco, Macy’s and Target.
Other retail sectors are seeing a continued rebound from smaller and shorter duration declines than experienced by the home-related merchants, accelerating from the 2.4% year-on-year growth seen over the holiday period.
The office-supply sector, down in 2009 some 15% from its 2006 peak, is up over 5% year-to-date versus last year, according to CGP’s retail growth vectors (RGV) analysis
The clothing sector, down last year almost 7% from its 2005 peak, is up 7% year-to-date, according to CGP’s RGV data.
Luxury retailers, ranging from Nordstrom to Tiffany, down last year some 11% from their peak two years ago, are up over 9% year-to-date from 2009.
Value retailers, ranging from BJ’s to TJX and Walmart — which never as a sector declined over the recession — are up 10% year-to-date, according to the RGV data.
CGP recently issued its 2010 retail sales forecast, calling for year-on-year growth of 4.6% in total sales — well above consensus estimates — and just under the 10 year 4.7% average. For 2010, we see a “scimitar recovery,” as shallow growth accelerates each quarter — with 6%+ retail growth by next fall — unless we get an oil price or tax hike. But it is becoming increasingly evident to even the naysayers that the American consumer is beginning to spend again — at least the 83% of Americans with full-time jobs.
We predict that 2010 will show retail earnings growth even more robust than the rebounding sales growth. Paradoxically, 2009’s record slump — the worst many retailers have seen in their corporate lives — provided a harsh but necessary discipline that forced many merchants to make the tough decisions that are put off in good times.
But these difficult cost-cutting decisions will make 2010, and the out-years, among the most profitable retailers have ever experienced — especially if the job market recovers.
Craig Johnson is president of Customer Growth Partners, New Canaan, Conn., a consulting and research firm serving the retail and other consumer industries. Founded in 2001, CGP conducts both proprietary and public forecasts of holiday and back-to-school retail sales, and is the only retail analyst firm that correctly predicted what turned out to be above consensus overall holiday season results. He can be reached at [email protected].
Cabela’s names chief supply chain officer
SIDNEY, Neb. Cabela’s announced that Doug Means will be joining the company as EVP and chief supply chain officer, reporting to Tommy Millner, CEO.
Previously, Means served as EVP production for better sportswear at Jones Apparel Group, which he joined in 1992. Prior to joining Jones Apparel, Means was a consultant for Kurt Salmon Associates in Atlanta, Ga.
“In January, we announced several changes and promotions in our top leadership roles, better aligning Cabela’s executive management team with our strategic initiatives,” said Tommy Millner, Cabela’s CEO. “Today I am excited to welcome Doug to our executive team and look forward to his valuable contributions to our supply chain operations.”