"This is the softest holiday sales performance I have seen," Robert Higgins, the company's chairman and chief executive officer said in a conference call with investors and analysts Wednesday. He blamed the sharp drop in sales for the five-week fourth quarter ending Dec. 31 on the general weakness in the industry.
Higgins, who founded Trans World in 1972, said lackluster holiday sales forced the Albany, NY company to lower its earnings forecast for fiscal 2005 from an expected 25 cents to 30 cents per share down to the break-even to 5 cents per share point.
Total sales for the company dropped to $284 million for the quarter, declining from $312 million for the same period last year. For the 11-month period ending Dec. 31, Trans World sales fell 6% while total sales declined 9% to $1.16 billion compared to $1.28 billion during the same period last year.
The biggest decline during the holidays was in music sales, which were down 15%. Video game sales were also off 6% while video sales were down 2%. Sales of electronics and other equipment showed a 3% increase, the company said.
In a bid to beef up its faltering music sales, Higgins said the firm is interested in making deals with record companies for exclusive distribution rights similar to the distribution rights granted to Wal-Mart, Target, and Starbucks, which have exclusive distribution on CDs for several recording artists.
The company said it also intends to ramp up distribution of its advanced sampling stations which allows consumers to sample and order music and video products in the firm's stores. So far, the machines are deployed in 180 of Trans World's 798 outlets which the firm operates under the FYE, Strawberries Music, Coconuts Music and Movies, and other flags.
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