Trans World Entertainment Corporation

views updated May 11 2018

Trans World Entertainment Corporation

38 Corporate Circle
Albany, New York 12203
U.S.A.
(518)452-1242
Fax: (518) 452-3547

Public Company
Incorporated: 1972 as Trans World Music Corporation
Employees: 4,100
Sales: $571.3 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: TWMC
SICs: 5735 Record & Prerecorded Tape Stores

Trans World Entertainment Corporation is one of the largest specialty music and video-store chains in the United States. It sells compact discs, prerecorded audio cassettes, prerecorded videocassettes, and related merchandise in both mall outlets and stand-alone stores. Trans World operates primarily under the names Record Town, Coconuts Music & Movies, and Saturday Matinee. It also owns stores under the name F.Y.E. (For Your Entertainment). Originally incorporated as Trans World Music Corporation, the company in 1994 changed its name to Trans World Entertainment Corporation to more adequately reflect the various markets in which it participates.

The Great Expansion of the Early Years: 1972-88

Prior to founding Trans World Music Corporation, Robert J. Higgins worked as the Eastern divisional sales manager for Trans Continental Music Corporation. There he gained important experience, and in 1972 he opened his own company, Trans World Music Corporation, with a $30,000 personal investment. Originally a wholesale music distributor, Trans World was headquartered in Albany primarily because Higgins, a native of Albany, recognized the citys advantage of having easy access to both the Northeast and Mid-Atlantic markets.

Although Trans World initially entered the profitable wholesale prerecorded music business, it did not take long for the company to take advantage of Higginss experience and knowledge of the industry as a whole, and in 1973 it opened its first retail operation under the name Record Town. By the end of 1974, Trans World was a $5.5 million company. The following year Higgins and Trans World made another important foray into the retail field: recognizing that Americans were spending a great deal of time and money in malls, Trans World opened the first of many Record Town mall locations. Then, in 1979, the company made a further commitment to the malls, opening its first specialty mall store under the name Tape World, selling prerecorded music tapes rather than records. One of the presiding factors in the decision to open the Tape World storesand in its eventual successwas that tapes were much smaller than records, allowing Tape World to fit more music titles into a smaller, less-expensive space.

By 1982 Trans World had sales of $25 million and was operating 38 retail units. That year the success of Record Town and Tape World encouraged Trans World to sell its wholesale business and to begin an aggressive expansion of its retail stores. At the time, most of Trans Worlds stores were clustered on the East Coast, but the expansion would eventually spread the companys stores throughout the United States.

Trans World made its initial public offering in 1986, trading shares on the NASDAQ exchange with the ticker symbol TWMC. (The ticker symbol remained TWMC even after the name change to Trans World Entertainment Corporation in 1994). Higgins, president and chief executive officer, retained the majority of Trans World shares and also served as chairman of the board of directors. Trans World continued rapid expansion throughout the 1980s and early 1990s, mostly by opening stand-alone and mall stores associated with the company but also through acquisition of retail outlets. On June 1, 1985, Trans World acquired all outstanding stock of the B&B Record Corporation, and in 1988 the company acquired the 14 Great American Music Stores located primarily in the Minneapolis-St. Paul area. Trans Worlds rapid expansion eventually contributed to an oversaturation of the music and video retail market, and by 1990 company profits began to erode.

Legal and Financial Trouble in the Late 1980s and Early 1990s

In 1989 a judge ruled that Trans World had to pay $2.5 million in damages to Peaches Entertainment Corporation. Peaches had given Trans World a license to use its trademark, but when the license expired in August 1986, Trans World continued to use the trademark in three states. The charge put a dent in profits for 1989, but Higgins said of the award: We are happy to get this non-operating issue behind us so that we can turn our management focus back to... operating the business.

In part because of the costs of its continued rapid expansion, the early 1990s saw declining profits for Trans World. In the third quarter of 1990, for example, the companys net income of $992,000 represented a drop of 47 percent compared with that in the same period of 1989. Though revenue was up 11 percent in the third quarter of 1990 to $74.4 million, costs associated with the opening of 40 new stores devoured Trans Worlds profits. These problems were reflected in the companys stock. Trans World had announced a plan in July 1990 to make a public offering of one million shares, 750,000 of which were owned by Higgins and 250,000 by the company. The offering was to be made at approximately the market valueat the time about $31.50 per sharebut by November 1990 the price of Trans World stock had fallen to $14.00 per share, and the company withdrew its public offering registration, citing poor stock market conditions as the reason for withdrawal. By 1993 net income was $9.8 million, down from $14.5 million in 1990, and in 1994 Trans World operated at a net loss of $6.3 million.

Part of the reason for the companys poor returns was the increasing competition from stores such as Best Buy Co., Inc., and Circuit City Stores Inc., which would often sell its music recordings at or below cost in an effort to attract customers into their stores (customers who might then buy other items). In 1996 music companies attempted to discourage stores from this practice by establishing the Minimum Advertised Pricing (MAP) policies, which threatened to withhold marketing allowances to retailers that sold their product below MAP prices. But retailers seemed to ignore the MAP policies until it became apparent that their loss-leader practices were not helping their sales.

In May 1994 Higgins purchased 10,000 shares of Trans World stock at $11 per share. The price might have seemed like a bargain (down from $31.50 in July 1990), but Trans World shares would eventually trade at a low of $1.75 during the fourth quarter of 1995. Recognizing that the market was probably oversaturated with retail music and video stores and that something drastic had to be done to turn Trans World around, Higgins announced on February 2, 1995, that Trans World would close 143 stores. The move was to eliminate poor-performing stores and concentrate on a core group of productive stores. Though Trans World closed 180 outlets during the year (more than the 143 initially announced), sales declined only 3.7 percent. The company also reduced its inventory by $28 million while increasing the product mix available to stores. Trans World took a net loss for 1995 of $25.4 million, due in large part to the $35 million charge for restructuring and closing.

By 1996 the store closings were beginning to pay off, and net income had risen to $7.1 million. Trans World operated a total of 479 stores at the years end, and by the third quarter of 1996, the share price had returned to $9.50. The positive income figure included a record single-quarter net income of $14.7 million for the fiscal 1996 fourth quarter, which meant fourth-quarter earnings of $1.51 per share.

Growth and Reorganization in the 1990s

On December 10, 1993, Trans World Music opened its first F.Y.E. (For Your Entertainment) store in Trumbull, Connecticut. F.Y.E. was to be Trans Worlds highest-volume mall operation. Billed in company literature as larger than life, bigger than anyone had imagined, with more store, more product, more of everything the customer wants, F.Y.E. was Trans Worlds prototype of a multimedia superstore where there is something to see, do, and ultimately buy for everyone in the family. This amazing superstore is about having a great time in the family game center, pulling up a chair in a reading nook, or celebrating a childs birthday or other event with an F.Y.E. party. Trans World was hoping to distinguish F.Y.E. from its competition by being one of the few family-oriented, multimedia retail superstores designed to fit in a mall environment.

Also important to the success of F.Y.E. and other Trans World retail outlets was the fact that by 1993 children ages four to 12 controlled or influenced as much as $132 billion a year in spending. The influence of children was particularly strong in the sales of movie videos. For example, the Walt Disney Companys Beauty and the Beast was not only the best-selling video of 1992 but the best-selling video ever. In 1993 Aladdin, also by the Walt Disney Company, outperformed Beauty and the Beast, becoming the best-selling video ever. Following Aladdin as top sellers for 1993 were Pinocchio, Free Willy, and Homeward Bound, all movies with children as the targeted audience. Recognizing this trend, Trans World Music made several moves in 1993 to take advantage of this huge source of sales. In their new F.Y.E. stores, a special department was set aside with childrens music, books, and videos. Within the Saturday Matinee stores, a special section called KidsMatinee was designed; called a store within a store by Trans World, KidsMatinee offered similar merchandise as that found in their F.Y.E. childrens section.

Company Perspectives

Generating a competitive return on investment for shareholders is Trans World Entertainments foremost responsibility, and this is the principal goal that guides the board of directors and the entire management team.

In 1992, when the Tandy Corporation was packaging its Incredible Universe electronic superstores, it turned to Trans World to supply the soft goods, such as compact discs and prerecorded videotapes, to accompany Tandys electronic hard goods, such as compact discs and VCRs. Trans World agreed to supply the music and video products to the giant stores, some of which occupied nearly 200,000 square feet of retail space, of which 10,000 square feet on average was devoted to the music and video departments. At the launch of Incredible Universe in the fall of 1992, Tandy chairman John Roach predicted that the United States could accommodate up to 50 of these gigastores, with a total sales of $3 billion. Trans World hoped that the joint venture with Incredible Universe would provide a broader customer base with a lower capital investment, thus lowering overhead and start-up costs and increasing profitability.

Though initial response to the Incredible Universe stores had been positive, performance over a longer period was lackluster. In 1996, in an effort to increase plunging profits, Incredible Universe announced plans to promote Coconuts, Record Town, or F.Y.E.depending upon the popularity and market recognition of the Trans World stores in the various Incredible Universe marketsas retail outlets inside the superstores. But it was already too late. In late 1996 Tandy Corporation announced that all its Incredible Universe stores were to be closed or sold. Retail analyst Lynn Detrick, of Williams MacKay Jordan & Co. in Houston, told Time magazine that maybe this does suggest that you can take it too far, that stores can be too big and inconvenient. Though not especially good news for Trans World, the closing losses were primarily Tandys.

Once Trans World began to see consistently positive results from its restructuring, Higgins began again to turn his sights toward growth and expanding market share. Though Trans World was to close another 37 stores in 1997, it was also planning to open 70 new stores, 40 of which would be relocations.

Meanwhile, Higgins and John Sullivan, the chief financial officer, began to talk publicly about acquiring another company. A few companies that did not respond well to sluggish sales and market oversaturation in the 1990sespecially those that had filed for bankruptcyseemed ripe for takeover. Due to the financial difficulties of our competitors, said Higgins, our acquisitions in real estate will be opportunistic. We will only acquire profitable stores and save them [with] economies of distribution. The reduction in the total number of music and video stores nationwide made it possible for Trans World to pursue exclusive operating agreements with shopping malls so that a Trans World retailer would be the only music and video store in the mall. The closing of hundreds of stores across the industry also made it possible for Trans World to expand again without falling into the same trap it had in the early 1990s. The company could rapidly pick up market share with relatively slow openings of new stores in strong sales areas and by making a few strategic acquisitions.

Adding to Trans Worlds good news, the company announced a new debt agreement to shareholders on June 5, 1997. The new refinancing agreement was reached with Congress Financial Corporation, a CoreStates Company, at interest rates averaging below the prime rate. This new debt agreement finalizes our successful restructuring efforts, said Higgins in a press statement. By offering such favorable rates, our lenders clearly recognize that we have effectively repositioned our company. Based on current borrowing levels, the company will save up to $2.5 million per year in interest charges alone. The company had previously obtained waivers from lenders to keep from being in default of two provisions of its loan agreements. The loans were initially made to finance store openings and relocations. The waivers had included agreements to pay higher interest rates.

Much of Trans World Entertainment Corporations turnaround has been credited to Higgins. A majority shareholder with slightly more than 50 percent of shares, he continued to have a vested interest in the company performing well. In 1997, as a testament to Trans Worlds turnaround, Higgins received Billboard magazines Video Person of the Year award.

Further Reading

Christman, Ed, Trans World Losses Down; MCA Golden in 4th Quarter, Billboard, November 30, 1996, p. 68.

_____, Trans World Unwraps Plan for Comeback4th Quarter, Billboard, October 7, 1995, pp. 83-84.

Fitzpatrick, Eileen, Trans World at 25, Billboard, July 5, 1997, pp. 68-75.

Frank, Stephen E., Insiders at Specialty Retailers Purchase Shares in Their Own Troubled Businesses, Wall Street Journal, August 3, 1994, pp. C23-24.

Goldstein, Seth, Q&A: Bob Higgins, Billboard, July 5, 1997, pp. 65-72.

Jeffrey, Don, Falling Stocks Zap Retail; Ongoing Price War Hobbles Chains, Billboard, February 18, 1995, pp. 1-3. Lanctot, Roger C., Data Points, Computer Retail Week 1996, April 15, 1996, p. 15.

The Perils of Having Way More Than Enough, Time, January 13, 1997, p. 58.

Reilly, Patrick M., Music Retailer Trans World Reports Narrowed Loss for Fiscal Third Period, Wall Street Journal, November 19, 1996, p. B13.

Scally, Robert, Incredible Universe Comes to an End; Final Sales Over by Mid-March, Discount Store News, March 3, 1997, pp. 1-2.

Trans World Music Plans Public Offering, Wall Street Journal, July 24, 1990, p. C21.

Trans World Musics Ist-Period Net Slashed by Damages Liability, Wall Street Journal, May 9, 1989, p. C22.

Terry Bain

Trans World Entertainment Corporation

views updated May 08 2018

Trans World Entertainment Corporation

38 Corporate Circle
Albany, New York 12203
U.S.A.
Telephone: (518) 452-1242
Fax: (518) 862-9519
Web site: http://www.twec.com


Public Company
Incorporated:
1972 as Trans World Music Corporation
Employees: 8,200
Sales: $1.33 billion (2004)
Stock Exchanges: NASDAQ
Ticker Symbol: TWMC
NAIC: 451220 Prerecorded Tape, Compact Disc, and Record Stores


Trans World Entertainment Corporation is one of the country's largest specialty music retailers. Through such retail chains as F.Y.E. (For Your Entertainment), Spec's Music, and Camelot Music, the company sells compact discs, prerecorded audio cassettes, prerecorded videocassettes, and related merchandise in both mall outlets and stand-alone stores. Trans World operates the chains Coconuts Music & Movies, Strawberries, Planet Music, and Saturday Matinee. In 2003, the company acquired the financially beleaguered Wherehouse Entertainment. Trans World also operates a successful online shopping presence on the Web.


The Great Expansion of the Early Years: 197288

Prior to founding Trans World Music Corporation, Robert J. Higgins worked as the Eastern divisional sales manager for Trans Continental Music Corporation. There he gained important experience, and in 1972 he opened his own company, Trans World Music Corporation, with a $30,000 personal investment. Originally a wholesale music distributor, Trans World was headquartered in Albany primarily because Higgins, a native of Albany, recognized the city's advantage of having easy access to both the Northeast and Mid-Atlantic markets.

Although Trans World initially entered the profitable wholesale prerecorded music business, it did not take long for the company to take advantage of Higgins's experience and knowledge of the industry as a whole, and in 1973 it opened its first retail operation under the name Record Town. By the end of 1974, Trans World was a $5.5 million company. The following year Higgins and Trans World made another important foray into the retail field: recognizing that Americans were spending a great deal of time and money in malls, Trans World opened the first of many Record Town mall locations. Then, in 1979, the company made a further commitment to the malls, opening its first specialty mall store under the name Tape World, selling prerecorded music tapes rather than records. One of the presiding factors in the decision to open the Tape World storesand in its eventual successwas that tapes were much smaller than records, allowing Tape World to fit more music titles into a smaller, less-expensive space.


By 1982 Trans World had sales of $25 million and was operating 38 retail units. That year the success of Record Town and Tape World encouraged Trans World to sell its wholesale business and to begin an aggressive expansion of its retail stores. At the time, most of Trans World's stores were clustered on the East Coast, but the expansion would eventually spread the company's stores throughout the United States.


Trans World made its initial public offering in 1986, trading shares on the NASDAQ with the ticker symbol TWMC. (The ticker symbol remained TWMC even after the name change to Trans World Entertainment Corporation in 1994). Higgins, president and chief executive officer, retained the majority of Trans World shares and also served as chairman of the board of directors. Trans World continued rapid expansion throughout the 1980s and early 1990s, mostly by opening stand-alone and mall stores associated with the company but also through acquisition of retail outlets. On June 1, 1985, Trans World acquired all outstanding stock of the B&B Record Corporation, and in 1988 the company acquired the 14 Great American Music Stores located primarily in the Minneapolis-St. Paul area. Trans World's rapid expansion eventually contributed to an oversaturation of the music and video retail market, and by 1990 company profits began to erode.

Legal and Financial Trouble in the Late 1980s and Early 1990s

In 1989 a judge ruled that Trans World had to pay $2.5 million in damages to Peaches Entertainment Corporation. Peaches had given Trans World a license to use its trademark, but when the license expired in August 1986, Trans World continued to use the trademark in three states. The charge put a dent in profits for 1989, but Higgins said of the award: "We are happy to get this non-operating issue behind us so that we can turn our management focus back to . . . operating the business."


In part because of the costs of its continued rapid expansion, the early 1990s saw declining profits for Trans World. In the third quarter of 1990, for example, the company's net income of $992,000 represented a drop of 47 percent compared with that in the same period of 1989. Though revenue was up 11 percent in the third quarter of 1990 to $74.4 million, costs associated with the opening of 40 new stores devoured Trans World's profits. These problems were reflected in the company's stock. Trans World had announced a plan in July 1990 to make a public offering of one million shares, 750,000 of which were owned by Higgins and 250,000 by the company. The offering was to be made at approximately the market valueat the time about $31.50 per sharebut by November 1990 the price of Trans World stock had fallen to $14.00 per share, and the company withdrew its public offering registration, citing poor stock market conditions as the reason for withdrawal. By 1993 net income was $9.8 million, down from $14.5 million in 1990, and in 1994 Trans World operated at a net loss of $6.3 million.

Part of the reason for the company's poor returns was the increasing competition from stores such as Best Buy Co., Inc., and Circuit City Stores Inc., which would often sell its music recordings at or below cost in an effort to attract customers into their stores (customers who might then buy other items). In 1996 music companies attempted to discourage stores from this practice by establishing the Minimum Advertised Pricing (MAP) policies, which threatened to withhold marketing allowances to retailers that sold their product below MAP prices. But retailers seemed to ignore the MAP policies until it became apparent that their loss-leader practices were not helping their sales.

In May 1994 Higgins purchased 10,000 shares of Trans World stock at $11 per share. The price might have seemed like a bargain (down from $31.50 in July 1990), but Trans World shares would eventually trade at a low of $1.75 during the fourth quarter of 1995. Recognizing that the market was probably oversaturated with retail music and video stores and that something drastic had to be done to turn Trans World around, Higgins announced on February 2, 1995, that Trans World would close 143 stores. The move was to eliminate poor-performing stores and concentrate on a core group of productive stores. Though Trans World closed 180 outlets during the year (more than the 143 initially announced), sales declined only 3.7 percent. The company also reduced its inventory by $28 million while increasing the product mix available to stores. Trans World took a net loss for 1995 of $25.4 million, due in large part to the $35 million charge for restructuring and closing.

By 1996 the store closings were beginning to pay off, and net income had risen to $7.1 million. Trans World operated a total of 479 stores at the year's end, and by the third quarter of 1996, the share price had returned to $9.50. The positive income figure included a record single-quarter net income of $14.7 million for the fiscal 1996 fourth quarter, which meant fourth-quarter earnings of $1.51 per share.


Growth and Reorganization in the 1990s

On December 10, 1993, Trans World Music opened its first F.Y.E. (For Your Entertainment) store in Trumbull, Connecticut. F.Y.E. was to be Trans World's highest-volume mall operation. Billed in company literature as "larger than life, bigger than anyone had imagined, with more store, more product, more of everything the customer wants," F.Y.E. was Trans World's prototype of a multimedia superstore where there is something to see, do, and ultimately buy for everyone in the family. "This amazing superstore is about having a great time in the family game center, pulling up a chair in a reading nook, or celebrating a child's birthday or other event with an F.Y.E. party." Trans World was hoping to distinguish F.Y.E. from its competition by being one of the few family-oriented, multimedia retail superstores designed to fit in a mall environment.


Also important to the success of F.Y.E. and other Trans World retail outlets was the fact that by 1993 children ages four to 12 controlled or influenced as much as $132 billion a year in spending. The influence of children was particularly strong in the sales of movie videos. For example, the Walt Disney Company's Beauty and the Beast was not only the best-selling video of 1992 but the best-selling video ever. In 1993 Aladdin, also by the Walt Disney Company, outperformed Beauty and the Beast, becoming the best-selling video ever. Following Aladdin as top sellers for 1993 were Pinocchio, Free Willy, and Homeward Bound, all movies with children as the targeted audience. Recognizing this trend, Trans World Music made several moves in 1993 to take advantage of this huge source of sales. In their new F.Y.E. stores, a special department was set aside with children's music, books, and videos. Within the Saturday Matinee stores, a special section called Kids' Matinee was designed; called a "store within a store" by Trans World, Kids' Matinee offered similar merchandise as that found in their F.Y.E. children's section.

Company Perspectives:

Generating a competitive return on investment for shareholders is Trans World Entertainment's foremost responsibility, and this is the principal goal that guides the board of directors and the entire management team.



In 1992, when the Tandy Corporation was packaging its Incredible Universe electronic superstores, it turned to Trans World to supply the "soft" goods, such as compact discs and prerecorded videotapes, to accompany Tandy's electronic "hard" goods, such as compact discs and VCRs. Trans World agreed to supply the music and video products to the giant stores, some of which occupied nearly 200,000 square feet of retail space, of which 10,000 square feet on average was devoted to the music and video departments. At the launch of Incredible Universe in the fall of 1992, Tandy chairman John Roach predicted that the United States could accommodate up to 50 of these "gigastores," with a total sales of $3 billion. Trans World hoped that the joint venture with Incredible Universe would provide a broader customer base with a lower capital investment, thus lowering overhead and start-up costs and increasing profitability.

Though initial response to the Incredible Universe stores had been positive, performance over a longer period was lackluster. In 1996, in an effort to increase plunging profits, Incredible Universe announced plans to promote Coconuts, Record Town, or F.Y.E.depending upon the popularity and market recognition of the Trans World stores in the various Incredible Universe marketsas retail outlets inside the superstores. But it was already too late. In late 1996 Tandy Corporation announced that all its Incredible Universe stores were to be closed or sold. Retail analyst Lynn Detrick, of Williams MacKay Jordan & Co. in Houston, told Time magazine that "maybe this does suggest that you can take it too far, that stores can be too big and inconvenient." Though not especially good news for Trans World, the closing losses were primarily Tandy's.

Once Trans World began to see consistently positive results from its restructuring, Higgins began again to turn his sights toward growth and expanding market share. Though Trans World was to close another 37 stores in 1997, it was also planning to open 70 new stores, 40 of which would be relocations.

Meanwhile, Higgins and John Sullivan, the chief financial officer, began to talk publicly about acquiring another company. A few companies that did not respond well to sluggish sales and market oversaturation in the 1990sespecially those that had filed for bankruptcyseemed ripe for takeover. "Due to the financial difficulties of our competitors," said Higgins, "our acquisitions in real estate will be opportunistic. We will only acquire profitable stores and save them [with] economies of distribution." The reduction in the total number of music and video stores nationwide made it possible for Trans World to pursue exclusive operating agreements with shopping malls so that a Trans World retailer would be the only music and video store in the mall. The closing of hundreds of stores across the industry also made it possible for Trans World to expand again without falling into the same trap it had in the early 1990s. The company could rapidly pick up market share with relatively slow openings of new stores in strong sales areas and by making a few strategic acquisitions.

Adding to Trans World's good news, the company announced a new debt agreement to shareholders on June 5, 1997. The new refinancing agreement was reached with Congress Financial Corporation, a CoreStates Company, at interest rates averaging below the prime rate. "This new debt agreement finalizes our successful restructuring efforts," said Higgins in a press statement. "By offering such favorable rates, our lenders clearly recognize that we have effectively repositioned our company. Based on current borrowing levels, the company will save up to $2.5 million per year in interest charges alone." The company had previously obtained waivers from lenders to keep from being in default of two provisions of its loan agreements. The loans were initially made to finance store openings and relocations. The waivers had included agreements to pay higher interest rates.

Much of Trans World Entertainment Corporation's turnaround has been credited to Higgins. A majority shareholder with slightly more than 50 percent of shares, he continued to have a vested interest in the company performing well. In 1997, as a testament to Trans World's turnaround, Higgins received Billboard magazine's Video Person of the Year award.


Into the New Millennium

Although Trans World prospered in the late 1990s, many music stores did not do as well in the new, more competitive market. Increased competition in the business by home electronics marketers such as Best Buy drove many music specialty stores into bankruptcy. One of these was the Columbus, Ohio-based store Camelot Music. In October 1998 Trans World announced that it would purchase the nearly defunct music store chain for about $450 million.


However, the acquisition of Camelot proved to be a drag on Trans World's profits for a number of years. By the end of 1999, the stores that came with the purchase of the Ohio company still were losing money, with sales down 4 percent compared to those of the previous year. Part of the reason for this loss was due to the fact that Camelot had less inventory on hand than had been thought at the time of the sale. In addition, in 2000 Trans World was hit with the results of a federal investigation into a tax fraud that Camelot participated in between 1990 and 1993. Trans World, as the owner of Camelot, became liable for $14 million, including the unpaid tax and the interest due on it.

Despite the setbacks posed by its troubles with the Camelot acquisition, Trans World continued to expand in the early years of the 21st century. In spite of the fact that music sales continued to drop industry-wide through 2001, Trans World profited through sales of DVDs and video games. Although CDs and other music-delivery systems made up 64 percent of total salesand thus still constituted Trans World's core businesssales of movies in electronic format and the gaming industry jumped 30 percent and 64 percent respectively. In 2003 Trans World made a successful bid for Wherehouse Entertainment Inc., a rival firm, which gave the corporation access to markets on the west coast.

Key Dates:

1972:
Robert J. Higgins founds Trans World Music as a wholesale music distributor.
1982:
The company begins focusing on retail rather than wholesale.
1986:
Trans World goes public.
1994:
Trans World Music becomes Trans World Entertainment to reflect the broadening range of its interests.
1999:
The company acquires Camelot Music.
2003:
The company acquires Wherehouse Entertainment Inc.



Still more difficulties awaited the Albany, New York-based music retailer in 2003. One of its major suppliers of listening technology, Full-Play Media Systems, contracted with Best Buy to produce listening stations for use in Best Buy stores. Trans World claimed that Full-Play's action constituted a breach of contract, and the corporation sued the technology manufacturer to prevent the Best Buy deal. In addition, Trans World protested the decision by the classic rock band the Rolling Stones to release a new four-DVD set only through Best Buy by pulling Rolling Stones albums from their shelves. Through that action, executive vice-president Fred Fox told Alan Wechsler of the Albany Times Union, Trans World took a stand against the band's decision. "It's just not right," he said. "We believe it should be a level playing field."


Principal Competitors

The Musicland Group Inc.; MTS Inc.; Amazon.com Inc.


Further Reading

Christman, Ed, "Trans World Entertainment Corp.," Billboard, November 20, 1999, p. 127.

, "Trans World Losses Down; MCA Golden in 4th Quarter," Billboard, November 30, 1996, p. 68.

, "Trans World Unwraps Plan for 'Comeback' 4th Quarter," Billboard, October 7, 1995, pp. 8384.

Fitzpatrick, Eileen, "Trans World at 25," Billboard, July 5, 1997, pp. 6875.

Frank, Stephen E., "Insiders at Specialty Retailers Purchase Shares in Their Own Troubled Businesses," Wall Street Journal, August 3, 1994, pp. C2324.

Furfaro, Danielle T., "Guilderland, N.Y., Entertainment Firm Found Liable for Camelot Music Tax Scam," Times Union (Albany, New York) October 20, 2000.

Goldstein, Seth, "Q&A: Bob Higgins," Billboard, July 5, 1997, pp. 6572.

Jeffrey, Don, "Falling Stocks Zap Retail; Ongoing Price War Hobbles Chains," Billboard, February 18, 1995, pp. 13.

Lanctot, Roger C., "Data Points," Computer Retail Week 1996, April 15, 1996, p. 15.

Payne, Melanie, "New York Entertainment Firm to Buy Ohio-Based Camelot Music," Knight Ridder/Tribune Business News, October 26, 1998.

"The Perils of Having Way More Than Enough," Time, January 13, 1997, p. 58.

Reilly, Patrick M., "Music Retailer Trans World Reports Narrowed Loss for Fiscal Third Period," Wall Street Journal, November 19, 1996, p. B13.

Scally, Robert, "Incredible Universe Comes to an End; Final Sales Over by Mid-March," Discount Store News, March 3, 1997, pp. 12.

"Trans World Music Plans Public Offering," Wall Street Journal, July 24, 1990, p. C21.

"Trans World Music's 1st-Period Net Slashed by Damages Liability," Wall Street Journal, May 9, 1989, p. C22.

Wechsler, Alan, "Albany, N.Y.-Based Music Chain Pulls Rolling Stones Albums after Best Buy Deal," Times Union (Albany, New York), October 31, 2003.


Terry Bain
update: Kenneth R. Shepherd