Five Below, benefitting from Toys R Us’ departure, reported a Q4 profit on strong toy sales, while Trans World Entertainment (FYE) posted a $65.2 million loss in Q4 and slashed its workforce 30%.

Five Below’s net income rose 32.5% to $89.3 million in Q4 ended Feb. 3 as revenue jumped 12.4% to $603 million amid better-then-expected toy sales during the holiday season. Same-store sales rose 4.4%, with toys contributing 1.5% to the increase on strong sales of action figures and board games, CFO Ken Bull said. Gross margin declined to 40.5% from 41.5% due largely to the increased sales of those lower margin toys, he said.

The company will spend about $170 million this year in opening 145-150 stores, up from 125 in 2018, as it expands into Nebraska and Arizona. It also is remodeling another 50 stores and is adding 10 Below sections for products priced up to $10 in about 20 locations, Anderson said. Five Below has been testing the 10 Below format in six stores since October. It recently launched online sales of $10 products (10-piece cosmetic brush set, throw blanket and gaming headphones).

Meanwhile, Trans World Entertainment’s Q4 (ended Feb. 2) loss widened to $65.2 million from $32.5 million a year earlier as it took a $59.7 million asset impairment charge, which included the closing of 50 stores during the past year and a 30% cut in its 2,500-employee workforce. Revenue declined 12.4% to $127.4 million, but same-store sales at Trans World’s brick-and-mortar FY E locations increased 2.8%. Sale of lifestyle/collectible products declined to 6% to $55.8 million, due largely to the declining store count. Lifestyle/collectibles accounted for 44% of Q4 revenue, up from 41% a year earlier. FYE revenue declined 14.6% to $78.8 million.

Trans World is restructuring the Amazon Marketplace business it launched in 2016 in buying etailz. Q4 ecommerce revenue fell 8.3% to $48.6 million.

Contact:

Trans World Entertainment, Edward Sapienza, CFO, 518-452-1242