Trans World Scales Back ‘Mix & Burn’ In-Store Downloads Trial

Further expansion of the Mix & Burn test will occur, if it occurs, after the holidays, Sullivan said. In 2005, Trans World bought 80 percent of Mix & Burn, which lets customers burn a CD in a store or download music to Coby, SanDisk or iRiver digital music devices. Trans World sells iPods, but Mix & Burn isn’t compatible with them. In investing in Mix & Burn, Trans World committed to providing $5.2 million in funding. The retailer has tested new download concepts for years as a hedge against declining CD sales. Its 2004 introductions of the subscription-based Download Zone on its Web site saw limited success.

Mix & Burn also is being combined at “a couple of stores” with Trans World listening and viewing stations. Users can employ these units to download music files to a digital audio player and transfer purchased songs to a home PC. Third-generation stations are deployed chainwide, with three or four at each store, company officials have said. Mix & Burn has four terminals at stores where it hasn’t been merged with the stations, Sullivan said.

Meanwhile, Trans World is testing an F.Y.E. remodel at 26 stores, including some of the Providence market’s 10 to 11 outlets, Sullivan said. Trans World is spending about $30,000 per store on carpets, paint and signs, plus entertainment vignettes, replacing a category-based format, Sullivan said. The new design debuted about three months ago at a store in Rotterdam, N.Y., company officials said. Trans World finished rebranding 680 stores to the F.Y.E. banner in the 2nd quarter. It continues to run 113 Suncoast Motion Picture Co. stores, down from about 140 at the start of the year. It acquired Suncoast along with Sam Goody outlets in buying some Musicland stores out of bankruptcy last year.

Trans World’s second-quarter loss grew to $10.1 million, from $7.7 million a year ago, as it struggled with a “soft retail environment,” CEO Robert Higgins said. Revenue fell to $267.3 million from $298.3 million on a six percent decline in same-store sales, with the chain operating 12 percent fewer stores. Same-store sales of music fell 19 percent in the 2nd quarter, an improvement over the previous quarter’s 21 percent decline. Music brought 43 percent of total revenue, down from 51 percent a year ago, company officials told investors in a Thursday earnings conference call. DVD same-store sales rose seven percent; the category represented 36 percent of total revenue, up from 33 percent a year earlier. Trans World’s electronics, accessories and boutique segment posted a 16% gain in same-store sales. The category grew to 13 percent of total sales, an increase from 10 percent a year earlier, as Trans World expanded its digital audio player assortment, said Sullivan. The videogames category logged a five percent same-store sales gain, rising to eight percent of quarterly revenue, up from seven percent, company officials said. Trans World ended the quarter with 963 outlets, down from 1,091 a year earlier. It will shut 45 to 50 stores this year, of which 29 closed in the first half, Sullivan said.

The past month saw Trans World begin DRM-free sales of about 9,000 Universal Music Group titles via its Web site, Sullivan said. The move comes as Wal-Mart and other retailers launch sales of DRM-free music. Trans World doesn’t disclose e-commerce revenue, as it “isn’t material” yet, Sullivan said.