A change could be coming soon to your local mall at a store you may have done some anime-related shopping over the years. Time to take a closer look at FYE.
The History of FYE
Trans World Entertainment may not sound familiar to you, but perhaps names like FYE, Suncoast, Sam Goody, Wherehouse, and SecondSpin.com will ring a bell. These various chains have their own histories, but a lot of them ended up or were formed by a company called The Musicland Group. In the glory days of the mall, the various Musicland brands boomed. They were eventually purchased by Best Buy in 2000 in a deal the Los Angeles Times called “may be the biggest merger in music retail history”.
However, despite the nearly $700 million they paid for Musicland, Best Buy unloaded them just two-and-half years later. The stores were in such dire straits that Best Buy didn’t even take any money for the deal; the buyer, Sun Capital, just took it in exchange for accepting Musicland’s debts.
But they couldn’t get the chain out of debt, and Musicland filed for bankruptcy in 2006. Many stores closed, but Trans World Entertainment decided to buy most of the remaining locations.
Trans World Entertainment dates back to 1972 as a wholesale music business, but the founder opened a retail store (Record Town) in 1973 and then a mall location a year after that. Eventually, through a series of openings and acquisitions, Trans World Entertainment eventually grew to over 1,000 stores.
The FYE brand was established in 1993. As Encyclopedia.com reports:
“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.”
After Trans World acquired Musicland, most of the Sam Goody stores were converted into FYEs, but sister chain Suncoast was almost completely eliminated by 2009. Other Trans World chains like Coconuts and Wherehouse were also renamed to make FYE Trans World’s primary retailer, but a few holdovers remain.
However, in recent years, FYE and Trans World have struggled. While collectibles have been a bright spot, the combination of increased competition — particularly the internet — and slowing mall traffic have led to many unprofitable quarters and fiscal years. The most recent financial results, for the quarter that ended on November 2nd, 2019, was mostly bleak: a loss of $23 million. Trans World filed a report to the United States Securities and Exchange Commission that additional results for Q3 would be late, saying that it had “substantial doubt” it could last another year.
On January 23rd, 2020, Trans World revealed that it was prepared to sell FYE and SecondSpin.com for $10 million plus taking over certain liabilities. With this sale, Trans World Entertainment would be only left with etailz, an online marketplace retailer that mostly operates on Amazon Marketplace.
Trans World announced that the proposed deal was approved by its shareholders on February 18th. The acquisition was completed just two days later, although the final price still had some leeway due to inventory levels. Trans World Entertainment also received some funding for etailz, which is also losing money despite improvement, in a separate, unrelated deal. Even with the sale, Trans World’s future is still on shaky ground.
FYE’s New Owners
So, who is the new owner of FYE, and what can shoppers expect?
FYE is now owned by Sunrise Records. Sunrise Records is a privately-owned Canadian record store chain that was founded in 1977. It was one of five biggest chains of its type in Canada, but a changing marketplace meant that not only did Sunrise Records’ rivals shrink or disappear, it also was forced to close stores until only a few remained.
But a new owner, Doug Putman, took over Sunrise in 2014, and he managed to add stores even though locations were limited to the province of Ontario.
Rival HMV Canada, which was perhaps the most dominant of the Canadian record shops, had its own issues. HMV Canada’s parent company, the British (and original) HMV, had sold HMV Canada to a restructuring company called Hilco Capital in 2011. After a lawsuit in 2017, HMV Canada closed all its stores. Sunrise Records got the leases for 70 HMV Canada stores and hoped to hire many of the laid-off employees.
Meanwhile, HMV had also found itself owned by Hilco in 2013. With it also facing financial trouble, Putman and Sunrise Records bought HMV for £883,000 (approximately $1.2 million US) in February 2019.
Today, HMV has 114 stores in the United Kingdom while Sunrise Records has 84 locations in Canada. Now, with the addition of the 200 or so FYE stores, Putman will now have the only major record shop chains in three countries.
The Future of FYE
So unlike some mergers and acquisitions, Putman doesn’t seem to be interested in unifying all his music stores under one brand. When he acquired HMV in 2019, he aimed to have it turning a profit within the year and to open new stores in 2020. Still, despite opening a megastore that includes every 4K Blu-ray available, there are still HMV locations closing in 2020. Perhaps it should be expected from a business bought so cheaply, but there’s no instant turn-around or guarantee that all stores acquired will stay open.
According to filings, Trans World Entertainment tried to sell FYE to Sunrise for $35 million around the time Putman was acquiring HMV. Those same filings also indicated that had FYE not been sold, the chain would have likely closed, and Sunrise was the only interested buyer.
Again, having only one interested buyer is never a good look for a company. But hey, at least they found one. But to go to agree to sell FYE for less than a third of their original offer means that FYE was in serious, serious trouble.
Right now, a notice is on SecondSpin.com that they are not buying music or movies. That’s actually how I found out FYE was sold since the sale happened so fast. This is likely so that FYE can do inventory for the final buying price. However, it leads to the question if FYE will continue its used media buyback — and if SecondSpin.com will even exist in the future. Looking at Sunrise Records, they only buy “hard to find, collectable, and strong-selling CDs/DVD/Blu-Ray”, and vinyls and cassettes exclude certain genres and older releases. The UK HMV does not appear to buy used media at all, so perhaps FYE will continue buying movies and music as they did before the Sunrise sale. Still, some things have to change, as there’s no way FYE can continue on its path.
That being said, I would expect to see some stores closing. FYE would almost double Putman’s current music shop count. He had less than nine three years ago — and in a single country to boot! Plus, according to LinkedIn, he’s also the president of a toy distributor and owns a restaurant and a boat repair shop. (By the way, in case you were curious, he’s 36 years old.) Even though the three companies are likely to remain separate branches, that’s a lot that requires his focus, especially since most of the music stores have been — or are in — precarious financial positions.
So it will be interesting to see what changes are made. Will FYE locations now put more emphasis on vinyl over most other products? Will clearance sales still happen on the regular? How much non-media will be stocked?
One aspect I could easily see being overhauled is the Backstage Pass membership program, which was the subject of a still-pending lawsuit. HMV does not currently have a rewards club or frequent shopper program. Sunrise’s main perk is earning a $5 reward when you spend $20 or more 15 times. Maybe something like that instead of all the focus on partner (restaurant, other stores) deals?
Of course, readers of this column are likely most interested in knowing about FYE’s anime and manga sections. Most stores I’ve visited stock Blu-rays, plushies, shirts, and manga volume. It probably carries the biggest selection of animanga merchandise in many malls. As I’ve said before in regards to other chains: yeah, FYE is probably not the primary go-to store for anime fans (I know I only shop the clearance sales) but it probably affects a lot of younger shoppers or companies that thrive on impulse purchases (keychains or POP figures, for example). I know when I visited FYE about a week ago, they had a mannequin with a My Hero Academia shirt and had posters up to advertise the movie. That’s the sort of promotion you won’t find at most mass merchandise retailers, and a lot of Internet users either naturally tune out ads or outright block them.
I personally do not shop at FYE a lot, and online practically never. When I do make a purchase at a store, it’s usually some 75%-90% off clearance or $2 T-shirts. Blu-rays are usually priced higher than online. Even if they weren’t, it’s just more convenient to have it shipped to my house instead of going to the mall. It’s a problem that many shops are facing, and with the rise of digital distribution, media stores have it even worse.
New owner Putman though seems dedicated to keeping record stores alive, so that’s good. When FYE was rumored to be for sale, I thought that it was going to be one of those situations where a company swoops in mainly to acquire the merchandise and then basically leave the stores for the dumpsters. However, considering the history of FYE’s sister stores and rivals and even Sunrise Records’ own near-elimination, you have to wonder if FYE can avoid being added to dustbin of retail history.