Entertainment retailers are having mixed success in lessening their dependence on CD sales. Hastings reported lower earnings earlier this week. Its comp revenue was up 0.6% and gains in other product categories helped make up for an 11.7% slide in music sales. Gross margin was up slightly, and SG&A as a percent of revenue was up a bit over a percentage point.

Yesterday, Trans World reported a loss of $19.2 million on lower total and comp sales. Through the first six months of the year, Trans World has lost $31.1 million, up from $19.1 million last year. The retailer, which operates chains such as f.y.e., said it was "on plan for the quarter." Some fundamentals, however, weakened. Gross margin decreased and SG&A as a percent of revenue increased. Inventory reductions are a positive step toward using capital more efficiently, but much of that reduction can be attributed to the closing of 174 stores since the end of Q2 2007.

For labels, there most positive aspect of Trans World's Q2 was its commitment to the CD. The company expanded it stock of secondary and tertiary CD titles. While a third of the open orders are yet to be received, Trans World said it is "already seeing an improvement" in catalog sales and it is committed to improving its market share.

And there was word today on the company's longtime struggle to incorpore digital downloads into the brick-and-mortar shopping experience. Two stores currently have a download kiosk that works with most devices (including the iPod) and offers over two million tracks. Forty stores will have the kiosks by fall. The company has for years clung to the idea that kiosks can be successfully integrated into its stores. These new kiosks are an improvement on the mix-and-burn kiosks currently in stores, but they are likely to have limited appeal and limited success.

In spite of a few positives, labels should look at Trans World's Q2 with a bit of trepidation. Even though Warner Music Group said in a conference call last week that none of its accounts are in or near a state of financial distress, one must wonder how long Trans World's transformation will take. The company is constantly in the red, and it is downright stubborn in its goal of incorporating digital kiosks (it has been going on, with few results, for years). Labels cannot afford for such a large retailer to stumble much further.

[music jobs] The Beggars Group & Matador Records is seeking a Paralegal