Trans World Entertainment Announces Earnings Guidance for 2001

ALBANY, N.Y., May 3 /PRNewswire/ —
Trans World Entertainment Corporation (Nasdaq: TWMC) announced earnings
guidance for fiscal year 2001.

For the fiscal year ending February 2, 2002, the Company expects to report
earnings per share in the range of $0.70 to $0.80, on revenues of
approximately $1.45 billion. This is compared to $0.83 per share on revenues
of $1.415 billion for fiscal 2000. The estimated results include the impact of
the previously announced re-branding and eWorks initiatives. The additional
expenses related to these initiatives will reduce 2001 earnings per share by
$0.26.

For the first fiscal quarter ending May 5, 2001, the Company expects a
loss of $0.05 per share on revenues of approximately $309 million. For the
first quarter of 2000, the Company reported net income of $0.18 per share, on
revenues of $310 million. Due to the competitive retail environment gross
margin is under pressure and comparable store sales are down versus a strong
sales performance last year. Last year’s sales performance was highlighted by
NSYNC’s blockbuster release. Comparable store sales for the first quarter are
expected to decrease 5%.

On March 19, Trans World announced a strategic plan, which will begin to
positively impact net earnings in fiscal 2002. The re-branding will include
the Company’s 730 mall-based specialty stores and its web site under a single,
unified brand, FYE (For Your Entertainment). eWorks, a supporting technology
initiative, will position the Company as the industry leader in the areas of
customization and personalization of entertainment, including emerging
wireless applications and digital downloading. For example, FYE will offer
comprehensive product sampling that will provide customers with the ability to
digitally preview any item in inventory. This industry-leading product
sampling will enable the Company to convert browsers to buyers, increase
average sales transaction and increase customer closure rate.

“Although the economic environment will continue to pressure our margins,
we expect a strong sales performance in the second half of the year to enable
us to report positive comparable store sales for the full year,” said Robert
J. Higgins, Chairman and Chief Executive Officer of Trans World.
“Additionally, we are seeing strong growth in areas such as DVD.”

“The roll-out of our branding and eWorks initiatives are moving ahead as
planned. We believe that this will drive our ability to improve customer
loyalty, sales, and market share. We expect these initiatives to enhance our
long-term growth and profitability,” concluded Mr. Higgins. “Finally, we will
continue to execute our growth strategy, and our strong balance sheet affords
us the flexibility necessary to take advantage of potential expansion
opportunities.”

Trans World Entertainment is a leading specialty retailer of music and
video products. The Company operates retail stores in 46 states, the District
of Columbia, the U.S. Virgin Islands, Puerto Rico and an e-commerce site,
http://www.twec.com. Mall locations include Camelot, Record Town, The Wall,
FYE, Disc Jockey and Saturday Matinee. Freestanding locations include Coconuts
Music and Movies, Strawberries Music, Spec’s and Planet Music.

Certain statements in this quarterly release set forth management’s
intentions, plans, beliefs, expectations or predictions of the future based on
current facts and analyses. Actual results may differ materially from those
indicated in such statements. Additional information on factors that may
affect the business and financial results of the Company can be found in
filings of the Company with the Securities and Exchange Commission.

SOURCE Trans World Entertainment Corporation

CONTACT: John Sullivan, Chief Financial Officer of Trans World
Entertainment Corporation, 518-452-1242, ext. 7400; or Michael Lendener,
Investor Relations of the MWW Group, 212-827-9727, , for
Trans World Entertainment