Trans World Entertainment Announces First Quarter 2003 Results

ALBANY, N.Y., May 14 /PRNewswire-FirstCall/ —
Trans World Entertainment Corporation (Nasdaq: TWMC) today announced total
sales of $273.4 million in its first quarter ended May 3, 2003, compared to
$279.5 million for the same period last year. Comparable store sales in the
first quarter of 2003 were flat with last year.

Net loss for the quarter was $5.1 million, or $0.13 per diluted share,
compared to net loss of $18.9 million, or $0.47 per diluted share last year.
The 2003 and 2002 results reflect the adoption of a new method of accounting
for vendor allowances, which was previously disclosed in the Company’s press
release dated April 29, 2003. The new method is pursuant to the Emerging
Issues Task Force guidance relating to vendor allowances, EITF No. 02-16,
Accounting by a Customer (Including a Reseller) for Certain Consideration
Received from a Vendor, which was issued in March, 2003.

Consistent with the transition rules outlined in EITF No. 02-16, the
Company adopted the new accounting retroactive to the beginning of fiscal
2002. The effect of this retroactive treatment on first quarter 2002 results
includes a one-time, non-cash, after-tax charge of $13.7 million or $0.34 per
diluted share, which is reflected as a “cumulative effect of a change in
accounting principle.”

The gross profit for the first quarter of 2003 was 35.7% versus 37.1% in
the first quarter of fiscal 2002. SG&A as a percentage of sales was 35.1%
compared to 36.7% last year. Both periods reflect the classification of a
portion of the company’s vendor allowances in cost of goods sold in accordance
with the requirements of EITF No. 02-16.

“We were pleased with our results for the quarter as we see a positive
response to the continued building of the FYE brand (“For Your Entertainment”)
and an increase in the consumer awareness of the recently installed Listening
and Viewing Stations (LVS). We were particularly pleased to see comparable
store CD sales improve to a negative 4% from a negative 14% for annual 2002.
Other categories continue to show solid gains, benefiting from marketing our
stores as a total entertainment retailer,” commented Robert J. Higgins, Trans
World’s Chairman and Chief Executive Officer.

“We remain comfortable with previously announced expectations for fiscal
2003 of earnings the range of $0.15 to $0.20 per share,” concluded Mr.
Higgins.

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,
www.fye.com. In addition to its mall locations, operated under the “FYE”
brand, the Company also operates freestanding locations under the names
Coconuts Music and Movies, Strawberries Music, Spec’s and Planet Music.

Certain statements in this 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.

v

 TRANS WORLD ENTERTAINMENT CORPORATION
                              INCOME STATEMENTS
                     (in millions, except per share data)

                                                   Thirteen Weeks Ended
                                           May 3,    % to     May 4,     % to
                                            2003    Sales      2002     Sales

    Sales                                 $273.4             $279.5

    Cost of sales                          175.8    64.3%     175.7     62.9%
    Gross profit                            97.6    35.7%     103.8     37.1%

    Selling, general and
     administrative expenses                96.1    35.1%     102.6     36.7%

    Depreciation and amortization            9.8     3.7%       9.6      3.4%
    Loss from operations                    (8.3)   -3.0%      (8.4)    -3.0%

    Interest expense (income)                0.2     0.1%       0.1      0.0%

    Loss before income taxes and
     cumulative effect of change in
     accounting principle                   (8.5)   -3.1%      (8.5)    -3.0%
    Income tax benefit                      (3.4)   -1.2%      (3.3)    -1.1%

    Loss before cumulative effect of
     change in accounting principle        $(5.1)   -1.9%     $(5.2)    -1.9%
    Cumulative effect of change in
     accounting principle,
     net of income taxes                     $--     0.0%    $(13.7)    -4.9%

    NET LOSS                               $(5.1)   -1.9%    $(18.9)    -6.8%

    Basic loss per common share:
    Loss per share before cumulative
     effect of change in
     accounting principle                 $(0.13)            $(0.13)

    Cumulative effect of change in
     accounting principle,
     net of income taxes                     $--             $(0.34)

    Basic loss per share                  $(0.13)            $(0.47)

    Weighted average number of
     common shares outstanding - basic      38.9               40.7

    Diluted loss per common share:
    Loss per share before cumulative effect
     of change in accounting principle    $(0.13)            $(0.13)

    Cumulative effect of change in
     accounting principle,
     net of income taxes                     $--             $(0.34)

    Diluted loss per share                $(0.13)            $(0.47)

    Weighted average number of
     common shares outstanding - diluted    38.9               40.7


                    TRANS WORLD ENTERTAINMENT CORPORATION
                       SELECTED BALANCE SHEET CAPTIONS
                     (in millions, except per store data)

                                           May 3,             May 4,
                                            2003               2002

     Cash and cash equivalents             $62.0              $58.8
     Merchandise inventory                 401.7              391.4
     Fixed assets (net)                    147.5              154.9
     Accounts payable                      222.2              209.8
     Long-term debt, less current portion    7.8                8.7

     Stores in operation                     843                887