Trans World Entertainment Announces First Quarter 2004 Results


Reports Earnings of $0.07 Per Share
Versus a $0.13 Loss Per Share in the Prior Period

Company Raises Fiscal Year Guidance

ALBANY, N.Y., May 13 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales of $304.5 million for
the first quarter ended May 1, 2004, an increase of 11% from $273.4 million in
the same period last year. For the first quarter of 2004, net income was $2.5
million, or $0.07 per diluted share, compared to a net loss of $5.1 million,
or $0.13 per diluted share, in the first quarter of 2003. Net income includes
an extraordinary gain of $418 thousand or $0.01 per share arising from the
acquisition of the Wherehouse Entertainment Stores last year. Comparable
store sales in the first quarter of 2004 were up 2%.

“Our solid first quarter financial results demonstrate the success of our
business model and reflect improvements across the industry,” commented Robert
J. Higgins, Trans World’s Chairman and Chief Executive Officer. “The positive
same store sales in the first quarter represented the third consecutive
quarter of comparable store sales increases. This quarter we saw further
improvement in the music and video categories and we anticipate a strong flow
of quality new releases in the second quarter as well. Trans World’s position
as the premier total entertainment destination and the strength of the FYE
brand will allow us to capitalize on future opportunities within the
marketplace.”

Gross profit as a percentage of sales for the first quarter of 2004 was
37.2% versus 35.7% in the first quarter of fiscal 2003. SG&A as a percentage
of sales was 33.2% compared to 35.1% last year.

“We expect second quarter comparable store sales to remain positive as a
result of improved music and video releases and our continued strategic
merchandising, marketing and branding efforts,” concluded Mr. Higgins.

Based on the improved earnings forecast for the first half of the year,
the Company now expects income before extraordinary gain to be in the range of
$0.65 to $0.70 per share for fiscal 2004, up from the previously announced
range of $0.55 to $0.60 per share.

Trans World Entertainment is a leading specialty retailer of music and
video products. The Company operates over 850 retail stores in 47 states, the
District of Columbia, the U.S. Virgin Islands, Puerto Rico and e-commerce
sites, www.fye.com and www.wherehouse.com. In addition to its mall locations,
operated primarily under the FYE brand, the Company also operates freestanding
locations under the names Coconuts Music and Movies, Strawberries Music,
Wherehouse, CD World, 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.

                    TRANS WORLD ENTERTAINMENT CORPORATION
                              Financial Results

    INCOME STATEMENTS:
    (in millions, except per share data)
                                                  Thirteen Weeks Ended
                                          May 1,     % to     May 3,     % to
                                           2004     Sales      2003     Sales

    Sales                                $304.5              $273.4

    Cost of sales                         191.2     62.8%     175.8     64.3%
    Gross profit                          113.3     37.2%      97.6     35.7%

    Selling, general and
    administrative expenses               101.2     33.2%      96.1     35.1%

    Depreciation and amortization           8.5      2.8%       9.8      3.6%
    Income / (Loss) from operations         3.6      1.2%      (8.3)    -3.0%

    Interest expense                        0.3      0.1%       0.2      0.1%

    Income / (Loss) before income
     taxes and extraordinary gain -
     unallocated negative goodwill          3.3      1.1%      (8.5)    -3.1%
    Income tax expense (benefit)            1.2      0.4%      (3.4)    -1.2%

    Income / (Loss) before extraordinary
     gain - unallocated negative goodwill   2.1      0.7%      (5.1)    -1.9%
    Extraordinary gain - unallocated
     negative goodwill, net of
     income taxes                           0.4      0.1%        --      0.0%

    NET INCOME / (LOSS)                   $ 2.5      0.8%    $ (5.1)    -1.9%

    Basic income / (loss) per
     common share:
    Income / (Loss) per share before
     extraordinary gain - unallocated
     negative goodwill                    $0.06              $(0.13)

    Extraordinary gain -
     unallocated negative goodwill,        0.01                  --
     net of income taxes

    Basic income / (loss) per share       $0.07              $(0.13)

    Weighted average number of common
     shares outstanding - basic            36.0                38.9

    Diluted income / (loss) per
     common share:
    Income / (Loss) per share before
     extraordinary gain - unallocated
     negative goodwill                    $0.06              $(0.13)

    Extraordinary gain - unallocated
     negative goodwill,                    0.01                  --
     net of income taxes

    Diluted income / (loss) per share     $0.07              $(0.13)

    Weighted average number of common
     shares outstanding - diluted          37.6                38.9


    SELECTED BALANCE SHEET CAPTIONS:
    (in millions, except store data)

    Cash and cash equivalents             $88.5               $62.0
    Merchandise inventory                 442.6               401.7
    Fixed assets (net)                    126.0               147.5
    Accounts payable                      243.0               222.2
    Long-term debt, less current portion    7.4                 7.8

    Stores in operation                     859                 843

SOURCE Trans World Entertainment Corporation
05/13/2004
CONTACT: John Sullivan, Executive Vice President and Chief Financial
Officer of Trans World Entertainment Corporation, +1-518-452-1242 ext. 7400;
or Kimberly Storin of The MWW Group, +1-212-704-9727, , for
Trans World Entertainment Corporation
Web site: http://www.twec.com
http://www.fye.com
http://www.wherehouse.com
(TWMC)