Trans World Entertainment Announces First Quarter 2005 Results

ALBANY, N.Y., May 12 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales decreased 6% to
$285.4 million for the first quarter ended April 30, 2005, compared to
$304.5 million in the first quarter of 2004. In the first quarter, the
Company operated 7% fewer stores than last year. For the first quarter of
2005, net loss was $1.0 million, or $0.03 per share. Net income for the first
quarter of 2004 was $2.5 million, or $0.07 per share, including an
extraordinary gain of $0.4 million or $0.01 per share related to the
acquisition of the Wherehouse Entertainment Stores in 2003. Comparable store
sales in the first quarter of 2005 decreased 2%.

“Our first quarter results were impacted by the sluggish performance of
new music and DVD releases after the Easter holiday. We were pleased with the
very strong performance of our video game business and the improvement in the
accessories category,” said Robert J. Higgins, Chairman and Chief Executive
Officer of Trans World Entertainment. “We expect second quarter comparable
sales to be positive on an improved line-up of music and DVD releases,
continued strength in our video game business and further improvement in our
accessories category.”

Gross profit as a percentage of sales for the first quarter of 2005 was
36.6% versus 37.2% in the first quarter of 2004. SG&A as a percentage of
sales was 34.2% compared to 33.2% last year.

Mr. Higgins added, “We continue to move forward with our digital strategy,
which includes our FYE Download Zone, a subscription-based digital music
service, where the consumer can have access to over a million songs. We are
further enhancing the capabilities of our digital music shopping experience
both in-store and online and are on track to introduce the next generation LVS
3 (Listening and Viewing Stations) system later this year.”

“We remain confident in our outlook for 2005, our overall business
strategy and our ability to exploit opportunities in the marketplace,
particularly in merchandising and real estate, and reiterate our estimate of
annual earnings per share of $0.85 to $0.90,” concluded Mr. Higgins.

Trans World Entertainment is a leading specialty retailer of music, video
and video game products. The Company operates over 800 retail stores in 46
states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and
e-commerce sites, http://www.fye.com, http://www.coconuts.com,
http://www.wherehouse.com and http://www.secondspin.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, Second Spin 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
                                        April 30,    % to   May 1,     % to
                                           2005     Sales     2004    Sales

    Sales                                 $285.4            $304.5

    Cost of sales                          180.8     63.4%   191.2     62.8%
    Gross profit                           104.6     36.6%   113.3     37.2%

    Selling, general and
       administrative expenses              97.7     34.2%   101.2     33.2%

    Depreciation and amortization            8.2      2.9%     8.5      2.8%
    Income / (Loss) from operations         (1.3)    -0.5%     3.6      1.2%

    Interest expense                         0.2      0.1%     0.3      0.1%

    Income / (Loss) before income taxes
     and extraordinary gain - unallocated
     negative goodwill                      (1.5)    -0.6%     3.3      1.1%
    Income tax expense (benefit)            (0.5)    -0.3%     1.2      0.4%

    Income / (Loss) before extraordinary
     gain - unallocated negative goodwill   (1.0)    -0.4%     2.1      0.7%
    Extraordinary gain - unallocated
     negative goodwill, net of income taxes    -      0.0%     0.4      0.1%

    NET INCOME / (LOSS)                    $(1.0)    -0.4%    $2.5      0.8%

    Basic income / (loss) per common
     share:
    Income / (Loss) per share before
     extraordinary gain
     - unallocated negative goodwill      $(0.03)            $0.06

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

    Basic income / (loss) per share       $(0.03)            $0.07

    Weighted average number of
       common shares outstanding - basic    35.3              36.0

    Diluted income / (loss) per common
     share:
    Income / (Loss) per share before
     extraordinary gain
     - unallocated negative goodwill      $(0.03)            $0.06

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

    Diluted income / (loss) per share     $(0.03)            $0.07

    Weighted average number of
       common shares outstanding -diluted   35.3              37.6


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

    Cash and cash equivalents              $68.0             $89.1
    Merchandise inventory                  409.4             442.6
    Fixed assets (net)                     126.0             126.0
    Accounts payable                       185.2             243.0
    Long-term debt, less current portion    16.5               7.4

    Stores in operation                      804               859

SOURCE Trans World Entertainment Corporation
05/12/2005
CONTACT: John J. Sullivan, EVP
Chief Financial Officer of Trans World Entertainment
518-452-1242
or Richard Tauberman of MWW Group
201-507-9500,

for Trans World Entertainment