Trans World Entertainment Announces First Quarter Results

ALBANY, N.Y., May 16 /PRNewswire/ — Trans World Entertainment Corporation
(Nasdaq: TWMC) today announced total sales of $309 million for its first
quarter ended May 5, 2001, compared to $310 million for the same period last
year. The net loss for the quarter was $2.1 million, or $0.05 per diluted
share, compared to net income of $8.9 million, or $0.18 per diluted share, in
the comparable quarter of 2000.

As disclosed in the May 3 earnings guidance announcement, comparable store
sales in the first quarter of 2001 decreased 5%, as compared to an 8% increase
last year. Gross profit for the first quarter was 33.4% of sales, compared to
last year’s 35.7% of sales. Selling, general and administrative expenses
increased to 31.4% of sales as compared to 28.7% in the first quarter last
year.

“As reported earlier, the first quarter was challenging, up against a
strong first quarter last year. However, we anticipate stronger sales growth
beginning in June when the new releases will be stronger than last year,”
commented Robert J. Higgins, Trans World’s Chairman and Chief Executive
Officer. “The re-branding of our mall stores and our eWorks initiative are
progressing as expected and will position us well to enhance our long term
growth and profitability.”

Trans World Entertainment is a leading specialty retailer of music and
video products. The Company operates retail stores in 45 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 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 5,    % to   April 29,  % to
                                            2001     Sales    2000    Sales

     Sales                                  $309.1           $310.1

     Cost of sales                           206.0   66.6%    199.3   64.3%
     Gross profit                            103.1   33.4%    110.8   35.7%

     Selling, general and
        administrative expenses               97.1   31.4%     89.0   28.7%

     Depreciation and amortization             9.7    3.2%      8.7    2.8%
     Income (loss)  from operations           (3.7)  -1.2%     13.1    4.2%

     Interest expense (income)                (0.4)  -0.1%     (1.2)  -0.4%
     Income (loss) before income taxes        (3.3)  -1.1%     14.3    4.6%

     Income tax expense (benefit)             (1.2)  -0.4%      5.4    1.7%

     NET INCOME (LOSS)                       $(2.1)  -0.7%     $8.9    2.9%

     Basic earnings (loss) per common
      share:
     Earnings (loss) per share              $(0.05)           $0.18
     Weighted average number of
        common shares outstanding - basic     42.5             49.7

     Diluted earnings (loss) per common
      share:
     Earnings (loss) per share              $(0.05)           $0.18
     Weighted average number of
        common shares outstanding -diluted    42.5             50.7

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

     Cash and cash equivalents               $45.7           $113.3
     Merchandise inventory                   481.6            421.6
     Fixed assets (net)                      148.8            137.3
     Accounts payable                        251.5            215.8
     Long-term debt, less current portion     12.3             18.1
     Shareholders' equity                    437.0            463.8

     Stores in operation                       979              941

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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 Counsel of The MWW Group, 212-704-9727, ,