Trans World Entertainment Announces Fourth Quarter and Fiscal 2001 Results; Company Provides Operating Guidance for 2002

ALBANY, N.Y., Feb 27, 2002 /PRNewswire-FirstCall via COMTEX/ — Trans World
Entertainment Corporation (Nasdaq: TWMC) today announced financial results for
its fourth quarter and full fiscal year 2001. In addition, management announced
their outlook for fiscal 2002 results.

In line with previously announced expectations, the Company reported net income
of $34.5 million, or $0.82 per share for the fourth quarter of 2001, compared to
net income of $40.1 million, or $0.89 per share in the fourth quarter of 2000.
Total sales were $511.0 million for the fourth quarter of 2001, compared to
sales of $553.4 million for the corresponding quarter of 2000. Total sales for
the 2000 period included an additional week of business in accordance with the
retail sales reporting calendar. Comparable store sales for the fourth quarter
of 2001 decreased 1%.

In the fourth quarter of 2001, gross profit as a percentage of sales was 31.7%,
compared to 34.5% of sales for the same period in 2000. Selling, general and
administrative expenses decreased to 17.9% of sales as compared to 21.0% in the
fourth quarter of last year.

“Although we continue to face a challenging economic environment that has
impacted our financial results, we are pleased with our performance in the
fourth quarter and remain optimistic regarding the Company’s longer-term
outlook,” said Robert J. Higgins, Chairman and CEO.

Total sales for the year ended February 2, 2002 were $1.4 billion, 2% below last
year. Comparable store sales for the year decreased 3%. Net income for fiscal
2001 was $16.8 million, or $0.39 per share compared to net income of $40.1
million, or $0.83 per share in 2000.

“During 2002 we will leverage our strong financial position and proven industry
expertise, as we continue to expand Trans World’s leadership position. As we
roll-out our new eWorks technology and customer loyalty programs in the second
and third quarter this year we expect these initiatives to positively impact our
financial results beginning in the second half of 2002. In addition, we will
continue to develop the FYE brand, broaden our product offering and expand Trans
World’s market share in categories such as DVD and video games, which have
demonstrated solid growth in recent quarters,” Mr. Higgins continued.

Management expects earnings in the range of $0.45 to $0.50 per share for fiscal
2002 on a total sales growth of approximately 2%. In addition, management is
forecasting gross margin at 33.0% while SG&A rates are expected to improve as
the Company’s eWorks strategy drives sales and earnings beginning in the fourth
quarter and beyond.

“Comparable store sales will likely decline in the low single digit range
through the second quarter of 2002. We should begin to experience better results
in the second half, with positive comparable store sales growth and improved
operating margins,” 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,
http://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.

                      TRANS WORLD ENTERTAINMENT CORPORATION
Financial Results

INCOME STATEMENTS:

(in millions, except Thirteen and Fourteen
per share data) Weeks Ended (1)
February 2, % to February 3, % to
2002 Sales 2001 Sales

Sales $511.0 $553.4

Cost of sales 348.9 68.3% 362.7 65.5%
Gross profit 162.1 31.7% 190.7 34.5%
—————————————-
Selling, general and
administrative expenses 91.3 17.9% 116.0 21.0%

Depreciation and amortization 10.4 2.0% 9.9 1.8%
—————————————-
Income from operations 60.4 11.8% 64.8 11.7%

Interest expense (income) (0.2) 0.0% (0.9) -0.2%
—————————————-
Income before income taxes 60.6 11.8% 65.7 11.9%

Income tax expense 26.1 5.1% 25.6 4.7%
—————————————-
NET INCOME $34.5 6.7% $40.1 7.2%
========================================
Basic earnings per common share:
Earnings per share $0.83 $0.91
Weighted average number of
common shares outstanding 41.5 44.2

Diluted earnings per common share:
Earnings per share $0.82 $0.89
Weighted average number of
common shares outstanding 42.1 44.9

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

Cash and cash equivalents
Merchandise inventory
Fixed assets (net)
Accounts payable
Long-term debt and capital lease
obligations, less current portion

Stores in operation

INCOME STATEMENTS:

(in millions, except
per share data) Fiscal Year Ended (2)
February 2, % to February 3, % to
2002 Sales 2001 Sales

Sales $1,388.0 $1,414.6

Cost of sales 935.3 67.4% 917.4 64.8%
—————————————-
Gross profit 452.7 32.6% 497.2 35.2%

Selling, general and
administrative expenses 382.1 27.5% 380.8 26.9%

Depreciation and amortization 40.6 2.9% 36.2 2.6%
—————————————-
Income from operations 30.0 2.2% 80.2 5.7%

Interest expense (income) 0.3 0.0% (3.4) -0.2%
—————————————-
Income before income taxes 29.7 2.2% 83.6 5.9%

Income tax expense 12.9 1.0% 43.5 3.1%
—————————————-
NET INCOME $16.8 1.2% $40.1 2.8%
========================================
Basic earnings per common share:
Earnings per share $0.40 $0.84
Weighted average number of
common shares outstanding 41.9 47.6

Diluted earnings per common share:
Earnings per share $0.39 $0.83
Weighted average number of
common shares outstanding 42.6 48.3

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

Cash and cash equivalents $254.9 $265.1
Merchandise inventory 409.1 475.7
Fixed assets (net) 160.4 152.7
Accounts payable 378.9 430.2
Long-term debt and capital lease
obligations, less current portion 9.5 13.8

Stores in operation 902 984

(1) – The fourth fiscal quarter ended February 2, 2002 contains 13 weeks.
The fourth fiscal quarter ended February 3, 2001 contains 14 weeks.

(2) – The fiscal year ended February 2, 2002 contains 52 weeks.
The fiscal year ended February 3, 2001 contains 53 weeks.


SOURCE Trans World Entertainment Corporation

CONTACT:          John Sullivan of Trans World Entertainment Corporation, Chief
Financial Officer, +1-518-452-1242, ext. 7400; Michael Lendener, Investor
Relations Counsel of The MWW Group, +1-212-704-9727,

URL: http://www.fye.com