Trans World Entertainment Announces Fourth Quarter and Fiscal Year 2005 Results

– Company Provides Guidance for First Quarter 2006 –

ALBANY, N.Y., March 9 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today reported financial results for its fourth
quarter and fiscal year 2005. For the quarter, comparable store sales
decreased 8%. Total sales decreased 11% to $458.6 million. During the quarter,
the Company operated 5% fewer stores, an average of 791 stores compared to an
average of 831 stores in the fourth quarter of last year. For the fourth
quarter of 2005, income before cumulative effect of a change in accounting
principle was $20.3 million, or $0.64 per diluted share compared to net income
of $34.7 million, or $0.98 per diluted share last year. Net income for the
fourth quarter of 2005 including the cumulative effect of a change in
accounting principle was $18.0 million, or $0.57 per diluted share.

“As previously announced, fourth quarter sales were affected by a general
weakness in our industry,” commented Robert J. Higgins, Trans World’s Chairman
and CEO. “New music releases, industry-wide, performed below last year and DVD
releases did not perform up to expectations. In video games, Microsoft’s X-Box
performed well, however, a lack of sufficient product negatively affected the
category as a whole. A bright spot was our electronics, accessories and
boutique businesses, which saw solid results from the introduction of new
products and enhanced merchandising initiatives.”

Comparable store sales for fiscal year 2005 decreased 6%. Total store
sales decreased 9% to $1.238 billion. Income before extraordinary gain and
cumulative effect of a change in accounting principle was $0.9 million, or
$0.03 per diluted share compared to $38.6 million, or $1.06 per diluted share
last year. Net loss for fiscal 2005 was $1.4 million or $0.04 per diluted
share and it includes the cumulative effect of a change in accounting
principle of $2.3 million, net of income taxes of $1.5 million, as a result of
the Company’s adoption of Financial Accounting Standards Board’s
Interpretation No. 47 (“FIN 47”), Accounting for Conditional Asset Retirement
Obligations-an interpretation of FASB Statement No. 143. FIN 47 became
effective for the Company in fiscal 2005.

For the first quarter of 2006, the Company expects a net loss per share in
the range of $0.25 to $0.30 on a comparable store sales decline of 6% to 7%.
Given the pending acquisition of Musicland, management will not be providing
full year 2006 guidance until the release of its first quarter results in May
so it can include the impact of the potential acquisition.

Trans World Entertainment is a leading specialty retailer of music, video
and video game products. The Company operates nearly 800 retail stores in 46
states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico. The
Company operates mall stores under the f.y.e brand and freestanding locations
under the names Coconuts Music and Movies, Strawberries Music, Wherehouse,
Spec’s and Second Spin. The Company also operates on the web at
http://www.fye.com, http://www.coconuts.com, http://www.wherehouse.com and
http://www.secondspin.com.

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

                                      January 28,  % to    January 29,  % to
                                          2006     Sales      2005      Sales

    Sales                                $458.6              $513.5

    Cost of sales                         307.4    67.0%      334.7      65.2%
    Gross profit                          151.2    33.0%      178.8      34.8%

    Selling, general and
       administrative expenses            106.7    23.3%      113.1      22.0%

    Depreciation and amortization           8.8     1.9%        9.6       1.9%
     Income from operations
                                           35.7     7.8%       56.1      10.9%

    Other income                           (0.6)   -0.1        (0.5)     -0.1%

    Interest expense                        1.0     0.1%        0.6       0.1%
    Income before income taxes,
     extraordinary gain - unallocated
     goodwill and cumulative effect of
     change in accounting principle        35.3     7.8%       55.9      10.9%

    Income tax expense                     15.0     3.4%       21.3       4.1%

    Income before extraordinary gain -
     unallocated goodwill and cumulative
     effect of change in accounting
     principle                            $20.3     4.4%      $34.7       6.8%

    Extraordinary gain - unallocated
     negative goodwill, net of income
     taxes of $0 and $2.0 million for
     fiscal 2005 and 2004, respectively       -     0.0%          -       0.0%

    Cumulative effect of change in
     accounting principle, net of income
     taxes of $1.5 million and $0 for
     fiscal 2005 and 2004, respectively    (2.3)   -0.5%          -       0.0%

    Net income (loss)                     $18.0     3.9%      $34.7       6.8%

    Basic earnings (loss) per common
     share:
    Earnings per share before
     extraordinary gain - unallocated
     negative goodwill and cumulative
     effect of change in accounting
     principle, net of income taxes       $0.65               $1.04

    Extraordinary gain - unallocated
     negative goodwill, net of income
     taxes of $0 and $2.0 million for
     fiscal 2005 and 2004 respectively       $-                  $-

    Cumulative effect of change in
     accounting principle, net of income
     taxes of $1.5 million and $0 for

     fiscal 2005 and 2004 respectively   $(0.07)                 $-


    Basic earnings (loss) per common
     share                                $0.58               $1.04

    Weighted average number of
       common shares outstanding           30.8                33.2

    Diluted earnings (loss) per common
     share:
    Earnings per share before
     extraordinary gain - unallocated
     negative goodwill (net of
     income taxes)                        $0.64               $0.98

    Extraordinary gain - unallocated
     negative goodwill, net of income
     taxes of $0 and $2.0 million for
     fiscal 2005 and 2004 respectively       $-                  $-

    Cumulative effect of change in
     accounting principle, net of income
     taxes of $1.5 million and $0 for
     fiscal 2005 and 2004 respectively   $(0.07)                 $-

    Diluted earnings (loss) per common
     share                                $0.57               $0.98

    Weighted average number of
     common shares outstanding             31.4                35.2



                                                   Fiscal Year Ended

                                     January 28,     % to  January 29,  % to
                                          2006       Sales    2005      Sales

    Sales                               $1,238.5            $1,365.1


    Cost of sales                          806.9     65.1%     870.0    63.7%
    Gross profit                           431.6     34.9%     495.1    36.3%

    Selling, general and
     administrative expenses               392.8     31.7%     415.7    30.5%

    Depreciation and amortization           34.0      2.8%      34.5     2.5%
    Income from operations                   4.8      0.4%      44.9     3.3%

    Other income                            (2.2)    -0.1%      (1.0)   -0.1%

    Interest expense                         3.0      0.2%       2.4     0.2%
    Income before income taxes,
     extraordinary gain - unallocated
     goodwill and cumulative effect of
     change in accounting principle          4.0      0.3%      43.5     3.2%

    Income tax expense                       3.1      0.2%       4.9     0.4%

    Income before extraordinary gain -
     unallocated goodwill and cumulative
     effect of change in accounting
     principle                              $0.9      0.1%     $38.6     2.8%

    Extraordinary gain - unallocated
     negative goodwill, net of income
     taxes of $0 and $2.0 million for
     fiscal 2005 and 2004, respectively        -      0.0%       3.2     0.3%
    Cumulative effect of change in
     accounting
    principle, net of income taxes of
     $1.5 million and
    $0 for fiscal 2005 and 2004,
     respectively                           (2.3)    -0.2%         -     0.0%

    Net income (loss)                      $(1.4)    -0.1%     $41.8     3.1%

    Basic earnings (loss) per common
     share:
    Earnings per share before extraordinary
     gain - unallocated negative goodwill
     and cumulative effect of change in
     accounting principle, net of income
     taxes                                 $0.03               $1.12

    Extraordinary gain - unallocated
     negative goodwill, net of income
     taxes of $0 and $2.0 million for
     fiscal 2005 and 2004 respectively        $-               $0.09

    Cumulative effect of change in
     accounting principle, net of income
     taxes of $1.5 million and $0 for
     fiscal 2005 and 2004 respectively    $(0.07)                 $-

    Basic earnings (loss) per common
     share                                $(0.04)              $1.21

    Weighted average number of
       common shares outstanding            32.0                34.5

    Diluted earnings (loss) per common
     share:
    Earnings per share before extraordinary
     gain - unallocated negative goodwill
     (net of income taxes)                 $0.03               $1.06

    Extraordinary gain - unallocated
     negative goodwill, net of income
     taxes of $0 and $2.0 million for
     fiscal 2005 and 2004 respectively        $-               $0.09

    Cumulative effect of change in
     accounting principle, net of income
     taxes of $1.5 million and $0 for
     fiscal 2005 and 2004 respectively    $(0.07)                 $-

    Diluted earnings (loss) per common
     share                                $(0.04)              $1.15

    Weighted average number of
     common shares outstanding              32.0                36.3

    SELECTED BALANCE SHEET CAPTIONS:
    (in millions, except store data)
    Cash and cash equivalents             $197.2              $229.8
    Merchandise inventory                  402.7               431.2
    Fixed assets (net)                     132.5               130.2
    Accounts payable                       322.8               358.4
    Long-term debt and capital lease
     obligations, less current portion      19.5                12.0

    Stores in operation                      782                 810

SOURCE Trans World Entertainment Corporation

CONTACT: John J. Sullivan, EVP,
Chief Financial Officer,
Trans World
Entertainment,
+1-518-452-1242;
Rich Tauberman,
of MWW Group,
,
+1-201-507-9500,
for Trans World Entertainment
Corporation