Trans World Entertainment Announces Fourth Quarter and Fiscal Year 2007 Results

ALBANY, N.Y., March 6 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today reported financial results for its fourth
quarter and fiscal year ended February 2, 2008.

For the fourth quarter, total sales decreased 23% to $451.5 million
compared to $586.7 million in 2006. Comparable store sales for the quarter
decreased 12%. The fourth quarter of 2006 contained fourteen weeks compared
to thirteen weeks in 2007.

For the fourth quarter of 2007, the Company recorded a net loss of
$66.0 million, or $2.12 per share. This year’s fourth quarter results
included a non-cash tax expense of $43.4 million, or $1.39 per share for the
quarter, to establish a full valuation allowance against the Company’s
deferred tax assets, pursuant to Statement of Financial Accounting Standards
(SFAS) No. 109, “Accounting for Income Taxes”. The deferred tax valuation
allowance relates to accounting requirements in situations where a company
experiences a cumulative pre-tax loss in its most recent three fiscal years.
Additionally, this year’s fourth quarter results included a non-cash
impairment charge to write down certain long-lived assets, pursuant to SFAS
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”,
totaling $30.7 million or $0.99 per share for the quarter. For the fourth
quarter of 2006 net income was $37.8 million or $1.17 per diluted share.

For fiscal year 2007, total sales decreased 14% to $1.266 billion compared
to $1.471 billion in 2006. Comparable store sales for fiscal year 2007
decreased 8%. Fiscal year 2006 contained fifty-three weeks compared to fifty-
two weeks in 2007.

Net loss for fiscal 2007 was $99.4 million, or $3.20 per share. For
fiscal year 2006, net income was $11.7 million, or $0.36 per diluted share.

Trans World Entertainment is a leading specialty retailer of entertainment
software, including music, video and video games and related products. The
Company operates over 800 retail stores in the United States, the District of
Columbia, the U.S. Virgin Islands, and Puerto Rico, primarily under the names
f.y.e. for your entertainment and Suncoast and on the web at www.fye.com,
www.wherehouse.com, www.secondspin.com, www.samgoody.com and www.suncoast.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

    STATEMENTS OF OPERATION:

    (in millions, except per share data)

                           Thirteen and Fourteen
                               Weeks Ended (1)        Fiscal Year Ended (2)
                         Feb. 2, % to  Feb. 3,% to Feb. 2,  % to  Feb. 3, % to
                          2008   Sales  2007  Sales  2008   Sales  2007  Sales

    Net sales            $451.5        $586.7     $1,265.7     $1,471.2

    Cost of sales         299.4   66.3% 382.9 65.3%  819.9  64.8% 952.0  64.7%
    Gross profit          152.1   33.7% 203.8 34.7%  445.8  35.2% 519.2  35.3%

    Selling, general and
     administrative
     expenses             111.7   24.7% 137.0 23.3%  433.2  34.2% 482.4  32.8%

    Impairment charge      30.7    6.8%     -  0.0%   30.7   2.4%    -    0.0%

    Depreciation and
     amortization           9.9    2.2%   9.3  1.7%   37.2   3.0%  36.8   2.5%
    (Loss) income from
     operations            (0.2)   0.0%  57.5  9.7%  (55.3) -4.4%   0.0   0.0%

    Other income           (0.3)   0.0%  (0.4)-0.1%   (0.4)  0.0%  (4.4) -0.3%
    Interest expense        1.3    0.3%   1.4  0.2%    6.5   0.5%   5.5   0.4%

    (Loss) income before
     income taxes,
     extraordinary
     gain - unallocated
     goodwill              (1.2)  -0.3%  56.5  9.6%  (61.4) -4.9%  (1.1) -0.1%

    Income tax expense
     (benefit)             64.8   14.3%  24.1  4.1%   38.0   3.0%  (2.1) -0.2%

    (Loss) income before
     extraordinary gain -
     unallocated goodwill (66.0) -14.6%  32.4  5.5%  (99.4) -7.9%   1.0   0.1%

    Extraordinary gain -
     unallocated negative
     goodwill, net of income
     taxes                    -    0.0%   5.4  0.9%      -   0.0%  10.7   0.7%

    Net (loss) income    $(66.0) -14.6% $37.8  6.4% $(99.4) -7.9% $11.7   0.8%


    Basic (loss) earnings
     per common share:
    (Loss) earnings per
     common share before
     extraordinary gain -
     unallocated negative
     goodwill            $(2.12)        $1.05      $( 3.20)      $0 .03

    Extraordinary gain -
     unallocated negative
     goodwill, net of
     income taxes             -          0.18            -         0.35

    Basic (loss) earnings
     per common share    $(2.12)        $1.23       $(3.20)       $0.38

    Weighted average
     number of common
     shares outstanding    31.1          30.9         31.0        30.8

    Diluted (loss) earnings
     per common share:
    (Loss) earnings per
     common share before
     extraordinary gain -
     unallocated negative
     goodwill            $(2.12)        $1.00       $(3.20)      $0.03

    Extraordinary gain -
     unallocated negative
     goodwill, net of
     income taxes             -          0.17            -        0.33

    Diluted (loss)
     earnings per common
     share               $(2.12)        $1.17       $(3.20)      $0.36

    Weighted average
     number of common
     shares - diluted      31.1          32.4         31.0        32.0


                                                February 2, February 3,
    SELECTED BALANCE SHEET CAPTIONS:               2008        2007
    (in millions, except store data)
    Cash and cash equivalents                     $74.7      $118.6
    Merchandise inventory                         440.2       504.9
    Fixed assets (net)                             82.2       138.3
    Accounts payable                              237.8       311.4
    Long-term debt and capital lease
     obligations, less current portion             12.6        16.1

    Stores in operation                             813         992

    (1) - The fourth fiscal quarter ended February 2, 2008 contains 13 weeks.
          The fourth fiscal quarter ended February 3, 2007 contains 14 weeks.

    (2) - The fiscal year ended February 2, 2008 contains 52 weeks.
          The fiscal year ended February 3, 2007 contains 53 weeks.

SOURCE Trans World Entertainment Corporation


CONTACT:
John J. Sullivan, EVP, Chief Financial Officer, Trans World
Entertainment
+1-518-452-1242
or
Richard Tauberman, MWW Group,
+1-201-964-2408

Web site: http://www.twec.com