Trans World Entertainment Announces Second Quarter 2003 Results

ALBANY, N.Y., Aug 13, 2003 /PRNewswire-FirstCall via COMTEX/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales of $246.7 million in
the second quarter ended August 2, 2003, compared to $267.5 million for the
same period last year. Comparable store sales decreased 5% in the second
quarter 2003.

Net loss for the second quarter was $2.9 million, or $0.08 per diluted
share, compared to a net loss of $7.0 million, or $0.17 per diluted share in
the second quarter 2002. The gross profit rate for the quarter increased to
39.1% from 36.8% last year. SG&A as a percentage of sales was 38.4% versus
37.7% last year. The second quarter 2003 results also include a benefit of
$2.1 million, or $0.05 per share, arising from the agreement to settle the
Company’s COLI litigation with the IRS. This benefit was recorded as a
reduction of income taxes.

“Our sales results in the second quarter reflect continuing consumer
uncertainty as well as a lack of new music releases,” commented Robert J.
Higgins, Trans World’s Chairman and Chief Executive Officer. “However, we
believe new music releases will pick up in the third quarter. The DVD and
video game categories continue to show sales gains, benefiting from our
strategic initiatives to merchandise and market our stores as a total
entertainment destination.”

Mr. Higgins concluded, “We continue to implement cost saving initiatives
and better inventory management positively impacted our cash balances, which
ended higher than last year. Additionally, we completed the repurchase of 2.1
million shares under our fourth stock repurchase program.”

Sales for the twenty-six week period ended August 2, 2003 were $520.1
million, compared to $547.0 million for the same period last year. Net loss
for the twenty-six week period was $8.0 million, or $0.21 per share compared
to a net loss of $25.9 million or $0.64 per share, in the comparable period of
2002. The Company adopted in fiscal 2002, EITF No. 02-16, Accounting by a
Customer (including a Reseller) for Consideration Received from a Vendor.
Consistent with the transition rules outlined in EITF No. 02-16, the Company
adopted the new accounting retroactive to the beginning of fiscal year 2002.
The effect of this retroactive treatment on year-to-date 2002 results included
a one-time, non-cash, after-tax charge of $13.7 million, or $0.34 per diluted
share, which was recorded as the “cumulative effect of a change in accounting
principle”.

“We remain comfortable with previously announced expectations for fiscal
year 2003 of earnings in the range of $0.15 to $0.20 per share,” 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,
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 per share data)

                         Thirteen Weeks Ended       Twenty-six Weeks Ended
                    Aug 2,  % to  Aug 3,  % to  Aug 2,  % to  Aug 3,  % to
                     2003   Sales  2002   Sales  2003   Sales  2002   Sales

    Sales            $246.7        $267.5        $520.1        $547.0

    Cost of sales     150.2  60.9%  169.1  63.2%  326.0  62.7%  344.8   63.0%
    Gross profit       96.5  39.1%   98.4  36.8%  194.1  37.3%  202.2   37.0%

    Selling, general
     and administrative
     expenses          94.8  38.4%  100.7  37.7%  190.9  36.7%  203.4   37.2%

    Depreciation and
     amortization       9.8   4.1%    9.9   3.7%   19.7   3.8%   19.5    3.6%
    Loss from
     operations        (8.1) -3.4%  (12.2) -4.6%  (16.5) -3.2%  (20.7)  -3.8%

    Interest expense
     (income)           0.3   0.1%    0.3   0.1%    0.5   0.1%    0.3    0.1%

    Loss before income
     taxes and cumulative
     effect of change in
     accounting
     principle         (8.4) -3.5%  (12.5) -4.7%  (17.0) -3.3%   (21.0)  -3.9%
    Income tax benefit (5.5) -2.2%   (5.5) -2.1%   (9.0) -1.7%    (8.8)  -1.6%

    Loss before
     cumulative effect
     of change in
     accounting
     principle        $(2.9) -1.3%  $(7.0) -2.6%  $(8.0) -1.6%  $(12.2)  -2.3%
    Cumulative effect
     of change in
     accounting
     principle, net of
     income taxes     $  --   0.0%   $ --   0.0%   $ --   0.0%  $(13.7)  -2.5%

    NET LOSS          $(2.9) -1.3%  $(7.0) -2.6%  $(8.0) -1.6%  $(25.9)  -4.8%

    Basic loss per
     common share:
    Loss per share
     before cumulative
     effect of change in
     accounting
     principle       $(0.08)       $(0.17)       $(0.21)        $(0.30)

    Cumulative effect
     of change in
     accounting      $   --        $   --        $   --         $(0.34)
     principle, net of
     income taxes

    Basic loss per
     share           $(0.08)       $(0.17)       $(0.21)        $(0.64)

    Weighted average
     number of
       common shares
        outstanding -
        basic          38.0          40.5          38.4           40.6

    Diluted loss per
     common share:
    Loss per share
     before cumulative
     effect of change in
     accounting
     principle       $(0.08)       $(0.17)       $(0.21)        $(0.30)

    Cumulative effect
     of change in
     accounting      $   --        $   --        $   --         $(0.34)
     principle, net of
     income taxes

    Diluted loss per
     share           $(0.08)       $(0.17)       $(0.21)        $(0.64)

    Weighted average
     number of common
     shares
     outstanding -
     diluted           38.0          40.5          38.4           40.6


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

    Cash and cash
     equivalents      $44.9         $25.9
    Merchandise
     inventory        371.3         389.5
    Fixed assets
    (net)             140.3         156.1
    Accounts payable  189.2         196.4
    Long-term debt,
     less current
     portion            7.7           8.1
    Stores in
     operation          826           890

SOURCE Trans World Entertainment Corporation

John Sullivan, Executive Vice President, Chief Financial
Officer of Trans World Entertainment Corporation, +1-518-452-1242 ext. 7400;

or Kimberly Storin, The MWW Group, +1-212-704-9727, or , for

Trans World Entertainment Corporation