Trans World Entertainment Announces Second Quarter 2007 Results

ALBANY, N.Y., Aug. 23 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales decreased 10% to $267.3
million for the second quarter ended August 4, 2007, compared to $298.3
million in the second quarter of 2006. The Company operated, on average, 12%
fewer stores during the second quarter of 2007, as compared to the same period
last year. Comparable store sales in the second quarter of 2007 decreased 6%.
For the second quarter of 2007, the net loss was $10.1 million, or $0.32 per
share. Loss before the extraordinary gain for the second quarter of 2006 was
$10.2 million, or $0.33 per share. Net loss for the second quarter of 2006
was $7.7 million or $0.25 per share.

“We improved our business in the second quarter, highlighted by a
continued strong gross margin and lower expenses,” said Robert J. Higgins,
Chairman and Chief Executive Officer of Trans World Entertainment. “In
addition, our comparable store sales results in every major category of
business improved over the first quarter.”

Gross profit as a percentage of sales for the second quarter of 2007 was
36.6% versus 35.6% in the second quarter of 2006. SG&A as a percentage of
sales was 39.5% compared to 40.2% last year.

Sales for the twenty-six week period ended August 4, 2007 decreased 6% to
$553.6 million, compared to $586.8 million in 2006. Net loss for the twenty-
six week period was $19.1 million or $0.62 per share. Loss before
extraordinary gain in 2006 was $18.2 million or $0.59 per share. Net loss was
$14.8 million, or $0.48 per share, in 2006.

“During the second quarter, we completed the re-branding of our stores to
the f.y.e. format, with the exception of 113 Suncoast video only stores, and
feel that we are gaining more traction toward becoming the total entertainment
retailer of choice,” Mr. Higgins continued. “Given the soft retailing
environment, we remain cautious and continue to expect slightly positive
earnings for fiscal 2007.”

Trans World Entertainment is a leading specialty retailer of entertainment
software, including music, home video and video games and related products.
The Company operates over 950 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

    INCOME STATEMENTS:
    (in millions, except per share data)
                                                Thirteen Weeks Ended
                                         August 4,  % to  July 29,   % to
                                           2007    Sales    2006    Sales

    Sales                                  $267.3           $298.3

    Cost of sales                           169.3   63.4%    192.1   64.4%
    Gross profit                             98.0   36.6%    106.2   35.6%

    Selling, general and
     administrative expenses                105.7   39.5%    119.8   40.2%

    Depreciation and amortization             9.2    3.5%      9.1    3.0%
    Loss from operations                    (16.9)  -6.4%    (22.7)  -7.6%

    Other income                             (0.1)  -0.1%     (3.6)  -1.2%

    Interest expense                          1.8    0.7%      1.5    0.5%

    Loss before income taxes and
     extraordinary gain - unallocated
     negative goodwill                      (18.6)  -7.0%    (20.6)  -6.9%
    Income tax benefit                       (8.5)  -3.2%    (10.4)  -3.5%

    Loss before extraordinary gain -
     unallocated negative goodwill          (10.1)  -3.8%    (10.2)  -3.4%
    Extraordinary gain - unallocated
     negative goodwill, net
     of income taxes                            -    0.0%      2.5    0.8%

    NET LOSS                               $(10.1)  -3.8%    $(7.7)  -2.6%

    Basic and diluted loss per common
     share:
    Loss per share before extraordinary
     gain - unallocated negative goodwill  $(0.32)          $(0.33)

    Extraordinary gain - unallocated
     negative goodwill, net of
     income taxes                               -             0.08

    Basic and diluted loss per share       $(0.32)          $(0.25)

    Weighted average number of
     common shares outstanding - basic
     and diluted                             31.1             30.8


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

    Cash and cash equivalents
    Merchandise inventory
    Fixed assets (net)
    Accounts payable
    Borrowings under line of credit
    Long-term debt, less current portion

    Stores in operation


                                               Twenty-six Weeks Ended
                                         August 4,  % to  July 29,   % to
                                           2007    Sales    2006    Sales

    Sales                                  $553.6           $586.8

    Cost of sales                           351.3   63.5%    380.1   64.8%
    Gross profit                            202.3   36.5%    206.7   35.2%

    Selling, general and
     administrative expenses                215.2   38.8%    225.3   38.4%

    Depreciation and amortization            18.4    3.3%     17.7    3.0%
    Loss from operations                    (31.3)  -5.6%    (36.3)  -6.2%

    Other income                             (0.1)   0.0%     (4.0)  -0.7%

    Interest expense                          3.2    0.6%      2.4    0.4%

    Loss before income taxes and
     extraordinary gain - unallocated
     negative goodwill                      (34.4)  -6.2%    (34.7)  -5.9%
    Income tax benefit                      (15.3)  -2.7%    (16.5)  -2.8%

    Loss before extraordinary gain -
     unallocated negative goodwill          (19.1)  -3.5%    (18.2)  -3.1%
    Extraordinary gain - unallocated
     negative goodwill, net of
     income taxes                               -    0.0%      3.4    0.6%

    NET LOSS                               $(19.1)  -3.5%   $(14.8)  -2.5%

    Basic and diluted loss per common
     share:
    Loss per share before extraordinary
     gain - unallocated negative goodwill  $(0.62)          $(0.59)

    Extraordinary gain - unallocated
     negative goodwill, net of
     income taxes                               -             0.11

    Basic and diluted loss per share       $(0.62)          $(0.48)

    Weighted average number of
     common shares outstanding -
     basic and diluted                       31.0             30.7


    SELECTED BALANCE SHEET CAPTIONS:       August 4,        July 29,
    (in millions, except store data)         2007             2006

    Cash and cash equivalents               $13.3            $18.2
    Merchandise inventory                   474.8            505.5
    Fixed assets (net)                      125.8            135.7
    Accounts payable                        166.5            191.3
    Borrowings under line of credit          61.8             40.7
    Long-term debt, less current portion     14.4             17.7

    Stores in operation                       963            1,091

SOURCE:
Trans World Entertainment Corporation

CONTACT:
John J. Sullivan
EVP
Chief Financial Officer of Trans World
Entertainment
+1-518-452-1242

Peter Gau of MWW Group
+1-201-964-2377