Trans World Entertainment Announces Second Quarter Results

ALBANY, N.Y., Aug. 15 /PRNewswire/ —
Trans World Entertainment Corporation (Nasdaq: TWMC) today announced total
sales of $294.6 million for its second quarter ended August 4, 2001, an
increase of 3% over $285.5 million for the same period last year. The Company
incurred a net loss for the quarter of $4.0 million, or $0.10 per share,
compared to net income of $6.7 million, or $0.14 per share, in the comparable
quarter of 2000.

Comparable store sales in the second quarter of 2001 decreased 4%. As
expected, gross profit for the second quarter was 33.5% of sales, compared to
last year’s 36.4% of sales. Selling, general and administrative expenses
increased to 32.3% of sales as compared to 29.9% in the second quarter last
year. During the second quarter, the Company continued to rollout the new FYE
brand and develop its eWorks initiative.

“While our second quarter results reflect the ongoing economic landscape,
we are encouraged by positive trends in certain product categories, such as
video and video games. Several new releases in both music and video are
expected to drive growth for the third and fourth quarters,” said Robert J.
Higgins, Trans World’s Chairman and Chief Executive Officer. “In addition, we
remain on schedule with the roll-out of our FYE brand, having re-branded
270 stores to date, and are on track to have 400 completed by the end of
August and the majority of our mall stores completed by the holiday selling
season.”

Sales for the twenty-six week period ended August 4, 2001 were
$603.7 million, compared to $595.6 million for the same period last year. Net
loss for the twenty-six week period was $6.1 million, or $0.14 per share
compared to a net income of $15.7 million, or $0.31 per share, in the
comparable 2000 period.

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.twec.com. Mall locations include Camelot, Record Town, The Wall,
FYE, Disc Jockey and Saturday Matinee. Freestanding locations include
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
                                          August 4,  % to   July 29,   % to
                                            2001     Sales    2000     Sales

    Sales                                  $294.6   100.0%   $285.5   100.0%

    Cost of sales                           195.9    66.5%    181.5    63.6%
    Gross profit                             98.7    33.5%    104.0    36.4%

    Selling, general and
     administrative expenses                 95.1    32.3%     85.5    29.9%

    Depreciation and amortization             9.6     3.3%      8.5     3.0%
    Income (loss) from operations            (6.0)   -2.1%     10.0     3.5%

    Interest expense (income)                 0.5     0.1%     (0.7)   -0.3%
    Income (loss) before income taxes        (6.5)   -2.2%     10.7     3.8%

    Income tax expense (benefit)             (2.5)   -0.8%      4.0     1.4%

    NET INCOME (LOSS)                       ($4.0)   -1.4%     $6.7     2.4%

    Basic earnings per common share:
    Earnings (loss) per share              ($0.10)            $0.14
    Weighted average number of
       common shares outstanding             41.9              48.4

    Diluted earnings per common share:
    Earnings (loss) per share              ($0.10)            $0.14
    Weighted average number of
     common shares outstanding               41.9              49.3

                                                Twenty Six Weeks Ended
                                          August 4,  % to   July 29,   % to
                                            2001     Sales    2000     Sales

    Sales                                  $603.7   100.0%   $595.6   100.0%

    Cost of sales                           401.9    66.6%    380.8    63.9%
    Gross profit                            201.8    33.4%    214.8    36.1%

    Selling, general and
       administrative expenses              192.2    31.8%    174.5    29.3%

    Depreciation and amortization            19.3     3.2%     17.2     2.9%
    Income (loss) from operations            (9.7)   -1.6%     23.1     3.9%

    Interest expense (income)                 0.1     0.0%     (2.0)   -0.3%
    Income (loss) before income taxes        (9.8)   -1.6%     25.1     4.2%

    Income tax expense (benefit)             (3.7)   -0.6%      9.4     1.6%

    NET INCOME (LOSS)                       ($6.1)   -1.0%    $15.7     2.6%

    Basic earnings per common share:
    Earnings (loss) per share              ($0.14)            $0.32
    Weighted average number of
       common shares outstanding             42.2              49.0

    Diluted earnings per common share:
    Earnings (loss) per share              ($0.14)            $0.31
    Weighted average number of
       common shares outstanding             42.2              50.0


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

    Cash and cash equivalents               $52.2            $106.0
    Merchandise inventory                   429.5             408.9
    Fixed assets (net)                      148.7             134.8
    Accounts payable                        223.8             200.0
    Long-term debt and capital lease
     obligations, less current portion       10.9              16.8

    Stores in operation                       970               940

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SOURCE Trans World Entertainment Corporation

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