Trans World Entertainment Announces Third Quarter 2006 Results

ALBANY, N.Y., Nov. 16 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced total sales increased 23% to $297.7
million for the third quarter ended October 28, 2006, compared to $241.4
million in the third quarter of 2005. The sales increase was due to the
Musicland acquisition, partially offset by a comparable store sales decrease
of 5%. For the third quarter of 2006, the Company incurred a net loss of $11.4
million, or $0.37 per share. During the quarter, the Company recorded an
extraordinary gain for unallocated negative goodwill of $1.9 million, net of
income tax, related to the acquisition of Musicland. Loss before the
extraordinary gain was $13.3 million, or $0.43 per share. The net loss for the
third quarter of 2005 was $11.5 million or $0.36 per share.

“We continue to see strong comparable store sales increases in our key
focus areas of DVD, Electronics and Games. However, the increases in these
categories did not offset the persistent weakness in the music category,” said
Robert J. Higgins, Chairman and Chief Executive Officer of Trans World
Entertainment. “We made progress in the quarter on initiatives that will
improve our operating results in the all important fourth quarter. These
include the continued re-merchandising of stores to highlight our DVD,
Electronics and Games categories, the re-branding of Sam Goody and free
standing stores to the f.y.e. brand and the conversion of Musicland’s Replay
Rewards customers to our Backstage Pass customer loyalty program,” Mr. Higgins
concluded.

Gross profit as a percentage of sales for the third quarter of 2006 was
36.6% versus 34.4% in the third quarter of 2005. SG&A as a percentage of sales
was 40.4% compared to 38.8% last year.

Sales for the thirty-nine week period ended October 28, 2006 were $884.5
million, compared to $779.9 million in 2005. Net loss for the thirty-nine week
period was $26.2 million or $0.85 per share compared to $19.4 million or $0.60
per share in 2005. Loss before extraordinary gain for the thirty-nine week
period was $31.5 million or $1.02 per share.

Trans World Entertainment is a leading specialty retailer of music, video
and video game products. The Company operates over 1,100 retail stores in the
United States, the District of Columbia, the U.S. Virgin Islands, and Puerto
Rico under various brands. The Company is in the process of consolidating the
majority of its stores (Coconuts Music and Movies, Strawberries Music,
Wherehouse, Sam Goody and Spec’s) under the name f.y.e. for your
entertainment. The Company also operates over 185 video only stores primarily
under the Suncoast brand and on the web at www.fye.com, www.coconuts.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       Thirty-nine Weeks Ended
                     Oct 28,  % to  Oct 29, % to  Oct 28, % to  Oct 29,  % to
                       2006   Sales  2005  Sales   2006   Sales   2005  Sales

    Sales             $297.7        $241.4         $884.5        $779.9

    Cost of sales      188.9  63.4%  158.4  65.6%   569.0  64.3%  499.5  64.0%
    Gross profit       108.8  36.6%   83.0  34.4%   315.5  35.7%  280.4  36.0%

    Selling, general
     and administrative
     expenses          120.2  40.4%   93.8  38.8%   345.5  39.1%  286.2  36.7%

    Depreciation and
     amortization        9.8   3.3%    8.6   3.6%    27.5   3.1%   25.1   3.2%
    Loss from
     operations        (21.2) -7.1%  (19.4) -8.0%   (57.5) -6.5%  (30.9) -3.9%

    Other income        (0.1)  0.0%   (0.2) -0.1%    (4.0) -0.5%   (1.6) -0.2%

    Interest expense     1.7   0.6%    0.8   0.3%     4.1   0.5%    2.0   0.3%

    Loss before income
     taxes and
     extraordinary
     gain - unallocated
     negative goodwill (22.8) -7.7%  (20.0) -8.3%   (57.6) -6.5%  (31.3) -4.0%
    Income tax benefit  (9.5) -3.2%   (8.5) -3.5%   (26.1) -3.0%  (11.9) -1.5%

    Loss before
     extraordinary
     gain -
     unallocated
     negative
     goodwill         $(13.3) -4.5% $(11.5) -4.8%  $(31.5) -3.5% $(19.4) -2.5%
    Extraordinary gain
     - unallocated
     negative
     goodwill, net of
     income taxes        1.9   0.6%      -   0.0%     5.3   0.6%      -   0.0%

    NET LOSS          $(11.4) -3.9% $(11.5) -4.8%  $(26.2) -2.9% $(19.4) -2.5%

    Basic loss per
     common share:
    Loss per share
     before
     extraordinary
     gain -
     unallocated
     negative
     goodwill         $(0.43)       $(0.36)        $(1.02)       $(0.60)

    Extraordinary gain
     - unallocated
     negative
     goodwill, net of
     income taxes       0.06             -           0.17             -

    Basic loss per
     share            $(0.37)       $(0.36)        $(0.85)       $(0.60)

    Weighted average
     number of
     common shares
     outstanding -
     basic              30.8          31.6           30.8          32.4

    Diluted loss per
     common share:
    Loss per share
     before
     extraordinary
     gain -
     unallocated
     negative
     goodwill         $(0.43)       $(0.36)        $(1.02)       $(0.60)

    Extraordinary gain
     - unallocated
     negative
     goodwill, net of
     income taxes       0.06             -           0.17             -


    Diluted loss per
     share            $(0.37)       $(0.36)        $(0.85)       $(0.60)

    Weighted average
     number of
     common shares
     outstanding -
     diluted            30.8          31.6           30.8          32.4


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

    Cash and cash
     equivalents                                    $13.5         $16.8
    Merchandise
     inventory                                      656.2         477.7
    Fixed assets (net)                              135.4         129.9
    Accounts payable                                353.5         252.0
    Long-term debt,
     less current
     portion                                         16.9          20.4
    Borrowings under
     line of credit                                  71.6             -

    Stores in
     operation                                      1,121           800

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

Richard Tauberman

MWW Group for Trans World Entertainment
+1-201-507-9500