Trans World Entertainment Announces Third Quarter Results

ALBANY, N.Y., Nov 13, 2001 /PRNewswire via COMTEX/ —

Reports On Major Strategic Initiatives Provides Fourth Quarter Outlook

Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced financial results for its third
quarter of fiscal 2001. In addition, management outlined several milestones that
the Company achieved during the quarter, and provided their outlook for the
fourth quarter.

“Although the events of September 11 and the challenging economic environment
have impacted our financial results, it is important to note the significant
milestones we have achieved toward enhancing Trans World’s leadership position
and ensuring the Company’s long-term growth and profitability,” said Robert J.
Higgins, Chairman and CEO, “During the third quarter we launched our FYE brand
and FYE.com, began the roll-out of our eWorks technology initiative and forged
an important partnership with Microsoft.”

Total sales increased by 3% to $273.4 million for the third quarter ended
November 3, 2001, compared to sales of $265.6 million for the third quarter of
2000. Comparable store sales in the third quarter of 2001 were down 2%. In line
with previously announced expectations, the Company incurred a net loss for the
quarter of $11.6 million, or $(0.28) per share, compared to a net loss of $15.6
million, or $(0.32) per share, in the comparable quarter of 2000. In the third
quarter, gross profit as a percentage of sales was 32.5%, compared to 34.5% of
sales for the same period in 2000. Selling, general and administrative expenses
increased to 36.1% of sales as compared to 34.0% in the third quarter of last
year.

Mr. Higgins added, “Through our new partnership with Microsoft, FYE is creating
a personalized entertainment shopping experience that will drive cross-channel
sales between stores and the FYE website. In addition, through this partnership,
FYE will create the entertainment industry’s most robust and comprehensive
customer relationship management system. We expect this partnership and the
related technology initiatives to positively impact the Company’s net income
beginning in the fourth quarter of 2002.”

Sales for the thirty-nine week period ended November 3, 2001 increased 2% to
$877.0 million, compared to $861.2 million for the same period last year. Net
loss for the thirty-nine week period was $17.7 million, or $(0.42) per share
compared to net income of $0.1 million in the comparable 2000 period.

Based on the current economic environment, the Company is reducing its fourth
quarter estimated earnings per share to between $0.80 and $0.85.

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.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
November 3, % to October 28, % to
2001 Sales 2000 Sales

Sales $273.4 $265.6

Cost of sales 184.5 67.5% 173.9 65.5%
Gross profit 88.9 32.5% 91.7 34.5%

Selling, general and
administrative expenses 98.7 36.1% 90.2 34.0%

Depreciation and amortization 10.9 4.0% 9.1 3.4%
Income (loss) from operations (20.7) -7.6% (7.6) -2.9%

Interest expense (income) 0.4 0.1% (0.5) -0.2%
Income (loss) before income taxes (21.1) -7.7% (7.1) -2.7%

Income tax expense (benefit) (9.5) -3.5% 8.5 3.2%

NET INCOME (LOSS) ($11.6) -4.2% ($15.6) -5.9%

Basic earnings per common share:
Earnings (loss) per share ($0.28) ($0.32)
Weighted average number of
common shares outstanding 41.8 48.4

Diluted earnings per common share:
Earnings (loss) per share ($0.28) ($0.32)
Weighted average number of
common shares outstanding 41.8 48.4

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

Cash and cash equivalents
Merchandise inventory
Fixed assets (net)
Accounts payable
Long-term debt and capital lease
obligations, less current portion

Stores in operation

TRANS WORLD ENTERTAINMENT CORPORATION
Financial Results

INCOME STATEMENTS:
(in millions, except per share data)
Thirteen Weeks Ended
November 3, % to October 28, % to
2001 Sales 2000 Sales

Sales $877.0 $861.2

Cost of sales 586.3 66.9% 554.7 64.4%
Gross profit 290.7 33.1% 306.5 35.6%

Selling, general and
administrative expenses 290.9 33.2% 264.7 30.7%

Depreciation and amortization 30.2 3.4% 26.3 3.1%
Income (loss) from operations (30.4) -3.5% 15.5 1.8%

Interest expense (income) 0.5 0.0% (2.5) -0.3%
Income (loss) before income taxes (30.9) -3.5% 18.0 2.1%

Income tax expense (benefit) (13.2) -1.5% 17.9 2.1%

NET INCOME (LOSS) ($17.7) -2.0% $0.1 0.0%

Basic earnings per common share:
Earnings (loss) per share ($0.42) $0.00
Weighted average number of
common shares outstanding 42.1 48.8

Diluted earnings per common share:
Earnings (loss) per share ($0.42) $0.00
Weighted average number of
common shares outstanding 42.1 49.7

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

Cash and cash equivalents $45.6 $72.7
Merchandise inventory 478.9 471.8
Fixed assets (net) 156.0 139.1
Accounts payable 293.3 259.9
Long-term debt and capital lease
obligations, less current portion 10.3 15.2

Stores in operation 963 935


SOURCE Trans World Entertainment Corporation

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

URL: http://www.fye.com