Trans World Entertainment Reports Record Fourth Quarter Earnings; Fourth Quarter Comparable Store Sales Increase 3%

ALBANY, N.Y.–(BUSINESS WIRE)–Feb. 23, 2000–Trans World Entertainment Corporation (Nasdaq National Market: TWMC) today announced record net income of $60.6 million, or $1.12 per diluted share, on sales of $517.9 million for the quarter ended January 29, 2000, compared to net income of $51.5 million, or $0.95 per diluted share, on sales of $497.7 million in the fourth quarter of fiscal 1998. Comparable store sales increased 3% in the fourth quarter of fiscal 1999, marking the Company’s sixteenth consecutive quarter of positive sales growth.

In fiscal 1999, the Company’s net income (before the impact of a one-time charge) was $76.6 million, or $1.44 per diluted share, on sales of $1.4 billion, compared to net income of $61.0 million, or $1.14 per diluted share, on sales of $1.3 billion in fiscal 1998. In 1999, the Company took a pre-tax charge of $25.5 million for expenses associated with the acquisition of Camelot Music. Including the charge, the Company reported net income for fiscal 1999 of $61.4 million, or $1.15 per diluted share. Comparable store sales in fiscal 1999 increased 2%.

In the fourth quarter the TWEC.com e-commerce site experienced an increase of 74% in unique visitors to 2.4 million compared to 1.4 million in the third quarter.

Robert J. Higgins, Chairman and Chief Executive Officer of Trans World, commented, “We are pleased with our record fourth quarter results and the continued improvement of the Camelot stores acquired in April. We look forward to the Camelot acquisition driving an increasing benefit to earnings as the new fiscal year progresses. Also, as of this date we have completed approximately 50 percent of the 5 million share stock repurchase program authorized in January.”

Gross profit as a percentage of sales decreased to 36.8% in fiscal 1999 from 37.9% in fiscal 1998. Selling, general and administrative expenses, as a percentage of sales, decreased to 24.7% in fiscal 1999 from 26.5% in fiscal 1998. Net interest income was $0.6 million compared to net interest expense of $2.8 million in 1998.

Trans World Entertainment is a leading specialty retailer of music and video products. The Company operates retail stores in 44 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and an e-commerce site, www.twec.com. Mall locations include Camelot, Record Town, The Wall, F.Y.E and Saturday Matinee. Freestanding locations include Coconuts Music and Movies, Strawberries Music, Spec’s and Planet Music.

Certain statements in this quarterly report 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. -0-

TRANS WORLD ENTERTAINMENT CORPORATION

Financial Results
INCOME STATEMENTS: (in millions, except per share data)

                                       Thirteen Weeks Ended
                          --------------------------------------------
                          January 29,    % to   January 30,    % to
                              2000      Sales       1999      Sales
                          --------------------------------------------

Sales                         $517.9                $497.7

Cost of sales                  322.8    62.3%        299.3    60.1%
                          --------------------------------------------
Gross profit                   195.1    37.7%        198.4    39.9%

Selling, general and
 administrative expenses        86.0    16.6%         95.9    19.3%

Camelot merger costs            (0.2)    0.0%

Depreciation
 and amortization                9.4     1.8%         10.4     2.1%
                          --------------------------------------------
Income from operations          99.9    19.3%         92.1    18.5%

Interest expense (income)       (1.4)   -0.3%          0.6     0.1%
                          --------------------------------------------
Income before income taxes     101.3    19.6%         91.5    18.4%

Income tax expense              40.7     7.9%         40.0     8.0%
                          --------------------------------------------

NET INCOME                     $60.6    11.7%        $51.5    10.4%
                          ============================================

Basic earnings
 per common share:
Earnings per share             $1.15                 $0.99
                          =============         =============

Weighted average
 number of common
 shares outstanding             52.9                  51.9
                          =============         =============

Diluted earnings
 per common share:
Earnings per share             $1.12                 $0.95
                          =============         =============
Weighted average
 number of common
 shares outstanding             53.9                  54.1
                          =============         =============




                                        Fiscal Year Ended
                           -------------------------------------------
                            January 29,   % to    January 30,   % to
                                2000      Sales       1999      Sales
                           -------------------------------------------

Sales                         $1,358.1              $1,282.4

Cost of sales                    858.6    63.2%        796.3    62.1%
                           -------------------------------------------
Gross profit                     499.5    36.8%        486.1    37.9%

Selling, general and
 administrative expenses         335.9    24.7%        340.2    26.5%

Camelot merger costs              25.5     1.9%

Depreciation
 and amortization                 36.0     2.7%         34.2     2.7%
                           -------------------------------------------
Income from operations           102.1     7.5%        111.7     8.7%

Interest expense (income)         (0.6)    0.0%          2.8     0.2%
                           -------------------------------------------
Income before income taxes       102.7     7.5%        108.9     8.5%

Income tax expense                41.3     3.0%         47.9     3.7%
                           -------------------------------------------

NET INCOME                       $61.4     4.5%        $61.0     4.8%
                           ===========================================

Basic earnings
 per common share:
Earnings per share               $1.17                 $1.19
                           ============         =============

Weighted average
 number of common
 shares outstanding               52.5                  51.1
                           ============         =============

Diluted earnings
 per common share:
Earnings per share               $1.15                 $1.14
                           ============         =============


Weighted average
 number of common
 shares outstanding               53.4                  53.5

                           ============         =============


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

Cash and cash equivalents       $280.0                $139.4

Merchandise inventory            437.4                 426.1

Fixed assets (net)               144.7                 139.1

Accounts payable                 353.3                 220.6

Long-term debt and

 capital lease

 obligations,
 less current portion             19.5                  36.1


Stores in operation                967                   988

CONTACT:
Trans World Entertainment Corporation

John Sullivan, Chief Financial Officer

518/452-1242 ext. 7400

or

The MWW Group

Rich Schineller/Jen Valz, 212/704-9727