Trans World Entertainment Reports Record Second Quarter Sales and Earnings; Earnings Per Share Up 27% For Second Quarter of Fiscal 2000

ALBANY, N.Y.–(BUSINESS WIRE)–Aug. 9, 2000–Trans World Entertainment Corporation (Nasdaq National Market:TWMC) today announced total sales of $285.5 million for its second quarter ended July 29, 2000, compared to $277.3 million for the same period last year. Net income for the quarter was $6.7 million, or $0.14 per share, compared to net income of $5.7 million or $0.11 per share, in the comparable 1999 quarter. Comparable store sales in the second quarter of 2000 increased 2%.

In the second quarter gross profit as a percentage of sales decreased to 36.4% of sales compared 37.0% of sales for the second quarter of 1999. Selling, general & administrative expenses decreased to 29.9% of sales from 30.1% in the second quarter of 1999.

“Our second quarter results reflect our commitment to deliver continued growth and profitability, while we work to further enhance Trans World’s long-term competitive position,” commented Robert J. Higgins, Trans World’s Chairman and Chief Executive Officer. “The integration of our mall and freestanding stores with our e-commerce sales channel is progressing well and we expect this combination to serve all of our customers’ needs. In the second quarter, traffic on our e-commerce site increased over 70% to 1.9 million unique visitors, up from 1.1 million visitors in the second quarter of 1999.”

Sales for the twenty-six week period ended July 29, 2000 were $595.6 million, compared to $564.3 million for the same period last year. Net income for the twenty-six week period was $15.7 million, or $0.31 per share, compared to a net loss of $2.9 million, or ($0.06) per share, in the comparable 1999 period. Results for last year’s twenty-six week period include a $25.7 million one-time pre-tax charge for costs related to the Camelot merger.

Trans World Entertainment is a leading specialty retailer of music and video products. The Company operates retail stores in 45 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, Saturday Matinee and F.Y.E. Freestanding locations include Coconuts Music and Movies, Strawberries Music, Spec’s and Planet Music. Certain statements in this 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
                          --------------------------------------------
                            July 29,     % to     July 31,     % to
                              2000      Sales       1999      Sales
                          --------------------------------------------

Sales                        $285.5                $277.3

Cost of sales                 181.5     63.6%       174.7     63.0%
                          --------------------------------------------
Gross profit                  104.0     36.4%       102.6     37.0%

Selling, general and
  administrative expenses      85.5     29.9%        83.3     30.1%

Camelot merger costs                     0.0%

Depreciation and
  amortization                  8.5      3.0%         9.0      3.2%
                          --------------------------------------------
Income (loss) from
  operations                   10.0      3.5%        10.3      3.7%

Interest expense (income)      (0.7)    -0.3%         0.5      0.2%
                          --------------------------------------------
Income (loss) before
  income taxes                 10.7      3.8%         9.8      3.5%

Income tax expense
  (benefit)                     4.0      1.5%         4.1      1.4%
                          --------------------------------------------

NET INCOME (LOSS)              $6.7     2.3%         $5.7     2.1%
                          ============================================

Basic earnings per
  common share:
Earnings (loss) per share     $0.14                 $0.11
                          =============         =============
Weighted average
  number of common
  shares outstanding           48.4                  52.2
                          =============         =============

Diluted earnings
  per common share:
Earnings (loss) per share     $0.14                 $0.11
                          =============         =============
Weighted average
  number of common
  shares outstanding           49.3                  53.6
                          =============         =============


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)

                                     Twenty Six Weeks Ended
                          --------------------------------------------
                            July 29,      % to     July 31,     % to
                              2000       Sales       1999      Sales
                          --------------------------------------------

Sales                       $595.6                $564.3

Cost of sales                380.8       63.9%     356.8       63.2%
                          --------------------------------------------
Gross profit                 214.8       36.1%     207.5       36.8%

Selling, general and
   administrative expenses   174.5       29.3%     168.5       29.9%

Camelot merger costs                      0.0%      25.7        4.5%

Depreciation and
  amortization                17.2        2.9%      17.5        3.1%
                          --------------------------------------------
Income (loss) from
  operations                  23.1        3.9%      (4.2)      -0.7%

Interest expense (income)     (2.0)      -0.3%       0.9        0.2%
                          --------------------------------------------
Income (loss) before
  income taxes                25.1        4.2%      (5.1)      -0.9%

Income tax expense
  (benefit)                    9.4        1.6%      (2.2)      -0.4%
                          --------------------------------------------
NET INCOME (LOSS)            $15.7        2.6%     ($2.9)      -0.5%
                          ============================================

Basic earnings per
  common share:
Earnings (loss) per share    $0.32                ($0.06)
                          ===========            ==========
Weighted average
  number of common
  shares outstanding          49.0                  52.1
                          ===========            ==========

Diluted earnings per
  common share:
Earnings (loss) per share    $0.31                ($0.06)
                          ===========            ==========

Weighted average
  number of common
  shares outstanding          50.0                  52.1
                          ===========            ==========

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

Cash and cash equivalents   $106.0                 $83.8
Merchandise inventory        408.9                 398.7
Fixed assets (net)           134.8                 136.7
Accounts payable             199.8                 206.2
Long-term debt and
  capital lease
  obligations, less
  current portion             16.8                  19.4

Stores in operation            940                   969



    CONTACT:  Trans World Entertainment Corporation
              John Sullivan
              Chief Financial Officer
              (518) 452-1242 ext. 7400
                                or
              The MWW Group
              Investor Relations
              Michael Lendener, (212) 704-9727