Trans World Entertainment to Record Income Tax Benefit

ALBANY, N.Y., July 19 /PRNewswire/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today announced that it will record a one-time
income tax benefit of $10.5 million, or $0.28 per share, in its fiscal second
quarter of 2004. The income tax benefit is the result of closing a federal
income tax examination for periods through the Company’s 1999 fiscal year. The
settlement closes all outstanding matters related to Company Owned Life
Insurance (“COLI”) policies, which were part of Trans World Entertainment
Corporation’s acquisition of Camelot Holdings, Inc. in fiscal 1999. With the
closing of the tax examination, the Company has surrendered the remaining COLI
policies.

The income tax benefit was not included in the Company’s previous annual
earnings guidance for 2004. Accordingly, the Company is increasing its
earnings guidance to include the tax benefit from a previous range of $0.65 to
$0.70 per share to a current range of $0.93 to $0.98 per share.

Trans World Entertainment will release its second quarter earnings on
August 12, 2004.

Trans World Entertainment is a leading specialty retailer of music and
video products. The Company operates over 850 retail stores in 47 states, the
District of Columbia, the U.S. Virgin Islands, Puerto Rico and e-commerce
sites, http://www.fye.com and http://www.wherehouse.com. In addition to its
mall locations, operated primarily under the FYE brand, the Company also
operates freestanding locations under the names Coconuts Music and Movies,
Strawberries Music, Wherehouse, CD World, 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.

SOURCE Trans World Entertainment Corporation
07/19/2004
CONTACT: John Sullivan, Executive Vice President, Chief Financial
Officer, of Trans World Entertainment Corporation, +1-518-452-1242, ext. 7400;
or Kimberly Storin of the MWW Group, +1-212-704-9727, for
Trans World Entertainment Corporation/
Web site: http://www.twec.com
http://www.fye.com
http://www.wherehouse.com /
(TWMC)