8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 20, 2010

TRANS WORLD ENTERTAINMENT CORPORATION

(Exact name of registrant as specified in its charter)

New York	0-14818	14-1541629
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer identification No.)

38 Corporate Circle, Albany, New York	12203
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (518) 452-1242

None

(Former name or former address, if changed since last report.)

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 20, 2010, Trans World Entertainment Corporation issued a press release announcing its financial results for its fiscal first quarter ended May 1, 2010. A copy of Trans World Entertainment Corporation’s press release is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K is being furnished under Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

ITEM 7.01. REGULATION FD DISCLOSURE

Attached hereto as Exhibit 99.2 is the transcript for the earnings conference call of Trans World Entertainment Corporation held on May 20, 2010. The information in this Current Report on Form 8-K, including the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibit attached hereto, shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Certain information contained in this Current Report on Form 8-K, including information in Exhibit 99.2 hereto, is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning results of operations and Trans World Entertainment Corporation’s strategies. Trans World Entertainment Corporation cautions that there are factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Trans World Entertainment Corporation; accordingly, there can be no assurance that such suggested results will be realized. For a list of Trans World Entertainment Corporation’s risk factors, see the Company’s Annual Filing on Form 10-K with the Securities and Exchange Commission for the year ended January 30, 2010.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

          (c) EXHIBITS. The following are furnished as Exhibits to this Report:

Exhibit No.		Description
99.1	Trans World Entertainment Corporation Press Release dated May 20, 2010.
99.2	Trans World Entertainment Corporation Transcript for Earnings Call held on May 20, 2010.

2

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TRANS WORLD ENTERTAINMENT CORPORATION
	/s/ John J. Sullivan
Date: May 21, 2010	John J. Sullivan
	Executive Vice President-Finance, Chief
	Financial Officer and Secretary

3

EXHIBIT INDEX

Exhibit No.		Description
99.1	Trans World Entertainment Corporation Press Release dated May 20, 2010.
99.2	Trans World Entertainment Corporation Transcript of Earnings Call held on May 20, 2010.

EX-99.1

Exhibit 99.1

Contact:
Trans World Entertainment
John J. Sullivan
EVP, Chief Financial Officer
(518) 452-1242 Contact:
Financial Relations BoardMarilynn Meek
(mmeek@frbir.com)
(212) 827-3773

38 Corporate Circle Albany, NY 12203
www.twec.com	NEWS  RELEASE
TRANS WORLD ENTERTAINMENT ANNOUNCES FIRST QUARTER RESULTS

          Albany, NY, May 20, 2010 — Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its first quarter ended May 1, 2010. For the first fiscal quarter of 2010, the Company recorded a net loss of $11.4 million, or $0.36 per share compared to a net loss of $13.7 million or $0.44 per share for the same period last year.

          For the first fiscal quarter, total sales decreased 18% to $156.5 million compared to $191.4 million for the same period in 2009. Comparable store sales for the quarter decreased 3%. During the quarter, the Company operated an average of 548 stores compared to 709 stores last year, a 23% decline.

          Gross profit for the quarter was $51.5 million or 32.9% of sales as compared to $65.8 million or 34.3% of sales for the same period last year. The reduction in gross profit as a percentage of sales was due to lower vendor allowances this year versus last year.

          Selling, general and administrative expenses for the quarter were $59.3 million, a 22% reduction from $75.7 million in the comparable period last year. SG&A expenses were 37.9% of sales versus 39.5% of sales for the same period last year.

          The Company had no borrowings outstanding on its credit facility at the end of the quarter as compared to $29.0 million outstanding at the end of the first fiscal quarter of 2009. Cash on hand at the end of the quarter was $21.3 million as compared to $8.2 million at the end of the quarter last year. Inventory was $251.3 million, or $69 per square foot, at the end of the quarter versus $332.7 million or $74 per square foot at the end of the first fiscal quarter of last year.

          Trans World will host a teleconference call today, Thursday, May 20, 2010, at 10:00 AM ET to discuss its financial results. Interested parties can listen to the simultaneous webcast on the Company’s corporate website, www.twec.com.

          Trans World Entertainment is a leading specialty retailer of entertainment software, including music, video and video games and related products. The Company operates retail stores in the United States, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico, primarily under the names f.y.e. for your entertainment and Suncoast and on the web at www.fye.com, www.wherehouse.com, www.secondspin.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.

—  table to follow  —

TRANS WORLD ENTERTAINMENT CORPORATION
Financial Results

STATEMENTS OF OPERATIONS:
(in thousands, except per share data)

	Thirteen Weeks Ended					Thirteen Weeks Ended
	May 1, 2010			% to Sales		May 2, 2009			% to Sales
Net sales	$	156,539				$	191,433
Cost of sales		105,014		67.1	%		125,681		65.7	%
Gross profit		51,525		32.9	%		65,752		34.3	%
Selling, general and administrative expenses		59,315		37.9	%		75,699		39.5	%
Depreciation and amortization		2,863		1.8	%		3,660		1.9	%
Loss from operations		(10,653	)	-6.8	%		(13,607	)	-7.2	%
Interest expense, net		688		0.4	%		703		0.3	%
Loss before income taxes		(11,341	)	-7.2	%		(14,310	)	-7.5	%
Income tax (benefit) expense		74		0.0	%		(574	)	-0.3	%
NET LOSS	$	(11,415	)	-7.3	%	$	(13,736	)	-7.2	%
Basic and diluted loss per share:
Basic and diluted loss per share	$	(0.36	)			$	(0.44	)
Weighted average number of common shares outstanding - basic and diluted		31,395					31,296
SELECTED BALANCE SHEET CAPTIONS:
(in thousands, except store data)
	May 1, 2010					May 2, 2009
Cash and cash equivalents	$	21,275				$	8,221
Merchandise inventory		251,279					332,695
Fixed assets (net)		31,398					47,552
Accounts payable		74,746					89,304
Borrowings under line of credit		—					28,981
Long-term debt, less current portion		6,545					7,980
Stores in operation		544					704

2

EX-99.2

Exhibit 99.2

TWMC - Q1 2010 Trans World Entertainment Corp.
Earnings Conference
Call

Event Date/Time: May. 20. 2010

PARTICIPANTS

Bob Higgins
Trans World Entertainment - Chairman, CEO

John Sullivan
Trans World Entertainment - CFO

PRESENTATIONOperator
Good day, ladies and gentlemen. Welcome to the Trans World Entertainment first quarter 2010 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session with instructions following at that time. (Operator Instructions). As a remind they are conference is being recorded. Your host for today’s conference Bob Higgins, Chairman and CEO.

Bob Higgins - Trans World Entertainment - Chairman, CEO
Thank you. Good morning, everyone. I’m sorry we are starting a few minutes late. On the call with me today is John Sullivan, our Chief Financial Officer, and also with us today is Mike Honeyman, our new President and COO. Mike brings our company extensive retail leadership with experience at Bernie’s TV, Bed Bath and Beyond, and Christmas tree shops. We are happy to have Mike on board and look forward to working with him to drive shareholder value.

Thank you for joining us today as we discuss our first quarter results. We will take questions following our comments.

Total sales in the first quarter decreased 18% to $156.5 million, as we operated 23% fewer stores. Comp store sales decreased 3%.

For the quarter, the Company recorded a net loss of $11.4 million or $0.36 per share compared to a net loss of $13.7 million or $0.44 per share for the same period last year. Our overall quarter one comp decline was 3%, driven by a 36% decrease in the video game category, which represents 6% of the business. The negative comp sales in video games were due to a reduction in the number of stores carrying games. During fiscal 2009, the Company eliminated the game category in over 200 stores. At the end of the first quarter, 139 of our stores carried games compared to 347 a year ago.

Music was down just 1% on a comp store basis, with the top 50 up 20% for the quarter. The music category represented 36% of our business for the quarter, the same as last year. For the quarter, the industry was down 12%.

Video sales increased 1% on a comp store basis. The comp increase was driven by the performance of Blu-Ray, as we are starting to see broad acceptance of this format. Comp sales, as a top 50, increased 22% during the quarter. Video now represents 44% of our business, up from 43 last year. For the quarter, the industry was down 5%.

Comp store sales for electronics, accessory, and trend also increased 1% on a comp basis and represented 14% of our business in the quarter, up from 13% last year.

Now, John will take you through financial highlights for the quarter. John?

John Sullivan - Trans World Entertainment - CFO
Thank you, Bob. Good morning. As Bob mentioned, our net loss for the quarter was $11.4 million, or $0.36 per share. Last year our net loss was $13.7 million or $0.44 per share. Our gross margin rate for the quarter decreased to 32.9% from 34.3% last year.

The reduction in gross profit as a percentage of sales was due to lower vendor allowances this year. SG&A expenses were $59.3 million, a reduction of 22% on the sales decline of 18%. Resulting in a decrease as a percentage of sales from 39.5% last year to 37.9% this year. Included in SG&A expenses is a gain of $350,000 related to the acquisition of five value music stores. Offset by $150,000 in transition costs. EBITDA was a loss of $7.8 million in the quarter versus a loss of $9.9 million last year.

Our net interest expense was $688,000 in the quarter, versus $703,000 last year. The decrease is due to no borrowings on our credit facility.

We ended the quarter without borrowings under the line of credit, compared to borrowings of $29 million last year.

Year-over-year we have lowered our inventory by $81 million. Our quarter end inventory position was $251 million, versus last year’s $333 million. On a square foot basis, this is $69 a foot versus $74 last year. During the quarter, we closed 18 stores and acquired five new stores.

We ended the quarter with 544 stores in operation and square footage totaling 3.6 million versus last year’s 704 stores and square footage totaling 4.5 million. Now, I will turn it back to Bob.

Bob Higgins - Trans World Entertainment - Chairman, CEO
Thank you, John. We are encouraged by our results in the first quarter.

Comp sales in our two largest categories, music and DVD, have reversed the trends we have seen over the last several years. The initiatives we implemented for these two categories have helped stabilize our sales and increase our market share, despite operating 23% fewer stores than last year.

We continue to leverage our SG&A expenses which helped us reduce our EBITDA loss in the first quarter versus last year’s first quarter.

We ended the quarter with cash of $21 million, and zero borrowings on our line of credit, as compared to the borrowings of $29 million last year.

We amended our credit facility, extending it to April 2013, providing us with the capital to fund our business for the next three years.

As I mentioned earlier, we also hired Mike Honeyman as our President and COO to strengthen our management team and help drive our operating results.

We made progress in the first quarter, but we still have a lot to accomplish this year. We are moving in the right direction and look forward to the remainder of 2010. With that, I would like to open up the call for any questions that any one has. Operator?

QUESTIONS AND ANSWERS
Operator
(Operator Instructions). I’m showing no questions for comments at this time, sir.

Bob Higgins - Trans World Entertainment - Chairman, CEO
Okay. Then I would like to thank everybody for their time this morning. We look forward to talking with you when we announce our second quarter results. So have a great day. Thank you. Thank you, operator.

Operator
Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. You may now disconnect, and have a wonderful day.