8-K

UNITED STATES
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): November 20, 2014

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 or organization)	(Commission file number)	(I.R.S. Employer Identification No.)

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

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

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

£	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 20, 2014, the Company issued a press release announcing its financial results for its fiscal third quarter ended November 1, 2014.  A copy of the Company’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 Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that Section. Furthermore, such information, including Exhibit 99.1 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.

ITEM 7.01. REGULATION FD DISCLOSURE

Attached hereto as Exhibit 99.2 is the transcript for the earnings conference call of the Company held on November 20, 2014. The information in this Current Report on Form 8-K, including Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section. Furthermore, such information, including Exhibit 99.2 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 the Company’s strategies. The Company 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 the Company; accordingly, there can be no assurance that such suggested results will be realized. For a list of the Company’s risk factors, see the Company’s annual filing on Form 10-K with the Securities and Exchange Commission for the year ended February 1, 2014.

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 November 20, 2014.
99.2	Trans World Entertainment Corporation Transcript for Earnings Call held on November 20, 2014.

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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
Date:  November 21, 2014	/s/ John Anderson
	John Anderson
	Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Trans World Entertainment Corporation Press Release dated November 20, 2014.
99.2	Trans World Entertainment Corporation Transcript of Earnings Call held on November 20, 2014.

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EX-99.1

Exhibit 99.1

	Contact: Trans World Entertainment John Anderson Chief Financial Officer (518) 452-1242	Contact: Financial Relations Board Marilynn Meek (mmeek@frbir.com) (212) 827-3773
38 Corporate Circle Albany, NY 12203
www.twec.com		NEWS RELEASE

TRANS WORLD ENTERTAINMENT ANNOUNCES THIRD QUARTER RESULTS

Albany, NY, November 20, 2014 -- Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its third quarter ended November 1, 2014. For the third quarter of 2014, the Company reported a net loss of $4.5 million, or a loss of $0.14 per share, compared to a net loss of $3.3 million, or a loss of $0.10 per share, for the same period last year.

Comparable store sales for the quarter were down 1.8% compared to the same quarter last year. Total sales for the quarter decreased 9.2% to $72.5 million compared to $79.8 million in 2013. During the quarter, the Company operated an average of 328 stores compared to 356 last year, a 7.9% decline in store count.

Gross profit for the quarter was $28.5 million, or 39.4% of sales, as compared to $30.7 million, or 38.5% of sales for the same period last year. The increase in gross profit as a percentage of sales was due to improved margin rates in a majority of the Company’s categories.

Selling, general and administrative (“SG&A”) expenses decreased 2.9% for the quarter to $31.6 million compared to $32.5 million for the comparable period last year. The reduction in SG&A expenses was due to fewer stores in operation, partially offset by $0.8 million in fees related to a legal settlement and expenses associated with the appointment of the new CEO. As a percentage of sales, SG&A expenses were 43.6% versus 40.8% for the same period last year.

For the thirty-nine weeks ended November 1, 2014, total sales decreased 9.0% to $231.6 million, compared to $254.5 million for the same period in 2013. Comparable store sales for the thirty-nine week period decreased 1.5% compared to the same period last year. Net loss for the thirty-nine week period was $10.0 million, or a loss of $0.31 per share, compared to a net loss of $4.3 million, or a loss of $0.13 per share, for the same period last year.

Gross profit for the thirty-nine weeks ended November 1, 2014 was $89.4 million, or 38.6% of sales, compared to $98.5 million, or 38.7%, of sales for the same period last year.

For the thirty-nine weeks ended November 1, 2014, SG&A expenses decreased 3.4% to $95.2 million compared to $98.5 million in the comparable period last year. As a percentage of sales, SG&A expenses were 41.1% versus 38.7% for the same period last year.

Cash on hand at the end of the quarter was $79.4 million, compared to $86.0 million at the end of the third quarter last year. The Company has returned approximately $20 million to our shareholders over the last 12 months through the payment of a special dividend and the repurchase of Company shares.

Inventory was $158.0 million at the end of the quarter, versus $174.9 million at the end of the third quarter last year, a reduction of 9.6%.

During the third quarter the Company repurchased 158,794 shares of common stock at an average price of $3.63 per share. Since the inception of the program, the Company has repurchased 1,276,469 shares of common stock at an average price of $3.98 per share. The Company has approximately $17.0 million available for purchase under its repurchase program.

Trans World will host a teleconference call today, Thursday, November 20, 2014, 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 products, including video, music, trend, electronics, video games and related products. The Company operates retail stores in the United States 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, and www.secondspin.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 —

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TRANS WORLD ENTERTAINMENT CORPORATION

Financial Results

STATEMENTS OF OPERATIONS:

(in thousands, except per share data)

	Thirteen Weeks Ended												Thirty-nine Weeks Ended
	November 1, 2014			% to Sales			November 2, 2013			% to Sales			November 1, 2014			% to Sales			November 2, 2013			% to Sales
Net sales	$	72,456					$	79,772					$	231,580					$	254,473
Cost of sales		43,922			60.6	%		49,032			61.5	%		142,222			61.4	%		155,930			61.3	%
Gross profit		28,534			39.4	%		30,740			38.5	%		89,358			38.6	%		98,543			38.7	%
Selling, general and administrative expenses		31,567			43.6	%		32,524			40.8	%		95,179			41.1	%		98,516			38.7	%
Depreciation and amortization		953			1.3	%		1,028			1.3	%		2,593			1.1	%		2,713			1.1	%
Loss from operations		(3,986	)		-5.5	%		(2,812	)		-3.6	%		(8,414	)		-3.6	%		(2,686	)		-1.1	%
Interest expense, net		469			0.7	%		481			0.6	%		1,429			0.6	%		1,451			0.6	%
Loss before income taxes		(4,455	)		-6.2	%		(3,293	)		-4.2	%		(9,843	)		-4.2	%		(4,137	)		-1.7	%
Income tax expense		21			0.0	%		22			0.0	%		115			0.1	%		119			0.0	%
Net income (loss)	$	(4,476	)		-6.2	%	$	(3,315	)		-4.2	%	$	(9,958	)		-4.3	%	$	(4,256	)		-1.7	%
Basic Loss per common share:
Basic Loss per share	$	(0.14	)				$	(0.10	)				$	(0.31	)				$	(0.13	)
Weighted average number of common shares outstanding - basic		31,625						32,586						31,869						32,673
Diluted Loss per common share:
Diluted Loss per share	$	(0.14	)				$	(0.10	)				$	(0.31	)				$	(0.13	)
Weighted average number of common shares outstanding - diluted		31,625						32,586						31,869						32,673
SELECTED BALANCE SHEET CAPTIONS:													November 1,						November 2,
(in thousands, except store data)														2014						2013
Cash and cash equivalents													$	79,366					$	86,028
Merchandise inventory														158,017						174,884
Fixed assets (net)														16,709						12,647
Accounts payable														69,335						72,971
Borrowings under line of credit														—						—
Long-term capital lease, less current portion														143						1,218
Stores in operation, end of period														327						360
Stores in operation, average during the period														328						356

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EX-99.2

Exhibit 99.2

Trans World Entertainment’s (TWMC) CEO Michael Feurer on Q3 2014 Results - Earnings Call Transcript

Trans World Entertainment Corporation (NASDAQ:TWMC)

Q3 2014 Earnings Conference Call

November 20, 2014 10:00 a.m. ET

Executives

Bob Higgins – Chairman

Michael Feurer – CEO

John Anderson – CFO

Analysts

William Myers - Miller Asset Management

Operator

Good day, ladies and gentlemen, and welcome to the Trans World Entertainment Third Quarter 2014 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Mr. Bob Higgins, Chairman of Trans World Entertainment Corporation. Sir, you may begin.

Bob Higgins

Thank you, Amanda. Thank you for joining us, as we discuss our third quarter and year-to-date results. On the call with me today are Mike Feurer, our Chief Executive Officer; and John Anderson, our Chief Financial Officer. As you know, Mike joined our company October 13th of this year. He has an extensive retail background with wide and direct experience, including strategy, branding, merchandizing, marketing, web, real estate, sourcing and production, as well as planning and allocation. Mike has hit the ground running and has added energy and excitement to the company and is enhancing our strategic vision. I’m confident Mike is the right person to lead the company into the future.

Now I’ll let Mike take you through our results. Mike?

Michael Feurer

Thank you, Bob. Just a few comments before we review the results. I’ve been with the company for just over a month and joined Trans World Entertainment holding a very strong belief in the bright future for the company and I’m even more encouraged after the experience of the past few weeks. The company has a tremendous opportunity to continue its evolution as the destination for entertainment centric and pop culture related product.

Now let me review the results for the third quarter. Our net loss was $4.5 million as compared to a net loss of $3.3 million in the third quarter of last year. Year-to-date our net loss was $10 million compared to a net loss of $4.3 million during the same period in 2013.

For the third quarter, our comp sales were down 1.8%. Total sales for the quarter decreased 9.2% to $72 million compared to an $80 million for the same period last year as our stores and operation declined by 8%.

Now some comments on our merchandize category performance for the quarter. Video comp sales were down 3%. Video sales were negatively impacted by weaker new releases resulting from the decline in box office sales earlier this year, this summer. Video represented 45% of our business for the quarter compared to 46% last year. Music comp sales declined 10%. The music category represents 27% of our business for the quarter compared to 30% last year as we continue to shift space and inventory investment from this category.

Trend comp sales increased 22%. Trend sales represented 15% of our business for the quarter compared to 12% last year. Electronics comp sales increased 5%. Electronic sales represented 9% of our business for the quarter compared to 8% last year. Video games comp sales were down 10% for the quarter as we were not able to offset the release of Grand Theft Auto in the comparable quarter last year. Game sales represented 4% of our business for the quarter, equal to 4% last year.

John will now take you through the financial highlights for the quarter in more detail. John?

John Anderson

Thanks Mike. Good morning. As Mike mentioned, our net loss for the quarter was $4.5 million or $0.14 per diluted share as compared to last year’s net loss of $3.3 million or $0.10 per diluted share. Year-to-date, the net loss was $10 million compared to a net loss of $4.3 million last year.

EBITDA for the quarter was a loss of $3 million compared to a loss of $1.8 million last year. Year-to-date, EBITDA was a loss of $5.8 million compared to $27,000 last year.

Our gross margin rate for the quarter increased 90 basis points from last year to 39.4% of sales driven by improved margin rates in the majority of our categories.

SG&A expenses were $31.6 million, a reduction of 2.9% or $1 million from last year’s third quarter. The decrease in SG&A expenses was driven by the reduction in store count, partially offset by $800,000 in fees related to a legal settlement and expenses associated with the appointment of the new CEO. SG&A expenses as a percent of sales was 43.6% compared to 40.8% for the same period last year.

Net interest expense was $469,000 in the quarter versus $481,000 last year.

We ended the quarter with cash of $79 million compared to $86 million last year. The company has returned approximately $20 million to our shareholders over the last 12 months through the payment of a special dividend and the repurchase of company shares.

Year-over-year, we have lowered our inventory by $17 million and finished the quarter with $158 million in inventory, 10% below last year’s $175 million.

We ended the quarter with 327 stores and 1.9 million square feet in operation versus last year’s 360 stores and 2.1 million square feet.

Now I will turn it back over to Mike.

Michael Feurer

Thanks John. The quarter included several highlights. Our growth categories have been well received by the customer and continue to deliver positive comps. We continue to improve gross margin rates in a majority of our merchandize categories through disciplined price management. During the quarter we also opened a new concept store in Woodbridge Mall in Woodbridge, New Jersey. While still early, we are encouraged by the results thus far. The store provides a shift in inventory mix and an improved merchandizing and visual presentation for our growth categories, while maintaining a strong presence in video and music. The shift in inventory mix and improved presentation has been favorably received by the customer and we’re looking forward to seeing how the store performs in the important holiday season.

As John also mentioned, we ended the quarter with cash of $79 million. And the company continues to repurchase shares under the stock repurchase program established by the board of directors.

Now I would like to open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question or comment comes from William Myers from Miller Asset Management. Your line is open.

William Myers

- Miller Asset Management

Good morning. Very impressive comps in the trend category. Could you talk a little bit more about that and whether that might become really the prime category for your chain as time goes on?

Michael Feurer

Thanks William and yes, they were impressive comps in that category and as mentioned, 15% contribution versus 12% last year. For competitive reasons, we’re not going to get into the detail of that product offering, but I would suffice it to say we are very encouraged by our results in this important category.

William Myers

- Miller Asset Management

Okay. If I could try one more question. How does trend gross margin compare to margins in your other categories?

Michael Feurer

Again for competitive reasons I won’t get into specifics, but it is a healthier -- it is definitely a healthier net margin than some of the traditional categories we’ve been operating in and very encouraging I will say that.

William Myers

- Miller Asset Management

Okay. I’ll take healthier. Thank you very much.

Operator

Thank you. (Operator Instructions). Sir, at this moment I’m showing no further questions.

Michael Feurer

Bob, any thoughts?

Bob Higgins

Yes. I would just like to thank everybody for your time today and hope everyone has a safe and happy holiday season. We will be releasing our holiday sales results on January 8 and that will just be a sales results press release. And we look forward to talking to you on about our fourth quarter and annual results on March 5, 2015. So if everyone will put that on their calendar I’d appreciate it. Thank you very much. I think Mike as I said earlier, has hit the ground running and he will be doing the calls going forward. So thank you very much for your time and your support. Thank you and thank you, Amanda.

Operator

Thank you, sir and thank you, ladies and gentlemen for participating in today’s conference. This does conclude today’s program. You may all now disconnect. Everyone have a great day.