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 19, 2011

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 19, 2011, Trans World Entertainment Corporation issued a press release announcing its financial results for its fiscal first quarter ended April 30, 2011. 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 19, 2011. 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 29, 2011.

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 19, 2011.
99.2	Trans World Entertainment Corporation Transcript for Earnings Call held on May 19, 2011.

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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
	/s/ John J. Sullivan
Date: May 23, 2011
	John J. Sullivan
	Executive Vice President-Finance, Chief Financial Officer and Secretary

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Trans World Entertainment Corporation Press Release dated May 19, 2011.
99.2	Trans World Entertainment Corporation Transcript of Earnings Call held on May 19, 2011.

EX-99.1

Exhibit 99.1

	Contact: Trans World Entertainment John J. Sullivan EVP, Chief Financial Officer		Contact: Financial Relations Board Marilynn Meek (mmeek@frbir.com)
	(518) 452-1242		(212) 827-3773
38 Corporate Circle Albany, NY 12203
		NEWS RELEASE
www.twec.com
TRANS WORLD ENTERTAINMENT ANNOUNCES FIRST QUARTER RESULTS

          Albany, NY, May 19, 2011 — Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its first quarter ended April 30, 2011. For the first quarter of 2011, the Company reported a 78% improvement in net loss to $2.5 million, or $0.08 per share, as compared to a net loss of $11.4 million or $0.36 per share for the same period last year.

          For the first quarter, total sales decreased 16.0% to $131.5 million compared to $156.5 million in 2010. Comparable store sales for the quarter decreased 2%. During the quarter, the Company operated an average of 451 stores compared to 548 stores last year, a 17.7% decline.

          Gross profit for the quarter was $48.3 million or 36.7% of sales as compared to $51.5 million or 32.9% of sales for the same period last year. The increase in gross profit as a percentage of sales was due to higher margin rates across all product categories and the leveraging of distribution and freight expenses primarily due to the closing of a distribution center in Carson, California last year.

          Selling, general and administrative expenses decreased 18.6% for the quarter to $48.3 million or 36.7% of sales, compared to $59.3 million, or 37.9% of sales in the comparable period last year. The reduction in SG&A expenses was due to the closing of underperforming stores and continued effective expense management.

          Cash on hand at the end of the quarter was $29.7 million compared to $21.3 million at the end of the quarter last year. The Company did not require any borrowings under its line of credit during this year’s first quarter.

          Trans World will host a teleconference call today, Thursday, May 19, 2011, 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, 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 —

TRANS WORLD ENTERTAINMENT CORPORATION
Financial Results

STATEMENTS OF OPERATIONS:

(in thousands, except per share data)

	Thirteen Weeks Ended
	April 30, 2011			% to Sales			May 1, 2010			% to Sales
Net sales	$	131,496					$	156,539
Cost of sales		83,206			63.3	%		105,014			67.1	%
Gross profit		48,290			36.7	%		51,525			32.9	%
Selling, general and administrative expenses		48,254			36.7	%		59,315			37.9	%
Depreciation and amortization		1,715			1.3	%		2,863			1.8	%
Loss from operations		(1,679	)		-1.3	%		(10,653	)		-6.8	%
Interest expense, net		832			0.6	%		688			0.5	%
Loss before income taxes		(2,511	)		-1.9	%		(11,341	)		-7.3	%
Income tax expense		36			0.0	%		73			0.0	%
NET LOSS	$	(2,547	)		-1.9	%	$	(11,414	)		-7.3	%
Basic and diluted loss per share:
Basic and diluted loss per share	$	(0.08	)				$	(0.36	)
Weighted average number of common shares outstanding - basic and diluted		31,425						31,395

SELECTED BALANCE SHEET CAPTIONS:
(in thousands, except store data)
	April 30, 2011		May 1, 2010
Cash and cash equivalents	$	29,674	$	21,275
Merchandise inventory		217,785		251,279
Fixed assets (net)		20,047		31,398
Accounts payable		71,021		74,764
Borrowings under line of credit		—		—
Long-term debt, less current portion		5,149		6,545
Stores in operation		444		544

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EX-99.2

Exhibit 99.2

TRANSCRIPT

TWMC - Q1 2011 Trans World Entertainment Corp Earnings Conference Call

Date: May 19, 2011

CORPORATE PARTICIPANTS

Bob Higgins

Trans World Entertainment Corp. - Chairman and CEO

John Sullivan

Trans World Entertainment Corp. - EVP, CFO and Secretary

CONFERENCE CALL PARTICIPANTS

Brendan McMillan

- Analyst

TRANSCRIPT

Operator

Good day, ladies and gentlemen. Welcome to the Trans World Entertainment first quarter 2011 conference call. At this time, all participants are in a listen-only mode. Later, we’ll have a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would like to introduce your host for today’s call, Mr. Bob Higgins, Chairman and CEO. You may begin.

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Thank you, Duranda. Good morning. On the call is with me is Mike Honeyman, our President and Chief Operating Officer, and John Sullivan, Our Chief Financial Officer. Thank you for joining us as we discuss our first quarter results. We’ll take questions following our comments.

During the quarter, we achieved positive EBITDA, which marked our best first quarter EBITDA performance since 2005. During the fourth quarter of last year, which is our highest volume sales quarter, we improved EBITDA year-over-year by $11 million. I am pleased to report that we followed that performance by improving this year’s EBITDA by $7.8 million to be a positive EBITDA of $36,000 compared to an EBITDA loss of $7.8 million last year. Total sales in the first quarter decreased 16% to $131.5 million as we operated 18% fewer stores. Comp store sales decreased 2% compared to last year.

Now let me touch on our performance by category. Video comp sales decreased by 5%. Comp sales in our top 50 SKUs decreased 39% during the quarter due to the strength of new releases last year, which included Avatar and New Moon. Our comp sales excluding top 50 increased 3%, demonstrating the underlying strength of our core catalog business. Video represented 42% of our business, down from 45% last year. For the quarter on an industry-wide basis, video sales were down 20%.

Music comp sales declined 3%. Comp sales in our top 50 SKUs decreased 13% in the quarter. Similar to our comp sales in video, our comp sales excluding the top 50 increased 3%, demonstrating the strength of our core catalog business. The music category represented 37% of our business for the quarter, compared to 36% last year. For the quarter on an industry-wide basis, physical CD sales were down 6%.

Electronics comp store sales increased 15%. Electronics sales represent 9% of our total business, compared to 7% last year.

Trend comparable store sales increased 8%. Trend product represented 7% of our business in the quarter, up from 6% last year.

Video games comp store sales were down 10% for the quarter. Last year at this time, we were liquidating games in stores that had games removed from their assortment. We now have games at 121stores, which represent 27% of our chain. Comp sales in these 121 go-forward stores were flat to last year in the game category. Game sales represent 5% of our business as compared to 6% last year.

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

John Sullivan - Trans World Entertainment Corp. - EVP, CFO and Secretary

Thank you, Bob. Good morning. Our net loss for the quarter was $2.5 million or $0.08 per share. That’s a 78% improvement over last year’s net loss of $11.4 million or $0.36 per share.

Exhibit 99.2

As Bob mentioned, EBITDA was a positive $36,000 in the quarter versus an EBITDA loss of $7.8 million last year, which is the best first-quarter performance on EBITDA since 2005.

Our gross margin rate for the quarter increased 380 basis points to 36.7% of sales from 32.9% last year. The increase in gross profit as a percentage of sales was due to higher margin rates across all our product categories and the leveraging of our distribution and freight costs due to the closing of a distribution facility in Carson, California, last year.

SG&A expenses were $48.3 million, a reduction of 18.6% on a total sales decline of 16%, resulting in a decrease as a percentage of sales to 36.7% this year from 37.9% last year. The decrease in SG&A was driven by the closing of underperforming stores and continued focus on effective expense management.

Net interest expense was $832,000 in the quarter, versus $688,000 last year. The increase is primarily due to the amortization of commitment fees related to the three-year extension we signed in April of 2010. In addition, interest expense also increased due to a 55-basis point increase in our unused loan commitment fee.

The Company did not require any borrowings under its line of credit during this year’s first quarter, and we ended the quarter without any borrowings outstanding under the line of credit and a cash balance of $29.7 million compared to $21.3 million last year.

Year-over-year, we have lowered our inventory by $35 million, and our quarter-end inventory position was $218 million versus last year’s $251 million. On a per-square-foot basis, this is $74 a foot versus $69 a foot last year.

During the quarter, we closed 17 stores in and opened one new store. We ended the quarter with 444 stores and 3 million square feet in operation versus last year’s 544 stores and 3.6 million square feet.

Now, I will turn it back over to Bob.

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Thank you, John. We are encouraged by our first quarter results. We posted our best first-quarter performance since 2005. We improved our net loss over last year by $8.9 million. As mentioned earlier, this followed the most profitable fourth quarter in 4 years.

As we discussed in our year-end call, 2011 is a year for us to improve our performance on a per-store basis through capitalizing on the foundation that we have built to deliver better value to our customers, control expenses, and drive additional bottom-line contribution. At that time, we committed to aggressively seizing opportunities to improve our operating results, evaluating all aspects of our business by challenging each and every component of our business to improve and become more efficient, while at the same time, we are committed to investing in people, technology, and merchandise to support our future.

While working to improve our results, we continue to focus on the management of inventory and cash to provide the needed capital as we work through our transition. We made progress on achieving these initiatives in the first quarter.

The 2% comp decrease was encouraging because of the tough comparisons from last year’s first quarter. We were able to partially offset a decline in our largest category, video, which was up against two blockbuster releases with comp increases in our video and music core catalog, coupled with strong comp increases in both electronics and trend. Combined electronics and trend now represent 16% of our business as compared to 13% last year.

Our gross margin as a percentage of sales improved significantly over last year as we improved our margin rate across all categories. We continue to streamline operations, improve processes, and reduce expenses, as demonstrated by the continual leveraging of our SG&A expenses during the first quarter. We have made significant progress in the first quarter, but we still have a lot to accomplish this year. We’re moving in the right direction and look forward to the remainder of 2011.

Now, Duranda, I would like to open up the call for any questions.

QUESTIONS AND ANSWERS

Operator

(Operator Instructions) The first question is from Brendan McMillan. Your line is open.

Exhibit 99.2

Brendan McMillan — Analyst

Yes. Hi. Bob, I guess a couple of things. First of all, you all went through the comp— categories pretty quickly. I will go back and listen to that later. Could you just - other than the electronics and trend improvement as a percentage, how are you all able to keep comps at just down 2%? Was that the primary offset to the video decrease year-over-year, or what really drove the improvement?

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Well, really, we kept the comps very reasonable considering the releases last year in video, and we did that with the core catalog. And we went after that business and did very well in it in both music and video. That is what really— because those two categories are such a big percentage of the business. We did do well in the electronics and the trend also, and that helped with the comps, the negative comps.

Brendan McMillan— Analyst

Okay, I’m sorry, the actual comps in the categories, the music comp was negative 13%, is that right?

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

No, there was negative 13 in the top 50.

Brendan McMillan — Analyst

Okay.

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

And it was —

John Sullivan - Trans World Entertainment Corp. - EVP, CFO and Secretary

Overall, it was down 3%.

Brendan McMillan — Analyst

Okay.

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

It was down 3% overall. And that was really driven — well, really, we had the “Avatar” and “New Moon” last year, which “Avatar” was the biggest Blu-ray release of the year last year, for the year.

Brendan McMillan — Analyst

Right.

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

So we withstood that fairly well.

Brendan McMillan — Analyst

Okay. Great. What was the video overall down?

John Sullivan - Trans World Entertainment Corp. - EVP, CFO and Secretary

Down 5%.

Brendan McMillan — Analyst

5%?

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Yes.

Brendan McMillan — Analyst

Okay. Great. Thank you. And the other question was Bob, you said on your — you said on the last call, sort of your sign off at the end of the call was you felt confidence about continuing to improve the performance, and obviously, you have done so this quarter, and had a good fourth quarter as well. But can you just talk a little bit about why you’re feeling some confidence in things? There’s not a lot of people outside of these Industries who would look at them and feel that confidence. I know you all have been searching for other categories to try and drive positive comps and try and use some of the space from the exit of other product categories. Could you just talk a little bit about where your confidence is coming from and maybe just give a little bit of visibility also on what you all doing in electronics and trend and what you are going to plan to do going forward?

Exhibit 99.2

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Yes. As far as the core business of music and video, there is no question that some of our major competitors have scaled back on the selection of merchandise they have. They still have the new releases and the top 50, but many of them are cut back on their catalog selection, and we think we’re benefiting from that for sure. And as far as the trend merchandise, we did very well with Justin Bieber and it continued into May with the release of the video. We would be considered, I think, Justin Bieber headquarters, and we do very well with that in the trend category, and that is done well for us. And in the electronic category, our focus has been on the headphones and some other smaller accessories for the iPods and so forth and have done very well in those categories.

As far as from expense point of view, we’re looking at every part of the business and making sure that we do adjust expenses from the field level to right size it for the number of stores we have, and at the home office doing the same thing. And that has been a very successful program. Now, we’re looking at every expense item and making sure that it’s an item that doesn’t need to be challenged. In other words, we’re challenging every expense item in the Company, and we’re having good progress with that.

Brendan McMillan — Analyst

Okay. I guess generally speaking from a strategic point of view, there’s — in the categories like trend and maybe to some extent in electronics, I can’t lay out what your product strategy is, but can you talk a little about your overall strategy for the stores?

Anything that is changing over the next year, and maybe your sense of the right direction and a continuation of— where square footage is going to go, what categories, and any thoughts you have about overall direction and strategy?

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Yes. First of all, I think one of the key things — we felt last year, we did not do a good job in the visual presentation at the stores. That is something we have started improvement on. We still don’t have at the level we have them at, but they will be no later than the third quarter for sure, and it’ll be taking place in the second quarter. The general look of the store will be very much improved.

As far as the layout by product area, our plan is to maintain the inventory selection in DVD, Blu-ray, and music, and continue to offer the selection in those as well as have very strong promotions around those categories. As far as the electronic and the trend, we will just focus on those areas that we do well on and expand in the areas that we do well on, and make sure we don’t get into some things that we don’t know anything about. We’ll be doing some experimenting like — visiting our stores, you’ll see we put in great t-shirt departments, and they’re doing well.

Brendan McMillan — Analyst

Okay. Appreciate it. Thank you.

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Thank you.

Operator

(Operator Instructions) I’m not showing any questions at this time, sir.

Bob Higgins - Trans World Entertainment Corp. - Chairman and CEO

Okay, so we will conclude the call. I would like to take this opportunity to thank all of our associates, vendors, and customers, and we look forward to talking to you about our second-quarter results on August 18. Thank you very much for your time today.

Thank you, Duranda, for your time, also.