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 21, 2013

TRANS WORLD ENTERTAINMENT CORPORATION

(Exact name of registrant as specified in its charter)

New York	0-14818	14-1541629
(State or other jurisdiction of	(Commission file number)	(I.R.S. Employer
incorporation or organization)		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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o 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 21, 2013, the Company issued a press release announcing its financial results for its fiscal third quarter ended November 2, 2013. 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 21, 2013. 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 2, 2013.

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 21, 2013.
99.2	Trans World Entertainment Corporation Transcript for Earnings Call held on November 21, 2013.

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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 22, 2013	/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 21, 2013.
99.2	Trans World Entertainment Corporation Transcript of Earnings Call held on November 21, 2013.

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EX-99.1

		EXHIBIT 99.1
	Contact:		Contact:
	Trans World Entertainment		Financial Relations Board
	John Anderson		Marilynn Meek
	Chief Financial Officer		(mmeek@frbir.com)
	(518) 452-1242		(212) 827-3773
38 Corporate Circle
Albany, NY 12203

www.twec.com   NEWS RELEASE  

TRANS WORLD ENTERTAINMENT ANNOUNCES THIRD QUARTER RESULTS

          Albany, NY, November 21, 2013 — Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its third quarter ended November 2, 2013. For the third quarter of 2013, the Company reported a net loss of $3.3 million, or a loss of $0.10 per share, compared to a net loss of $2.2 million, or a loss of $0.07 per share, for the same period last year.

          Comparable store sales for the quarter were down 3.7%. Total sales for the quarter decreased 13.1% to $79.8 million compared to $91.8 million in 2012. During the quarter, the Company operated an average of 356 stores compared to 379 last year, a 6.1% decline.

          Gross profit for the quarter was $30.7 million, or 38.5% of sales, as compared to $34.7 million, or 37.9% of sales for the same period last year. Selling, general and administrative (“SG&A”) expenses decreased 8.2% for the quarter to $32.5 million compared to $35.4 million for the comparable period last year. The reduction in SG&A expenses was due to fewer stores in operation. As a percentage of sales, SG&A expenses were 40.8% versus 38.6% for the same period last year.

          For the thirty-nine weeks ended November 2, 2013, total sales decreased 13.8% to $254.5 million, compared to $295.1 million for the same period in 2012. Comparable store sales for the thirty-nine week period decreased 4.7%. Net loss for the thirty-nine week period was $4.3 million, or a loss of $0.13 per share, compared to a net loss of $1.3 million, or a loss of $0.04 per share, for the same period last year.

          Gross profit for the thirty-nine weeks ended November 2, 2013 was $98.5 million, or 38.7% of sales, compared to $112.4 million, or 38.1%, of sales for the same period last year. For the thirty-nine weeks ended November 2, 2013, SG&A expenses decreased 9.6% to $98.5 million compared to $108.9 million in the comparable period last year. As a percentage of sales, SG&A expenses were 38.7% versus 36.9% for the same period last year.

          Cash on hand at the end of the quarter was $86.0 million, compared to $59.9 million at the end of the third quarter last year. Inventory was $174.9 million at the end of the quarter, versus $178.3 million at the end of the third quarter last year, a decline of 1.9%.

          Trans World will host a teleconference call today, Thursday, November 21, 2013, 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, the District of Columbia 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 2, 2013			% to Sales			October 27, 2012			% to Sales			November 2, 2013			% to Sales			October 27, 2012			% to Sales
Net sales	$	79,772					$	91,769					$	254,473					$	295,094
Cost of sales		49,032			61.5	%		57,032			62.1	%		155,930			61.3	%		182,724			61.9	%
Gross profit		30,740			38.5	%		34,737			37.9	%		98,543			38.7	%		112,370			38.1	%
Selling, general and administrative expenses		32,524			40.8	%		35,417			38.6	%		98,516			38.7	%		108,928			36.9	%
Depreciation and amortization		1,028			1.3	%		948			1.0	%		2,713			1.1	%		2,774			0.9	%
Loss from operations		(2,812	)		-3.6	%		(1,628	)		-1.7	%		(2,686	)		-1.1	%		668			0.2	%
Interest expense, net		481			0.6	%		513			0.6	%		1,451			0.6	%		1,805			0.6	%
Loss before income taxes		(3,293	)		-4.2	%		(2,141	)		-2.3	%		(4,137	)		-1.7	%		(1,137	)		-0.4	%
Income tax expense		22			0.0	%		47			0.1	%		119			0.0	%		141			0.0	%
Net income (loss)	$	(3,315	)		-4.2	%	$	(2,188	)		-2.4	%	$	(4,256	)		-1.7	%	$	(1,278	)		-0.4	%
Basic Loss per common share:
Basic Loss per share	$	(0.10	)				$	(0.07	)				$	(0.13	)				$	(0.04	)
Weighted average number of common shares outstanding - basic		32,586						31,555						32,673						31,543
Diluted Loss per common share:
Diluted Loss per share	$	(0.10	)				$	(0.07	)				$	(0.13	)				$	(0.04	)
Weighted average number of common shares outstanding - diluted		32,586						31,555						32,673						31,543

SELECTED BALANCE SHEET CAPTIONS: (in thousands, except store data)	November 2, 2013		October 27, 2012
Cash and cash equivalents	$	86,028	$	59,932
Merchandise inventory		174,884		178,332
Fixed assets (net)		12,647		15,264
Accounts payable		72,971		65,002
Borrowings under line of credit		—		—
Long-term capital lease, less current portion		1,218		2,250
Stores in operation, end of period		360		376

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EX-99.2

Trans World Entertainment Corporation Q3 2013 Results Earnings Call Exhibit 99.2

Executives

Bob Higgins - Chairman and CEO

John Anderson - Chief Financial Officer

Analysts

William Myers - Miller Asset

Trans World Entertainment Corporation Q3 2013 Results Earnings Call November 21, 2013 10:00 AM ET

Operator

Good day, ladies and gentlemen. And welcome to the Trans World Entertainment Third Quarter 2013 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions to be given at that time. (Operator Instructions)

As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host for today, Mr. Bob Higgins, Chairman and CEO. Sir, you may begin.

Bob Higgins - Chairman and CEO

Thank you. Good morning, everyone. Thank you for joining us as we discuss our third quarter and year-to-date results. On the call with me today is John Anderson, our Chief Financial Officer.

For the third quarter, our net loss was $3.3 million as compared to a net loss of $2.2 million in the third quarter of last year. Year-to-date, our net loss is $4.3 million, compared to a net loss of $1.3 million during the same period in 2012. For the third quarter, our comp sales were down 3.7%. Total sales for the quarter decreased 13% to $79.8 million, compared to $91.8 million last year.

Now I will touch on our sales performance by category for the quarter. Video comp sales were down 3%. The decrease was driven by softness in DVD sales as Blu-ray continued to perform well. Video represented 46% of our business, compared to 45% last year.

Music comp sales declined 7%. The Music category represented 30% of our business for the quarter, compared to 31% last year.

Trend comp sales increased 11%. We continue to take advantage of opportunities to strengthen our selection of entertainment related merchandize. Trend sales represented 12% of our business for the quarter, compared to 10% last year.

Electronic comp sales decreased 16%. The declined in Electronics is due to increase competition in headphones. We are now in the process of rolling out enhancements to our assortment and customer shopping experience, which we expect will improve our results during the holiday season. Electronic sales represented 8% of our business for the quarter, compared to 10% last year.

Video Games comp sales were up 7% for the quarter. Video Game sales were driven by the release of Grand Theft Auto during the quarter. Game sales represented 4% of our business for the quarter the same levels last year.

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

John Anderson - Chief Financial Officer

Thanks Bob. Good morning. As Bob mentioned, our net loss for the quarter was $3.3 million or $0.10 per diluted share, as compared to last year’s net loss of $2.2 million or $0.07 per diluted share. Year-to-date, the net loss of $4.3 million compared to a net loss of $1.3 million last year.

EBITDA for the quarter was a loss of $1.8 million, compared to a loss of $680,000 last year. Year-to-date, EBITDA was $26,000 compared to $3.4 million last year.

Our gross margin rate for the quarter increased 60 basis points from last year to 38.5% of sales, driven by improved margin rates in our video and music categories.

Trans World Entertainment Corporation Q3 2013 Results Earnings Call Exhibit 99.2

SG&A expenses were $32.5 million, a reduction of 8.2% from last year’s third quarter. The decrease in SG&A expenses was driven by the reduction in store count. SG&A expenses as a percent of sales was 40.8%, compared to 38.6% for the same period last year. Net interest expense was $481,000 in the quarter versus $513,000 last year.

We ended the quarter with 360 stores and 2.1 million square feet in operation, versus last year’s 376 stores and 2.3 million square feet. We finished the quarter with the $175 million in inventory, 2% below last year’s $178 million. On a per square foot basis, inventory was $82 compared to $77 last year.

We ended the quarter with $86 million in cash, compared to $60 million last year. During the 13 weeks ended November 2, 2013, the company repurchased 302,000 shares of common stock at an average price of $4.57 per share for an aggregate purchase price of approximately $1.4 million, leaving approximately $20.6 million available for purchase under the program.

Now, I’ll turn it back over to Bob.

Bob Higgins - Chairman and CEO

Thanks John. We’ve been disappointed in our results, needless to say. Despite the challenging results there were several highlights for the quarter, we continue to deliver strong comp sales in our Trend category.

We continue to improve gross margin rates in the majority of our merchandise categories through disciplined price management. We opened five stores during the third quarter, year-to-date, we’ve opened 14 stores.

As John mentioned, we ended the quarter with cash of $86 million and the company continues to repurchase shares under the stock repurchase program established by the Board of Directors. Given the competitive changes occurring in our industry, the company is establishing strategic initiatives to combat industry issues due to technology changes and capitalize on just in purchasing preferences by consumers within the broader entertainment industry.

The overall goal of the plan is to transform the merchandising mix and shopping experience, both in our stores and online by adding new entertainment related products to compliment our core product lines and appeal to a broader customer base.

Our brand promises to make the latest and greatest entertainment accessible to people in an easy, fun environment, which will support the expansion of our store base while improving profitability in our existing stores.

As part of developing the plan, we will be evaluating the resources and investments required to test and implement initiatives to transform our stores, and provide our customers with a new and improved shopping experience that will drive increased sales and profits.

As we move forward with the plan, we will share further details on future calls. I’d like to thank you for your time today and hope everyone has a safe and happy holiday season. But before that I’d just like to open up the call now to any questions that anybody might have.

Question-and-Answer Session

Operator

(Operator Instructions) And we have a question from the line of William Myers of Miller Asset. Your line is open. Please go ahead.

William Myers - Miller Asset

Thank you for taking our questions. Could you — have you any indication of — what are your feelings about how the holiday season is shaping up at this point?

Bob Higgins - Chairman and CEO

It’s really too early to tell without even, Thanksgiving weekend and so it’s really hard to tell. If we look at our monthly sales, October was the best of the three months but that doesn’t tell you anything. So it’s really too hard to tell and we are going to have a fair number of — the majority of our stores will actually be open [on Thanksgiving]. We are not sure exactly what time yet, but

Trans World Entertainment Corporation Q3 2013 Results Earnings Call Exhibit 99.2

they will be open before 12 0’ Clock that’s for sure. And depending on the mall and what they are doing. We expect to capitalize on that.

William Myers - Miller Asset

Okay. And the new stores, which seem to be in time for the holiday season, any comments on — your thoughts on how they are — how you are seeing opening new stores, the competition at this point?

Bob Higgins - Chairman and CEO

No, it’s pretty much what we expect and I think, like with any new stores you will have one that does better than others and some that won’t do as well. But in general, I think it’s — we have got it well under control.

William Myers - Miller Asset

Okay. And just finally leases on stores, are they trending back up at this point or down, or I know that would only be a long-term effect, but how is that environment?

Bob Higgins - Chairman and CEO

Well, the environment out there is still — it is people want our category and they see a value to our category and so we are able to — not that it’s easy, but we are able to work with the developer that works something out, that works for him or works for us. So we are still doing, what I would call the right thing in the lease area.

William Myers - Miller Asset

Okay. That sounds good and that’s all from me.

Bob Higgins - Chairman and CEO

Okay. Thank you.

Operator

Thank you. (Operator instructions) And I’m showing no additional question in the queue.

Bob Higgins - Chairman and CEO

Okay. Well, like I said earlier I would like to wish everybody a safe and happy holiday season. And we look forward to talking you about our quarter-end and annual results on March 6th of 2014. Thank you very much and thank you, operator.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may all disconnect. Have a great rest of your day.