50-OFF Stores Reports Preliminary Operating Results and Plans.

SAN ANTONIO--(BUSINESS WIRE)--Sept. 13, 1996--San Antonio-based 50-OFF Stores, Inc. announced today preliminary results for the 26-week period ended Aug. 2, 1996. Net sales were $64.1 million, down 26.3 percent from the comparable prior year period's $87.0 million, and the company's loss before income taxes rose to $7.7 million (excluding any as yet undetermined charge for future store liquidations or closings and overhead reductions) from $1.9 million. The company operated a weighted average of 100.4 stores in the most recent period as compared to 106.6 in the comparable prior year period.

50-OFF Stores' operating results in recent years have been disappointing, reflecting weaknesses in retailing generally and in apparel retailing specifically: the casualization of apparel has hurt many apparel retailers; and regional, off-price retailers have faced increased competition for the "value-conscious" consumers' purchases. In addition, 50-OFF was especially hard hit by the last devaluation and continued deterioration of the Mexican peso and the continuing economic turmoil along the Texas-Mexico border where it operates 13 50-OFF stores, historically its best performing locations.

Faced with such deteriorating results and the apparent consumer rejection of the 50-OFF retailing concept in almost all its markets, the Board of Directors has supported a change of leadership, the continued conversion of existing 50-OFF stores to LOT$OFF stores, a geographic consolidation of the chain and the liquidation or closing of underperforming stores of stores located outside of a reduced market area, and appropriate reductions in field and corporate overhead and staffing. In addition, management has been pursuing an infusion of capital and an external affiliation with a supplier of product and credit and additional concessions from lenders and landlords to secure the resources necessary to implement its business plan and to effect the changes believed necessary by management to achieve profitability. Although management believes it has developed an appropriate plan for the company in its current environment, no assurance can be given that the company will be successful in its efforts to secure such necessary concessions and resources or to improve operations and reverse operating trends. If such efforts are not successful, management will consider, among other alternatives, strategic or financial alliances with other third parties, the merger or sale of all or a part of the company and the filing of a petition under Chapter 11 of the Bankruptcy Code.

As previously reported, 50-OFF Stores is in the process of redirecting its retail activities from off-price retailing to a closeout retailing concept. Coincident and consistent with this change is a change in the mix of products, historically a majority in family apparel, to a majority in non-apparel merchandise, principally through the addition of new product categories to the company's historical non-apparel offerings which include domestics, housewares and giftware, home furnishings, shelf-stable food products, toys, luggage, footwear, stationery and health and beauty aids. New categories include sporting goods, automotive, greeting cards, fine jewelry, books, party goods, seasonal, pet supplies and hardware, among others. The company will continue to maintain a healthy showing of basic family apparel products in the new LOT$OFF stores. The actual merchandise mix will fluctuate by category, by season and by store based on customer needs and buying trends, demographics and the availability of products at closeout prices. This merchandising concept is designed to appeal to value-conscious shoppers and other "bargain hunters," and management is hopeful its implementation will lead to higher initial mark- ups, less promotional pricing, fewer mark-downs, less inventory shrink, increased store traffic and improved operating results.

The company currently plans to open six LOT$OFF stores in San Antonio on Sept. 27 at 50-OFF's six existing San Antonio locations. A seventh San Antonio store, currently operating as The Clothing Liquidator, will reopen as a 50-OFF store, carrying LOT$OFF clearance merchandise at 50 percent of the LOT$OFF price. These six new LOT$OFF stores will bring to 19 the number of LOT$OFF stores operated by the company, 13 of such stores having opened in Oklahoma (5) and the Dallas Metroplex (8) July 26 and Aug. 1, 1996, respectively. Early operating results for the 13 existing LOT$OFF stores have been encouraging, far surpassing the results of the 85 remaining 50-OFF stores.

CONTACT: 50-OFF Stores, Inc.,

Charles Fuhrmann, 210/804-4904