ADVO Revises First Quarter Expectations.

Business Editors

WINDSOR, Conn.--(BUSINESS WIRE)--Jan. 7, 2002

ADVO, Inc. (NYSE: AD) today revised its revenue and earnings expectations for its first fiscal quarter ending December 29, 2001.

The Company expects revenues for the first quarter to be in the range of $285 - $287 million, and diluted E.P.S. in the range of $0.58 - $0.60. This includes approximately $2.2 million of incremental expenses related to organizational realignments and additional security costs as the Company has committed to significant incremental on-going investments in its security and safety initiatives. In addition to these investments, the revision relates to revenue shortfalls during the December holiday season, as retailers did not invest in advertising during this period as vigorously as expected. Notably, despite this fall-off, the Company's expected 4% revenue decline this quarter is markedly better than ADVO's peer group and newspaper companies, which in total, are expected to post declines of 7-10%.

Gary Mulloy, ADVO's Chairman and CEO, stated, "It appears that many retailers prejudged this holiday season as an environment with little upside, and opted not to make incremental advertising investments late in the season as a result. This action was exacerbated by budgetary pressures as they drove to meet spending limits at year-end." Mr. Mulloy continued, "Looking forward, we expect our revenue growth momentum to improve as the year progresses, and we remain very much on track with our internal productivity efforts. Additionally, our strategic business development team continues to be active in new project development which will provide additional profit leverage as the economy improves. We announced today two new second in-home date advertising programs with major clients to begin in January which, combined, will add approximately 1.5 million households to our distribution. We are also proceeding carefully into the international arena and are actively evaluating an entry into the Canadian market. Despite our near-term challenges, we believe that the outlook for the business remains extremely positive, and we are confident in our five-year strategic goal to deliver annual E.P.S. growth of 15-20%."

The Company also revised its outlook for the remainder of fiscal 2002 to accommodate its on-going increased investment in security and tempered revenue outlook. The Company expects revenue for the full fiscal year to show a growth rate in the low single digits, and diluted E.P.S. to be roughly flat to prior year in the $2.50 - 2.55 range.

The Company indicated it will hold an analyst conference call to discuss its revised expectations today at 6:00 - 6:45 ET. The call in number is 1-800-500-0177, and the replay number is 888-203-1112 (access code # 434088). The replay will be available until midnight January 11, 2002.

ADVO is the nation's largest full-service targeted direct mail marketing services company with annual revenues of over $1.1 billion. The Company's core ShopWise branded shared mail program is distributed nationally to approximately 60 million households weekly. Approximately 32 million additional households can be reached, on a shared mail basis, through ADVO's National Network Extension (A.N.N.E.). Additionally, the Company's consumer web site, ShopWise.com, provides targeted Internet access to consumers. ADVO's subsidiary, MailCoups, Inc., produces SuperCoups, an advertising solution for local neighborhood businesses. ADVO launched the America's Looking For Its Missing Children(R) program in partnership with the National Center for Missing & Exploited Children and the United States Postal Service in 1985, and ADVO's missing child cards are responsible for safely recovering 113 children. ADVO has 22 mail processing facilities and 60 sales offices nationwide. ADVO's corporate headquarters are located at One Univac Lane, Windsor, Connecticut 06095. The Company can be visited at its Web site at www.advo.com.

This report contains certain forward looking statements regarding the Company's results of operations and financial position within the meaning of Sections 21E of the Securities Exchange Act of 1934, as amended. Such forward looking statements are based on current information and expectations and are subject to risks and uncertainties which could cause the Company's actual results to differ materially from those in the forward looking statements. Such risks and uncertainties include, but are not limited to: changes in customer demand and pricing; the possibility of consolidation throughout the retail sector; the impact of economic and political conditions on retail advertising spending and our distribution system; postal and paper prices; possible governmental regulation or legislation affecting aspects of the Company's business; the efficiencies achieved with technology upgrades; the amount of shares the Company will repurchase in the future under its buyback program; fluctuations in interest rates related to the outstanding debt and other general economic factors.