Barry's Jewelers reports fiscal 1996 fourth quarter results; further expansion of successful superstore concept.

MONROVIA, Calif.--(BUSINESS WIRE)--Sept. 12, 1996--Barry's Jewelers Inc. (NASDAQ/NM:BARY) Thursday reported results for its fiscal 1996 fourth quarter and year ended May 31, 1996.

The company also announced that it will add 30 superstores in advance of the 1996 holiday sales season, bringing to 46 the number of superstores it will have open for this period. To accomplish the expansion, Barry's will convert 17 existing stores to superstores and open 13 of its 18 planned new stores in that format.

For the quarter, net sales were $29.4 million compared with $29.1 in the fourth quarter of last year. Comparable store sales rose 2.1 percent over the same quarter a year ago. The net loss for the quarter was $4.5 million or $1.12 per share, vs. $0.2 million, or 5 cents per share, in the same period of fiscal 1995.

Results for 1995 were restated to reflect a previously announced inventory error detected during the reconciliation of the company's inventory for fiscal 1996.

For fiscal 1996, net sales improved 3.0 percent to $140.1 million from $136.0 million in the same period a year ago. Comparable store sales for fiscal 1996 improved an additional 2.2 percent over fiscal 1995, for which comparable store sales rose 11 percent.

The net loss for fiscal 1996 was $2.8 million, or 70 cents per share, vs. restated net income of $1.9 million, or 48 cents per share, a year ago.

The loss for fiscal 1996 was in part attributable to the company's absorption of approximately $1.2 million of charges that consisted of $972,000 in SG&A expenses and $232,000 in debt acquisition expenses.

The charges are mostly related to expenses incurred for the settlement of legal actions, the write-off of deferred financing fees related to the redemption of Senior Secured Notes, and fees related to the recent sale of 1.5 million shares of the company's stock by Wells Fargo Bank to private investors. In addition, the company continued to experience higher than anticipated inventory shrinkage.

Commenting on the company's results, Robert W. Bridel, president and chief executive officer of Barry's Jewelers, said: "This was a year of great transition for Barry's Jewelers. During the year, the company underwent a significant change in leadership with the appointment just before year-end of a new president and chief executive officer and a vice chairman.

"That process continued after the year's conclusion with the addition of three proven executives to our board: William Eberle as chairman, and John W. Gildea and William P. O'Donnell as directors.

"We also secured an $85-million revolving line of credit with First National Bank of Boston, a portion of which was used to retire outstanding obligations under our securitization facility with Capital Markets Assurance Corp.

"We anticipate recording an extraordinary pre-tax charge of approximately $876,000 during the first quarter of fiscal 1997 related to the termination of the agreements with that institution."

"Against the backdrop of these events we remained focused on our growth strategies and maintained the progress of Barry's turnaround efforts that in combination will enhance store performance and will improve the overall strength of our organization," Bridel continued.

"As part of that process, we implemented a range of internal systems that included measures to help contain inventory shrinkage," he said.

"Importantly, we achieved a three percent increase in overall sales for the year despite the fact that we further tightened our credit standards to improve the quality of our receivables. Under those stricter standards, comparable store sales also continued to increase, rising another two percent above the 11 percent gain we achieved last year.

"Strategically, we continued to see very favorable results from our 16 new superstores and as a result plan to convert an additional 17 of our best performing mall-based locations to superstores in advance of the upcoming holiday season," Bridel added.

"This, along with the opening of 13 of our 18 new stores as superstores and the remodeling of 40 other stores, should add good strength to our competitive position going into this critical sales period."

Barry's Jewelers, one of the nation's largest independent retailers of fine jewelry, operates 171 retail jewelry stores in 17 states throughout the country, primarily in California, Texas, Arizona, North and South Carolina, Utah, Montana, Colorado, Ohio, and Indiana. -0-

                         BARRY'S JEWELERS INC.
                         FINANCIAL HIGHLIGHTS
                (unaudited, in 000s except share data)

                               Three Months Ended        Year Ended
                                    May 31,                May 31,
                                1996       1995        1996      1995

Net sales                   $  29,413  $  29,149   $ 140,145  $ 136,055

Litigation and professional
 fees                            (540)      --          (972)      --

Operating (loss) income        (2,491)     1,022       8,651     11,670

Accelerated write-off of
 debt acquisition costs          --         --          (232)      --

(Loss) income before taxes     (5,339)    (1,612)     (2,495)     1,906

Income taxes                     (850)    (1,407)        288       --

Net (loss) income           $  (4,489) $    (205)  $  (2,783) $   1,906

Net (loss) income per share $   (1.12) $   (0.05)  $   (0.70) $    0.48

Weighted average common
 shares outstanding         3,999,416  3,968,976   3,977,791  3,968,998

CONTACT: Barry's Jewelers Inc., Monrovia

Robert W. Bridel/Thomas S. Liston, 818/303-4741

or

Silverman Heller Associates, Los Angeles 

Eugene G. Heller, 310/208-2550