Bradlees Announces First Quarter Results.

Business Editors

BRAINTREE, Mass.--(BUSINESS WIRE)--May 18, 2000

Bradlees, Inc. (NASDAQ:BRAD) today announced a reduced net loss for the 13-week first quarter ended April 29, 2000 compared with the first quarter of 1999 despite a sales shortfall for the quarter primarily attributable to unseasonably cold and rainy weather.

The Company reported a net loss of $23.5 million, or $2.36 per share, compared with a net loss of $24.4 million, or $2.39 per share, in the prior-year period. The loss before interest and the cumulative effect of an accounting change was reduced to $16.1 million from $17.0 million in the prior year. The quarter reflected the successful disposition of the Company 's previously closed Peabody, MA store lease and the related $2.7 million gain resulting from the early termination of the associated lease obligation. In addition, the Company's SG & A expenses included a $1.9 million credit associated with the elimination of certain benefit liabilities.

"While earnings were helped by the items discussed above, I remain pleased that our earnings improved over last year in the face of adverse weather in April which significantly impacted early spring and Easter sales," said Peter Thorner, Bradlees Chairman and Chief Executive Officer. "The effect of extensive new competitive store openings in March and April were well within our expectations. However, because we are traditionally more softlines-oriented than other discount retailers, our business was particularly affected by the cold and rainy weather.

"As the weather has become more seasonably appropriate during May, we have seen our business respond favorably and sales so far are on plan for the month. In addition, we are extremely pleased with the early results of our new Staten Island store which opened late last month. Customer response has been tremendous and results so far have significantly exceeded our expectations."

Total sales for the quarter increased 1.1% to $325.3 million from $321.9 million in the prior year period. Comparable store sales decreased 1.4% over the prior year period.

Bradlees is a leading regional discount retailer with 105 stores in seven Northeast states and 1999 sales of $1.5 billion. Bradlees offers an assortment of merchandise focused on basic and casual apparel, basic and fashion items for the home, and commodity and convenience products.

General information about Bradlees, including corporate background and press releases, is available on the internet at http://www.bradlees.com. To find the nearest store location call toll-free 1-877-272-3533 or visit the web site.

Safe Harbor Statement: this press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Any such statements are subject to important factors which could cause the Company's actual results to differ from those anticipated by the forward-looking statements. These factors are referenced in the Company's latest Form 10K and in other SEC filings.

                            BRADLEES, INC.
                           AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)
            (Dollars in thousands except per share amounts)

                                               13 Weeks Ended
                                         4/29/00             5/1/99

Total sales                             $ 325,290          $ 321,903
Leased department
 sales                                     10,365              9,567
Net sales                                 314,925            312,336
Cost of goods sold                        227,556            224,556
Gross margin                               87,369             87,780
Lease department and
 other operating income                     2,971              2,731
                                           90,340             90,511
Selling, store operating,
 administrative and
 distribution expenses                    103,033            100,204
Depreciation and
 amortization expense                       6,136              7,288
Gain on disposition
 of property                                2,733                --

Loss before interest
 and cumulative effect
 of an accounting change                  (16,096)           (16,981)

Interest and debt
 expense                                    7,384              6,882

Loss before cumulative
 effect of an accounting change           (23,480)           (23,863)

Cumulative effect of
 accounting change                            --                 558

Net loss                                ($ 23,480)         ($ 24,421)

Net loss per share
 before accounting change               ($   2.36)         ($   2.34)
Cumulative effect
 of accounting change                         --               (0.05)

Net loss per share                      ($   2.36)         ($   2.39)

                            BRADLEES, INC.
                           AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Unaudited)
                        (Dollars in thousands)

                                              4/29/00     5/1/99
ASSETS

Current assets:
 Cash                                        $  9,107   $ 10,315
 Accounts receivable                           12,354      8,470
 Inventories                                  296,827    263,527
 Prepaid expenses                              11,274     10,435
  Total current assets                        329,562    292,747

Property excluding
 capital leases, net                           92,550     89,053
Property under capital
 leases, net                                   21,942     10,037
  Total property, plant and equipment, net    114,492     99,090

Lease interests, net                           70,390     74,728
Assets held for sale                             --       14,000
Other, net                                      8,101      6,354
 Total other assets                            78,491     95,082
 Total Assets                                $522,545   $486,919

                            BRADLEES, INC.
                           AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Unaudited)
                        (Dollars in thousands)

LIABILITIES AND
 STOCKHOLDERS' EQUITY

                                                 4/29/00      5/1/99
Current liabilities:
 Accounts payable                              $ 174,138    $ 156,680
 Accrued expenses                                 14,705       21,711
 Revolver borrowings                             187,359      132,427
 Self-insurance reserves                           6,430        6,358
 Current portion of
  capital lease
  obligations and notes                            2,963        2,532
   Total current liabilities                     385,595      319,708
Long-term liabilities:
 Obligations under
  capital leases                                  22,323       24,824
 Lease financing
  obligation                                      17,487         --
 Convertible notes
  payable                                           --         28,995
 Self-insurance reserves                          12,758       12,908
 Unfavorable lease
  liability                                       45,299       44,742
 Other long-term
  liabilities                                     16,046       25,045
   Total long-term liabilities                   113,913      136,514
Stockholders' equity:
 Common stock: 9,954,599 shares
 (10,225,711 shares at 5/1/99)
 Par value                                           100          102
 Additional paid-in capital                       55,785       55,016
Accumulated deficit                              (32,848)     (24,421)
 Total stockholders' equity                       23,037       30,697

  Total Liabilities and Stockholders' Equity   $ 522,545    $ 486,919