Cost-U-Less Reports Fiscal 1998 Third Quarter And Year-to-date Operating Results.

BELLEVUE, Wash.--(BUSINESS WIRE)--Oct. 28, 1998--Cost-U-Less, Inc. (Nasdaq:CULS) today reported sales and operating results for the third quarter (thirteen weeks) and first thirty-nine weeks of fiscal 1998, both ended September 27, 1998, and developments in the South Pacific and Caribbean.

Net income for the third quarter of fiscal 1998 increased to $288,000 or $0.09 per share (diluted), compared to net income of $264,000 or $0.12 per share (diluted), for the third quarter of fiscal 1997.

Net sales for the third quarter of 1998 increased 10.8 percent to $33.0 million from $29.8 million during the third quarter of fiscal 1997. Comparable-store sales (stores open for a full 13 months) increased 10.4 percent for the third quarter of fiscal 1998.

Net income for the first thirty-nine weeks of fiscal 1998 increased to $676,000 or $0.27 per share (diluted), compared to a loss of $11,000 or $0.01 per share (diluted), during the first thirty-nine weeks of fiscal 1997.

Net sales for the first thirty-nine weeks of fiscal 1998 increased 3.0 percent to $96.2 million from $93.4 million during the first thirty-nine weeks of fiscal 1997. The increase of $2.8 million was primarily due to same store sales increases and sales from a new store in Nadi, Fiji, but offset by a loss of sales totaling $3.4 million from two mainland stores that closed at the end of the first and second quarters of fiscal 1997. Comparable-store sales increased 6.7 percent for the first thirty-nine weeks of fiscal 1998.

Cost-U-Less opened a new store on July 2, 1998, in Nadi, Fiji -- the company's first foreign store located outside a U.S. territory -- and will open another store in Suva, Fiji, on November 12, 1998. Construction is on schedule for a new store in Curacao, Netherlands Antilles, scheduled to open January 28, 1999. Lease negotiations on sites in Aruba, Papua New Guinea, St. Maarten and Tahiti continue to move forward. The company has postponed plans for a store in Tonga due to a downturn in economic conditions in Tonga caused mainly by a draught and influences from the Asian crisis. Jim Rose, Cost-U-Less' president and CEO, stated, "We are continually re-evaluating proposed new markets and make decisions on opening stores based on economic conditions rather than a desire to increase our store base."

Cost-U-Less is a leading operator of mid-sized club-style stores operating in U.S. territory and foreign island markets, operating nine stores at the end of the third quarter of 1998. More information is available at http://www.costuless.com. -0-

                           COST-U-LESS, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                         September 27,    December 28,
                                             1998             1997
                                    ----------------------------------
                                         (Unaudited)
                                ASSETS
Current assets:
   Cash and cash equivalents             $    5,457       $    1,028
   Receivables, net                           1,408            1,023
   Inventories, net                          16,460           12,271
   Other current assets                       1,236              987
                                     ---------------------------------
     Total current assets                    24,561           15,309

Property and equipment, net                  11,455            6,847
Deposits and other assets                       812              518
Deferred tax assets                             141              141
                                     =================================
     Total assets                        $   36,969       $   22,815
                                     =================================

                 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                      $   11,463       $    8,953
   Accrued expenses                           1,838            1,235
   Income taxes payable                           0              141
   Line of credit                                 0              376
   Current portion of
    long-term debt                              633              384
   Current portion of
    capital leases                              422              406
                                      --------------------------------
Total current liabilities                    14,356           11,495

Deferred rent                                   524              481
Long-term debt, less
 current portion                              2,189                -
Capital lease obligations,
 less current portion                           854            1,169
                                      --------------------------------
Total liabilities                            17,923           13,145

Shareholders' equity:
   Preferred stock, $0.001 par value:
     Authorized shares - 2,000,000
     Issued and outstanding
      shares - none
   Common stock, $0.001 par value:
     Authorized shares - 25,000,000
     Issued and outstanding shares -
      3,539,961 and 1,999,961                12,271            3,525
   Retained earnings                          6,841            6,165
   Accumulated other comprehensive income       (66)             (20)
                                       -------------------------------
Total shareholders' equity                   19,046            9,670
                                       ===============================
Total liabilities and
 shareholders' equity                    $   36,969       $   22,815
                                       ===============================

                           COST-U-LESS, INC.
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
            (in thousands, except share and per share data)

                            13 WEEKS ENDED         39 WEEKS ENDED
                      ------------------------------------------------
                         Sept. 27,  Sept. 28,   Sept. 27,    Sept. 28,
                           1998       1997        1998         1997
                      ------------------------------------------------

Net sales                $ 32,958  $ 29,747   $   96,163   $   93,403
Merchandise costs          27,501    24,870       80,211       78,221
                        ----------------------------------------------
Gross profit                5,457     4,877       15,952       15,182

Operating expenses:
   Store                    3,769     3,484       10,958       11,001
   General and
    administrative          1,089       769        2,960        2,352
   Store opening               83       115          547          183
   Store closing                0         0          244        1,300
                        ----------------------------------------------
Total operating expenses    4,941     4,368       14,709       14,836
                        ----------------------------------------------
Operating income (loss)       516       509        1,243          346

Other income (expense):
Other income (expense)       (10)         0          (10)           0
Interest income               57          0           57            0
Interest expense            (126)      (118)        (260)        (362)
                        ----------------------------------------------
Income (loss) before
 income taxes                437        391        1,030          (16)

Income tax provision
 (benefit)                   149        127          354           (5)
                        ==============================================
Net income (loss)       $    288  $     264   $      676   $      (11)
                        ==============================================

Earnings (loss)
 per common share:
   Basic                $  0.09   $   0.13   $     0.28    $    (0.01)
   Diluted                 0.09       0.12         0.27         (0.01)

Weighted average
 common shares
 outstanding          3,116,884  1,999,961    2,372,269     1,999,961
                    ==================================================
Weighted average
 common shares
 outstanding,
 assuming dilution    3,226,655  2,137,693    2,501,252     1,999,961
                    ==================================================