Cutter & Buck Announces Preliminary Fourth Quarter and Fiscal Year 2001 Results.

Business Editors

SEATTLE--(BUSINESS WIRE)--May 7, 2001

Cutter & Buck Inc. (Nasdaq: CBUK) announced today that it expects to report net sales for the fourth quarter ended April 30, 2001 decreased 2.9% to approximately $53.0 million, compared to $54.6 million for the same quarter a year ago. Net sales for fiscal 2001 increased 11.5% to approximately $170.0 million compared to $152.4 million for fiscal 2000. The company also expects to report diluted earnings per share for the fourth quarter 2001 in the range of $0.02 to $0.05, and diluted earnings per share for fiscal year 2001 in the range of $0.34 to $0.37.

"These results are less than we planned," said Harvey Jones, Chairman & CEO. "There were a number of factors that impacted the fourth quarter including:

-- A slowdown in corporate sales, which historically account for over 1/3 of
revenues and were more susceptible to the economic downturn.

-- A significant reduction in the number of golf rounds played, reflecting the
unusually cold Winter and Spring weather and the slower economy.

-- Increased off-price and liquidation sales, which disposed of the excess Fall
inventory from our third quarter, but reduced gross margins.

-- A cost structure that assumed a continued strong economy and sales growth,
with limited short-term flexibility."

"During the first half of fiscal year 2001, we believed the strong economy would continue, and we invested in infrastructure and new businesses with the expectation that the related costs would be covered by sales growth," added Jones. "In December, as sales began to slow we implemented cost control initiatives and plan to continue those initiatives in fiscal year 2002, including:

-- Reducing operating expenses.

-- Restraining capital expenditures, including significantly

slowing company-owned retail store expansion.

-- Reducing purchases to enhance inventory turns in the back

half of fiscal year 2002.

-- Managing our business to be cash flow positive in fiscal

year 2002."

"We reduced inventory by approximately $6 million during the fourth quarter to an estimated $55 million," said Marty Marks, President & COO. "Although we have more Spring fashion inventory than anticipated due to the sales shortfall, our total fashion inventories are slightly down from the prior year at just over $12 million. Classics inventory and our new company-owned retail stores generally accounted for the year over year inventory growth of approximately 49%."

"To provide some context for the current trading price of our stock," continued Marks, "at $5.66 a share, the stock market values us at:

-- 35% of sales

-- 64% of book value, and

-- Between 15.0-16.5 times expected fiscal year 2001

earnings.

We suspect the continued short position of 1,087,870 shares as of April 12, 2001 may be negatively impacting the price of the stock."

"As of April 30, 2001 we had over $7 million in cash with approximately $15 million available under our credit facility," commented Steve Lowber, Vice President and CFO. "We are carefully managing assets and slowing expansion plans for additional company-owned retail stores, in order to achieve positive cash flow during fiscal year 2002. We are well positioned to last out the economic downturn and then take advantage of an upturn in economic conditions."

The Company is scheduled to release full fourth quarter and fiscal year 2001 results on Thursday, June 21, 2001.

Statements made in this news release that are not historical facts are forward-looking information. Actual results or events may differ materially from those projected or described in any forward-looking information. Specifically, there are a number of important factors that could cause actual results or events to differ materially from those anticipated by any forward-looking information. Those factors include, but are not limited to, style changes and product acceptance, relations with and performance of suppliers and independent sales representatives, the ability of the Company to control costs and expenses through the referenced initiatives, the ability of the company to manage inventory, the ability of the Company to carry out successful design and planned product and brand messaging/extension activities and to penetrate its chosen distribution channels, competition, access to capital, foreign currency risks, the efficacy of the warehouse management system as it relates to the Company's operations, technological change, political and trade relations and general economic conditions particularly in the U.S. and Europe. Additional information on these and other factors, which could affect the Company's financial results, are included in its Securities and Exchange Commission filings. Finally, there may be other factors not mentioned above or included in the Company's SEC filings that may cause actual results to differ materially from any forward-looking information.

Cutter and Buck designs and markets upscale sportswear and outerwear under the Cutter & Buck brand. The Company is committed to achieving commercial success in a way that respects people, communities and the environment. The Company sells its products primarily through golf pro shops and resorts, corporate sales accounts and better specialty stores. Cutter & Buck products feature distinctive, comfortable designs, high quality materials and manufacturing and rich detailing.