Dairy Mart Expects Net Loss for Fiscal Year Ended January 29, 2000.

Business Editors

HUDSON, Ohio--(BUSINESS WIRE)--April 13, 2000

Dairy Mart Convenience Stores, Inc. (AMEX:DMC) announced today that it expects to report a net loss for its fourth fiscal quarter and the fiscal year ended January 29, 2000 and substantially reduced operating results for its first quarter of fiscal year 2001.

Dairy Mart will release its full fiscal-year 2000 results later this month.

Consistent with overall industry trends, the Company's results have been adversely affected by three significant operating trends: 1) lower gasoline gross profit margins; 2) lower merchandise gross profit margins; and 3) continuing increases in operating expenses, primarily related to store labor. Additionally, the Company incurred nonrecurring expenses in the fourth fiscal quarter associated with a derivative litigation settlement and the reclassification of the Company's two classes of common stock into a new single class of common stock.

Gasoline gross profit margins have been impacted by unprecedented and widely publicized increases in crude oil prices and wholesale gasoline costs. These dramatic wholesale cost increases have had a negative impact on gasoline margins and are in contrast with the higher margins reported in the previous fourth quarter and fiscal year when wholesale prices were considerably lower. The Company also incurred substantial costs in its fourth fiscal quarter related to its ongoing pursuit of a long-term gasoline supply and branding relationship for its Ohio and Michigan markets.

Merchandise gross profit margins were lower, largely because of increases in the wholesale cost of cigarettes. Additionally, higher retail cigarette prices have increased carton sales, which are less profitable than individual pack sales.

Operating expenses are again reflecting rising wages, employee benefits and payroll taxes -- a trend unlikely to improve in an environment of very-low unemployment.

The Company expects that its fiscal 2001 first quarter operating results will also be negatively affected by these factors.

Robert B. Stein, Jr., Dairy Mart's Chairman, President and CEO stated, "Although we are obviously disappointed with current results, we believe there is reason to expect improvement. Gasoline gallons sold increased 19% in fiscal 2000 and when wholesale gasoline prices decline, as they currently are, our increased market share should translate into higher earnings. Additionally, comparable store sales were up 11% last year and to counter higher store operating expenses, we continue to review our in-store merchandise, looking for opportunities to increase some product prices while remaining competitive. We are also continuing to place a greater emphasis on a variety of higher-margin food service products, particularly our Millstone Coffee program."

Any statements contained in this release that are not historical facts, including those relating to the Company's financial performance, expected declines in gasoline prices, anticipated increases in the production of crude oil, our ability to alter our product mix and status of the unemployment rate, may be considered forward-looking statements and are subject to risks, uncertainties and other factors that could cause actual results to differ materially. Actual results may differ from these forward looking statements due to risk factors, such as decisions by OPEC nations not to increase production of crude oil, inflation, a lack of demand for our higher margin products, a loss of our market share, as well as those discussed in our periodic reports filed with the Securities and Exchange Commission.

Dairy Mart Convenience Stores, Inc. was named "Convenience Store Chain of the Year," a national industry honor presented by Convenience Store Decisions magazine. The Company owns or operates approximately 600 retail stores in seven states in the Midwest and Southeast. Through consulting and licensing agreements, the Company is also affiliated with more than 200 stores in Korea and approximately 400 locations in Malaysia. For more information, visit Dairy Mart's web site at www.dairymart.com.