Dairy Mart Reports Favorable Earnings Comparisons For Fiscal 1998 Fourth Quarter and Full Year.

HUDSON, Ohio--(BUSINESS WIRE)--April 30, 1998--

Company Accelerates Major Growth and Construction Plan

Dairy Mart Convenience Stores Inc. (AMEX:DMC.A)(AMEX:DMC.B) today announced that its financial results for the 1998 fourth quarter and fiscal year, which ended Jan. 31, 1998, improved over the corresponding periods of the prior year.

Comparable-store sales were up 3.1 percent for the fourth quarter and 2.5 percent for all of fiscal 1998. Fourth-quarter revenues were $107 million in fiscal 1998, as compared with $141 million the year before, reflecting the June 1997 sale of 156 stores in the northeastern United States.

The company recorded a net loss of $2.5 million, or $0.54 per share, for the fourth quarter of fiscal 1998, which compares favorably with last year's fourth-quarter net loss of $3.9 million, or $0.85 per share. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter turned around to $1.2 million from a $300,000 loss the year before.

For all of fiscal 1998, Dairy Mart's net loss was reduced to $1.7 million from $1.9 million in fiscal 1997. On a per-share basis, the net loss was $0.37 in fiscal 1998 and $0.42 in fiscal 1997. Revenues were $501.4 million for fiscal 1998 and $585.7 million for fiscal 1997. EBITDA for fiscal 1998 was $19.0 million and for the prior year was $20.1 million.

"Dairy Mart continues to improve," said Robert B. Stein, Jr., Dairy Mart's chairman, president and chief executive officer. "We had a smaller loss in our seasonally slow fourth quarter and for all of fiscal 1998 than we did the year before because we have continually been improving the efficiency of our operations. We have increased our same-store sales and product gross profits in a very competitive retailing environment. The gross margins realized on cigarettes and on certain other key product categories continue to be under exceptional pressure as our competitors vie for market share, specifically yielding in certain in-store product margins to attract the gasoline-buying customer. These thinner retail margins at store level were compounded by higher store labor costs related to the most recent increase in the minimum wage and an overall tight labor market."

"Improving the overall quality of our asset base and increasing our overall revenue mix to include more gasoline sales is the key element of our business plan," Stein said. "We will accomplish our goals primarily by opening new stores and by entering into longer-term branding and supply relationships with major oil companies. More gasoline sales would increase our total gross profit dollars without a corresponding increase in operating costs."

"Only 46 percent of our locations now sell gasoline," Stein continued. "To improve our position in the marketplace, we are implementing the largest increase in new store development in the company's history. In fiscal 1998, we opened six new stores. In fiscal 1999 we intend to construct approximately 25 new convenience retail locations and approximately 65 new locations in total over the next two years. The majority of new stores will be located in Ohio and Kentucky where Dairy Mart has its largest concentration of stores."

"The new stores we have added already have had a very positive impact on the company's overall profitability, because they generate average annual sales in excess of $2 million each, which is four times higher than our older stores, and their overall sales mix contains a larger percentage of gasoline and higher-margin food service products," Stein said. "The addition of 65 stores over the next 24 months should produce in excess of $130 million in new total revenues with higher profit margins."

"Our strategy of improving our asset quality in defined core markets has proven to be a good one," Stein said. "As we have said before, we will remain competitively priced at the retail level to retain Dairy Mart's current customers and to attract new, permanent customers."

Dairy Mart Convenience Stores Inc., one of the nation's leading convenience store retailers, owns or operates more than 600 retail stores in seven states. Through consulting and licensing agreements, the company is also affiliated with over 200 stores in Korea and approximately 400 locations in Malaysia. The company is headquartered in Ohio, where there are approximately 400 Dairy Mart stores. Dairy Mart's web site address is www.dairymart.com.

Statements contained in this release that are not historical facts may constitute forward-looking statements with respect to Dairy Mart's future performance. Forward-looking statements are generally identified by the words "anticipate," "believe," "expect," "intend," "estimate," and similar expressions. Factors that could cause actual results to differ materially from those in the forward-looking statements include competition, general economic conditions, the availability of capital, the ability to obtain suitable locations for new stores and the ability to attract and retain key personnel.

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         Dairy Mart Convenience Stores Inc. and Subsidiaries
                Consolidated Statements of Operations
                             (Unaudited)
               (in thousands, except per share amounts)

                      For the Fourth Fiscal          For the Fiscal
                         Quarter Ended                 Year Ended
                    Jan. 31,      Feb. 1,        Jan. 31,     Feb. 1,
                      1998         1997            1998        1997


Revenues           $ 106,953     $140,940      $ 501,359  $  585,746

Cost of goods sold
  and expenses:

    Cost of
      goods sold      76,750      105,955        364,932     431,851
    Operating and
      administrative
      expense         31,546       38,309        128,221     145,631
    Interest expense   2,545        2,690         10,612      10,877
                     -------      -------        -------      ------
                     110,841      146,954        503,765     588,359

    Income before
      income taxes    (3,888)      (6,014)        (2,406)     (2,613)

Provision for income
  taxes                1,349        2,094            696         727

    Net income      $ (2,539)   $  (3,920)     $  (1,710)   $ (1,886)

Weighted average
  number of shares     4,702        4,612          4,605       4,441

Income per share    $  (0.54)   $   (0.85)     $   (0.37)   $  (0.42)

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Amex Trading Symbols 

Class A Common Stock -- DMC.A

Class B Common Stock -- DMC.B

CONTACT: Dairy Mart Convenience Stores Inc.

Gregory G. Landry, 330/342-6729