Dairy Mart Reports Results For Fiscal 2001 Second Quarter; Convenience Store Operations Continue to Improve.

Business & Consumer/Retail Editors

HUDSON, Ohio--(BUSINESS WIRE)--Sept. 12, 2000

Dairy Mart Convenience Stores, Inc. (AMEX:DMC) today announced financial results for its second quarter ended July 29, 2000.

Revenues for the second quarter increased 26%, to $195.8 million from $155.6 million for the same period last year, marking the seventh consecutive quarter of double-digit revenue growth. Merchandise sales of company-operated stores open at least a year increased 1.5% in the quarter. Gasoline revenues increased 61%, to $94.3 million compared with $58.7 million in the prior-year quarter. The average selling price of gasoline increased 44 cents per gallon, and total gallons of gasoline sold increased 15% percent, to 61.0 million gallons from 53.0 million gallons in the same quarter last year.

Net income for the quarter was $0.1 million, or $0.02 per share, compared with net income of $1.2 million, or $0.24 per share, in the prior year. Results for the second quarter of the current year, however, included non-recurring expenses of $0.4 million primarily related to the Company's previously announced and ongoing effort to explore all of its strategic options, including a potential sale of the Company. On an operating basis, earnings before interest, taxes, depreciation and amortization (EBITDA) were $7.8 million in both the current year and prior year second quarters.

"Despite relatively soft same-store sales increases caused by unseasonably cool and wet weather this summer, our convenience store operations continued to improve," said Robert B. Stein, Jr., Dairy Mart's Chairman, President and Chief Executive Officer. "Our convenience store group had increased profitability as our new stores continue to mature. The net earnings of the Company were overall negatively impacted by non-recurring expenses related to the Company's review of its strategic options, by increased interest expense primarily related to higher rates and by expenses associated with the sale or closure of under-performing stores."

For the first half of fiscal 2001 revenues increased 31% to $368.8 million from $281.9 million for the same period last year. Merchandise sales of company-operated stores open at least a year increased 5.5%. Total gasoline gallons sold increased 21% to 120.6 million gallons from 99.9 million gallons last year.

The Company recorded a net loss of $2.8 million, or $0.57 per share, for the first half of fiscal 2001, compared with net income of $1.3 million, or $0.26 per share, in the first half of last year. First half results for this year, however, include $0.5 million of non-recurring expenses as described above, whereas first half results for last year include a $0.7 million non-recurring gain associated with the sale of certain assets. On an operating basis, EBITDA were $9.3 million for the first half of fiscal 2001 compared to $12.4 million for the same period last year.

Dairy Mart Convenience Stores, Inc. was named "Convenience Store Chain of the Year" in 1999 by Convenience Store Decisions magazine. Dairy Mart owns or operates approximately 575 retail stores in seven states located 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.

Any statements contained in this release that are not historical facts, including those relating to future operating results; improved gasoline and other gross margins; and possible strategic alternatives of the Company, including possible sale of the Company, that may be considered forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially. Factors that could cause actual results to differ from those forward-looking statements include competition, general economic conditions, current and anticipated gasoline market conditions and the impact on anticipated gasoline margins, the ability to find one or more suitable buyers for individual stores or the Company as a whole at acceptable prices, the ability of such buyers to finance the store purchases or the Company as a whole and other factors discussed in periodic reports filed by the Company with the Securities and Exchange Commission.

         Dairy Mart Convenience Stores, Inc. and Subsidiaries

                 Consolidated Statements of Operations
                              (Unaudited)
               (in thousands, except per share amounts)

                       FOR THE SECOND FISCAL      FOR THE TWO FISCAL
                           QUARTER ENDED            QUARTERS ENDED
                      ------------------------------------------------
                       July 29,     July 31,     July 29,     July 31,
                        2000         1999         2000         1999
----------------------------------------------------------------------

Revenues              $ 195,810   $ 155,550     $ 368,744   $ 281,903

Cost of goods sold
 and expenses:

  Cost of goods sold    153,943     117,079       291,353     210,034
  Operating and
   administrative
   expenses              38,414      33,560        76,151      63,914
  Interest expense        3,295       2,697         6,422       5,546
                      ---------   ---------     ---------   ---------
                        195,652     153,336       373,926     279,494
                      ---------   ---------     ---------   ---------

  Income (loss) before
   income taxes             158       2,214        (5,182)      2,409

Benefit from (provision
 for) income taxes          (64)     (1,058)        2,394      (1,155)
                      ---------   ---------     ---------   ---------

  Net income (loss)   $      94   $   1,156     $  (2,788)  $   1,254
                      ---------   ---------     ---------   ---------
                      ---------   ---------     ---------   ---------

Earnings (loss) per
 basic share          $    0.02   $    0.24     $   (0.57)  $    0.26

Weighted average
 number of basic
 shares                   4,918       4,862         4,907       4,858

AMEX TRADING SYMBOL - DMC