Dairy Mart Reports Substantial Improvements In Fiscal 1999 Third Quarter and Year-to-Date Results; Total Revenues, Same-Store Sales and Operating Profitability Continue to Grow.

HUDSON, Ohio--(BUSINESS WIRE)--Dec. 14, 1998--Dairy Mart Convenience Stores, Inc. (AMEX:DMC.A) (AMEX:DMC.B) today announced financial results for its fiscal 1999 third quarter and year-to-date periods ended October 31, 1998.

In order to show the company's comparative financial performance more clearly, actual results for the year-to-date fiscal period are compared with pro forma results for the corresponding period last year, which have been adjusted to exclude the gain realized from the sale of 156 convenience store and gasoline locations in June 1997, as well as the historical operating results associated with the assets sold (see table attached).

The company's current-year third-quarter revenues increased $7.9 million or 6.7 percent to $126.2 million from $118.3 million last year. Continued improvement in profitability yielded net income of $601,000, or $0.13 per share, for the third quarter of fiscal 1999, which was a turnaround from a net loss of $310,000, or $0.07 per share, a year ago. Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased substantially to $6.6 million for the current quarter from $4.4 million in the prior-year third quarter.

For the three fiscal quarters ended October 31, 1998, net income of $854,000, or $0.18 per share, was a turnaround from the pro forma net loss of $1,004,000, or $0.22 per share, a year ago. EBITDA was $17.6 million as compared to pro forma $13.0 million in the first nine months of the prior year.

"I am pleased with the progress that we continue to make," said Robert B. Stein, Jr., Dairy Mart's Chairman, President, and Chief Executive Officer. "Comparable corporate-store sales are up 8.6% in the current third quarter and 9.4% on a year-to-date basis. These increases combined with our new store openings are the driving forces behind total revenue growth on a quarter-to-quarter and year-to-year comparison basis. We increased our total revenues, same-store sales and profitability in a very competitive retailing environment.

"Our strategy of improving the overall quality of our asset base and increasing our revenue mix to include more gasoline sales is yielding results," Mr. Stein continued. "So far this fiscal year we have opened 17 new stores and have 12 more under construction. We are on plan to open 25 new stores this fiscal year and we have already started the construction of some of next year's stores. These new stores, which sell gasoline as well as a broad variety of convenience items, are more profitable than our older stores and are expected to be the key to profitable growth over the long term. By the end of fiscal 2000, we expect to have opened approximately 65 new locations, which should produce in excess of $130 million in new total revenues with higher profit margins."

In the third quarter, Dairy Mart terminated an automated teller machine (ATM) agreement because of insufficient transaction volume. The agreement, which was entered into in May, 1997, affects approximately 500 Dairy Mart stores and was originally for five years, but Dairy Mart's former partner in the agreement has agreed to pay Dairy Mart a termination fee in lieu of its ongoing payment obligations. Dairy Mart is presently reviewing alternative ATM programs. Also during the quarter, Dairy Mart completed the previously announced relocation of the remaining functions from its former headquarters facility in Enfield, Connecticut to its new corporate headquarters in Hudson, Ohio. The fiscal 1999 third-quarter results include net income of $488,000, or $.11 per share, related to the net financial effect of these events.

Dairy Mart Convenience Stores, Inc. owns or operates approximately 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 more than 400 Dairy Mart stores. Dairy Mart's web site address is www.dairymart.com.

Statements contained in this release that are not historical facts, including those relating to future financial performance and construction plans, 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," "plan," "intend," "should," "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, construction delays, the ability to attract and retain key personnel and other factors disclosed in Dairy Mart's periodic filings with the Securities and Exchange Commission.

(Table Follows) -0-

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

                 FOR THE THIRD FISCAL       FOR THE THREE FISCAL
                    QUARTER ENDED              QUARTERS ENDED
                 ____________________       ____________________

                October 31, November 1, October 31, November 1, 1997
                   1998       1997         1998     _________________
                                                      As        Pro
                                                   Reported  Forma (a)
_____________________________________  _______________________________

Revenues         $ 126,183  $ 118,313  $ 362,161  $ 394,410  $ 352,346

                 _________  _________  _________  _________  _________

Cost of goods
 sold and
 expenses:

 Cost of goods
  sold              88,721    86,095    257,754     288,195    256,678
 Operating and
  administrative
  expenses          33,658    30,163     94,803      96,667     89,676
 Interest expense    2,695     2,607      8,027       8,066      7,784
                 _________  _________  _________  _________  _________

                   125,074   118,865    360,584     392,928    354,138
                 _________  _________  _________  _________  _________

 Income (loss)
  before income
  taxes              1,109      (552)     1,577       1,482    (1,792)

(Provision) benefit
 for income taxes     (508)      242       (723)       (653)      788
                 _________  _________  _________  _________  _________

 Net income (loss) $   601    $ (310)   $   854    $    829  $ (1,004)
_____________________________________  ______________________________

Earnings (loss)
 per share -
 Basic             $  0.13    $(0.07)   $  0.18    $   0.18  $  (0.22)
Earnings (loss)
 per share -
 Diluted           $  0.13    $(0.07)   $  0.18    $   0.17  $  (0.22)
_____________________________________  ______________________________

Earnings Before Interest
 Expense, Income Taxes,
 Depreciation and
  Amortization
  (EBITDA) (b)     $ 6,567   $ 4,386    $17,612   $ 17,899   $ 13,030
_____________________________________  ______________________________

(a) The Company sold 156 convenience store and gasoline locations in
    the northeastern United States in June, 1997. The pro forma
    information presented reflects the exclusion, for all fiscal
    periods shown, of the gain realized from the sale of these assets,
    as well as the historical revenues, cost of goods sold, operating
    expenses, and direct and indirect administrative expenses
    associated with the assets sold. The pro forma information is not
    necessarily indicative of the results which would have been
    reported if the transaction had occurred at the beginning of the
    fiscal periods shown.

(b) EBITDA is significant to the Company's calculations of its
    financial covenants and is defined as earnings before interest
    expense, income taxes and depreciation and amortization expenses.
    EBITDA should not be viewed as a substitute for Generally Accepted
    Accounting Principles (GAAP) measurements such as net income
    (loss) or cash flow from operations.


                         AMEX TRADING SYMBOLS
                     CLASS A COMMON STOCK - DMC.A
                     CLASS B COMMON STOCK - DMC.B