Elder-Beerman Announces Plan for New Merchandising Strategy and Organizational Streamlining.

Business Editors

DAYTON, Ohio--(BUSINESS WIRE)--Aug. 11, 2000

The Elder-Beerman Stores Corp. (Nasdaq:EBSC) today announced that it has completed its evaluation of strategic alternatives and has announced a three-part strategic plan to reinforce its position as the department store of choice in secondary markets in the Midwest. The new plan calls for:

-- A shift in the company's merchandising strategy -- The company

plans to aggressively grow its opening price point and

moderate priced value driven assortments, with an intense

focus on ladies' and men's apparel, ladies' shoes and the home

store. The company also intends to grow its already strong

cosmetics business. Frederick J. Mershad, chairman and chief

executive officer, stated that, "This new merchandising

direction is the product of an intense effort over the past

several months by a team of our executives and outside retail

consultants, and has been tested through an extensive study of

thousands of our customers conducted this summer by our

consultants. We believe we can deliver exceptional moderate

and opening price point assortments in ladies' and men's

apparel, ladies' shoes and the home store that represent

quality, fashion and value to our customers. We intend to make

these businesses, along with our strong cosmetics business,

the major differentiators to bring customers to

Elder-Beerman."

-- An acceleration of new concept store development -- The

company will capitalize on its successful, newly developed

concept stores that were introduced in the third and fourth

quarter of 1999. The company has previously announced the fall

season openings of three new concept stores in Howell,

Michigan, West Bend, Wisconsin and Jasper, Indiana. New

concept store openings will be accelerated beginning in the

spring of 2001. The company will also incorporate some of the

most successful operational elements of the concept stores

into existing company stores over the next eighteen months.

About one-half of the existing stores will be modified prior

to the Christmas 2000 shopping season, with the balance to be

converted in 2001.

The new concept stores, smaller than the typical department store, maximize the flexibility and use of selling space in a customer-friendly setting through a floor plan that features movable interior walls, a neutral color palate, high capacity floor fixturing and extensive wallscaping. These stores are located in smaller, secondary markets where there is less competition, allowing Elder-Beerman to position itself as the retail destination of first choice. Features of these stores include:

-- Highly visible centralized customer service centers

conveniently located in main aisles throughout the store,

which are staffed during all store hours, providing

efficient, convenient transactions and quality customer

service.

-- Assisted service cosmetics and shoes available on open

sell fixtures for ease of selection.

-- And The Zone, a combined juniors and young men's shop that

creates an exciting specialty store within a store to

capture sales from the next generation of customers.

-- Streamlining of the company's organizational structure -- An

aggressive streamlining initiative is planned to improve

profits in the near term through significant, permanent

expense reductions of $10 to $12 million pretax in fiscal 2001

and an additional $5 to $7 million pretax in fiscal 2002. The

company's expense cutting initiatives touch all aspects of the

company's operations, with particular emphasis on reductions

in corporate office expense, work simplification and/or

elimination and systems enhancement. The expense cutting steps

include an immediate job reduction affecting approximately 130

people. These reductions affect all departments and all

levels. Employees at the company have been notified of the

plan, and those affected will receive severance packages

consistent with company policy and industry standards.

The company's decision to reposition its merchandising direction was driven in part by a thorough market analysis conducted by ROI Retail Strategies, a consumer research firm, and a complete reevaluation of the company's strategic plan with the assistance of Renaissance Partners, LP, a retail consulting firm. Mershad noted that "the ROI research validates the opportunities Elder-Beerman has in repositioning its merchandising strategy."

The company estimates that, including the severance costs for job reductions, the company will incur up to $16 million in charges to complete this restructuring. These charges will include: approximately $2 million in severance pay and other expenses in connection with job reductions, including severance costs in connection with the termination of John A. Muskovich, former president and chief operating officer; approximately $750,000 in outside professional fees and expenses incurred in connection with the development of the restructuring plan and the Year 2000 proxy; and up to $13 million in merchandise non-cash charges to be incurred during the balance of fiscal 2000 to bring the company's merchandise inventories into a position consistent with the new merchandising strategy.

Mershad continued, "We have targeted key areas that we need to strengthen and strengths we need to exploit, based on our experience and on customer research. Demographic trends and customer research affirm that our repositioning will provide the best mix of merchandise for our customers. And our new concept store format is a customer-friendly vehicle to deliver that merchandise and promote customer loyalty. The streamlining of our organizational structure will allow us to execute our new retail strategy while minimizing the risk of any short-term adverse effect on our bottom line."

Mershad concluded, "We're confident that in the current environment our best opportunities to strengthen our franchise rest with implementing this strategic plan rather than selling the company."

The nation's ninth largest independent department store chain, The Elder-Beerman Stores Corp. is headquartered in Dayton, Ohio and operates 60 department stores in Ohio, West Virginia, Indiana, Michigan, Illinois, Kentucky, Wisconsin and Pennsylvania. Elder-Beerman also operates two furniture superstores. The company has announced it will open three new concept stores in 2000.

This press release contains "forward-looking statements," including predictions of future operating performance, events or developments such as our future sales, profits, expenses, income and earnings per share. In addition, words such as "expects," "anticipates," "intends," "plans," "believes," "hopes," and "estimates," and variations of such words and similar expressions, are intended to identify forward-looking statements.

Because forward-looking statements are based on a number of beliefs, estimates and assumptions by management that could ultimately prove inaccurate, there is no assurance that forward-looking statements will prove to be accurate. Many factors could materially affect our actual future operations and results, including the following: increasing price and product competition; fluctuations in consumer demand and confidence; the availability and mix of inventory; fluctuations in costs and expenses; the effectiveness of advertising, marketing and promotional programs; the ability of the company to achieve its expense cutting initiatives; the timing and effectiveness of new store openings; the growing impact of electronic commerce; weather conditions that affect consumer traffic in stores; the continued availability and terms of financing; the outcome of pending and future litigation; consumer debt levels; and other general economic conditions that affect retail operations and sales, such as the rate of employment, inflation and interest rates and the condition of the capital markets.

Elder-Beerman undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.