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PERFUMANIA REPORTS SECOND QUARTER AND SIX MONTH RESULTS; LOSSES BEFORE INCOME TAX BENEFIT IN LINE WITH RECENT ANALYST EXPECTATIONS

 PERFUMANIA REPORTS SECOND QUARTER AND SIX MONTH RESULTS; LOSSES
 BEFORE INCOME TAX BENEFIT IN LINE WITH RECENT ANALYST EXPECTATIONS
 MIAMI, Sept. 21 /PRNewswire/ -- Perfumania, Inc. (NASDAQ: PRFM) today announced a net loss and lower wholesale sales for the latest 13 and 26 week periods. This loss and lower sales were primarily a result of the inventory reserves and expense accruals related to the previously reported allegations by a U.S. licensor, that a certain perfume in inventory purchased by the company, was not genuine.
 Sales and gross profit in the retail division increased substantially during the latest 13 and 26 week periods.
 On Aug. 1, 1992, after giving effect to the losses reported, the company's book value per share was $7.23.
 For the 13 weeks ended Aug. 1, 1992 the company reported a net loss of $4,670,111 ($.82 per share) compared to net income of $838,905 ($.37 per share) for the three months ended July 31, 1991. The company also reported a net loss of $4,463,514 ($0.91 per share) for the 26 weeks ended Aug. 1, 1992, compared to net income of $571,722 ($0.25 per share) for the six months ended July 31, 1991. Net income for the 3 and 6 months ended July 1, 1991 included an extraordinary credit of $226,431 or $0.10 per share. The company's losses before income taxes for the 13 and 26 weeks ended Aug. 1, 1992 was $5,172,855 and $4,839,634, respectively. The losses before income tax benefit were in line with recent analyst expectations. The company did not recognize a full tax benefit for its current period losses because it did not have sufficient income in prior periods to offset such losses. The company has approximately $3.5 million of net operating loss carryovers to offset income taxes on future income.
 The company's retail division, which currently operates 92 stores, experienced increases in both sales and gross profit during the current periods. Comparable store sales increased 16.7 percent and 22.9 percent for the 13 and 26 weeks ended Aug. 1, 1992, respectively, while gross profit of the retail division increased approximately $1.1 million and $2.7 million, respectively, for these periods. The company expects to open approximately 10 to 13 additional stores before the end of the year.
 The company's losses are primarily the result of reserves and other accounting charges associated with pending allegations that the company's inventory of a perfume product purchased by the wholesale division from a foreign supplier was not genuine. As a result of the allegations, the company requested the return of all the challenged products from its wholesale customers. The company's investigations into such allegations have not been concluded. However, because the company has been advised by the U.S licensor of the product that its investigation has resulted in a determination that the challenged goods are not genuine and the company will not be able to determine whether to challenge that conclusion until its own investigation is complete, the company decided to recognize during the current period, potential losses associated with the matter. As a result the company established a reserve for potential inventory losses of approximately $3.7 million and recorded a reversal of approximately $2.8 million in sales of the product. Included in the reserve for potential inventory losses are approximately $200,000 of related investigative and legal costs. Ilia Lekach, the company's chairman and chief executive officer, stated that "we intend to continue to pursue our investigation until we can conclusively determine whether the challenged goods are authentic and, if necessary to seek judicial determination of the matter. While we can not predict at this time when the matter will be concluded, we are focusing our efforts in the wholesale division on new business opportunities as the Christmas season approaches."
 -0- 9/21/92
 /CONTACT: Julie Silver of Boardroom Communications, 305-321-6334, for Perfumania, Inc.; or Ilia Lekach, chairman, or Ron Friedman, chief financial officer of Perfumania, Inc., 305-592-4080/
 (PRFM) CO: Perfumania, Inc. ST: Florida IN: REA SU: ERN


JB-AW -- FL010 -- 1634 09/21/92 11:38 EDT
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Date:Sep 21, 1992
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