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REEDS JEWELERS ANNOUNCES RECORD SALES AND POSITIVE EARNINGS FOR SECOND QUARTER

 REEDS JEWELERS ANNOUNCES RECORD SALES AND
 POSITIVE EARNINGS FOR SECOND QUARTER
 WILMINGTON, N.C., Sept. 17 /PRNewswire/ -- Reeds Jewelers, Inc. (NASDAQ-NMS: REED) today announced record sales and positive earnings for the second fiscal quarter ended Aug. 31, 1992.
 Net sales were a second quarter record of $11,712,000, up 6.9 percent from last year's record second quarter of $10,960,000. Comparable store sales were positive in every month of the quarter resulting in a 5.8 percent increase on a same store basis. The Company earned $8,000 in the quarter compared to a loss of $196,000 or $0.06 per share in the second quarter last year.
 Gross margins were 39.8 percent, up from 38.8 percent last year. While margins were improved, they were negatively impacted by an 18.8 percent increase in rent expense, which is a major component of occupancy costs.
 Selling, general, and administrative expenses increased to 42.3 percent of net sales this year from 40.0 percent for the same quarter last year, primarily as a result of increased performance compensation for sales personnel and additional advertising. Bad debt continued to improve, falling to 4.2 percent from 5.8 percent of net sales. Interest expense fell to 6.6 percent from 8.3 percent of net sales as a result of lower average borrowings and the reduced prime rate.
 "We are pleased with the Company's return to second quarter profitability for the first time since our new strategy was put into place. Our promotional events continue to translate into strong sales results and we will continue these events in order to take market share and build momentum going into the all-important Christmas selling season." Alan M. Zimmer, President and Chief Executive Officer of Reeds added that " ... Reeds, which is now the tenth largest retail jeweler in the nation, continues to establish a reputation for innovation and profitability during these confusing economic times. We are excited about entering the third quarter with positive earnings and are pleased to be so well positioned for strong full-year results."
 Sales for the first six months ended Aug. 31, 1992 were $22,901,000, up 3.2 percent from $22,192,000 in the same period a year earlier. Year-to-date, the Company has earned $78,000, or $0.02 per share, compared to a loss of $127,000, or $0.04 per share, during the first six months of last year.
 Reeds did not open or close any stores during the second quarter, nor did it complete any remodels. The Company has no plans to open or close any stores during the third quarter, but will relocate one of its stores in Memphis, Tenn., and one in Chesapeake, Va., to better locations in their existing malls and will convert its Grays stores in Oklahoma to the Reeds name.
 Reeds Jewelers is a specialty retailer presently operating 67 stores primarily in enclosed regional shopping malls in 12 states principally in the Southeast. The Company specializes in the sale of fine jewelry, and emphasizes, "Quality, Value, and Service."
 REEDS JEWLERS, INC.
 FINANCIAL HIGHLIGHTS
 (dollars in thousands, except per share data)
 Three Months ended Six Months Ended
 Percent Aug. 31, Aug. 31, Percent Aug. 31, Aug. 31,
 Change 1992 1991 Change 1992 1991
 Net sales 6.9 $11,712 $10,960 3.2 $22,901 $22,192
 Other
 revenues 17.1 1,571 1,342 10.2 3,003 2,726
 Total
 revenues 8.0 13,283 12,302 4.0 25,904 24,918
 Cost of
 sales 5.0 7,051 6,713 4.1 13,873 13,331
 SG&A 12.9 4,958 4,391 7.8 9,417 8,737
 Bad debt -22.8 491 636 -24.9 932 1,241
 Interest -15.7 769 912 -16.0 1,543 1,836
 Income
 taxes -- 6 -154 -- 61 -100
 Net earnings/
 (loss) -- $ 8 $ -196 -- $ 78 $ -127
 Earnings/
 (loss) per
 share -- $ 0.00 $-0.06 -- $ 0.02 $ -0.04
 Shares
 outstanding 3,462,500 3,462,500 3,462,500 3,462,500
 Number of
 stores open 67 67 67 67
 -0- 9/17/92
 /CONTACT: Alan M. Zimmer, President & CEO, 919-350-3111, or James R. Rouse, Treasurer & CFO, 919-350-3116, both of Reeds Jewelers, Inc./
 (REED) CO: Reeds Jewelers, Inc. ST: North Carolina IN: REA SU: ERN


JZ -- CH002 -- 0481 09/17/92 09:33 EDT
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Date:Sep 17, 1992
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