Gander Mountain Reports Second Quarter 2008 Results

ST. PAUL, Minn., Aug. 27 /PRNewswire-FirstCall/ -- Gander Mountain Company
(Nasdaq: GMTN), the nation's largest retail network of stores for hunting,
fishing, boating, camping, marine and outdoor lifestyle products and services,
today reported sales of $252.9 million for the quarter ended August 2, 2008,
an increase of 16.8 percent over the prior year period. Comparable store
sales decreased 11.7 percent in the second quarter. The 2008 period includes
$39.7 million in revenue due to the expansion of the company's direct
marketing business through Overton's.
Net loss for the second quarter was $4.9 million, or $0.20 per share,
compared to a net loss of $9.7 million, or $0.48 per share, in the second
quarter of fiscal 2007. Per share information for the most recent quarter
reflects the issuance of an additional 4,067,797 shares of common stock in
December 2007, the proceeds of which were used to partially fund the Overton's
acquisition.
For the 26 weeks ended August 2, 2008, the company reported sales of
$460.5 million, an increase of 17.4 percent over the comparable period in
2007. The company reported a net loss for the 26-week period of $29.3 million,
or $1.22 per share, compared with a net loss of $32.5 million, or $1.61 per
share for the 26 weeks ended August 4, 2007.
"As anticipated, second quarter results reflect continuing economic
pressure on consumer purchases of discretionary items, and we expect these
conditions to persist in the second half of fiscal 2008," said Mark Baker,
president and CEO.
"Entering the seasonally-stronger second half of our year, Gander
Mountain's concentration on growth in the direct business, targeted marketing
spend, and cost-saving initiatives offer opportunities for improved
performance in the remainder of fiscal 2008," said Baker.
Gross profit increased 30.9 percent to $67.5 million for the second
quarter. As a percent of sales, gross profit increased 288 basis points to
26.7 percent, reflecting both improvement in business mix relating to
higher-margin direct sales and increased retail product margins.
Selling, general and administrative expenses (SG&A) for the second quarter
increased 21.1 percent to $66.9 million, reflecting the inclusion of
$14.6 million in operational expenses from the direct marketing segment. As a
percent of sales, SG&A for the retail segment improved 97 basis points over
the comparable quarter last year.
Conference Call Information
A conference call to discuss these results will be held today at 8:00 a.m.
Central Time. The conference call will be webcast from
http://www.GanderMtn.com. To register for the event, please go to the Website
at least 15 minutes early to register, download and install any necessary
audio software.
For those who cannot listen to the live broadcast, an archived webcast
will be available shortly after the conclusion of the call, and remain
available on http://www.GanderMtn.com for approximately 90 days. The
transcript will be posted on the Website as well.
About Gander Mountain Company
Gander Mountain Company (Nasdaq: GMTN), headquartered in Saint Paul,
Minnesota, is the nation's largest retail network of stores for hunting,
fishing, camping, boating, marine, and outdoor lifestyle apparel and footwear,
products and services. Since 1960, the Gander Mountain brand has offered an
expanding assortment of competitively priced outdoor equipment, technical
apparel and footwear, as well as gunsmith, archery, boat, ATV and marine
services. The stores feature national, regional and local brands as well as
the company's owned brands. Focused on a "We Live Outdoors" culture, Gander
Mountain dedicates itself to creating outdoor memories. There are 115
conveniently located Gander Mountain outdoor lifestyle stores in 23 states,
and direct sales at www.GanderMtn.com. For the nearest store location call
800-282-5993 or visit www.GanderMtn.com. Gander Mountain is also the parent
company of Overton's (www.overtons.com), a leading catalog and Internet based
retailer of products for boating and other water sports enthusiasts.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this release that are not historical or current facts
are forward-looking statements. All forward-looking statements in this release
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future
results, performances or achievements expressed or implied by the
forward-looking statements. Certain of these risks and uncertainties are
described in the "Risk Factors" section of the company's Annual Report on Form
10-K for fiscal 2007 and other required reports, as filed with the SEC, which
are available at http://www.GanderMtn.com and at the SEC's Website at
http://www.sec.gov.

Gander Mountain Company
Consolidated Statements of Operations - Unaudited
(In thousands, except per share data)

13 Weeks Ended 26 Weeks Ended
August 2, August 4, August 2, August 4,
2008 2007 2008 2007
Sales $252,873 $216,511 $460,535 $392,260
Cost of goods sold 185,390 164,975 351,023 306,848
Gross profit 67,483 51,536 109,512 85,412
Operating expenses:
Selling, general and
administrative expenses 66,939 55,266 125,896 106,808
Exit costs, impairment and other
charges 316 292 1,092 626
Pre-opening expenses 408 982 2,035 1,712
Loss from operations (180) (5,004) (19,511) (23,734)
Interest expense, net 4,509 4,530 9,351 8,506
Loss before income taxes (4,689) (9,534) (28,862) (32,240)
Income tax provision 165 125 437 250
Net loss $(4,854) $(9,659) $(29,299) $(32,490)

Basic and diluted loss per common
share $(0.20) $(0.48) $(1.22) $(1.61)

Weighted average common shares
outstanding 24,087 20,312 24,069 20,201

Gander Mountain Company
Consolidated Balance Sheets
(In thousands)

August 2, February 2,
2008 2008
Assets (Unaudited)
Current assets:
Cash and cash equivalents $1,666 $2,622
Accounts receivable 17,852 10,992
Income taxes receivable 454 486
Inventories 417,207 403,683
Prepaids and other current
assets 19,059 15,987
Total current assets 456,238 433,770
Property and equipment, net 170,661 168,685
Goodwill 54,330 48,803
Acquired intangible assets, net 19,483 25,098
Other assets, net 2,079 3,576
Total assets $702,791 $679,932

Liabilities and shareholders'
equity
Current liabilities:
Borrowings under credit facility $259,972 $246,013
Accounts payable 105,147 72,563
Accrued and other current
liabilities 55,433 60,606
Notes payable - related parties 10,000 -
Current maturities of long term
debt 13,712 8,247
Total current liabilities 444,264 387,429

Long term debt 58,284 64,173
Deferred income taxes 7,322 7,113
Other long term liabilities 27,462 27,397

Shareholders' equity:
Preferred stock ($.01 par value,
5,000,000 shares authorized;
no shares issued and outstanding) - -
Common stock ($.01 par value,
100,000,000 shares authorized;
24,118,755 and 24,049,064 shares
issued and outstanding) 241 241
Additional paid-in-capital 278,048 277,110
Accumulated deficit (112,830) (83,531)
Total shareholders' equity 165,459 193,820
Total liabilities and
shareholders' equity $702,791 $679,932

Gander Mountain Company
Consolidated Statements of Cash Flows - Unaudited
(In thousands)

26 Weeks Ended
August 2, August 4,
Operating activities 2008 2007
Net loss $(29,299) $(32,490)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 15,661 12,684
Exit costs, impairment and
other charges 605 -
Stock-based compensation
expense 703 743
(Gain)/ loss on disposal of
assets (17) 34
Change in operating assets
and liabilities:
Accounts receivable (6,828) (7,053)
Inventories (13,524) (69,816)
Prepaids and other current
assets (3,072) (5,281)
Other assets 1,186 (95)
Accounts payable and other
liabilities 25,053 33,499
Deferred income taxes 209 -
Net cash used in operating
activities (9,323) (67,775)

Investing activities
Purchases of property and
equipment (12,299) (17,475)
Acquisition related expenses (164) -
Proceeds from sale of assets 29 -
Net cash used in investing
activities (12,434) (17,475)

Financing activities
Borrowings under credit
facility 13,959 76,002
Proceeds from short term notes
payable - related parties 10,000 -
Proceeds from long term debt - 7,582
Proceeds from exercise of
stock options and employee
stock purchases 235 3,053
Reductions in long term debt (3,393) (1,287)
Net cash provided by financing
activities 20,801 85,350

Net increase in cash (956) 100
Cash, beginning of period 2,622 1,342
Cash, end of period $1,666 $1,442

Non-cash investing activities: During the 26 weeks ended August 2, 2008
and August 4, 2007, the Company acquired equipment totaling approximately
$2.9 million and $1.6 million, respectively, that was financed through
capital leases. Additionally, during the 26 weeks ended August 2, 2008
and August 4, 2007, there were $2.0 million and $1.2 million,
respectively, in non-cash accruals and reclassifications for property and
equipment that did not require the use of cash. These amounts are
excluded from Purchases of property and equipment in this statement of
cash flows.

Gander Mountain Company
Segment Information - Unaudited
(In thousands)

Statement of Operations Data:
13 Weeks Ended August 2, 2008 Retail Direct Total
Sales $213,145 $39,728 $252,873
(Loss) income from operations (2,973) 2,793 (180)
Depreciation and amortization 7,491 160 7,651

26 Weeks Ended August 2, 2008 Retail Direct Total
Sales $401,138 $59,397 $460,535
(Loss) income from operations (21,716) 2,205 (19,511)
Depreciation and amortization $14,872 $789 $15,661

Balance sheet data:
As of August 2, 2008 Retail Direct Total
Total assets $607,222 $95,569 $702,791
Inventories 396,199 21,008 417,207
Goodwill and intangible assets 7,030 66,783 73,813
Long term debt $23,284 $35,000 $58,284

SOURCE Gander Mountain Company

Investor Relations, Bob Vold or Brad Kanter, +1-651-325-4300, or Media, David
Ewald, +1-651-290-6276, cell, +1-612-490-2650, all of Gander Mountain Company