Dover Saddlery Reports Fourth Quarter and Full Year 2008 Financial Results

LITTLETON, MA, Mar 30 (MARKET WIRE) --
Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multichannel retailer of
equestrian products, today announced financial results for the fourth
quarter and fiscal year ended December 31, 2008.

Fourth quarter results

Total revenues for the fourth quarter of 2008 were $21.4 million compared
to $22.9 million for the fourth quarter of 2007, a decrease of 6.8%. It is
important to note that retail revenues increased 8.7% to $6.2 million,
primarily due to the opening of new stores in 2007 and 2008, while
same-store sales declined 11.8% due to a decline in consumer confidence
and spending levels.

On a non-GAAP basis the company reported net income of $353,000, or $0.07
per diluted share. This followed a GAAP net income of $920,000 or $0.18
cents a share for the fourth quarter of 2007. In addition, the fourth
quarter of 2008 generated an estimated federal taxable income of $625,000.

On a GAAP basis, in the fourth quarter of 2008, a non-cash goodwill
impairment charge of $14.3 million was recorded. This resulted in a GAAP
net loss of $(13.9) million, or $(2.68) a share.

"In the fourth quarter of 2008 we recorded a non-cash goodwill impairment
charge of $14.3 million," said Stephen L. Day, president and CEO of Dover
Saddlery. "This charge was required under current accounting rules
regarding impairment because our market capitalization declined to a level
below our book value. However I do not believe our market capitalization
today reflects the true long-term value of our company, in spite of
obvious risk and volatility in the short term resulting from current
economic conditions."

"During 2008, the value of Dover Saddlery's common stock, like most common
stocks, was significantly impacted by the deteriorating economy," Mr. Day
continued. "Under GAAP accounting, the goodwill carried on the balance
sheet was determined to be impaired, due to a reduction in its fair value
compared to its book carrying value. While the goodwill impairment charge
reduced reported earnings for the fourth quarter of 2008, it does not
affect Dover Saddlery's liquidity, cash flows, cash earnings or debt
covenants."

A reconciliation of net income calculated in accordance with GAAP and
non-GAAP measures is provided in the tables accompanying this press
release.

Full Year Results

Total revenues for the fiscal year 2008 were $78 million compared to $81.4
million for 2007. This decrease was attributable to the weak economic
environment as experienced by most retailers, particularly in the fourth
quarter.

Retail store revenues increased by 11.4% to $22.2 million. This increase
was attributable to the opening of new Dover Saddlery retail stores in
2007 and 2008. Same store sales declined by 4.7% due to lower than usual
store traffic in the latter part of the year.

On a non-GAAP basis, net income for 2008 was $418,000 or $0.08 per diluted
share This followed GAAP net income of $825,000 or $0.16 per diluted
share in year 2007. The full year 2008 performance generated an estimated
federal taxable income of $775,000.

The non-cash, goodwill impairment charge of $14.3 million, recorded in the
fourth quarter, resulted in a GAAP net loss for the fiscal year 2008 of
$(13.8) million, or $(2.68) per share. While the goodwill impairment
charge reduced reported earnings for 2008, it does not affect Dover
Saddlery's liquidity, cash flows, cash earnings or debt covenants.

"2008 was a difficult operating environment for our industry as a result
of numerous external factors which led to all time historical lows in
consumer confidence, resulting in a contraction in specialty retail
consumer spending," Mr. Day observed. "As a result, the Company has
developed several short term strategies to maintain or expand market
share, reduce operating costs and reduce capital expenditures. We are
pleased that the loyalty of our customers and strength of our brand,
combined with our aggressive cost control, resulted in a non-GAAP income
from operations of $2.36 million and a positive non-GAAP net income for
the year." (See the accompanying table for reconciliation to GAAP.)

Mr. Day continued, "Regarding our retail-rollout, in order to focus on
profitability and await an expected more favorable lease environment, we
are currently not planning to open additional stores in 2009 unless an
exceptionally good opportunity arises. At the end of 2008, Dover Saddlery
had completed 25% of its initial retail rollout target of 50 locations,
and in spite of a challenging retailing environment, all stores are
performing well."

Business Outlook 2009

Until there is greater long-term visibility on the consumer environment,
the Company is not providing guidance on business prospects in 2009.

Today's Teleconference and Webcast

Dover Saddlery will be hosting a conference call at 8:30 A.M. ET today to
discuss the fourth quarter and full year 2008 results. Investors are
invited to listen to the earnings conference call over the Internet
through the company's website at http://investor.shareholder.com/DOVR/
this web cast will be archived for a year.

About Dover Saddlery, Inc. Dover Saddlery, Inc. (NASDAQ: DOVR) is the
leading multichannel retailer of equestrian products in the United States.
Founded in 1975 in Wellesley, Massachusetts, by United States Equestrian
team members, Dover Saddlery has grown to become The Source(R) for
equestrian products. Dover offers a broad and distinctive selection of
competitively priced, brand-name products for horse and rider through
catalogs, the Internet and company-owned retail stores. Dover Saddlery,
Inc. serves the English rider and through Smith Brothers, the Western
rider. The Source(R), Dover Saddlery(R) and Smith Brothers(R) are
registered marks of Dover Saddlery.

For more information, please call 1-978-952-8062 or visit
www.DoverSaddlery.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the
meaning of section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including
without limitation statements made about the Company's business outlook
for fiscal 2009, the prospects for overall revenue growth and
profitability, and the opening of and revenue growth from new stores. All
statements other than statements of historical fact included in this
press release regarding the company's strategies, plans, objectives,
expectations, and future operating results are forward-looking
statements. Although Dover believes that the expectations reflected in
such forward-looking statements are reasonable at this time, it can give
no assurance that such expectations will prove to have been correct.
These forward-looking statements involve significant risks and
uncertainties, including those discussed in this release and others that
can be found in "Item 1A Risk Factors" of Dover Saddlery's Annual Report
on Form 10-K for the fiscal year ended December 31, 2008. Dover Saddlery
is providing this information as of this date and does not undertake any
obligation to update any forward-looking statements contained in this
document as a result of new information, future events or otherwise. No
forward-looking statement can be guaranteed and actual results may differ
materially from those Dover Saddlery projects.

DOVER SADDLERY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

Three Months Ended Year Ended

Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007

Revenues, net - direct $ 15,182 $ 17,240 $ 55,843 $ 61,519
Revenues, net - retail
stores 6,182 5,685 22,138 19,873
---------- ---------- ---------- ----------
Revenues, net - total $ 21,364 $ 22,925 $ 77,981 $ 81,392
Cost of revenues 13,023 13,620 49,319 50,474
---------- ---------- ---------- ----------
Gross profit 8,341 9,305 28,662 30,918
Selling, general and
administrative expenses 7,103 7,358 26,299 27,263
Litigation settlement
expense -- -- -- 700
Goodwill impairment charge
(1) 14,267 -- 14,267 --
---------- ---------- ---------- ----------
Income (loss) from
operations (13,029) 1,947 (11,904) 2,955
Interest expense, financing
and other related costs,
net 322 454 1,287 1,612
Other investment loss 78 -- 96 --
---------- ---------- ---------- ----------
Income (loss) before income
tax provision (13,429) 1,493 (13,287) 1,343
Provision for income taxes 485 573 562 518
---------- ---------- ---------- ----------
Net income (loss) $ (13,914) $ 920 $ (13,849) $ 825
========== ========== ========== ==========

Net income (loss) per share
Basic $ (2.68) $ 0.18 $ (2.68) $ 0.16
========== ========== ========== ==========
Diluted $ (2.68) $ 0.18 $ (2.68) $ 0.16
========== ========== ========== ==========
Number of shares used in
per share calculation
Basic 5,187,000 5,105,000 5,164,000 5,086,000
Diluted 5,187,000 5,237,000 5,164,000 5,240,000

Other Operating Data:

Number of retail stores(2) 12 10 12 10
Capital expenditures 236 104 1,123 862
Gross profit margin 39.0% 40.6% 36.8% 38.0%

(1) Includes a non-cash, non-tax deductible goodwill impairment charge of
approximately $14,367 triggered by declines in the Company's market
capitalization.

(2) Includes eleven Dover-branded stores and one Smith Brothers store;
the December 31, 2008 store count includes the Branchburg, NJ
Dover-branded store opened in Q2 2008, and the Alpharetta, GA
Dover-branded store opened in Q4 2008.

DOVER SADDLERY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

December 31, December 31,
2008 2007
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents $ 448 $ 309
Accounts receivable 833 1,169
Inventory 17,330 16,769
Prepaid catalog costs 1,673 1,427
Prepaid expenses and other current assets 997 952
Deferred income taxes -- 72
----------- -----------
Total current assets 21,281 20,698

Net property and equipment 3,599 3,153

Other assets:
Goodwill -- 14,267
Deferred income taxes 583 472
Intangibles and other assets, net 989 741
----------- -----------
Total other assets 1,572 15,480
----------- -----------
Total assets $ 26,452 $ 39,331
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligation and
outstanding checks $ 480 $ 618
Accounts payable 2,168 3,314
Accrued expenses and other current liabilities 3,640 3,713
Income taxes payable -- 568
Deferred income taxes 212 --
----------- -----------
Total current liabilities 6,500 8,213

Long-term liabilities:
Revolving line of credit 8,300 6,300
Subordinated notes payable, net 4,907 4,738
Capital lease obligation, net of current
portion 125 150
----------- -----------
Total long-term liabilities 13,332 11,188
Stockholders' equity:
Common stock, par value $0.0001 per share;
15,000,000 shares authorized; issued 5,187,038
as of December 31, 2008 and 5,105,318 December
31, 2007 1 1
Additional paid in capital 44,801 44,262
Treasury stock, 795,865 shares at cost (6,082) (6,082)
Accumulated deficit (32,100) (18,251)
----------- -----------
Total stockholders' equity 6,620 19,930
----------- -----------
Total liabilities and stockholders' equity $ 26,452 $ 39,331
=========== ===========

Non-GAAP Financial Measures and Information

From time to time, in addition to financial results determined in
accordance with generally accepted accounting principles in the United
States ("GAAP"), the Company provides financial information determined by
methods other than in accordance with GAAP. The Company's management uses
these non-GAAP measures in their analysis of the Company's performance and
ongoing operations. These non-GAAP measures are referred to as "Non-GAAP
Income from Operations," "Non-GAAP Net Income," and "Non-GAAP Earnings Per
Share," which all reflect adjustments for the goodwill impairment charge.
Estimated federal taxable income is the amount we report on our federal
income tax return as income on which we pay federal taxes. The Company
believes that these non-GAAP operating measures supplement our GAAP
financial information and provide useful information to investors for
evaluating the Company's operating results, and trends that may be
affecting the Company's business, as they allow investors to more readily
compare our operations to prior financial results, and our future
performance. These disclosures should not be viewed as a substitute for
operating results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be
presented by other companies.

These non-GAAP measures are provided below and on the Company's website at
http://www.doversaddlery.com/ (click on the Investor Relations link at the
top of the home page). The Company's website is not part of this
press
release.

RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS, NON-GAAP NET
INCOME AND EARNINGS PER SHARE
(In thousands, except share and per share data)
(Unaudited)

Three Months Ended Dec. 31, 2008
--------------------------------

GAAP Impairment Non-GAAP
As Charges Pro-forma
Reported Total

Revenues, net - total $ 21,364 -- $ 21,364
Cost of revenues 13,023 -- 13,023
--------- --------- ----------
Gross profit 8,341 -- 8,341
Selling, general and administrative
expenses 7,103 -- 7,103
Goodwill impairment charge 14,267 (14,267) --
--------- --------- ----------
Income (loss) from operations (13,029) 14,267 1,238
Interest expense, financing and other
related costs, net 322 -- 322
Other investment loss 78 -- 78
--------- --------- ----------
Income (loss) before income tax provision (13,429) 14,267 838
Provision for income taxes 485 -- 485
--------- --------- ----------
Net income (loss) $ (13,914) $ 14,267 $ 353
========= ========= ==========
Net income (loss) per share
Basic $ (2.68) $ -- $ 0.07
========= ========= ==========
Diluted $ (2.68) $ -- $ 0.07
========= ========= ==========
Number of shares used in per share
calculation
Basic 5,187,000 -- 5,187,000
Diluted 5,187,000 -- 5,227,000

Year Ended Dec. 31, 2008
--------------------------------

GAAP Impairment Non-GAAP
As Charges Pro-forma
Reported Total

Revenues, net - total $ 77,981 -- $ 77,981
Cost of revenues 49,319 -- 49,319
--------- --------- ----------
Gross profit 28,662 -- 28,662
Selling, general and administrative
expenses 26,299 -- 26,299
Litigation settlement expense -- -- --
Goodwill impairment charge 14,267 (14,267) --
--------- --------- ----------
Income (loss) from operations (11,904) 14,267 2,363
Interest expense, financing and other
related costs, net 1,287 -- 1,287
Other investment loss 96 -- 96
--------- --------- ----------
Income (loss) before income tax provision (13,287) 14,267 980
Provision for income taxes 562 -- 562
--------- --------- ----------
Net income (loss) $ (13,849) $ 14,267 $ 418
========= ========= ==========
Net income (loss) per share
Basic $ (2.68) $ -- $ 0.08
========= ========= ==========
Diluted $ (2.68) $ -- $ 0.08
========= ========= ==========
Number of shares used in per share
calculation
Basic 5,164,000 -- 5,164,000
Diluted 5,164,000 -- 5,266,000

RECONCILIATION OF GAAP INCOME BEFORE TAXES TO ESTIMATED FEDERAL TAXABLE
INCOME
(In thousands)
(Unaudited)

Three Months Ended
Dec. 31, 2008
------------------------

Income (loss) before taxes $ (13,429)
Permanent differences 14,286
State taxes (tax) (117)
Timing differences (115)
------------------------
Estimated federal taxable income $ 625
========================

Year Ended Dec. 31, 2008
------------------------

Income (loss) before taxes $ (13,287)
Permanent differences 14,446
State taxes (tax) (143)
Timing differences (241)
------------------------
Estimated federal taxable income $ 775
========================

Contact:
Janet Nittmann
Email Contact
Tel 978 952 8062 x218

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