SOURCE: Dover Saddlery

November 08, 2007 16:00 ET

Dover Saddlery Reports Third Quarter 2007 Financial Results

LITTLETON, MA--(Marketwire - November 8, 2007) - Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multi-channel retailer of equestrian products, today reported financial results for the third quarter ended September 30, 2007.

Total revenues for the third quarter increased 15.8% to $19.9 million, compared to $17.2 million for the same period in 2006. Retail store revenues increased 49%, or $1.8 million, to $5.6 million. Same store sales increased 8.5% compared with the third quarter of 2006.

Net income for the third quarter of 2007 increased 124% to $444,000, or $0.08 per diluted share, compared to $198,000 or $0.04 per diluted share for the third quarter of 2006. Gross profit as a percentage of revenues increased to 37.0% from 36.6% in the third quarter of the prior year.

"We are pleased with the results of the third quarter of 2007. We now have a total of ten stores opened and are pleased to report that our store location model is being proven by healthy store sales. We had an extremely successful Grand Opening of our new Dallas store in mid-September and this store is performing very well," said Stephen L. Day, president and CEO of Dover Saddlery. "We are currently considering new store locations with the plan to open between four and six stores in 2008."

Year-to-Date Results

For the first nine months of 2007, total revenue increased 12.4 % to $58.5 million and revenues from the retail channel increased 62.8% to $14.2 million. After adjustment for cannibalization, same store sales increased 7.1% over the first nine months of 2006. Net loss for the first nine months of 2007 was ($94,000) or ($0.02) per diluted share, compared to a net income of $841,000 or $0.16, per diluted share for the first nine months of 2006. This change of $935,000 is largely attributable to the cumulative after-tax impact of $600,000 from the Goldsmith Agio Helms settlement and related legal costs. During the first nine months of 2007, Dover Saddlery opened four stores, compared with one new store opening in the first nine months of 2006.

Business Outlook 2007

The Company currently expects that total 2007 revenues will range from $79 million to $83 million. Increased revenues are expected to come mainly from the retail channel.

Conference Call and Webcast

Dover Saddlery will hold a conference call and webcast today at 5:00 p.m. Eastern Standard Time (EST) to discuss its third quarter results. To access the webcast via the Internet, please go to http://investor.shareholder.com/DOVR/events.cfm and click on the webcast icon. A telephone replay will be available from 8:00 p.m. November 8 until midnight, November 15, by dialing 719/457-0820 and entering pass code 5148605.

About Dover Saddlery, Inc.

Dover Saddlery, Inc. (NASDAQ: DOVR) is the leading multi-channel 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® 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®, Dover Saddlery® and Smith Brothers® are registered marks of Dover Saddlery.

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

Notice Regarding 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 prospects for overall revenue growth 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, 2006 on file with the Securities and Exchange Commission and in subsequent periodic reports filed with the SEC.

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
       (Dollar amounts in thousands, except share data, un-audited)





                             Three Months Ended      Nine Months Ended

                            Sept. 30,   Sept. 30,   Sept. 30,   Sept. 30,
                               2007        2006        2007        2006

Revenues, net - direct          14,318      13,433      44,279      43,289
Revenues, net - retail
 stores                          5,593       3,759      14,189       8,717
                            ----------  ----------  ----------  ----------
Revenues, net - total       $   19,911  $   17,192  $   58,468  $   52,006
Cost of revenues                12,541      10,896      36,854      33,252
                            ----------  ----------  ----------  ----------
Gross profit                     7,370       6,296      21,614      18,754
Selling, general and
 administrative expenses         6,220       5,751      19,906      16,685
Litigation settlement
 expense                            --          --         700          --
                            ----------  ----------  ----------  ----------
Income from operations           1,150         545       1,008       2,069
Interest expense, financing
 and other related costs,
 net                               445         248       1,158         680
                            ----------  ----------  ----------  ----------
Income (loss) before
 provision for income taxes        705         297        (150)      1,389
Provision (benefit) for
 income taxes                      261          99         (56)        548
                            ----------  ----------  ----------  ----------
Net income (loss)           $      444  $      198  $      (94) $      841
                            ==========  ==========  ==========  ==========


Net income (loss) per share
Basic                       $     0.09  $     0.04  $    (0.02) $     0.17
                            ==========  ==========  ==========  ==========
Diluted                     $     0.08  $     0.04  $    (0.02) $     0.16
                            ==========  ==========  ==========  ==========
Number of shares used in
 per share calculations
Basic                        5,089,000   5,074,000   5,079,000   5,074,000
Diluted                      5,367,000   5,222,000   5,079,000   5,231,000

Other Operating Data:

Number of retail stores(1)          10           5          10           5
Capital expenditures               126         571         795         733
Gross profit margin               37.0%       36.6%       37.0%       36.1%


(1) Includes the new Dover stores in Chantilly, VA, and Lexington, VA
    opened in Q1 2007, and the Charlottesville, VA store opened in Q2 2007,
    and the Dallas, TX store opened in Q3 2007.




                  DOVER SADDLERY, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
             (Dollar amounts in thousands, except share data)



                                                Sept. 30,      Dec. 31,
                                                  2007           2006
                                              -------------  -------------
                                               (unaudited)
ASSETS
Current assets:
 Cash and cash equivalents                    $         167  $         101
 Accounts receivable                                  1,113            795
 Inventory                                           18,768         14,811
 Prepaid catalog costs                                2,079          2,133
 Prepaid expenses and other current assets            1,522            988
                                              -------------  -------------
Total current assets                                 23,649         18,828

Net property and equipment                            3,233          2,832

Other assets:
 Deferred income taxes                                  466            297
 Other assets, net                                      560            642
 Goodwill                                            14,267         14,267
                                              -------------  -------------
Total other assets                                   15,293         15,206
                                              -------------  -------------
Total assets                                  $      42,175  $      36,866
                                              =============  =============

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 Current portion of long-term debt and
  short-term bank borrowings                  $       2,256  $       1,768
 Accounts payable                                     3,481          3,508
 Accrued expenses and other current
  liabilities                                         3,463          3,355
 Income taxes payable                                    --            282
 Deferred income taxes                                  131            206
                                              -------------  -------------
Total current liabilities                             9,331          9,119

Long-term liabilities:
 Revolving line of credit, net of current
  portion                                            11,000          5,900
 Subordinated notes payable                           3,000          3,000
 Capital lease obligation, net of current
  portion                                               131            117
                                              -------------  -------------
Total long-term liabilities                          14,131          9,017
Stockholders’ equity
 Common stock, par value $0.0001 per share;
  15,000,000 shares authorized; issued
  5,105,318 as of September 30, 2007 and
  5,074,344 December 31, 2006                             1              1
Additional paid in capital                           43,964         43,887
Treasury stock, 795,865 shares at cost               (6,082)        (6,082)
Accumulated deficit                                 (19,170)       (19,076)
                                              -------------  -------------
Total stockholders’ equity                           18,713         18,730
                                              -------------  -------------
Total liabilities and stockholders’ equity    $      42,175  $      36,866
                                              =============  =============

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