SOURCE: Dover Saddlery

August 11, 2008 16:35 ET

Dover Saddlery Reports Second Quarter 2008 Financial Results

LITTLETON, MA--(Marketwire - August 11, 2008) - Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multichannel retailer of equestrian products, today reported financial results for the second quarter ended June 30, 2008.

Total revenues for the second quarter were $19.9 million, compared to $20 million in the second quarter of 2007. Retail store channel revenues increased 19.2% to $5.9 million, primarily due to the opening of new Dover Saddlery stores. Direct channel revenues decreased 6.6%, attributable to soft consumer demand. Same-store-sales were up 3.6% for the second quarter compared with the prior year.

Net income for the second quarter was $250,000, a decrease of 33.5% from $376,000 for the second quarter of 2007. Resulting earnings per diluted share were $0.05, versus earnings per diluted share of $0.07 in the corresponding period of the prior year.

"Despite challenging market conditions, we achieved an increase in same-store-sales in the second quarter and we had a very successful Grand Opening at our new store in Branchburg, New Jersey," said Stephen L. Day, president and CEO of Dover Saddlery. "I am also very pleased to report that all the retail stores are performing well and our proprietary software model is proving very effective in correctly locating new retail stores."

Year-to-Date Results

For the first six months of 2008, total revenues were $37.6 million, a decrease of 2.5% from $38.6 million for the same period in 2007. Revenues from the retail channel increased 16.5% to $10 million and direct channel revenues dropped 7.9%. Net loss for the first six months of 2008 improved 80% to $(109,000) compared to a net loss of $(539,000) for the first six months of 2007. The resulting loss per diluted share improved to $(0.02) from $(0.11) in the first half of 2007. This improvement was due to reduced selling, general and administrative and litigation expenses.

Business Outlook 2008

Dover Saddlery is revising its full-year 2008 revenues guidance to a range of $81 million to $87 million, from previously issued revenue guidance of $87 million to $92 million. This is based upon the continuing consumer slowdown in the retail economy.

Increased revenues are expected to come mainly from the retail channel. The company is currently is planning to open two additional stores in 2008, bringing the total number of Dover Saddlery retail stores opened to three in 2008.

Conference Call and Webcast

Dover Saddlery will hold a conference call and webcast on Tuesday August 12th at 8:30 a.m. ET to discuss its first 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 11:30 a.m. ET August 12th until midnight Tuesday August 19th by dialing 719-4570820, pass code 6940988.

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 2008, 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, 2007.

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, unaudited)


                                 Three Months Ended     Six Months Ended

                                June 30,   June 30,   June 30,   June 30,
                                  2008       2007       2008       2007

Revenues, net - direct             14,087     15,086     27,583     29,960
Revenues, net - retail stores       5,854      4,912     10,012      8,597
                                ---------  ---------  ---------  ---------
Revenues, net - total           $  19,941  $  19,998  $  37,595  $  38,557
Cost of revenues                   12,967     12,441     24,266     24,313
                                ---------  ---------  ---------  ---------
Gross profit                        6,974      7,557     13,329     14,244
Selling, general and
 administrative expenses            6,284      6,561     12,870     13,686
Litigation settlement expense          --         --         --        700
                                ---------  ---------  ---------  ---------
Income (loss) from operations         690        996        459       (142)
Interest expense, financing and
 other related costs, net             315        399        648        713
Other income                            2         --          2         --
                                ---------  ---------  ---------  ---------
Income (loss) before income tax
 provision (benefit)                  377        597       (187)      (855)
Provision (benefit) for income
 taxes                                127        221        (78)      (316)
                                ---------  ---------  ---------  ---------
Net income (loss)               $     250  $     376  $    (109) $    (539)
                                =========  =========  =========  =========

Net income (loss) per share
Basic                           $    0.05  $    0.07  $   (0.02) $   (0.11)
                                =========  =========  =========  =========
Diluted                         $    0.05  $    0.07  $   (0.02) $   (0.11)
                                =========  =========  =========  =========
Number of shares used in per
 share calculation
Basic                           5,177,000  5,074,000  5,141,000  5,074,000
Diluted                         5,290,000  5,239,000  5,141,000  5,074,000

Other Operating Data:

Number of retail stores(1)             11          9         11          9
Capital expenditures                  267        251        497        669
Gross profit margin                  35.0%      37.8%      35.5%      36.9%


(1) Includes ten Dover-branded stores and one Smith Brothers store; the
    June 30, 2008 store count includes the Dallas, TX Dover-branded store
    opened in Q3 2007, and the Branchburg, NJ Dover-branded store opened in
    Q2 2008.






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


                                                    June 30,   December 31,
                                                      2008         2007
                                                  -----------  -----------
                                                  (unaudited)
ASSETS
Current assets:
   Cash and cash equivalents                      $       464  $       309
   Accounts receivable                                    768        1,169
   Inventory                                           17,482       16,769
   Prepaid catalog costs                                1,389        1,427
   Prepaid expenses and other current assets            1,454          952
   Deferred income taxes                                   40           72
                                                  -----------  -----------
Total current assets                                   21,597       20,698

Net property and equipment                              3,285        3,153

Other assets:
   Goodwill                                            14,267       14,267
   Deferred income taxes                                  505          472
   Intangibles and other assets, net                    1,124          741
                                                  -----------  -----------
Total other assets                                     15,896       15,480
                                                  -----------  -----------
Total assets                                      $    40,778  $    39,331
                                                  ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of capital lease obligation
    and outstanding checks                        $     1,341  $       618
   Accounts payable                                     2,410        3,314
   Accrued expenses and other current liabilities       3,829        3,713
   Income taxes payable                                    --          568
                                                  -----------  -----------
Total current liabilities                               7,580        8,213

Long-term liabilities:
   Revolving line of credit                             8,000        6,300
   Subordinated notes payable, net                      4,815        4,738
   Capital lease obligation, net of current
    portion                                               106          150
                                                  -----------  -----------
Total long-term liabilities                            12,921       11,188
Stockholders' equity:
   Common stock, par value $0.0001 per share;
    15,000,000 shares authorized; issued
    5,187,038 as of June 30, 2008 and 5,105,318
    December 31, 2007                                       1            1
Additional paid in capital                             44,718       44,262
Treasury stock, 795,865 shares at cost                 (6,082)      (6,082)
Accumulated deficit                                   (18,360)     (18,251)
                                                  -----------  -----------
Total stockholders' equity                             20,277       19,930
                                                  -----------  -----------
Total liabilities and stockholders' equity        $    40,778  $    39,331
                                                  ===========  ===========

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