Dairy Mart's Losses Double

Dairy Mart Convenience Stores Inc., the financially-strapped midwestern chain, said yesterday that its first-quarter losses more than doubled, hurt by closing of underperforming stores, the harsh winter and a lackluster U.S. economy.

The company reported a loss of $7.7 million for the quarter ended May 5, up from a $2.9 million shortfall a year earlier.

"Revenues declined as we continue to upgrade our store base by closing or selling low-volume, underperforming stores," said Bob Stein, chairman of Dairy Mart. "Additionally cold and wet weather, a tough economy and the high price of gasoline also impacted revenues. However, I'm pleased that our previously announced business restructuring plan under which 30 executive, managerial and administrative positions were eliminated has begun to reap the expected benefits through lower general and administrative overhead costs."

The news comes one month after Dairy Mart said it would attempt to sell or close an estimated 200 stores and reduce corporate and field overhead. The company has already eliminated approximately 30 higher level positions.

Those actions were spurred by a recent buyout initiated by Stein and a group of investors, who acquired Dairy Mart in March for $22.8 million and took the chain private. Upon the successful takeover bid, Stein said, "I continue to believe there is a good opportunity in this industry to grow the business."

To date, the new ownership has already shut down 29 units, trimming Dairy Mart's store count to 547, less than half its peak count of 1,300 in 1989. Revenues fell 6.5 percent to $161.7 million, principally as a result of the store closings. Dairy Mart shares closed up 5 cents at $3.50 on the American Stock Exchange. The stock is trading about 22 percent below DM Acquisition's take-over bid of $4.50.
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