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Gadzooks July Trends Lower

From: ASAP

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Gadzooks, Inc. announced that July sales are trending significantly lower than earlier expectations, with month-to-date comparable store sales for July down approximately 9.0 percent. As a result, the company now expects total sales to range from $23.5 million to $24.2 million for July and from $76.1 million to $76.8 million for the second quarter ending August 3. Based upon these sales assumptions, the company now projects second quarter operating results to range from breakeven to a loss of $0.04 per diluted share versus a loss of $0.14 per diluted share for the second quarter last year.

"We had anticipated that comparable store sales for the second quarter would increase a low-single-digit percentage, but despite entering fiscal July with a low-single-digit quarter-to-date comparable store sales increase, current month sales trends have been significantly lower than expectations prompting us to reduce second quarter projections," said Jerry Szczepanski, chairman and chief executive officer. "While it is not possible to quantify the exact effect on sales, we believe that our business has been negatively impacted by a number of external factors including Florida's decision not to anniversary their sales tax holiday and a change in Texas law generally providing for later openings of public schools compared to the prior year."

Dallas-based Gadzooks, Inc. is a mall-based specialty retailer of casual apparel and related accessories for young men and women principally between the ages of 14 and 18. The Company currently operates 435 Gadzooks stores and four Orchid stores, for a total of 439 stores in 41 states.

Certain statements contained in this press release (other than historical information) may be deemed forward-looking statements that involve risks and uncertainties. Reference is made to the "Risk Factors" section of the company's Annual Report on Form 10-K for the fiscal year ended Feb. 2, 2002 for factors that, among others, could cause the actual results of the company to differ materially from those contained in the forward-looking statements.

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