Gander Mountain Company reported sales of $317.6 million for the quarter ended February 2, 2008, a decrease of 2.8% from $326.9 million for the prior year period. Comparable store sales decreased 11.9% in the fourth quarter.
Net income for the fourth quarter declined 61.9% to $5.8 million, or 25 cents per share, from $15.3 million, or 85 cents per share, in the fourth quarter of fiscal 2006. The current period earnings include a loss of $1.2 million, reflecting two months of seasonal operating results at Overton's Inc., which was acquired by Gander Mountain in December 2007.

For the fiscal year, the company reported sales of $969.4 million, an increase of 6.4% over the prior year. Comparable store sales declined 5.4%. The company reported a net loss for the 52-week period of $31.8 million, or $1.52 per share, compared with a net loss of $13.2 million, or 88 cents per share for the prior fiscal year.

Per share information for the most recent fourth quarter and full fiscal year reflect the issuance of an additional 4,067,797 shares of common stock in December 2007, the proceeds of which were used to partially fund the Overton's acquisition.

“As anticipated, fourth quarter results reflected difficult operating conditions, both in the broad economy and in our industry. These conditions have eased slightly in the first quarter,” said Mark Baker, president and CEO. “We expect the positive seasonal impact of Overton's to emerge in the first half of fiscal 2008 as we expand our presence in the direct marketing arena.”

“We will open five stores during the year, replacing three smaller stores and adding to our southern store count,” added Baker. “The combination of cost-saving initiatives, growth in direct marketing and fewer store openings will position Gander Mountain for improved performance in fiscal 2008.”

    Fourth Quarter and Fiscal 2007 Financials:
— Gross profit increased 7.1 percent to $240.8 million for the 2007
fiscal year. As a percent of sales, gross profit increased 18 basis
points to 24.8 percent, reflecting general improvement in pricing
structure, improved clearance management, benefits of scale, and
higher penetration of owned-brand merchandise.

— During the quarter, Gander Mountain closed two unprofitable stores and
took cost reduction actions that will benefit 2008. The company
incurred store closing and asset impairment charges, severance costs,
and adjustments to the service model in the PowerSports category,
resulting in charges of $4.3 million for the quarter and $6.5 million
for the year.

— Selling, general and administrative expenses (SG&A) for the fiscal
year 2007 increased 16 percent to $241 million, driven by new store
growth and including operational expenses related to Overton's. As a
percent of sales, SG&A increased from 22.8 percent in fiscal 2006 to
24.8 percent in the 2007 comparable period, primarily as a result of
the decrease in comparable store sales. Gander Mountain has
historically reported store operating expenses and general and
administrative expenses independently. As a result of the Overton's
acquisition, the company will report SG&A going forward.

                           Gander Mountain Company
Consolidated Statements of Operations
(In thousands, except per share data)

4th Quarter – unaudited Fiscal Year
13 weeks 14 weeks 52 weeks 53 weeks
February 2, February 3, February 2, February 3,
2008 2007 2008 2007
Sales $317,604 $326,885 $969,403 $911,438
Cost of goods sold 232,357 236,132 728,649 686,722
Gross profit 85,247 90,753 240,754 224,716

Operating expenses:
Selling, general and
administrative expenses 68,988 61,488 240,744 207,431
Exit costs, impairment
and other charges 4,285 72 6,493 458
Pre-opening expenses 84 – 4,836 3,245
Gain on insurance settlement – – – (1,400)
Income (loss) from
operations 11,890 29,193 (11,319) 14,982
Interest expense, net 5,696 4,898 19,745 19,187
Debt conversion charge – 9,037 – 9,037
Income (loss) before
income taxes 6,194 15,258 (31,064) (13,242)
Income tax provision 375 – 750 –
Net income (loss) $5,819 $15,258 $(31,814) $(13,242)

Income (loss) per common
Basic $0.25 $0.88 $(1.52) $(0.88)
Diluted $0.25 $0.85 $(1.52) $(0.88)

Weighted average common shares
Basic 22,889 17,340 20,913 15,100
Diluted 22,901 18,101 20,913 15,100