"We are encouraged by the progress we've made to drive sustainable long-term growth for this company," says Perry D. Odak, president and CEO. "Despite a continuing soft economy and internal initiatives that have had a short-term adverse impact on our results, but are intended to build a foundation for growth, we were able to drive significant profitability gains and we have begun to see gradual improvement in our sales results," he says.

Net sales in the second quarter were $242.2 million, up 2.6% compared with $236.2 million in the second quarter of 2002. The sales gain was driven by the addition of three new stores to the company's portfolio in the first quarter, which more than offset the sale or closure of four stores year-over-year.

Sales in the second quarter were also boosted by the shift of the Easter holiday into the second quarter of 2003, which had a 25 basis point positive impact on comparable store sales. However, continued road construction near five of the company's stores in the quarter nearly offset this gain with a 20 basis point negative impact to same-store sales.

First half 2003 sales were $478.2 million, a 1.9% increase compared to $469.2 million in the same period last year. Comparable store sales in the second quarter of 2003 were negative 0.1% compared to positive same-store sales of 5.2% in the second quarter of 2002. Comparable store customer traffic in the second quarter was negative 3.5% and comparable store average transaction size per customer was positive 3.4%.

Continued disruption related to the company's SKU reduction program, transition to a new private label program, a previously announced remodeling and resetting activity and the road construction continue to put pressure on comparable store sales and customer traffic in second quarter 2003.