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Dover Saddlery Announces First Quarter 2014 Financial Results

LITTLETON, MA -- (Marketwired) -- 05/08/14 -- Dover Saddlery, Inc. (NASDAQ: DOVR), the leading omni-channel retailer of equestrian products, today reported financial results for the first quarter ended March 31, 2014.

Total revenues for the first quarter of 2014 increased 9.4% to $19.7 million, from $18.0 million achieved in the first quarter of 2013. Revenues in the retail channel increased 21.5% to $8.8 million from $7.2 million, due primarily to the opening of new stores in 2013; while same-store sales for the first quarter of 2014 increased 3.7%.

The net loss for the first quarter of 2014 was $(543,000), or $(0.10) per diluted share, compared to $(538,000) or $(0.10) per diluted share in the first quarter of the prior year.

"I am pleased to report that the three Dover Saddlery stores opened in the fourth quarter of 2013 performed very well in the first quarter of this year. These stores have contributed towards the 22% increase in retail channel revenues," commented Stephen L. Day, president and CEO of Dover Saddlery. "The increase in selling, general and administrative expense was due primarily to increased direct marketing costs and increased labor and lease expenses associated with the new stores."

Adjusted EBITDA for the first quarter of 2014 improved to $(479,000), from $(514,000) in the first quarter of 2013. A reconciliation of the net income calculated in accordance with GAAP and the non-GAAP Adjusted EBITDA measure is provided in the table accompanying this press release.

Business Outlook 2014

Dover Saddlery is planning to open four to six retail stores in 2014. Until there is greater long-term visibility on sustainable economic conditions and consumer behavior, the Company is not providing guidance on other business prospects.

Today's Teleconference and Webcast

Dover Saddlery will be hosting a conference call at 4:30 P.M. EDT today to discuss the first quarter 2014 results. Investors are invited to listen to the earnings conference call over the Internet through the company's website at http://investor.shareholder.com/DOVR/, this web cast will be archived for a year.

About Dover Saddlery, Inc. Dover Saddlery, Inc. (NASDAQ: DOVR) is the leading multichannel retailer of equestrian products in the United States. Founded in 1975 in Wellesley, Massachusetts, by United States Equestrian team members, Dover Saddlery has grown to become The Source® for equestrian products. Dover offers a broad and distinctive selection of competitively priced, brand-name products for horse and rider through catalogs, the Internet and company-owned retail stores. Dover Saddlery, Inc. serves the English rider and through Smith Brothers, the Western rider. The Source®, Dover Saddlery® and Smith Brothers® are registered marks of Dover Saddlery.

For more information, please call 1-978-952-8062 or visit www.DoverSaddlery.com.

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 2014, the prospects for overall revenue growth, expense ratios, growth in the retail channel, profitability, and the opening of 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, 2013. 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.

              (In thousands, except share and per share data)

                                                     Three Months Ended
                                                   March 31,     March 31,
                                                     2014          2013

Revenues, net- direct                            $     10,912  $     10,784
Revenues, net - retail stores                           8,800         7,242
                                                 ------------  ------------
Revenues, net - total                                  19,712  $     18,026
Cost of revenues                                       12,637        11,629
                                                 ------------  ------------
Gross profit                                            7,075         6,400
Selling, general and administrative expenses            8,024         7,265
                                                 ------------  ------------
Loss from operations                                     (949)         (865)
Interest expense, financing and other related
 costs, net                                               142           124
Other investment income (loss), net                        (2)           11
                                                 ------------  ------------
Loss before income tax benefit                         (1,093)         (978)
Benefit for income taxes                                 (550)         (440)
                                                 ------------  ------------
Net loss                                         $       (543) $       (538)
                                                 ============  ============

Net loss per share
Basic                                            $      (0.10) $      (0.10)
                                                 ============  ============
Diluted                                          $      (0.10) $      (0.10)
                                                 ============  ============
Number of shares used in per share calculation
Basic                                               5,352,000     5,338,000
Diluted                                             5,352,000     5,338,000

Other Operating Data:

Number of retail stores(1)                                 22            18
Capital expenditures                                      339           376
Gross profit margin                                      35.9%         35.5%
(1) Includes twenty-one Dover-branded stores and one Smith Brothers store.

                         (In thousands, unaudited)
                                                     Three Months Ended
                                                   March 31,     March 31,
                                                     2014          2013

Net loss                                         $       (543) $       (538)
                                                 ------------  ------------
Other comprehensive loss net:
  Change in fair value of interest rate swap
   contract, net of tax                                     9            16
                                                 ------------  ------------
Total comprehensive loss                         $       (534) $       (522)
                                                 ============  ============

                     (In thousands, except share data)
                                                   March 31,     Dec. 31,
                                                     2014          2013
Current assets:
 Cash and cash equivalents                       $        214  $        319
 Accounts receivable                                      888         1,300
 Inventory                                             26,652        23,633
 Prepaid catalog costs                                  1,744           974
 Prepaid expenses and other current assets              1,971         1,277
 Deferred income taxes                                    369           355
                                                 ------------  ------------

Total current assets                                   31,838        27,858

Net property and equipment                              5,760         5,763

Other assets:
 Deferred income taxes                                  1,346         1,495
 Intangibles and other assets, net                        740           758
                                                 ------------  ------------
Total other assets                                      2,086         2,253
                                                 ------------  ------------
Total assets                                     $     39,684  $     35,874
                                                 ============  ============

Current liabilities:
 Current portion of capital lease obligations
  and outstanding checks                         $        347  $        290
 Current portion - term note                              786           786
 Current portion - Capex term loan                        711           630
 Accounts payable                                       1,939         2,352
 Accrued expenses and other current liabilities         5,534         7,201
 Income taxes payable                                       -         1,006
                                                 ------------  ------------
Total current liabilities                               9,317        12,265

Long-term liabilities:
 Revolving line of credit                               7,673            95
 Capex term loan, net of current portion                2,620         2,818
 Term note, net of current portion                      3,928         4,125
 Capital lease obligation, net of current
  portion                                                  86            96
 Interest rate swap contract                              173           189
                                                 ------------  ------------
Total long-term liabilities                            14,480         7,323
Stockholders' equity:
 Common stock, par value $0.0001 per share;
  15,000,000 shares authorized; 6,160,103 and
  6,147,263 issued and 5,364,238 and 5,351,398
  outstanding as of March 31, 2014 and December
  31, 2013, respectively                                    1             1
Additional paid in capital                             46,439        46,304
Treasury stock, 795,865 shares at cost                 (6,082)       (6,082)
Other comprehensive loss                                 (113)         (122)
Accumulated deficit                                   (24,358)      (23,815)
                                                 ------------  ------------
Total stockholders' equity                             15,887        16,285
                                                 ------------  ------------
Total liabilities and stockholders' equity       $     39,684  $     35,874
                                                 ============  ============

Non-GAAP Financial Measures and Information

From time to time, in addition to financial results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company provides financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP measures in its analysis of the Company's performance and ongoing operations. The Company believes that these non-GAAP operating measures supplement our GAAP financial information and provide useful information to investors for evaluating the Company's operating results and trends that may be affecting the Company's business, as they allow investors to more readily compare our operations to prior financial results and our future performance. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

When we use the term "Adjusted EBITDA," we are referring to net income minus interest income, investment income and other income plus interest expense, income taxes, non-cash stock-based compensation, depreciation, amortization and other investment loss. We present Adjusted EBITDA because we consider it an important measure of our performance, and the Company ties its executive and employee bonus pools directly to this measure. We also believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

The following table reconciles net loss to Adjusted EBITDA (in thousands):

                                                     Three Months Ended
                                                   March 31,     March 31,
                                                     2014          2013

Net loss                                         $       (543) $       (538)
Depreciation                                              342           263
Amortization of intangible assets                          18            18
Stock-based compensation                                  110            70
Interest expense, financing and other related
 costs, net                                               142           124
Other investment (income) loss, net                         2           (11)
Benefit for income taxes                                 (550)         (440)
                                                 ------------  ------------
Adjusted EBITDA                                  $       (479) $       (514)
                                                 ============  ============

Janet Nittmann
Email Contact
Tel 978-952-8062 x218

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