TANDYCRAFTS, INC. CONTINUES TURNAROUND REPORTS SIGNIFICANTLY IMPROVED FIRST QUARTER EARNINGS Fort Worth, Texas. October 22, 1996 -- TANDYCRAFTS, INC. (NYSE: TAC) announced today significantly improved results for its fiscal first quarter ended September 30, 1996. Net income for the quarter was $797,000, or $0.07 per share compared to a net income of $9,000 for the same quarter of fiscal 1996. Excluding those operations divested as part of the company's strategic restructuring program, net sales were basically flat when compared to the same quarter last year. Total retail sales for the quarter increased 1.3% while manufacturing sales from continuing operations decreased 2.8%. Although manufacturing sales were down, the company's backlog for orders, primarily in its Picture Frames and Framed Art division, was significantly higher when compared to the same period last year. Net sales were $57,770,000, a 7.3% decrease compared to the $62,349,000 reported for the comparable period last year. In commenting on the company's performance, R. Earl Cox III, Chairman, stated "We are pleased with the company's progress. The results this quarter continue the turnaround since implementing a strategic restructuring plan nine months ago. The many changes that have taken place in the past nine months continue to show positive results. This is the third consecutive quarter with significantly improved earnings over the same quarter last year. Operating income for the first quarter increased 86.5% to $2,048,000. We are encouraged by these results, and are working to achieve the level of performance that we expect from various units. This is a year of transition. We firmly believe that the company is headed in the right direction and expect to continue this positive trend going forward in fiscal 1997." Tandycrafts, Inc. is a specialty retailer and manufacturer. Included in its Specialty Retail segment are Tandy Leather Company, Joshua's Christian Stores, Cargo Furniture & Accents, and Sav-On Office Supplies. The Specialty Manufacturing segment is comprised of two manufacturing divisions: Picture Frames and Framed Art and Tandy Wholesale International ("TWI"). Information disclosed in this news release which are forward-looking statements involve risks with uncertainties including, but not limited to, the performance of each operating unit, relationships with certain key customers, commodity price fluctuations, interest rate fluctuations, recessionary factors, seasonality, and other risks indicated in filings with the Securities and Exchange Commission such as Tandycrafts' most recent Form 10-Q and 10-K. (Table to follow) Three Months Ended ---------------------------- September 30, September 30, 1996 1995 ------------ ------------ Net sales $ 57,770 $ 62,349 ------------ ------------ Operating costs and expenses: Cost of goods sold 35,688 38,813 Selling, general and administrative 18,662 20,913 Restructuring charge Depreciation and amortization 1,372 1,525 ------------ ------------ Total operating costs and expenses 55,722 61,251 ------------ ------------ Operating income 2,048 1,098 Interest expense, net 822 1,085 ------------ ------------ Income before income taxes 1,226 13 Provision for income taxes 429 4 ------------ ------------ Net income $ 797 $ 9 ============ ============ Net income per share $0.07 $0.00 ===== ===== Weighted average common and common equivalent shares 12,198 11,769 ====== ====== Cargo Joshua's Sav-On Furniture Tandy Leather Christian Office & Retail Bookstores Supplies Accents ------------- ---------- -------- ---------- Number of stores 172 72 36 39 Net sales 9,558 5,828 9,455 5,126 Operating income / (loss) (331) (746) 562 122 Same store sales gains / (losses) (6.2)% (19.7)% 28.3% (15.9)% # # #