TANDYCRAFTS, INC. REPORTS 19% INCREASE IN FIRST QUARTER EARNINGS Fort Worth, Texas. October 22, 1997 -- TANDYCRAFTS, INC. (NYSE: TAC) announced today improved results for its fiscal first quarter ended September 30, 1997. Net income for the quarter increased 19% to $949,000, or $0.08 per share compared to net income of $797,000, or $0.07 per share for the same quarter last year. Excluding divested operations, net sales increased $3,581,000, or 7%, over the prior fiscal year with both retail sales and manufacturing sales increasing 7%. Same-store sales at Sav-On Office Supplies and Joshua's Christian Stores increased 8.3% and 18.5%, respectively. The Picture Frame and Framed Art division, recently consolidated under the name Pinnacle Art & Frame, achieved a sales increase of 17.8%. Same-store sales at Tandy Leather declined 4.7%, and the TWI division experienced a sales decrease of 10.6%. In commenting on the first quarter, Michael J. Walsh, Chief Executive, stated, "Fiscal 1997 was a transition year during which steps were taken to position each operation on a profitable foundation to support future growth. We are now beginning to see the benefits of those decisions which we believe will allow us to build a brighter future for the Company and its shareholders. Not only do we continue to be encouraged by the significant progress shown at Joshua's Christian Stores, but we are also encouraged with the strong performance at Pinnacle Art & Frame, which is benefiting from the recent consolidation within that division. We are also encouraged by the recent performance at Tandy Leather Company. While Tandy Leather incurred a same-store sales decrease in the first quarter, September showed a same-store sales increase, the first in three years. Operating results also showed significant improvement when compared to the same quarter last year". Certain statements contained herein which are not historical facts are forward looking statements that involve risks and uncertainties including, but not limited to, customer demand and trends, related inventory risks due to shifts in customer demand, risks associated with new business opportunities, competition, dependence on key personnel, the performance of each operating unit, relationships with key customers, commodity price fluctuations, new product introductions, interest rate fluctuations, recessionary factors, seasonality and other risks disclosed in the Company's latest annual report on Form 10-K filed with the Securities and Exchange Commission. Tandycrafts, Inc. is a specialty retailer and manufacturer. Included in its Specialty Retail segment are Tandy Leather Company, Joshua's Christian Stores, and Sav-On Office Supplies. The Specialty Manufacturing segment is comprised of two manufacturing divisions: Pinnacle Art & Frame and Tandy Wholesale International ("TWI"). Three Months Ended ----------------------------- September 30, September 30, 1997 1996 ------------- ------------- Net sales $ 55,359 $ 57,770 ------------- ------------- Operating costs and expenses: Cost of goods sold 35,834 35,688 Selling, general and administrative 15,932 18,662 Depreciation and amortization 1,270 1,372 ------------- ------------- Total operating costs and expenses 53,036 55,722 ------------- ------------- Operating income 2,323 2,048 Interest expense, net 862 822 ------------- ------------- Income before income taxes 1,461 1,226 Provision for income taxes 512 429 ------------- ------------- Net income $ 949 $ 797 ============= ============= Net income per share $0.08 $0.07 ===== ===== Weighted average common and common equivalent shares 12,636 12,198 ====== ====== Joshua's Sav-On Tandy Leather Christian Office Retail Bookstores Supplies ------------- ---------- -------- Number of stores 163 62 40 Net sales 8,978 6,924 10,599 Operating income / (loss) (156) (180) 603 Same store sales gains / (losses) (4.7)% 18.5% 8.3% # # #