Fiscal 2009 second quarter consolidated sales were $248.4 million compared to consolidated sales of $252.9 million for the second quarter of fiscal 2008, a 1.8 percent decrease.

Consolidated SG&A costs, as a percentage of sales, increased 110 basis points to 27.6 percent of sales in the quarter, reflecting increased advertising expense.

Consolidated net loss was $7.3 million for the fiscal 2009 second quarter compared to a consolidated net loss of $4.9 million for the same quarter last year. The increased loss resulted primarily from discounts and markdowns associated with the withdrawal from PowerSports categories and increased advertising expense. Gander Mountain reported a net loss per share of $0.30 compared with a net loss per share of $0.20 for the second quarter of fiscal 2008.

Retail segment sales for the second quarter were $210.8 million, a decrease of $2.3 million or 1.1 percent, as compared to the fiscal 2008 second quarter. Direct segment sales were $37.6 million for the quarter, compared to $39.7 million for the same quarter last year, a decrease of 5.4 percent.

Comparable store sales during the second quarter of fiscal 2009 declined 2.4 percent. The firearms, ammunition, hunting accessories, fishing, marine and camping categories all experienced comparable store sales gains during the quarter. During the quarter, Gander Mountain substantially completed its withdrawal from the boat, ATV and power sport services categories. Excluding the negative 4.2 percent impact of these categories, comparable store sales were a positive 1.8 percent during the quarter.

Retail segment net loss was $9.1 million compared to a retail net loss of $6.8 million for the second quarter of last year. Net income for the direct segment was $1.7 million for the quarter, compared with $2.0 million for the second quarter of last year, reflecting start up costs related to the Gander Mountain direct business.

Improvement in inventory management resulted in a decrease in retail segment inventory of 7.1 percent per square foot year-over- year.

For the 26 weeks ended August 1, 2009, the company reported sales of $476.1 million, an increase of 3.4 percent over the same period in fiscal 2008. Comparable store sales for the 26-week fiscal 2009 period increased 2.2 percent. Excluding the negative 4.8 percent impact of boat and ATV sales and power sport services, comparable store sales were a positive 7.0 percent for the first half of 2009. The company reported a net loss for the 26-week period of $26.0 million, or $1.07 per share, compared with a net loss of $29.3 million, or $1.22 per share for the 26 weeks ended August 2, 2008.

"A difficult retail environment slowed Gander Mountain's progress during the second quarter, as overall sales declined slightly," said David C. Pratt, chairman and interim chief executive officer. "Positive comparable store sales in our core categories and continued gains in initial margin were offset by costs associated with exiting PowerSports as well as increased marketing efforts. We continue to apply a more disciplined approach to our operations, capital, and expense decisions. While we expect the retail environment to be challenging in the second half of the year, our ongoing efforts to improve operating margins, manage costs and reduce debt will continue into the second half of the year."

About Gander Mountain Company

Gander Mountain Company (Nasdaq: GMTN), headquartered in Saint Paul, Minnesota, is the nation's largest retail network of stores for hunting, fishing, camping, marine, and outdoor lifestyle apparel and footwear, products and services. Established in 1960, the Gander Mountain brand has offered an expanding assortment of outdoor equipment, technical apparel and footwear, as well as gunsmith and archery services. The stores feature national, regional and local brands as well as the company's owned brands. Focused on a "We Live Outdoors" culture, Gander Mountain dedicates itself to creating outdoor memories. There are 116 conveniently located Gander Mountain outdoor lifestyle stores in 23 states and three outlet stores. Customers may also shop at www.GanderMtn.com. For the nearest store location call 800-282-5993 or visit www.GanderMtn.com. Gander Mountain is also the parent company of Overton's (www.overtons.com), a leading catalog and Internet based retailer of products for boating and other water sports enthusiasts.

Cautionary Note Regarding Forward-Looking Statements

Any statements in this release that are not historical or current facts are forward-looking statements. All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward- looking statements. Certain of these risks and uncertainties are described in the "Risk Factors" section of the company's Annual Report on Form 10-K for fiscal 2008 and other required reports, as filed with the SEC, which are available at www.GanderMtn.com and at the SEC's Website at www.sec.gov.

Gander Mountain Company

Consolidated Statements of Operations - Unaudited

(In thousands, except per share data)

13 Weeks Ended__ 26 Weeks Ended

----------------__ ----------------

August 1, August 2, August 1, August 2,

2009__ 2008__ 2009__ 2008

----__ ----__ ----__ ----

Sales__ $248,413__ $252,873__ $476,067__ $460,535

Cost of goods sold__ 184,045__ 185,390__ 364,796__ 351,023

-------__ -------__ -------__ -------

Gross profit__ 64,368__ 67,483__ 111,271__ 109,512

Operating expenses:

Selling, general and

administrative expenses__ 68,484__ 66,939__ 130,611__ 125,896

Exit costs and related

charges__ 388__ 316__ 673__ 1,092

Pre-opening expenses__ -__ 408__ 299__ 2,035

---__ ---__ ---__ -----

Loss from operations__ (4,504)__ (180)__ (20,312)__ (19,511)

Interest expense, net__ 2,611__ 4,509__ 5,228__ 9,351

-----__ -----__ -----__ -----

Loss before income taxes__ (7,115)__ (4,689)__ (25,540)__ (28,862)

Income tax provision__ 220__ 165__ 440__ 437

---__ ---__ ---__ ---

Net loss__ $(7,335)__ $(4,854)__ $(25,980) $(29,299)

=======__ =======__ ========__ ========

Basic and diluted loss per

common share__ $(0.30)__ $(0.20)__ $(1.07)__ $(1.22)

Weighted average common

shares outstanding__ 24,196__ 24,087__ 24,196__ 24,069

Gander Mountain Company

Consolidated Balance Sheets

(In thousands)

August 1, January 31,

2009__ 2009

----__ ----

unaudited

Assets

Current assets:

Cash and cash equivalents__ $1,534__ $1,655

Accounts receivable__ 19,082__ 10,784

Income taxes receivable__ -__ 62

Inventories__ 395,183__ 358,127

Prepaids and other current assets__ 12,487__ 12,132

------__ ------

Total current assets__ 428,286__ 382,760

Property and equipment, net__ 154,012__ 162,180

Goodwill__ 47,114__ 47,114

Acquired intangible assets, net__ 18,631__ 19,130

Other assets, net__ 1,693__ 1,936

-----__ -----

Total assets__ $649,736__ $613,120

========__ ========

Liabilities and shareholders' equity

Current liabilities:

Borrowings under credit facility__ $259,709__ $204,514

Accounts payable__ 81,921__ 63,863

Accrued and other current liabilities__ 50,538__ 55,456

Notes payable - related parties__ 10,000__ 10,000

Current maturities of long term debt__ 18,054__ 15,628

------__ ------

Total current liabilities__ 420,222__ 349,461

Long term debt__ 42,099__ 50,402

Deferred income taxes__ 6,121__ 5,954

Other long term liabilities__ 27,086__ 27,398

Shareholders' equity:

Preferred stock ($.01 par value,

5,000,000 shares authorized; no

shares issued and outstanding)__ -__ -

Common stock ($.01 par value,

100,000,000 shares authorized;

24,197,199 and 24,195,736 shares

issued and outstanding)__ 242__ 242

Additional paid-in-capital__ 278,974__ 278,691

Accumulated deficit__ (125,008)__ (99,028)

--------__ -------

Total shareholders' equity__ 154,208__ 179,905

-------__ -------

Total liabilities and

shareholders' equity__ $649,736__ $613,120

========__ ========

Gander Mountain Company

Consolidated Statements of Cash Flows - Unaudited

(In thousands)

26 Weeks Ended

----------------

August 1, August 2,

Operating activities__ 2009__ 2008

----__ ----

Net loss__ $(25,980)__ $(29,299)

Adjustments to reconcile net loss to

net cash used in operating activities:

Depreciation and amortization__ 15,356__ 15,661

Exit costs and related charges__ 622__ 605

Stock-based compensation expense__ 275__ 703

Gain on disposal of assets__ (77)__ (17)

Change in operating assets and liabilities:

Accounts receivable__ (8,237)__ (6,828)

Inventories__ (37,055)__ (13,524)

Prepaids and other current assets__ (355)__ (3,072)

Other assets__ (65)__ 1,186

Accounts payable and other liabilities__ 12,677__ 25,053

Deferred income taxes__ 167__ 209

---__ ---

Net cash used in operating activities__ (42,672)__ (9,323)

-------__ ------

Investing activities

Purchases of property and equipment__ (5,510)__ (12,299)

Acquisition related expenses__ -__ (164)

Proceeds from sale of assets__ 77__ 29

--__ --

Net cash used in investing activities__ (5,433)__ (12,434)

------__ -------

Financing activities

Borrowings under credit facility, net__ 55,195__ 13,959

Proceeds from short term notes payable -

related parties__ -__ 10,000

Reductions in long term debt__ (7,219)__ (3,393)

Proceeds from exercise of stock options

and employee stock purchases__ 8__ 235

---__ ---

Net cash provided by financing activities__ 47,984__ 20,801

------__ ------

Net decrease in cash__ (121)__ (956)

Cash, beginning of period__ 1,655__ 2,622

-----__ -----

Cash, end of period__ $1,534__ $1,666

======__ ======

Non-cash investing activities: During the 26 weeks ended August 1, 2009

and August 2, 2008, the Company acquired equipment totaling approximately

$1.3 million and $2.9 million, respectively, that was financed through

capital leases. These amounts are excluded from Purchases of property and

equipment in this statement of cash flows.

Gander Mountain Company

Segment Information - Unaudited

(In thousands)

Statement of

Operations data: 13 Weeks Ended__ 13 Weeks Ended

August 1, 2009__ August 2, 2008

--------------__ --------------

Retail__ Direct__ Total__ Retail__ Direct__ Total

------__ ------__ -----__ ------__ ------__ -----

Sales__ $210,837 $37,576 $248,413 $213,145 $39,728 $252,873

Depreciation and

amortization__ 7,278__ 260__ 7,538__ 7,491__ 160__ 7,651

Exit costs and

related charges__ 388__ -__ 388__ 316__ -__ 316

(Loss) income

from operations__ (6,815)__ 2,311__ (4,504)__ (2,973)__ 2,793__ (180)

Net (loss) income $(9,070) $1,735 $(7,335) $(6,829) $1,975 $(4,854)

26 Weeks Ended__ 26 Weeks Ended

August 1, 2009__ August 2, 2008

--------------__ --------------

Retail__ Direct__ Total__ Retail__ Direct__ Total

------__ ------__ -----__ ------__ ------__ -----

Sales__ $420,707 $55,360 $476,067 $401,138 $59,397 $460,535

Depreciation and

amortization__ 14,841__ 515__ 15,356__ 14,872__ 789__ 15,661

Exit costs and

related charges__ 673__ -__ 673__ 1,092__ -__ 1,092

(Loss) income

from operations__ (20,946)__ 634__ (20,312) (21,716)__ 2,205 (19,511)

Net (loss) income $(25,429)__ $(551) $(25,980) $(29,645)__ $346 $(29,299)

Balance Sheet

data: As of August 1, 2009__ As of January 31, 2009

----------------------__ ------------------------

Retail__ Direct__ Total__ Retail__ Direct__ Total

------__ ------__ -----__ ------__ ------__ -----

Total assets__ $558,963 $90,773 $649,736 $517,812 $95,308 $613,120

Inventories__ 376,679__ 18,504__ 395,183__ 334,868__ 23,259 358,127

Goodwill and

acquired

intangibles__ 145__ 65,600__ 65,745__ 400__ 65,844__ 66,244

Long term debt__ $17,099 $25,000__ $42,099__ $20,402 $30,000 $50,402

SOURCE: Gander Mountain Company

Originally published by Gander Mountain Company.

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