R.G. Barry/Dearfoams Reports Strong Third Quarter

PICKERINGTON, Ohio, May 8 /PRNewswire-FirstCall/ -- R.G. Barry Corporation, the Dearfoams company NASDAQ: DFZ, today reported strong third quarter sales and earnings performance.

    For the quarter, the Company reported:

    --  Net earnings of $1.2 million or $0.12 per basic share and $0.11 per
        diluted share compared to net earnings of $208,000 or $0.02 per basic
        share and diluted share in the third quarter of fiscal 2007;
    --  Net sales increased nearly 24 percent to $20.2 million compared to
        $16.4 million reported for the corresponding period of fiscal 2007;
        and
    --  Gross profit as a percent of sales increased to 39.5 percent from
        38.8 percent in the comparable quarter of fiscal 2007.


    For the nine months:

    --  Net earnings were $9.1 million, or $0.87 per basic share and $0.85 per
        diluted share, versus net earnings of $26.8 million or $2.67 per basic
        share and $2.58 per diluted share in the comparable period one year
        ago. Fiscal 2007 net earnings reflected an income tax benefit of
        $13.1 million from the reversal of the Company's deferred tax asset
        valuation allowance and an $878,000 benefit from the sale of land;
    --  Net sales of $91.0 million versus $91.2 million one year ago; and
    --  Gross profit as a percent of sales at 41.6 percent up from
        39.9 percent in the comparable period of fiscal 2007.

The $3.9 million increase in third quarter net sales was primarily related to a shift in a portion of the Company's slipper business to the second half of fiscal 2008 as a result of its selection as the sole supplier of replenishment slippers for its largest mass-market customer.

Management Comments

"We are very pleased with our performance through the third quarter," said Greg Tunney, President and Chief Executive Officer. "We benefited from our position of leadership in accessory category footwear, our variable cost business model, our strong balance sheet and our growing presence across broad retail channels.

"We continue to expect our full fiscal year 2008 income from continuing operations, before taxes and excluding the 2007 gain of $878,0000 from the sale of land, to increase by approximately 10.0 percent versus fiscal 2007. However, due to a slowing retail environment and to the loss of some reorder business as a result of the April 10 tornado that damaged our San Angelo, Texas, distribution center, we now expect our net sales for the full 2008 fiscal year to rise by approximately 3.0 percent, instead of our previously issued guidance of approximately 4.0 percent.

"As we begin looking toward next year, we are sensitive to the incredibly challenging macro economic trends we see developing, but we believe they present opportunities for the smart, well-capitalized business. We are well positioned strategically, operationally and financially to pursue growth initiatives and to take advantage of developing opportunities in our category through acquisition growth. We have the flexibility necessary to capitalize on these immediate opportunities in the marketplace while we also build a solid base for growth and profitability that will extend well beyond our next fiscal year," Mr. Tunney concluded.

Conference Call/Webcast Today

R.G. Barry Corporation senior management will conduct a conference call for all interested parties at 10:00 a.m. EDT today. Management will discuss the Company's performance, its plans for the future and will accept questions from participants. The conference call will available at (888) 530-7880 or (706) 634-1795 until five minutes before starting time. To listen live via the Internet, simply log on at http://www.videonewswire.com/event.asp?id=47898.

Replays of the call will be available approximately one-hour after its completion. The audio replay can be accessed through Thursday, May 15, 2008, by calling (800) 642-1687 or (706) 645-9291 and using passcode 44513504. A written transcript and audio replay of the call will be posted for 12 months at the Company's Web site http://www.rgbarry.com under the "Investors/News Release" section.

About R.G. Barry Corporation

R.G. Barry Corporation, the Dearfoams(R) company, is one of the world's leading developers and marketers of accessory footwear. Visit us online at http://www.rgbarry.com to learn more about our business.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain statements in this news release, which are not historical fact, are forward-looking statements, and are based upon information available to the Company on the date of this release. Our forward-looking statements inherently involve risks and uncertainties that could cause actual results and outcomes to differ materially from those anticipated by our forward-looking statements. Factors that could cause or contribute to our actual results differing materially from our current forecasts include, but are not limited to, the following: the strength of the retail market; the success of planned project launches; our receipt of shipments from third-party manufacturers in China on a timely basis; our ability to distribute to customers on a timely basis goods held in our own distribution centers and third-party distribution centers; product returns, customer concessions and promotion costs that are materially higher than what we currently plan; the unexpected loss of key management or one or more of our key customers; an unexpected reduction in business from one of our key customers; the impact of competition on the Company's market share; unfavorable changes in foreign exchange rates, particularly China's exchange rate; and our ability to comply with the various terms and covenants of our unsecured credit facility with The Huntington National Bank. Other risks to our business are detailed in previous press releases, shareholder communications and Securities Exchange Act of 1934 filings, including those in the disclosure in "Item 1A - Risk Factors" of Part I of our 2007 Annual Report on Form 10-K for the fiscal year ended June 30, 2007. Except as required by applicable law, we do not undertake to update the forward-looking statements contained in this news release to reflect new information that becomes available after the date hereof.

                         --financial charts follow--



                     R.G. BARRY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands of dollars, except for per share data)
                                   (unaudited)

                                            Thirteen Weeks   Thirty-nine Weeks
                                                Ended              Ended
                                       March 29, March 31, March 29, March 31,
                                          2008      2007      2008      2007

    Net sales                           $20,236   $16,375   $90,921   $91,192
    Cost of Sales                        12,248    10,017    53,132    54,825
        Gross profit                      7,988     6,358    37,789    36,367

        Gross profit (as percent of
         sales)                            39.5%     38.8%     41.6%     39.9%

    Selling, general and administrative
     expenses                             7,067     6,592    24,672    23,361
    Gain on disposal of land                  -         -         -      (878)
    Restructuring and asset impairment
     charges                                  -        91         -       163

        Operating profit (loss)             921      (325)   13,117    13,721

    Other income                              -        35        50       131
    Interest income (expense), net          242       171       420      (364)

        Income (loss) from continuing
         operations, before income tax    1,163      (119)   13,587    13,488

    Income tax expense (benefit)            (45)     (240)    4,531   (13,088)

      Earnings from continuing operations 1,208       121     9,056    26,576

      Earnings from discontinued
       operations                             -        87        -        241

    Net earnings                         $1,208      $208    $9,056   $26,817

    Earnings per common share:
     continuing operations
        Basic                             $0.12     $0.01     $0.87     $2.65
        Diluted                           $0.11     $0.01     $0.85     $2.56

    Earnings per common share:
     discontinued operations
        Basic                                $-     $0.01       $-      $0.02
        Diluted                              $-     $0.01       $-      $0.02

    Earnings per common share: total
        Basic                             $0.12     $0.02     $0.87     $2.67
        Diluted                           $0.11     $0.02     $0.85     $2.58

    Average number of common shares
     outstanding
        Basic                            10,484    10,069    10,435    10,043
        Diluted                          10,663    10,482    10,669    10,395



                           CONSOLIDATED BALANCE SHEET
                            (in thousands of dollars)
                                   (unaudited)

                                            March 29,   March 31,    June 30,
                                              2008        2007         2007
    ASSETS
    Cash  & Short term investments           $28,003     $16,939     $18,207
    Accounts Receivable, net                   7,515      11,366       6,860
    Inventory                                 14,060      12,440      14,639
    Prepaid expenses and other current
     assets                                    2,759       9,629       7,192
    Assets held for disposal                       -           -       2,788
      Total current assets                    52,337      50,374      49,686

    Net property, plant and equipment          3,033       2,574       2,255

    Other assets                              11,637       7,763      11,587
      Total Assets                           $67,007     $60,711     $63,528

    LIABILITIES & SHAREHOLDERS' EQUITY
    Short-term notes payable                   2,283       2,533       2,278
    Accounts payable                           5,421       4,502       7,443
    Other current liabilities                  2,340       5,850       3,412
    Liabilities associated with assets
     held for sale                                 -           -       2,357
      Total current liabilities               10,044      12,885      15,490

    Long-term debt                               209         290         272
    Accrued retirement costs and other        10,852      11,039      11,551
    Shareholders' equity, net                 45,902      36,497      36,215
      Total liabilities & shareholders'
       equity                                $67,007     $60,711     $63,528