CD Warehouse Store Hits $1 Million Mark

Market Wire, 20050229

CD Warehouse, Inc. (NASDAQ NMS: CDWI), an international music retailer specializing in value-driven new and used CD sales and an online e-commerce platform (www.cdwarehouse.com), announced its first million dollar retail store today.

Located on Garnet Avenue in San Diego, CA, the Pacific Beach CD Warehouse music store, one of 14 in the San Diego market, posted sales in excess of $1 million from June 1, 1999 to May 31, 2000, the first store ever in the company's history to achieve this coveted milestone, reported company Chairman and CEO, Jerry Grizzle.

Stores in Plano, TX, Cape Girardeau, MO, Springfield, MO and Idaho Falls, ID are also near the $1 million sales mark, recording 12-month sales in excess of $900,000. "While several stores have come close to achieving this milestone, this San Diego store reached it with strong trends over the past three months," Grizzle said. "All in all, it is quite an achievement, especially considering the store is under 2,000 square feet."

In recognition of the achievement, CD Warehouse is establishing a new category for million dollar- producing stores entitled "Platinum Stars." Building around the music industry's platinum designation granted to artists when their CD sales surpass a million copies, CD Warehouse will present franchise and company stores achieving this designation with in-store recognition designed to spark interest and build traffic.

The San Diego store is a company-owned store, acquired in February 1999. "We extend an enthusiastic congratulations to Patrick DiFazio, David Broce, Frank D'Amato, and the entire Pacific Beach store team for this history-making accomplishment," Grizzle said.

CD Warehouse stores range in size from 1,500 to 2,500 square feet and are located in high-traffic strip shopping centers. The stores, which offer between 10,000 and 15,000 new and used CD selections spanning every major music category, include a full complement of new CD releases, with pre-owned CD selections accounting for roughly 70 percent of the dollar sales volume in company stores.

"We couldn't be more pleased with the achievement of the Pacific Beach store. While we are also pleased with the performance of the vast majority of franchise and company-owned stores system- wide, internally we are focused on stimulating greater organic growth by carefully managing costs and improving efficiencies," Grizzle said. "Brick and click sales trends, combined with measures to promote organizational and operational efficiencies, indicate we are making progress in our plan to return to profitability this calendar year."

CD Warehouse, Inc. franchises and operates retail music stores across the United States, five foreign countries and the District of Columbia. CD Warehouse stores buy, sell and trade pre-owned CDs with their customers. In addition, the company continues to expand its presence on the Internet through an exclusive selling partnership with Half.com, an eBay company, and CD Warehouse's own e-commerce site, www.cdwarehouse.com, providing consumers access to CD Warehouse's unprecedented 600,000 plus on- line library of quality pre-owned CDs.

Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such forward- looking statements are made based on management's belief as well as assumptions made by, and information currently available to, management pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors, including those contained in the Company's periodic reports filed with the Securities and Exchange Commission.