CD Warehouse Adds Four New Stores

Market Wire, 20050229

CD Warehouse, Inc. (NASDAQ NMS: CDWI), an international music retailer specializing in the growing commerce of online and offline value-driven new and used CDs, opened four new stores this week, announced company Chairman and CEO, Jerry Grizzle.

Located in Tennessee, Georgia and Indiana, the four new stores push the total number of franchised and company-owned retail outlets to 332 in 39 states, the District of Columbia and five foreign countries.

"The store openings this week underscore our refocused initiative to expand the CD Warehouse presence. We are on track to open 30 franchised and company-owned stores this year," Grizzle said.

The new franchised stores are located in fast-growing suburbs of three of the nation's fastest growing cities, Nashville, Atlanta and Indianapolis. Two stores opened in the Nashville suburbs of Franklin and Bellevue. One store opened in the Atlanta suburb of Buford, Georgia and another store opened in the Indianapolis suburb of Avon, Indiana.

Since the beginning of this year, CD Warehouse has opened 12 stores in nine markets. The company opened or acquired 49 stores in 1999. "The ongoing expansion of CD Warehouse is a key element of our corporate strategy to grow the company's revenues. Today's announcement reinforces the renewed emphasis being placed on cultivating revenues through the strategic location of new stores nestled in high-income and high-growth areas," Grizzle said.

The four new 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 will offer between 10,000 and 15,000 new and used selections, spanning major music categories. Pre-owned CD selections generate roughly 70 percent of the dollar sales volume in the company's stores.

Internet Selling Partnership Yields Favorable Results

"While continuing our expansion in the number of brick and mortar stores, we are placing equal emphasis on building a vibrant presence on the Internet. The exclusive selling partnership entered into earlier this year with Half.com has already exceeded our expectations," Grizzle said.

Half.com connects buyers and sellers of previously owned books, music, movies and video games. The site is ranked as one of the top 50 most active shopping sites on the Internet, according to PC Data Reports Online. On June 13, 2000 eBay, the world's leading personal trading community, announced it had entered into an agreement to acquire Half.com."It's not unusual to record 400 to 500 sales in a day through Half.com. On June 9, 2000, we generated 657 orders through Half.com, the highest one-day total so far. To date, the Internet sales through Half.com have climbed much faster than forecasted. In the first 30 days of our selling partnership, we have processed 6,005 orders, generating $46,700 in revenue," Grizzle said.

He continued, "We are also experiencing promising activity on our CD Warehouse e-commerce site, cdwarehouse.com. Orders through May 31, 2000 have reached 3,302. The link between the Half.com and our own e-commerce site is generating increased traffic on our site. Consumers are becoming aware of CD Warehouse by visiting the Half.com site. Because our selections at Half.com are necessarily limited to those that sell for 50 percent of retail, the consumer wanting greater depth of merchandise can click to cdwarehouse.com and experience the full range of selections offered by CD Warehouse."

CD Warehouse is focusing on revitalizing under-performing areas by developing and executing new strategies, such as the Half.com selling partnership. In addition, the company is aiming to achieve greater profitability from existing assets with new programs and initiatives and a continued effort at controlling costs and improving efficiencies.

"We see strong synergies between the click side of the business and brick side of the business. The two can complement one another and allow us to seize the opportunities that will emerge as the Internet evolves and our "unique" store experience expands. We will use the Internet as a proactive tool for generating revenue. As we cast an ever bigger net on the Internet, we will exploit the medium to push store traffic," Grizzle concluded.

CD Warehouse, Inc. franchises and operates retail music stores in 39 states, the District of Columbia, England, France, Guatemala, Canada and Venezuela under the name "CD Warehouse, Disc Go Round, CD Exchange and Music Trader." CD Warehouse stores buy, sell, and trade pre-owned CDs with their customers. CD Warehouse stores also sell a full complement of new release CDs. In addition, the Company sells used and new CDs through its own proprietary Internet e-commerce site and also sells used CDs through a selling partnership with Half.com.

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.