The Leather Factory, Inc. (TLF)
By: Robert Davis

In a move that confirms its commitment to building a retail presence, The Leather Factory (AMEX:TLF)announced the hiring of a Director of Operations for its new Tandy Leather subsidiary, with "35 years of experience in leatherworking and successful management of retail operations." Tandy Leather is the newly acquired retail arm of The Leather Factory.

Previously a Regional Manager with Tandycrafts' Tandy Leather subsidiary from 1978 to 1989, Jim Linnell,the new Director of Operations, subsequently became President of another Tandycrafts subsidiary, a retail store chain of religious books, music and gifts, which he expanded from an 18-store regional chain to a 75- store national chain.

Demonstrating that Linnell can help build TLF's "shareholder value," Tandycrafts sold this subsidiary in 1998 for $11.5 million.

Historically, Tandy Leather's retail operations have generated strong revenues and profits. In fiscal 1994 Tandycrafts reported that its Tandy Leather subsidiary had generated $49.3 million in revenues and $4.8 million in operating income. However, Tandycrafts focused its attentions elsewhere during the latter half of the 1990s, and as a result, the Tandy Leather franchise gradually eroded. Its decline accelerated around 1998, as its parent began closing retail outlets and divesting subsidiaries in an effort to reposition itself. By fiscal 2000,Tandy Leather's revenues had dropped to only $7.1 million, although it did generate $357,000 in pre-tax income.

Clearly, TLF has brought in Mr. Linnell to revive the Tandy Leather retail presence.

We are currently projecting a 20% future growth rate for TLF, prior to the projected incremental impact of this
new Tandy Leather retail chain.

J.M.Dutton & Associates, LLC. John M. Dutton, President and Supervisory Analyst, 801 S. Figueroa, Suite 1120, Los Angeles, CA 90017 Phone (213) 929-2616, Fax (213) 896 0457 Email: [email protected] Web site: www.JMDutton.com

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