Herman's Sporting Goods Board Authorizes Reverse Stock Split

CARTERET, N.J.--(BUSINESS WIRE)--MAY 12, 1995--Herman's Sporting Goods, Inc., a closely held specialty retailer based in Carteret, N.J., today issued the following letter, which is being mailed to the Company's stockholders:

Dear Herman's Stockholder:

To avoid the financial and management burdens that becoming a public reporting company would entail, the Board of Directors of Herman's Sporting Goods, Inc. has approved a reverse stock split that will reduce the number of holders of the Company's Common Stock. At present, Herman's has approximately 1,050 stockholders, most of whom are former creditors who received their shares in conjunction with Herman's emergence from chapter 11 last year. Under Securities and Exchange Commission regulations, the size of this stockholder group would require Herman's to become a public reporting company in the near future. After the reverse split, however, Herman's will have approximately 210 stockholders, which is lower than the S.E.C. threshold.

The Board believes the reverse stock split is in Herman's best interest, because becoming a public reporting company would require the expenditure of considerable time and money to comply with S.E.C. regulations, thereby using resources which would be better applied to more pressing needs. In addition, in light of the highly competitive nature of the retail industry, the Board feels that Herman's ability to keep certain information confidential will benefit the Company as it pursues its long-term objectives.

The reverse split will create one new share of reclassified Common Stock for every 1,250 shares of Common Stock currently held. Shareholders of record on May 12, 1995 will exchange each block of 1,250 shares of old stock for one share of the new Common Stock. Fractional shares of the new stock will not be issued. Instead, stockholders with less than 1,250 shares will receive a cash payment determined by multiplying $2.53 by the number of shares of old Common Stock they hold. Stockholders with more than 1,250 shares of Common Stock will receive cash according to the same formula in lieu of a fractional share to the extent that the number of shares of Common Stock they hold is not evenly divided by 1,250.

As a result of the reverse stock split, the approximately 840 current holders of Common Stock who hold less than 1,250 shares of Common Stock will be "cashed out." Collectively, these stockholders hold approximately 285,000 of the approximately 19.4 million shares of Common Stock outstanding.

Although Herman's Common Stock is not publicly traded and therefore has no "market price," $2.53 per share is believed to be a fair price for the stock. The Company understands that most recent private sales of Common Stock have been at a price significantly lower than $2.53 per share.

The price of $2.53 per share was established by weighing available facts, including the price for the purchase of shares pursuant to the exercise of rights in the Company's recently completed rights offering, the prices paid by Herman's investor group for their interest in the Company at the time they acquired their original ownership, and the price for exercise of management options under the Company's stock option plans for senior executives and other members of Herman's management.

To receive formal approval for the reverse stock split, a special meeting of Herman's stockholders will be held at the Company's offices at 2 Germak Drive, Carteret, New Jersey, on May 23, 1995 at 9:30 A.M. Please note that Herman's original investor group owns approximately 80% of all outstanding shares and will constitute a quorum at the special meeting of stockholders. The investors have indicated that they will vote in favor of the proposed reverse stock split, and, therefore, the reverse stock split will be made effective immediately following the special stockholders meeting.

A Notice of Special Meeting of Stockholders and an Information Statement which discuss the reverse stock split in more detail are being mailed to you under separate cover. We urge you to read these documents carefully. If you have any questions regarding this matter, please contact Thomas Noonan, Herman's Chief Financial Officer, at (908) 969-4596.

As always, we appreciate your continued support and interest in the turnaround of Herman's.

Sincerely,

Alfred F. Fasola, Jr. Stuart H. Kessler

Chief Executive Officer Chief Operating Officer

CONTACT: Kekst and Company

Michael Freitag

212/593-2655

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