Quarterly Profits Continue from New Management's Turnaround Strategy

STAGE II APPAREL CORP. (AMEX: SA), a leading manufacturer of proprietary and licensed brandname casual apparel, activewear and collection sportswear for men and boys, today announced profitable results for the first quarter of 2000. This marks the Company's fifth consecutive profitable quarter, validating new management's innovative turnaround strategy.

For the quarter ended March 31, 2000, Stage II reported net sales of $2.9 million, an increase of 85% from $1.6 million in net sales for the first quarter of 1999. The Company realized net income of $37,000 or $.01 per share in the first quarter this year compared to $11,000 or $.00 per share in the same quarter of 1999.

The growth in quarterly net sales reflects a restructured and more highly motivated sales team with a deeper knowledge of each product line and targeted customer base, as well as the emergence of a revamped product mix and marketing strategy. Quarterly results do not yet reflect the full impact of the Company's brand building program buttressed on the Cross Colours trademark acquired in May 1999.

Richard Siskind, President and CEO of Stage II, said "Since acquiring control of Stage II and replacing prior management in May 1998, we have rebuilt our asset base with exciting brands featuring our redesigned apparel lineup, launched our new website designed to bring our showroom to apparel retailers of all sizes worldwide and substantially reduced fixed costs. With these initial goals for the Company's turnaround accomplished, we have positioned Stage II to build on its new foundation."

Mr. Siskind continued "In addition to several new licenses for upscale mens activewear and lifestyle apparel, our initiatives include the acquisition of the Cross Colours trademark, a pioneer brand in the early development of young men's urban fashion. The Cross Colours brand achieved rapid success in the early 1990s by creating a fresh new urban look in the young men's fashion forward market. We acquired this renowned trademark not only to develop our own lines of Cross Colours streetwear but also to license the brand for a wide variety of retail items in mainstream market segments, focusing initially on kids' and juniors' activewear, footwear, accessories and home products."

"Stage II has relaunched the Cross Colours brand for this year's Spring/Summer season with the same innovation in design and marketing associated with the pioneer trademark. Our new lineup has been well received by upstairs specialty stores nationwide, heralding a bright future for our Cross Colours Streetwear." Mr. Siskind concluded, "In addition, we initiated our licensing campaign for Cross Colours in the first quarter of 2000 under an exclusive three-year manufacturing and distribution arrangement for Cross Colours boys' sportswear with Kids Headquarters, a division of Wear Me Apparel with over 25 years of success in this market. The launch of Cross Colours for boys is scheduled for the Spring 2001 season. We are continuing to review additional licensing proposals for this brand in other categories of the fast growing urban streetwear youth fashion market."

Since 1980, Stage II Apparel Corp. has been a leading manufacturer of men's and boys' casual apparel and activewear. The Company markets its apparel to department stores, sporting goods chains and specialty stores. Its current licensed labels include Adolfo Sport and Activewear, Adolfo Golf and Adolfo Sportswear as department and specialty store brands, plus the recently acquired Stanley Blacker brand for men's activewear, swimwear, loungewear and various accessories. In addition, the Company features its own proprietary lines, including the Cross Colours brand for the urban youth streetwear market, Main Event and Pro Tour as sporting good brands and Timber Run as an outdoor utility brand sold through specialty sporting good channels.

A summary of quarterly financial data for the Company is set forth below.


Stage II Apparel Corp.
($ in thousands, except per share data)

Quarter Ended March 31,
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2000 1999
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Statement of Operations Data:
Net sales...................................$ 2,935 $ 1,591
Gross profit................................ 754 515
SG&A expenses............................... 636 432
Interest expenses, net...................... 86 101
Net income.................................. 37 11
Basic and dilutive net income per share.....$ .01 $ .00
Average primary shares outstanding.......... 4,122 3,904


Mar. 31, Dec. 31,
2000 1999
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Balance Sheet Data:
Cash and cash equivalents...................$ 720 $ 691
Accounts receivable......................... 245 393
Inventory................................... 3,771 2,145
Marketable securities....................... 701 665
Total assets................................ 7,958 6,409
Total liabilities........................... 4,578 3,099
Shareholders' equity........................ 3,380 3,310

Forward Looking Statements

This Release includes forward looking statements within the meaning of Section 21E of the Securities Exchange Act relating to matters such as anticipated operating and financial performance, business prospects, developments and results of the Company. Actual performance, prospects, developments and results may differ materially from anticipated results due to economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including risks of inflation, fluctuations in market demand for the Company's products and changes in the level of future expenses for the manufacturing and distribution of those products. Words such as "anticipated," "expect," "intend," "plan" and similar expressions are intended to identify forward looking statements, all of which are subject to these risks and uncertainties.