MINNEAPOLIS, Jan. 18 /PRNewswire/ -- G&K Services, Inc. (Nasdaq: GKSRA), a
leading supplier of uniforms and related textile services, expects to report
continued improvement in its revenue growth rate for the second quarter ended
December 25, 1999, but a higher-than-expected loss from the ramp-up of direct
sales operations will lead to a decline in earnings versus the prior-year
period.  The Company announced today that it expects to report revenues in the
$142 million range for the quarter, up 9% from $129.9 million a year ago,
while earnings are likely to be $.41-.42 per share, down from $.45 per share
in the prior-year quarter.
    "Revenue growth rates in our core rental operations continued to improve,
as expected," said Richard Fink, chairman.  "However, expenses in the direct
sale/catalog group connected with rapid expansion, continuing high costs
associated with a recently expanded fulfillment center and implementation of
a new information system, produced a wider operating loss than we anticipated.
In addition, the Company absorbed larger than expected expenses from our
self-insured health care plan and a non-operating charge tied to our deferred
compensation plan.  Absent these impacts, earnings would have been consistent
with analyst earnings estimates."
    Fink said the earnings impact of the negative items included:

               Area                       Estimated Second Quarter
                                         Earnings Per Share Impact
        Direct sale/catalog group
          - expansion costs                         $0.06

        Health insurance costs                      $0.03

        Deferred compensation plan
          - non operating charge                    $0.02

    Second quarter rental revenue is expected to increase by more than 8% over
the prior year and approximately 7% on a comparable basis after adjusting for
acquisitions and divestitures.  The Company stated that the second quarter
marks the fourth straight quarter of increasing quarterly growth rates in
the rental business.  Direct sale revenue is expected to increase more than
30% driven by an increase of more than 50% in the direct sale/catalog group.
This fast growth business has now posted growth in excess of 50% for five out
of the last six quarters.
    In addition to the direct sale/catalog expansion costs, the Company's
self-funded health insurance costs are expected to be higher than anticipated
due to several large claims, which drove the Company's total health insurance
costs to unusually high levels.  Finally, the Company expects to incur an
unanticipated charge of $.02 per share related to a non-qualified deferred
compensation plan.  This charge relates directly to the exceptionally strong
growth in the stock market during the fiscal second quarter.
    Looking forward, the Company anticipates earnings for fiscal 2000 of
$1.83 - $1.87 per share, which includes continued, but declining, operating
losses in the third and fourth quarters in the direct sale/catalog group.
Tom Moberly, chief executive officer, stated, "The direct sale/catalog group
is a rapidly growing business unit which is strategically important because
it is complementary to our rental operation by offering our customers a more
complete selection of products and services.  We recognized late last year
that we needed to make significant investments in the fulfillment center and
information system in order to support the rapid growth.  However, we clearly
did not execute these changes as effectively as we should have.  We are making
every effort to improve productivity in the fulfillment center and to complete
implementation of the new information system during the second half of fiscal
2000."
    G&K Services expects to announce second quarter earnings on January 25,
2000.

    This press release contains "forward-looking statements" within the
meaning of the federal securities laws, including statements concerning
business strategies and their intended results, and similar statements
concerning anticipated future events and expectations that are not historical
facts.  These forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.  The
forward-looking statements in this press release reflect management's best
judgement at the time they are made, but all such statements are subject to
numerous risks and uncertainties, which could cause actual results to differ
materially from those expressed in or implied by the statements herein.
Additional information concerning potential factors that could effect future
financial results is included in the Company's Annual Report on Form 10-K for
the Fiscal Year Ended June 26, 1999.
    G&K Services is headquartered in Minneapolis, Minnesota.  The company is
one of the largest suppliers of uniforms and related products in the United
States, and is the largest uniform service provider in Canada.  G&K operates
over 130 uniform processing facilities and branch offices, serving over
105,000 customers and processing over 2 million garments daily.
    To receive the latest information about G&K Services, Inc. by fax, at no
cost, dial 1-800-Pro-Info, Code GKSRA

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