The following discussion may contain forward-looking statements regarding us, our business prospects and our results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in Item 1A-"Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Commission that advise interested parties of the risks and factors that may affect our business.

Overview

Gander Mountain Company operates the nation's largest retail network of stores specializing in hunting, fishing, camping, marine and outdoor lifestyle products and services. We have expanded our store base to 118 conveniently located Gander Mountain outdoor lifestyle stores, (including three outlet centers), providing approximately 6.6 million square feet of retail space in 23 states: Alabama, Arkansas, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Tennessee, Texas, Virginia, West Virginia and Wisconsin. We opened our newest store in March 2009, which we anticipate will be our only new store in fiscal 2009 as we focus on growing our direct marketing business and continuing to improve the profitability of our retail operations.

Since its origin in 1960, our brand name has developed a strong appeal and relevance to consumers who participate in outdoor sports and recreation activities. Our customers value our "We Live Outdoors" culture and theme. Our core strategy is to provide our target customers with a unique and broad assortment of outdoor equipment, accessories, related technical apparel and footwear; expert services; convenient locations; and value pricing. Our stores feature an extensive selection of leading national and regional brands as well as our company's owned brands. We tailor our merchandise assortments to take advantage of our customers' seasonal and regional or local preferences. We seek to combine this broad product offering with superior customer service based on our store associates' extensive product knowledge and outdoor-related experience.

In March 2003, we began transforming our market position from a traditional specialty store to a large-format, category-focused store. We did this by opening new stores in a large format and increasing the selling space within our original, small-format stores. Prior to March 2003, our typical store was approximately 31,000 square feet. Our large-format stores range from approximately 50,000 to 120,000 square feet, with our current focus primarily upon stores of 60,000 to 65,000 square feet. Our large-format stores are generally located with convenient access to a major highway and have an open-style shopping environment characterized by wide aisles, open bar-joist ceilings and high-density racking. To further build upon our brand's reputation for high quality and exceptional value, we outfitted certain stores and our new stores with additional features such as brick and stone accents, log-wrapped columns, and improved branding, fixture, flooring and signage elements. The larger format enables us to offer more products and services to our customers. As of January 31, 2009, 73 of our 118 stores were in our large format.

Our large-format stores offer other unique features and specialized services, including a full-service gunsmith shop, a full-service archery pro shop and archery target lanes. Some of the large-format stores also include a bait shop that opens early for the convenience of our customers. We utilize outside

selling areas adjacent to most of our large-format stores to display additional offerings of larger items such as kayaks, trailers, canoes, ATVs, jon-boats and power boats.

Nearly all of our stores have a Gander Mountain Lodge, which is an in-store meeting room available for public use, where we provide hunter safety classes, outdoor-skills seminars and other community-focused activities.

We began offering ATVs in fiscal 2004 and power-boats in fiscal 2006, as well as maintenance and repairs for ATVs, power-boats and other small engines. Beginning in fiscal 2007 and continuing through fiscal 2008, we began scaling back our market position and inventory levels in these product categories due to the lack of profitability and general economic concerns. We will exit the ATV and power-boat product categories and their related services before the end of fiscal 2009. All of our stores will continue to sell the popular john-boats, as well as small outboard engines and trolling motors.

The sales of outdoor lifestyle products and services through our 118 retail stores constitutes our Retail segment.

On December 6, 2007 we acquired Overton's, Inc., a leading internet and catalog marketing company targeting recreational boaters and water sports enthusiasts. Overton's product line is extensive, ranging from water skis, wakeboards and apparel to electronics, boat covers, boat seats and other marine accessories. Overton's products are sold under two principal brands, Overton's and Consumers Marine, through a multi-channel approach that includes catalogs, websites (www.Overtons.com and www.Consumersmarine.com) and three retail showrooms. Overton's is a wholly-owned subsidiary of Gander Mountain headquartered in Greenville, North Carolina. We acquired Overton's for its established position in the marine accessories business but also to provide us a platform from which to develop and grow the internet and catalog retail channels for the Gander Mountain product categories. We believe an effective multi-channel retail offering in our industry sector would include deriving between 25% to 40% of our total business from the internet and catalog channels.

In August 2008, we launched a new internet and catalog operation under our Gander Mountain brand offering an initial assortment of the products available in our retail stores. We intend to expand our product assortment and continue to grow this component of our direct business as we seek to build market share in an internet and catalog market. Together, the Overton's and Gander Mountain brands comprise our Direct segment.

We measure performance using such key operating statistics as comparable store sales, sales per square foot, gross margin percentage and store operating expenses, with a focus on labor, as a percentage of sales.

We also measure and evaluate investments in our retail locations, including inventory and property and equipment. Inventory performance is primarily measured by inventory per square foot and by inventory turns, or the number of times store inventory turns over in a given period, and amounts of owned inventory at various times based on payment terms from our vendors. The most significant investments in property and equipment are made at the time a store is opened by us.

We believe that the overall growth of our business will allow us to generally maintain or increase our product gross margins. Increased merchandise volumes should enable us to improve our purchasing leverage and achieve greater support throughout the supply chain. The mix of merchandise in our total sales also influences our product gross margins. As we plan to grow sales through our Direct segment as well as increase sales and enhance productivity of our retail stores, a number of other factors may impact, positively or negatively, our product gross margin percentage, including:

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º an increasing merchandising mix of product sold through our Direct segment,

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º the introduction of new product categories with varying gross margin percentage characteristics,

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º changes in the merchandise mix at our current locations,

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º differences in merchandise mix by geographic location,

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º price competition,

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º clearance activities in connection with seasonal inventory management,

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º closeout sales in connection with store relocations and industry consolidation,

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º sourcing of products from locations outside the United States,

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º vendor programs, and

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º supply chain enhancements.

In addition, our gross margin is impacted by store occupancy and distribution costs. We monitor these costs in absolute dollars and as a percentage of sales.

The most significant store operating expenses are labor and related employee benefits and advertising. Our employee benefits include health insurance, the cost of which continues to increase faster than the general rate of inflation. We continually monitor this cost and review strategies to effectively control increases, but we are subject to the overall trend of increases in health care costs. Advertising costs are monitored as a percentage of sales. These costs are largely variable, which allows us to actively manage them to facilitate achieving our sales, gross margin percentage and store operating contribution objectives. We expect to increase advertising expenditures in fiscal 2009 as compared to fiscal 2008.

Store operating contribution, which is calculated by deducting a store's operating expenses from its gross margin, is used to evaluate overall performance on an individual store basis.

Selling, general and administrative expenses are monitored and controlled as a percentage of sales. We have made significant investments in infrastructure, including our information systems, distribution capabilities and personnel. Our current infrastructure facilitates our growth plans. We expect these expenses to decrease as a percentage of sales over time.

Pre-opening expenses are related to store openings, including relocations. These expenses will fluctuate based on the number and timing of new store openings.

Inventory turns are based on cost of sales and average inventory for the applicable period. We recognize that our inventory turns may be lower than those of other retailers, which we believe is due, in part, to the categories of merchandise we carry, including firearms, and the large quantities of merchandise we use in our in-store displays. We believe we have the opportunity to enhance our supply chain to improve our inventory turns. Additionally, in merchandise categories that experience slower inventory turns, we continue to work with vendors to increase our trade credit terms to reduce our investment in owned inventory. We cannot assure you that we will be able to improve our inventory turns or inventory investment.

Identification of appropriate new store sites has been essential to our growth strategy. We believe our focus on our larger store size and our ability to utilize either recycled, or second-use, facilities or build-to-suit locations provides us with increased opportunities to find optimal real estate locations on attractive terms. We evaluate and invest in new stores based on site-specific projected returns on investment.

Since the acquisition of Overton's, we have two reportable segments: Retail and Direct. We evaluated our operating and reporting segments in accordance with SFAS No. 131 and considered the discrete financial information reviewed by our chief operating decision maker in making decisions regarding allocation of resources and in assessing performance. Reporting in this format provides

management with the financial information necessary to evaluate the success of the segments and the overall business. Prior to December 6, 2007, we operated under one segment, Retail.

Results of Operations

The following table presents, for the periods indicated, selected items in the consolidated statements of operations as a percentage of our sales:

                                                      Fiscal Year
                                      52 weeks         52 weeks         53 weeks
                                     January 31,      February 2,      February 3,
                                        2009             2008             2007
     Sales                                    100 %            100 %            100 %
     Cost of goods sold                      74.6 %           75.2 %           75.3 %

     Gross profit                            25.4 %           24.8 %           24.7 %
     Operating expenses:
       Selling, general and                  24.2 %           24.8 %           22.8 %
       administrative expenses
       Exit costs, impairment and             0.1 %            0.7 %            0.1 %
       other charges
          Goodwill impairment                 0.6 %            0.0 %            0.0 %
          charge
       Pre-opening expenses                   0.2 %            0.5 %            0.4 %
       Gain on insurance                      0.0 %            0.0 %           (0.2 )%
       settlement

     Income (Loss) from                       0.3 %           (1.2 )%           1.6 %
     operations
     Interest expense, net                    1.7 %            2.0 %            2.1 %
     Debt conversion charge                   0.0 %            0.0 %            1.0 %

     Loss before income taxes                (1.4 )%          (3.2 )%          (1.5 )%
     Income tax provision                     0.1 %            0.1 %            0.0 %

     Net loss                                (1.5 )%          (3.3 )%          (1.5 )%

In fiscal 2008, the Direct segment represented approximately 9% of our consolidated sales and incurred a net loss from operations of $2.9 million while the Retail segment represented 91% of our consolidated sales and produced net income from operations of $6.1 million. The Direct segment loss is primarily attributable to costs incurred for the start-up and launch of the Gander Mountain brand Direct business.

Sales consist of sales from comparable stores, new stores and non-comparable stores, as well as sales from our Direct segment since December 6, 2007. A store is included in the comparable store base in its fifteenth full month of operations. A relocated store returns to the comparable store base in its fifteenth full month after relocation. New store sales include sales from stores we opened during the current period. Non-comparable store sales include sales in the current period from our stores opened during the previous fiscal year before they have begun their fifteenth month of operation.

Cost of goods sold includes the cost of merchandise, freight, distribution, inventory shrinkage and store occupancy costs. Store occupancy costs include rent, real estate taxes and common area maintenance charges. Cost of goods sold also includes the cost of merchandise and freight expenses of our Direct segment.

Selling, general and administrative expenses include store associate payroll, taxes and fringe benefits, advertising, maintenance, utilities, depreciation, insurance, bank and credit card charges and other store level expenses. It also includes all expenses associated with operating our corporate headquarters in St. Paul, MN as well as the expenses of our Direct segment since December 6, 2007, the date of our acquisition of Overton's. Refer to Note 1 in the accompanying notes to our consolidated financial statements for further detail on expense classification.

Pre-opening expenses consist primarily of payroll, rent, recruiting, advertising and other costs incurred prior to a new store opening.

Fiscal 2008 compared to Fiscal 2007

Sales. Consolidated sales increased by $95.2 million, or 9.8%, to $1.1 billion in fiscal 2008 from $969.4 million in fiscal 2007. The Direct segment and Retail segment produced $80.4 million and $14.8 million, respectively, of the increase.

The Retail increase resulted from sales of $94.1 million in fiscal 2008 from new stores not included in the comparable store sales base, a comparable store sales decrease of $49.9 million and a $29.4 million sales decrease from stores closed during fiscal 2008 but open in fiscal 2007, as well as changes in other revenue. The Direct segment sales of $85.9 million for fiscal 2008 was an increase of $80.4 million over fiscal 2007 because fiscal 2007 included only two months of Direct segment sales.

In fiscal 2008, we opened five new stores, including three relocations/consolidations, and added approximately 400,000 net square feet of retail selling space, a 6.5% increase. During fiscal 2007, we opened 13 new stores, including three relocations/consolidations, and added 700,000 net square feet of retail selling space, a 12.8% increase. We also closed two underperforming stores in the fourth quarter of fiscal 2007.

Our comparable store sales declined 5.6% for fiscal 2008, as compared to a comparable store sales decline of 5.4% for fiscal 2007. The comparable store sales were negatively impacted by the overall economic environment, including recent disruption in the financial and credit markets, declining real estate values, increasing foreclosures in the housing markets, rising unemployment, and decreased business and consumer confidence, and their effects on discretionary spending and the retail environment. Additionally, continued de-emphasis of our ATVs and power boat categories and, we believe, less Retail segment advertising expenditures in fiscal 2008 as compared to fiscal 2007, negatively impacted comparable store sales. Our fourth quarter, seasonally important because of the hunting seasons and holidays, produced a comparable store sales decline of only 0.2%, which reflected the strength of our firearms, ammunition and accessories categories.

Overall, the Retail sales mix for fiscal 2008 was relatively consistent with fiscal 2007. The notable exceptions were: (i) the firearms, ammunition and accessories category, which increased its share of the Retail sales mix by 335 basis points on strong market demand, (ii) lower sales in the powersports category resulting in a 160 basis points lower share of the sales mix, almost all of which was due to lower sales in ATVs as we began exiting this category in early 2008 before the peak fall selling season for ATVs and (iii) the apparel category which experienced a decline of 102 basis points in its share of the sales mix.

Gross Profit. Consolidated gross profit increased by $29.7 million, or 12.4%, to $270.5 million in fiscal 2008 from $240.8 million in fiscal 2007. As a percentage of sales, consolidated gross profit increased 57 basis points to 25.4% in fiscal 2008 from 24.8% in fiscal 2007. The significant factors affecting our gross profit rate during fiscal 2008 were the inclusion of the higher-margin Direct business in our results this year, which provided 127 basis points, offset by a negative impact of 70 basis points in the Retail segment.

Retail segment initial margin rates increased 39 basis points because of increasing scale, continued inventory rationalization efforts, improved pricing structure and better management of clearance merchandise. Retail's distribution costs as a percentage of sales reflected a positive benefit of 19 basis points from operating efficiencies. These positive variances were offset by a 123 basis point negative impact from increased store occupancy costs as a result of reduced leverage from lower comparable store sales and lower sales per square foot at our newer, less mature stores.

Retail segment initial margins benefited from higher initial margin rates in firearms, ammunition and accessories partially offset by lower margin rates in powersports and lower sales of higher-margin apparel.

Selling, General and Administrative Expenses. Consolidated SG&A expenses increased by $17.1 million, or 7.1%, to $257.8 million in fiscal 2008 from $240.7 million in fiscal 2007. As a percentage of sales, consolidated SG&A expenses decreased 62 basis points to 24.2% in fiscal 2008 from 24.8% in fiscal 2007.

The significant factors affecting consolidated SG&A expenses during fiscal 2008 were positive leverage from cost controls in the Retail segment that had a positive impact of 223 basis points, partially offset by the inclusion of the higher-rate Direct business SG&A costs in our results this year, which negatively impacted SG&A as a percentage of sales by 161 basis points.

Retail segment advertising costs decreased in fiscal 2008 and as a percentage of sales were 92 basis points lower as we lowered our marketing expenditures. We also more effectively managed store labor and related costs despite negative comparable store sales, resulting in a 50 basis point improvement as a percentage of sales. Other SG&A costs were also lowered in fiscal 2008, resulting in 81 basis points, as a percentage of sales, of additional improvement.

Exit Costs, Impairment and Other Charges. We continued to incur costs in fiscal 2008 similar to those we incurred in fiscal 2007, primarily because costs subsequent to the closing of a store will continue when sub-lease income is not sufficient to offset the closed-stores' costs in total. In addition, we incurred exit costs associated with three stores closed replaced by two new large-format stores in the first quarter of fiscal 2008. These fiscal 2008 exits costs were offset by a reduction of lease termination costs resulting from the reversal of liabilities for three closed stores that were re-opened as retail outlet centers. The reversal resulted in a credit to exit costs, impairment and other charges of $1.8 million in the third quarter of fiscal 2008. The net amount of exit costs, impairment and other charges for fiscal 2008 was $0.9 million.

During the latter half of fiscal 2007, in response to changes in economic and retail industry conditions, management began efforts to streamline operating activities and took further actions designed to improve profitability. This included closing two unprofitable stores, a reduction in the stores and markets that sold our powersports products and reductions in workforce at our headquarters location in St. Paul. In addition, we recorded severance costs earlier in fiscal 2007 relative to two executive terminations. Also, as a result of the Overton's acquisition in December 2007, we wrote-off certain assets, whose use was discontinued, related to capitalized web site development costs that began earlier in fiscal 2007. These charges in the aggregate were $6.5 million for fiscal 2007.

Goodwill Impairment. Based upon the results of our annual impairment testing as of the end of fiscal 2008, we recorded a non-cash impairment charge for our goodwill in our Retail reporting unit of $6.5 million. There was no such goodwill impairment charge in fiscal 2007. This charge was primarily due to our company's market capitalization, which was based on the closing price of our stock for a 30-day period preceding January 31, 2009, being lower than the carrying amount or book value of our company.

Pre-opening Expenses. Pre-opening expenses decreased $2.8 million, or 57.7%, to $2.0 million in fiscal 2008 from $4.8 million in fiscal 2007. We opened five new stores in fiscal 2008 and 13 new stores in fiscal 2007, including relocated stores in both periods.

Interest Expense, net. Interest expense decreased by $1.7 million, or 8.8%, to $18.0 million in fiscal 2008 from $19.7 million in fiscal 2007.

Average outstanding borrowings during fiscal 2008 increased 22% as compared to fiscal 2007, due to the Overton's acquisition, increased cash used to fund our growth and operating loss and for capital expenditures in connection with new and existing stores. Average interest rates on our outstanding borrowings were 181 basis points lower in fiscal 2008 than in fiscal 2007, due to general interest rate

declines. The average effective interest rate on all of our outstanding borrowings as of January 31, 2009 and February 2, 2008 was 4.65% and 6.82%, respectively.

Income Tax Provision. Our fiscal 2008 and fiscal 2007 tax provision primarily represents minimum or net worth taxes due in various states. Certain states have adopted an adjusted gross receipts tax. We have no provision for Federal income tax for fiscal 2008 or fiscal 2007 due to the uncertainty of the realization of our net operating loss carryforwards. We have determined the realization of the tax benefit related to our net deferred tax asset is uncertain at this time and a valuation allowance was recorded for the entire balance of our net deferred tax asset.

Net Loss. Our net loss was $15.5 million for fiscal 2008, as compared to net loss of $31.8 million for fiscal 2007, due to the factors discussed above.

Fiscal 2007 compared to Fiscal 2006

Sales. Sales increased by $58.0 million, or 6.4%, to $969.4 million in fiscal 2007 from $911.4 million in fiscal 2006. The increase resulted from sales of $122.3 million in fiscal 2007 and fiscal 2006 from new stores not included in the comparable store sales base, a comparable store sales decrease of $58.0 million and an $11.8 million sales decrease from stores closed during 2007 but open in 2006 as well as changes in other revenue. Overton's sales for two months in fiscal 2007 also contributed $5.5 million of the increase. In fiscal 2007, we opened 13 new stores, including three relocated stores, and added 700,000 square feet of retail selling space, a 12.8% increase. We also closed two underperforming stores in the fourth quarter of fiscal 2007. During fiscal 2006, we opened eight new stores, including one relocated store, and added 483,000 square feet of retail selling space, a 9.7% increase.

Our comparable store sales declined 5.4% for fiscal 2007, as compared to a comparable store sales decline of 1.1% for fiscal 2006. For fiscal 2007, the 5.4% decline is calculated by comparing the 52 weeks of fiscal 2007 to 52 weeks, not the actual 53 weeks, for fiscal 2006. The fiscal 2007 decline is due to weak sales in the second half of fiscal 2007. Comparable store sales in our fiscal third quarter decreased 8.4% and our fiscal fourth quarter decreased 11.9%, eroding the 2.7% comparable store sales increase in the first half of fiscal 2007. The sales decline was impacted by worsening overall economic conditions, including credit concerns, housing market foreclosures, rising fuel and food prices, and decreased consumer confidence. We believe these conditions negatively impacted many specialty retailers especially in the fourth quarter. In addition, in the fourth quarter of fiscal 2007, we believe sales were negatively impacted by our decision to reduce advertising expenditures.

Overall, the sales mix for fiscal 2007 was relatively consistent with fiscal 2006 with no product category changing its sales mix more than 125 basis points, except the powersports category. Powersports continued to gain market share with a significant increase in comparable stores sales and increased sales penetration of 252 basis points, driven largely by increased penetration of boat sales. The apparel category experienced a decline in its share of the sales mix, driven by less clearance sales in fiscal 2007 and less traffic in our stores during our third and fourth quarter prime seasons. The fishing category . . .