Exhibit 99.1

Company Contacts:	Media Contacts:
Greg Mize	David Bassett
Vice President, Investor Relations	(248) 855-6777, Ext. 132
(248) 362-4400, Ext. 211
Thomas Braum	Fred Marx
Senior Vice President and CFO	(248) 855-6777, Ext. 131
(248) 362-4400, Ext. 718

FOR IMMEDIATE RELEASE

HANDLEMAN COMPANY REPORTS THIRD QUARTER RESULTS

• Net income for the third quarter of this year of $21.1 million or $.86 per diluted share, was ahead of the prior year.

• Third quarter revenues were $443.9 million this year, in-line with the same period last year.

• The balance sheet remains strong – the Company had no debt, and cash and cash equivalents were $76 million at the end of the third quarter of this year.

Troy, Michigan – February 24, 2004 Handleman Company (NYSE: HDL), www.handleman.com, today announced results for its third quarter of fiscal year 2004, which ended January 31, 2004. Revenues for the third quarter of this year were $443.9 million, compared to revenues of $450.5 million from continuing operations for the third quarter of last year. Net income for the third quarter of this year was $21.1 million or $.86 per diluted share, compared to $3.4 million or $.13 per diluted share for the third quarter of fiscal 2003.

As previously announced, the Company completed its sale of Anchor Bay Entertainment, a wholly owned subsidiary, effective November 1, 2003. As a result, all periods presented in this press release reflect the classification of Anchor Bay’s financial results as discontinued operations.

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For the third quarter of last year, income from continuing operations was $3.0 million or $.12 per diluted share, and income from discontinued operations was $411,000 or $.01 per diluted share. The third quarter of fiscal 2003 also included a $.67 per share loss attributable to a charge for impairment of subsidiary assets. Excluding this charge, the Company’s income from continuing operations for the third quarter last year would have been $.79 per diluted share.

The following table reconciles net income and diluted earnings per share for the third quarter of this fiscal year and last fiscal year with proforma net income and earnings per share for continuing and discontinued operations, as well as charges for impairment of subsidiary assets.

	Fiscal Third Quarter
	This Year				Last Year
	Net Income*		EPS		Net Income*		EPS
Third quarter net income	$	21,144	$	.86	$	3,427	$	.13
Income from discontinued operations		—		—		411		.01
Income from continuing operations		21,144		.86		3,016		.12
Impairment of subsidiary assets, net of taxes		—		—		17,434		.67
Income from continuing operations, before impairment of subsidiary assets charge	$	21,144	$	.86	$	20,450	$	.79

* In thousands

Continuing operations for the third quarter of fiscal 2004 and 2003 consisted of music category management and distribution operations in the United States, United Kingdom, Canada and Mexico, as well as category management operations in Argentina and Brazil. For the third quarter and first nine months of fiscal 2003, continuing operations also included Madacy Entertainment, which was sold during the third quarter of fiscal 2003. Madacy Entertainment revenues for the third quarter and first nine months of last year were $10.0 million and $44.8 million, respectively.

The gross margin rate, as a percent to revenue, for the third quarter of this year was 19.6%, compared to 19.2% from continuing operations for the third quarter of last year. Selling,

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general and administrative expenses for the third quarter were $53.8 million or 12.1% of revenues, compared to $54.7 million or 12.1% of revenues from continuing operations for the third quarter of last year.

During the third quarter of this year, the Company repurchased 750,500 shares of its stock at an average price of $20.93 per share. As of January 31, 2004, the Company had repurchased 2.4 million shares, or 46% of the shares authorized by its Board under a 20% share repurchase program at an average price of $18.12 per share. As of January 31, 2004, the Company had 23,906,661 shares outstanding.

Revenues from continuing operations for the first nine months of this year were $919.1 million, compared to $1.0 billion from continuing operations for the first nine months of last year. Income from continuing operations for the first nine months of fiscal 2004 was $30.4 million or $1.23 per diluted share, compared to $16.9 million or $ .65 per diluted share from continuing operations for the comparable period of last year. Net income for the nine months of last year included a $.67 per share loss attributable to a charge related to impairment of subsidiary assets.

The Company’s third quarter and first nine months of this fiscal year consisted of 13 and 39 weeks, respectively, whereas the comparable periods last year consisted of 14 and 40 weeks, respectively. The Company’s fiscal year 2004 will end on May 1, 2004 and will consist of 52 weeks, whereas its fiscal year 2003 ended on May 3, 2003 and consisted of 53 weeks.

Stephen Strome, Chairman and CEO of Handleman Company said, “Music industry sales continue to improve compared to the same period of last year. As a result, we expect our fourth quarter revenues this year to be comparable to, or slightly greater than, revenues of $261 million from continuing operations for our fourth quarter of last year. In addition, we expect earnings per share for our fourth quarter of this year to approximate earnings per share of $.22 from continuing operations for the fourth quarter of last year. The Company’s financial condition continues to be strong. We had no debt, and cash and cash equivalents at the end of the third quarter this year were $76 million. Our strong balance sheet allows us to continue to return value to our shareholders through our stock repurchase and cash dividend programs.”

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Call Notice

Handleman Company will host a conference call to discuss third quarter fiscal year 2004 financial and operating results on Wednesday, February 25, 2004 at 11:00 a.m. Eastern Standard Time. To participate in the teleconference call (in listen only mode), please dial 800-442-9683 at least five minutes before the start of the conference call. In addition, Handleman Company will simulcast the conference live via the internet. The web cast can be accessed and will be available for 30 days on the investor relations page of Handleman Company’s web site, www.handleman.com. A telephone replay of the conference call will be available until Midnight Friday, February 27, 2004 by calling 800-642-1687 (PIN Number 4941840).

* * * * * * * * * * * *

About Handleman Company

Handleman Company is a category manager and distributor of prerecorded music to mass merchants in the United States, United Kingdom, Canada, Mexico, Brazil and Argentina. As a category manager, the Company manages a broad assortment of titles to optimize sales and inventory productivity in retail stores and provides direct-to-store shipments, marketing and in-store merchandising.

* * * * * * * * * * * *

Information in this press release contains forward-looking statements, which are not historical facts and involve risk and uncertainties. Actual results, events and performance could differ materially from those contemplated by these forward-looking statements, including without limitations, conditions in the music industry, business with Kmart following its emergence from Chapter 11 proceedings, the ability to enter into profitable agreements with customers in the new businesses outlined in the Company’s strategic growth plan, securing funding or providing sufficient cash required to build and grow new businesses, customer requirements, continuation of satisfactory relationships with existing customers and suppliers, effects of electronic commerce, relationships with the Company’s lenders, pricing and competitive pressures, the occurrence of catastrophic events or acts of terrorism, certain global and regional economic conditions, and other factors discussed in this press release and those detailed from time to time in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.

- Tables Follow -

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CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	Jan. 31, 2004 (13 Weeks)			Jan. 31, 2003 (restated) (14 Weeks)			Jan. 31, 2004 (39 Weeks)			Jan. 31, 2003 (restated) (40 Weeks)
Revenues	$	443,902		$	450,477		$	919,095		$	1,018,392
Costs and expenses
Direct product costs		357,049			363,794			732,682			810,841
Selling, general and administrative expenses		53,787			54,724			139,102			154,360
Impairment of subsidiary assets		—			33,100			—			33,100
Interest (income) expense, net		(248	)		(173	)		(255	)		79
Income (loss) from continuing operations before income taxes and minority interest		33,314			(968	)		47,566			20,012
Income tax (expense) benefit		(12,170	)		3,984			(17,128	)		(3,460	)
Minority interest		—			—			—			366
Income from continuing operations		21,144			3,016	*		30,438			16,918	*
Income from discontinued operations, net of tax		—			411			2,598			2,915
Net income	$	21,144		$	3,427	*	$	33,036		$	19,833	*
Basic net income per share
- From continuing operations	$	.87		$	.12	*	$	1.23		$	.65	*
- From discontinued operations		—			.01			.10			.11
Total basic net income per share	$	.87		$	.13	*	$	1.33		$	.76	*
Diluted net income per share
- From continuing operations	$	.86		$	.12	*	$	1.23		$	.65	*
- From discontinued operations		—			.01			.10			.11
Total diluted net income per share	$	.86		$	.13	*	$	1.33		$	.76	*
Weighted average number of shares outstanding - basic		24,292			25,792			24,787			26,157
- diluted		24,506			25,845			24,912			26,178

* Includes impairment of subsidiary asset charges of $17.4 million or $.67 per share.

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CONSOLIDATED CONDENSED BALANCE SHEETS

(amounts in thousands)

(unaudited)

	January 31, 2004		January 31, 2003 (restated)
Assets
Cash and cash equivalents	$	76,043	$	54,047
Accounts receivable		249,336		191,424
Merchandise inventories		132,286		139,286
Other current assets		9,795		16,737
Assets held for sale		—		42,882
Total current assets		467,460		444,376
Property and equipment, net of depreciation and amortization		61,210		54,206
Other assets, net		23,254		64,381
Total assets	$	551,924	$	562,963
Liabilities
Accounts payable	$	185,544	$	176,203
Debt, current portion		—		3,571
Other current liabilities		39,385		27,732
Liabilities held for sale		—		9,174
Total current liabilities		224,929		216,680
Debt, non-current		—		31,851
Other liabilities		5,794		8,426
Shareholders’ equity		321,201		306,006
Total liabilities and shareholders’ equity	$	551,924	$	562,963

ADDITIONAL INFORMATION FROM CONTINUING OPERATIONS (amounts in thousands)

	Three Months Ended						Nine Months Ended
	Jan. 31, 2004 (13 Weeks)			Jan. 31, 2003 (restated) (14 Weeks)			Jan. 31, 2004 (39 Weeks)			Jan. 31, 2003 (restated) (40 Weeks)
Net income	$	21,144		$	3,016		$	30,438		$	16,918
Interest (income) expense, net		(248	)		(173	)		(255	)		79
Income tax expense (benefit)		12,170			(3,984	)		17,128			3,460
Depreciation expense		4,806			4,267			11,776			13,897
Amortization expense		—			—			—			—
Recoupment of license advances		—			1,088			—			4,110
Impairment of subsidiary assets		—			33,100			—			33,100
Adjusted EBITDA*	$	37,872		$	37,314		$	59,087		$	71,564
Additions to property and equipment	$	10,805		$	4,467		$	17,489		$	11,578
License advances and acquired rights		—		$	1,717			—		$	3,344

* Adjusted EBITDA is computed as net income plus, net interest (income) expense, income tax expense (benefit), depreciation expense, amortization expense, recoupment of license advances and impairment of subsidiary assets.

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