SEVENTH AMENDMENT TO LOAN AND SECURITY
                   AGREEMENT



     THIS SEVENTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT (the "Amendment"), dated as
of March 27,  2000, is entered into between
CONGRESS FINANCIAL CORPORATION (WESTERN), a
California corporation ("Lender), and
GOTTSCHALKS INC., a Delaware corporation
("Borrower"), with its corporate office
located at 7 River Park Place East, Fresno,
California 93720.

                    RECITAL

     A.   Borrower and Lender have previously
entered into that certain Loan and Security
Agreement dated December 20, 1996, as amended
by the First Amendment to Loan and Security
Agreement, dated as of August 20, 1998, the
Second Amendment to Loan and Security
Agreement, dated as of September 1, 1998, the
Third Amendment to Loan and Security
Agreement, dated as of December 18, 1998, the
Fourth Amendment to Loan and Security
Agreement, dated as of January 29, 1999, the
Fifth Amendment to Loan and Security
Agreement, dated as of March 1, 1999 and the
Sixth Amendment to Loan and Security
Agreement, dated as of August 12, 1999 (as
amended, supplemented or modified from time to
time, the "Loan Agreement"), pursuant to which
Lender has made certain loans and financial
accommodations available to Borrower. Terms
used herein without definition shall have the
meanings ascribed to them in the Loan
Agreement.

     B.   Lender and Borrower wish to further amend
the Loan Agreement under the terms and
conditions set forth in this Amendment.
Lender and Borrower are entering into this
Amendment with the understanding and agreement
that, except as specifically provided herein,
none of Lender's rights or remedies as set
forth in the Loan Agreement is being waived or
modified by the terms of this Amendment.

     NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants herein
contained, and for other good and valuable
consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties
hereby agree as follows:

     1.   Definitions.

          (a)  Section 1.59 is hereby added to
the Loan Agreement and reads in its entirety
as follows:

          "1.59  "Net Income" shall
     mean, with respect to any Person, for any
     period, the aggregate of the net income
     (loss) of such Person and its
     Subsidiaries, on a consolidated basis,
     for such period (excluding to the extent
     included therein any extraordinary or one-
     time gains or losses) after deducting all
     charges which should be deducted before
     arriving at the net income (loss) for
     such period and after deducting the
     Provision for Taxes for such period, all
     as determined in accordance with GAAP."

          (b)  Section 1.60 is hereby added to
the Loan Agreement and reads in its entirety
as follows:

          "1.60   "Provision for Taxes"
     shall mean an amount equal to all taxes
     imposed on or measured by net income,
     whether Federal, State or local, whether
     current or deferred,  and whether foreign
     or domestic, that are paid or payable by
     any Person and its Subsidiaries in
     respect of such fiscal year on a
     consolidated basis in accordance with
     GAAP."

     2.   Interest Rate.  Section 1.34 of the
Loan Agreement is hereby amended to read in
its entirety as follows:

          "1.34   "Interest Rate"
     shall mean, (a) as to Prime Rate Loans, a
     rate of one quarter of one (.25)
     percentage point per annum less than the
     Prime Rate and, as to Eurodollar Rate
     Loans, a rate of two (2.00) percentage
     points per annum in excess of the
     Adjusted Eurodollar Rate (based on the
     Eurodollar Rate applicable for the
     Interest Period selected by Borrower as
     in effect three (3) Business Days after
     the date of receipt by Lender of the
     request of Borrower for such Eurodollar
     Rate Loans in accordance with the terms
     hereof, whether such rate is higher or
     lower than any rate previously quoted to
     Borrower); and (b) with respect to
     Revolving Loans outstanding during any
     period in which Borrower shall have
     elected to use the advance rate option
     provided for in Section 2.1(a)(i)(B) and
     in which the sum of the Revolving Loans
     and Letter of Credit Accommodations
     exceeds the least of seventy five percent
     (75%) of the Value of the Eligible
     Inventory, thirty-eight and one half
     percent (38.5%) of the Retail Sales Price
     of the Eligible Inventory, or eighty-five
     percent (85%) of the Appraised Value of
     the Eligible Inventory, a rate of two and
     one-quarter (2.25) percentage points per
     annum in excess of the Adjusted
     Eurodollar Rate; provided, however, that
     (y) in the event Borrower's Net Income
     for its fiscal year ending January 29,
     2000 exceeds Six Million Dollars
     ($6,000,000) and (z) Borrower has average
     Excess Availability for the ninety (90)
     days preceding such date of not less than
     Ten Million Dollars ($10,000,000) and
     Twenty Million Dollars ($20,000,000)
     thereafter (it being understood that
     Lender may reduce such Excess
     Availability amount upon the completion
     of an acquisition of another entity
     permitted by Lender), the applicable
     Interest Rate provided for in the
     preceding clause (a) of this Section 1.34
     shall be reduced by one-eighth of one
     (.125) percentage point, such reduction
     in the applicable Interest Rate to be
     effective as of the first day of the
     month immediately following the date of
     receipt by Lender of Borrower's audited
     annual financial statements, as provided
     by Borrower to Lender pursuant to Section
     9.6(a)(iii) hereof, indicating the
     required pretax income (and such
     reduction shall continue to be in effect
     for so long as the Excess Availability is
     not less than Twenty Million Dollars
     ($20,000,000) (it being understood that
     Lender may reduce such Excess
     Availability amount upon the completion
     of an acquisition of another entity
     permitted by Lender) and continues to be
     met as measured on a quarterly basis);
     and provided further, however, the
     Interest Rate shall mean the rate of two
     and one-quarter (2.25) percentage points
     per annum in excess of the Prime Rate as
     to Prime Rate Loans and the rate of four
     and one-half (4.50) percentage points per
     annum in excess of the Adjusted
     Eurodollar Rate as to Eurodollar Rate
     Loans, at Lender's option, without
     notice, (a) for the period on and after
     the date of termination or non-renewal
     hereof, or the date of the occurrence of
     any Event of Default or event which with
     notice or passage of time or both would
     constitute an Event of Default, and for
     so long as such Event of Default or other
     event is continuing as determined by
     Lender and until such time as all
     Obligations are indefeasibly paid in full
     (notwithstanding entry of any judgment
     against Borrower) and (b) on the
     Revolving Loans at any time outstanding
     in excess of the amounts available to
     Borrower under Section 2 (whether or not
     such excess(es) arise or are made with or
     without Lender's knowledge or consent and
     whether made before or after an Event of
     Default)."

     3.   Revolving Loans.  Section 2.1(a)(i)
of the Loan Agreement is hereby amended to
read in its entirety as follows:

          "(i) either (A) the least of:  (I)
     seventy-five percent (75%) of the Value
     of the Eligible Inventory, (II) eighty-
     five percent (85%) of the Appraised Value
     of the Eligible Inventory, or (III)
     thirty-seven and one-half percent (37.5%)
     of the Retail Sales Price of the Eligible
     Inventory; or (B) provided no Event of
     Default shall have occurred and be
     continuing, then at Borrower's option and
     upon one (1) day's prior written notice
     to Lender, from November 1 through
     December 31 of each calendar year, the
     least of (I) eighty percent (80%) of the
     Value of Eligible Inventory, (II) eighty-
     five percent (85%) of the Appraised Value
     of the Eligible Inventory, or (III)
     thirty-nine percent (39%) of the Retail
     Sales Price of the Eligible Inventory,
     which percentages shall remain in effect
     through December 31 unless revoked by
     Borrower upon one (1) day's prior written
     notice to Lender; provided, however, that
     advances against Eligible Domestic In-
     Transit Inventory shall not, at any one
     time, exceed Five Million Dollars
     ($5,000,000); minus"

     4.   Inventory Covenants.  Section 7.3(d)
of the Loan Agreement is hereby amended to
read in its entirety as follows:

          "(d) upon Lender's request, Borrower
     shall, at its expense, no more than once
     in any calendar quarter, but at any time
     or times as Lender may request upon the
     occurrence and during the continuance of
     an Event of Default, deliver or cause to
     be delivered to Lender written reports or
     appraisals as to the Inventory in form,
     scope and methodology reasonably
     acceptable to Lender by an appraiser
     reasonably acceptable to Lender,
     addressed to Lender or upon which Lender
     is expressly permitted to rely (with the
     understanding that Lender may revise the
     definition of "Eligible Inventory"
     hereunder or establish Availability
     Reserves as Lender may deem advisable in
     good faith based upon the results of such
     updated appraisals), but in any event, at
     least two of such appraisals delivered in
     any calendar year shall be conducted to
     include the full scope of Inventory and
     at least two other of such appraisals
     shall be conducted to include gross
     recovery updates of the Inventory;"

     5.   Adjusted Net Worth.  Section 9.14 of
the Loan Agreement is hereby amended to read
in its entirety as follows:

               "Borrower shall, at all times,
     maintain Adjusted Net Worth of not less
     than One Hundred Fifteen Million Dollars
     ($115,000,000) and beginning with fiscal
     January 31, 2002, One Hundred Fifteen
     Million Dollars ($115,000,000) plus fifty
     percent (50%) of Borrower's Net Income;
     provided, however, Lender will only test
     for Borrower's compliance with this
     financial covenant only in the event that
     Borrower's Excess Availability is less
     than Ten Million Dollars ($10,000,000)."

     6.   Term.  Lender and Borrower hereby
agree to renew the term of the Loan Agreement
and the other Financing Agreements pursuant to
Section 12.1(a) of the Loan Agreement.  The
Loan Agreement and the other Financing
Agreements shall continue in force and effect
for a term ending on March 31, 2002.

     7.   Consent to Acquisition Financing.
Notwithstanding Sections 9.8 and 9.9 of the
Loan Agreement, Lender hereby consents to
Borrower obtaining acquisition financing for
the purpose of acquiring all of the assets or
stock of an entity up to the amount of Twenty
Million Dollars ($20,000,000) on terms and
conditions reasonably acceptable to Lender in
its sole discretion.  Lender's consent is
contingent upon its receipt of certain
documentation as reasonably required by
Lender, including without limitation a
subordination agreement, intercreditor
agreement and access agreement, delivered to
Lender and reasonably satisfactory to Lender
in form and substance.

     8.   Effectiveness of this Amendment.
Lender must have received the following items,
in form and content acceptable to Lender,
before this Amendment is effective and before
Lender is required to extend any credit to
Borrower as provided for by this Amendment.
The date on which all of the following
conditions have been satisfied is the "Closing
Date".

          (a)  Amendment.  This Amendment
     fully executed in a sufficient number of
     counterparts for distribution to Lender
     and Borrower.

          (b)  Authorizations.  Evidence that
     the execution, delivery and performance
     by Borrower and any instrument or
     agreement required under this Amendment
     have been duly authorized.

          (c)  Representations and Warranties.
     The representations and warranties set
     forth herein and in the Loan Agreement
     must be true and correct.

          (d)  Accommodation Fee.  Lender
     shall have received from Borrower a fee
     in the amount of Seventy Five Thousand
     Dollars ($75,000) for the processing and
     approval of this Amendment.

          (e)  Other Required Documentation.
     All other documents and legal matters in
     connection with the transactions
     contemplated by this Amendment shall have
     been delivered or executed or recorded
     and shall be in form and substance
     satisfactory to Lender.

     7.   Representations and Warranties.  The
Borrower represents and warrants as follows:

          (a)  Authority.  The Borrower and
     each other Loan Party has the requisite
     corporate power and authority to execute
     and deliver this Amendment, as
     applicable, and to perform its
     obligations hereunder and under the Loan
     Documents (as amended or modified hereby)
     to which it is a party.  The execution,
     delivery and performance by the Borrower
     of this Amendment and by each other Loan
     Party of each Loan Document (as amended
     or modified hereby) to which it is a
     party have been duly approved by all
     necessary corporate action of such Loan
     Party and no other corporate proceedings
     on the part of such Loan Party are
     necessary to consummate such
     transactions.

          (b)  Enforceability.  This Amendment
     has been duly executed and delivered by
     the Borrower. This Amendment and each
     Loan Document (as amended or modified
     hereby) is the legal, valid and binding
     obligation of each Loan Party hereto or
     thereto, enforceable against such Loan
     Party in accordance with its terms, and
     is in full force and effect.

          (c)  Representations and Warranties.
     The representations and warranties
     contained in each Loan Document (other
     than any such representations or
     warranties that, by their terms, are
     specifically made as of a date other than
     the date hereof) are correct on and as of
     the date hereof as though made on and as
     of the date hereof.

          (d)  No Default.  No event has
     occurred and is continuing that
     constitutes an Event of Default.

     8.   Choice of Law.  The validity of this
Amendment, its construction, interpretation
and enforcement, the rights of the parties
hereunder, shall be determined under, governed
by, and construed in accordance with the
internal laws of the State of California
governing contracts only to be performed in
that State.

     9.   Counterparts.  This Amendment may be
executed in any number of counterparts and by
different parties and separate counterparts,
each of which when so executed and delivered,
shall be deemed an original, and all of which,
when taken together, shall constitute one and
the same instrument.  Delivery of an executed
counterpart of a signature page to this
Amendment by telefacsimile shall be effective
as delivery of a manually executed counterpart
of this Amendment.

     10.  Due Execution.  The execution,
delivery and performance of this Amendment are
within the power of Borrower, have been duly
authorized by all necessary corporate action,
have received all necessary governmental
approval, if any, and do not contravene any
law or any contractual restrictions binding on
Borrower.

     11.  Reference to and Effect on the Loan
Documents.

          (a)  Upon and after the
     effectiveness of this Amendment, each
     reference in the Loan Agreement to "this
     Agreement", "hereunder", "hereof" or
     words of like import referring to the
     Loan Agreement, and each reference in the
     other Loan Documents to "the Loan
     Agreement", "thereof" or words of like
     import referring to the Loan Agreement,
     shall mean and be a reference to the Loan
     Agreement as modified and amended hereby.

          (b)  Except as specifically amended
     above, the Loan Agreement and all other
     Loan Documents, are and shall continue to
     be in full force and effect and are
     hereby in all respects ratified and
     confirmed and shall constitute the legal,
     valid, binding and enforceable
     obligations of Borrower to Lender.

          (c)  The execution, delivery and
     effectiveness of this Amendment shall
     not, except as expressly provided herein,
     operate as a waiver of any right, power
     or remedy of Lender under any of the Loan
     Documents, nor constitute a waiver of any
     provision of any of the Loan Documents.

          (d)  To the extent that any terms
     and conditions in any of the Loan
     Documents shall contradict or be in
     conflict with any terms or conditions of
     the Loan Agreement, after giving effect
     to this Amendment, such terms and
     conditions are hereby deemed modified or
     amended accordingly to reflect the terms
     and conditions of the Loan Agreement as
     modified or amended hereby.

     12.  Ratification.  Borrower hereby
restates, ratifies and reaffirms each and
every term and condition set forth in the Loan
Agreement, as amended hereby, and the Loan
Documents effective as of the date hereof.

     13.  Estoppel.  To induce Lender to enter
into this Amendment and to continue to make
advances to Borrower under the Loan Agreement,
Borrower hereby acknowledges and agrees that,
after giving effect to this Amendment, as of
the date hereof, there exists no Event of
Default and no right of offset, defense,
counterclaim or objection in favor of Borrower
as against Lender with respect to the
Obligations.

     IN WITNESS WHEREOF, the parties have
entered into this Amendment as of the date
first above written.

          "BORROWER"

           GOTTSCHALKS INC.,
           a Delaware corporation

           By:/s/Michael S. Geele
           Title: Senior Vice President/CFO



           "LENDER"

           CONGRESS FINANCIAL CORPORATION
           (WESTERN), a California corporation

           By:/s/Kristine Metchikian
           Title: Vice President