UNITED STATES
            SECURITIES AND EXCHANGE COMMISSION
                  WASHINGTON, D.C.  20549


                         FORM 10-K


[ X ]     Annual  Report  Pursuant  to  Section 13 or  15(d) of the Securities
          Exchange Act of 1934 (No Fee Required)

For The Fiscal Year Ended January 30, 1999

                                  or

[   ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 (No Fee Required)

For the transition period from _________  to _________

                    Commission File Number 1-09100

                           Gottschalks Inc.
        (Exact name of Registrant as specified in its charter)

          Delaware                            77-0159791
(State or other jurisdiction of             (IRS Employer
 incorporation or organization)          Identification No.)

  7 River Park Place East, Fresno, CA            93720
(Address of principal executive offices)      (Zip code)

Registrant's telephone no., including area code: (209) 434-4800

Securities registered pursuant to Section 12(b) of the Act:

                                  Name of each exchange
Title of Each Class               on which registered

Common Stock, $.01 par value         New York Stock Exchange
                                     Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant; (1) has filed all 
reports required to  be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the  preceding  12  months (or for such 
shorter period that  the  Registrant  was required  to  file  such  
reports);  and (2) has  been  subject  to  such  filing requirements 
for the past 90 days. Yes  X     No

Indicate by check mark if disclosure of delinquent filers pursuant 
to Item 405 of Regulation S-K is not contained herein, and will not 
be contained, to the best of the  Registrant's  knowledge,  in  
definitive  proxy  or  information  statements incorporated by reference 
in Part III of this Form 10-K or any amendment to  this Form 10-K.   
[ X ]

The  aggregate  market  value of the voting stock held by non-affiliates 
of  the Registrant as of March 31, 1999:
Common Stock, $.01 par value:  $51,061,000

On  March  31,  1999 the Registrant had outstanding 12,575,565 shares  
of  Common Stock.

Documents  Incorporated  By  Reference: Portions of the  Registrant's  
definitive proxy statement with respect to its Annual Stockholders' 
Meeting scheduled to  be held  on  June  24,  1999, which will be filed 
pursuant to  Regulation  14A,  are incorporated by reference into 
Part III of this Form 10-K.


                                  INDEX
                                      
                                 PART I
                                      
                                             Page No.
                                      
Item 1.   Business........................      1
Item 2.   Properties......................     24
Item 3.   Legal Proceedings...............     28
Item 4.   Submission of Matters to a Vote of
          Security Holders................     28

                                   PART II

Item 5.   Market for Registrant's Common
          Stock and Related Stockholder
          Matters.........................     28
Item 6.   Selected Financial Data.........     29
Item 7.   Management's Discussion and Analysis
          of Results of Operations and Financial
          Condition.......................     33
Item 7A.  Quantitative and Qualitative
          Disclosures About Market Risk...     50
Item 8.   Financial Statements and
          Supplementary Data..............     50
Item 9.   Changes in and Disagreements with
          Accountants on Auditing and
          Financial Disclosures...........     50

                                  PART III

Item 10.  Directors and Executive Officers
          of the Registrant...............     51
Item 11.  Executive Compensation..........     53
Item 12.  Security Ownership of Certain
          Beneficial Owners and Management.    53
Item 13.  Certain Relationships and
          Related Transactions............     53

                                   PART IV

Item 14.  Exhibits, Financial Statement
          Schedule and Reports on Form 8-K.    53

Signatures.................................    90



                                   PART I
Item 1.   BUSINESS

GENERAL

          Gottschalks  Inc.  is  a regional department and  specialty  store
chain based in Fresno, California. The Company currently operates forty full-
line  department  stores,  including  thirty  Gottschalks'  stores  located
throughout  California,  and  in  Oregon, Washington  and  Nevada,  and  ten
"Harris/Gottschalks"  stores located in the Southern  California  area.  The
Company  also operates twenty-two "Gottschalks" and "Village East" specialty
stores  which carry a limited selection of merchandise. On August 20,  1998,
the   Company   acquired  nine  of  the  stores  now  operated   under   the
"Harris/Gottschalks"  nameplate (closing  one  of  the  acquired  stores  on
January  31,  1999,  as planned) from The Harris Company ("Harris")  of  San
Bernardino,  California. In fiscal 1998, the Company's sales, which  include
sales  applicable to the Harris/Gottschalks locations after August 20, 1998,
exceeded  a  half-a-billion  dollars for the first  time  in  the  Company's
history.  Fiscal  1998 sales totaled $517.1 million, a 15.4%  increase  from
fiscal  1997 sales of $448.2 million. Total department store sales comprised
96.5%, and specialty store sales comprised 3.5%, of fiscal 1998 sales.

          Gottschalks  and  Harris/Gottschalks department  stores  typically
offer  a  wide  range  of  moderate to better brand-name  and  private-label
merchandise,  including  men's, women's, junior's  and  children's  apparel;
cosmetics,  shoes, fine jewelry and accessories; home furnishings  including
china,  housewares,  domestics, electronics (in  ten  locations)  and  small
electric  appliances;  and other consumer goods. The Company's  stores  also
carry  private-label  merchandise and a mix  of  higher  and  budget  priced
merchandise. The Company's department stores are generally anchor tenants of
regional shopping malls. Village East specialty stores, which offer  apparel
for larger women, are located in the same mall in which a Company department
store  is  located, or as a separate department within some of the Company's
larger  stores. The Company services all of its stores, including its  store
locations  outside  California,  from a  420,000  square  foot  distribution
facility centrally located in Madera, California.
          
          The  Company has operated continuously for over 94 years since  it
was  founded by Emil Gottschalk in 1904. The Company did its initial  public
offering of stock in 1986, and most of its growth has occurred since then.

          Gottschalks   Inc.  includes  the  accounts  of  its  wholly-owned
subsidiary, Gottschalks Credit Receivables Corporation ("GCRC"). GCRC  is  a
qualified special purpose entity which was formed in 1994 in connection with
a  receivables  securitization program. (See  Note  3  to  the  Consolidated
Financial  Statements  and  Part II, Item 7,  "Management's  Discussion  and
Analysis  of  Financial  Condition and Results of Operations--Liquidity  and
Capital Resources".)

BUSINESS ACQUISITION

          On  August  20, 1998, the Company acquired substantially  all  the
assets  and business of Harris, a wholly-owned subsidiary of El Corte Ingles
("ECI")  of Spain. Harris operated nine full-line department stores  located
in  the Southern California area. The assets acquired consisted primarily of
merchandise  inventories,  customer credit card  receivables,  fixtures  and
equipment  and  certain  intangibles.  The  Company  also  assumed   certain
liabilities  relating  to  the business, including  vendor  payables,  store
leases  and  certain other contracts. The purchase price for the assets  was
2,095,900  shares  of common stock of the Company and  a  $22.2  million  8%
Subordinated Note due August 20, 2003. As planned, the Company closed one of
the acquired stores on January 31, 1999.

          Management  believes the primary benefits of the acquisition  are:
(1)  the  addition of approximately $90.0 million of annual sales volume  to
further  leverage  Gottschalks' overhead; (2)  the  elimination  of  certain
duplicative  corporate and distribution functions of Harris;  (3)  increased
purchasing  power in areas such as merchandising, advertising, supplies  and
insurance;  (4)  the acquisition of a profitable shoe division  operated  by
Harris;  (5)  the  potential to more fully develop Harris'  home  divisions,
which  management  believes are under-penetrated  in  the  Company's  market
areas;  and (6) the addition of more than 100,000 active proprietary  credit
card customers.

OPERATING STRATEGY

          Merchandising Strategy.  The Company's merchandising  strategy  is
directed   at  offering  and  promoting  nationally  advertised,  brand-name
merchandise  recognized  by  its customers  for  style  and  value,  and  to
complement the branded merchandise with a mixture of private-label and other
higher and budget priced merchandise. Brand-name apparel, shoe, cosmetic and
accessory  lines  carried  by  the Company include  Estee  Lauder,  Lancome,
Clinique,  Dooney & Bourke, Nine West, Liz Claiborne, Carole Little,  Calvin
Klein,  Ralph  Lauren, Guess, Nautica, Karen Kane, Tommy  Hilfiger,  Esprit,
Evan  Picone, Haggar, Koret and Levi Strauss. Brand-name merchandise carried
for  the  home  includes Sony, Mitsubuishi, Lenox, Krups,  Calphalon,  Royal
Velvet, KitchenAid and Samsonite. Certain of the Company's stores also carry
apparel  lines  desired by the Company's more affluent customers,  including
St.  John Knits, Dana Buchman, Ellen Tracy and Ralph Lauren (Polo).  In  the
Company's stores, brand-name merchandise is prominently displayed,  in  many
cases with vendor supplied fixtures and signage. The Company's merchandising
activities  are  conducted centrally from its corporate offices  in  Fresno,
California.
          
          The  Company's merchandising strategy also continues to  focus  on
reallocating  selling  floor space to higher profit margin  items,  such  as
shoes,  and  shifting its merchandise mix to a higher proportion  of  better
brands.  For example, during fiscal 1998, the Company reduced the number  of
stores  that carry electronics, traditionally a lower gross margin  line  of
business,  and intends to discontinue carrying electronics in its stores  by
the  end  of  fiscal  1999.  In fiscal 1999, the  Company  will  assume  the
operation  of its shoe division, which is currently operated by  an  outside
company  as a leased department (in Gottschalks locations). In fiscal  1999,
the Company also plans to expand and remodel the shoe departments in certain
of  its stores. The Company's merchandising strategy also continues to focus
on  serving particular market segments experiencing increasing growth in its
market areas, including the "55 Plus" age group and the Hispanic population.

          The following table sets forth for the periods indicated
          a summary of the Company's total sales by division,
          expressed as a percent of net sales:
<TABLE>
<CAPTION>
          
                             1998    1997    1996    1995   1994
Softlines:
<S>                          <C>     <C>     <C>     <C>    <C>
Cosmetics & Accessories...   18.2%   17.8%   17.5%   17.2%  16.6%
Women's Clothing..........   16.8    16.8    15.9    15.5   16.1
Men's Clothing............   14.0    14.0    14.4    14.3   13.9
Women's Dresses, Coats
  & Lingerie..............    7.7     7.9     7.9     7.8    7.9
Shoes, Fine Jewelry & Other
  Leased Departments (1)..    7.7     7.8     7.8     7.4    7.1
Junior's Clothing.........    4.6     5.2     5.5     6.0    6.3
Children's Clothing.......    5.5     5.3     5.3     4.9    4.9
Village East..............    2.5     2.5     2.5     2.6    2.6
Shoes (2).................    0.8
                             ----    ----    ----    ----   ----
   Total Softlines........   77.8    77.3    76.8    75.7   75.4

Hardlines:
Housewares................   10.7    10.6    10.4    11.0   10.9
Domestics & Luggage.......    7.8     8.1     7.9     8.1    8.1
Electronics & Furniture...    3.7     4.0     4.9     5.2    5.6
                             ----    ----    ----    ----   ----
   Total Hardlines........   22.2    22.7    23.2    24.3   24.6
                             ----    ----    ----    ----   ----

Total Sales (3)...........  100.0%  100.0%  100.0%  100.0% 100.0%

</TABLE>
                            =====   =====   =====   =====  =====
---------------------

          (1)    The  Company  currently leases the fine jewelry,  shoe  (in
          thirty-one  of  its stores as of January 30, 1999)  and  maternity
          wear  departments,  custom  drapery, restaurants  and  the  beauty
          salons  in  its department stores. The shoe department  lease  has
          been terminated effective mid-fiscal 1999.

          (2)   The Company currently operates the shoe departments  in
          the   Harris/Gottschalks  locations.  Upon  terminating  the  shoe
          department lease in mid-fiscal 1999, the Company will operate  the
          shoe department in all of its locations.

          (3)  Fiscal  1998 amounts include sales applicable  to  the
          Harris/Gottschalks stores starting August 20,  1998.  Fiscal  1997
          and prior amounts presented reflect Gottschalks sales only and  do
          not reflect amounts applicable to Harris.

          The  Company  is  a  member of Frederick Atkins, Inc.  ("Frederick
Atkins"),  a  national  association of major retailers  which  provides  its
members  with  group purchasing opportunities. The Company's  membership  in
Frederick  Atkins  provides it with the ability to obtain better  prices  by
purchasing  a larger volume of merchandise along with other members  of  the
organization.  Substantially all of the Company's private-label  merchandise
is  currently purchased through Frederick Atkins. The Company also purchases
merchandise from numerous other suppliers, none of which accounted for  more
than 5% of the Company's net purchases in fiscal 1998.
          
          Store  Location and Expansion Strategy.  The Company's stores  are
located primarily in diverse, growing, non-major metropolitan areas  in  the
western  United  States. Management believes the Company has  a  competitive
advantage in offering moderate to better brand-name merchandise and  a  high
level  of service to customers in secondary markets where there is a  strong
demand  and  fewer competitors offering such merchandise.  The  Company  has
historically avoided expansion into major metropolitan areas which are  well
served by the Company's larger competitors. Some of the Company's stores are
located  in  agricultural  areas and cater to mature  customers  with  above
average  levels  of disposable income. The Company's department  stores  are
generally  anchor tenants of regional shopping malls, with the  majority  of
its  stores ranging in size from 50,000 to 150,000 gross square feet.  Other
anchor tenants in the malls generally complement the Company's goods with  a
mixture  of  competing and non-competing merchandise, and serve to  increase
customer foot traffic within the mall.
          
          The  Company  generally seeks to open two  new  stores  per  year,
although more stores may be opened in any given year if it is believed to be
financially  attractive to the Company. As part of its  expansion  strategy,
the  Company  may also pursue selective strategic acquisitions. The  Company
has  continued to invest in the renovation and refixturing of  its  existing
store  locations in an attempt to maintain and improve market share in those
market  areas. Store renovation projects can range from updating  decor  and
improving  in-store lighting, fixturing, wall merchandising and signage,  to
more  extensive  remodeling and expansion projects.  The  Company  sometimes
receives  reimbursement for certain of its new store construction costs  and
costs  associated  with  the renovation and refixturing  of  existing  store
locations from mall owners and vendors. Such contributions have enhanced the
Company's  ability to enter into attractive market areas that are consistent
with the Company's long-term expansion plans.

          The   following  table  presents  selected  data  related  to  the
Company's stores for the fiscal years indicated:
<TABLE>
<CAPTION>

Stores open at
year-end:            1998    1997     1996     1995     1994

<S>                  <C>      <C>      <C>      <C>      <C>
Department stores    40 (1)   34       32       31       26
Specialty stores     22 (2)   25       27       29       27
                     --       --       --       --       --        
TOTAL                62       59       59       60       53
                     ==       ==       ==       ==       ==
Gross store square
footage (in thousands):

Department
 stores           4,301    3,391    3,175    2,878    2,327

Specialty stores     83       94      101      106       98
                     ==       ==      ===      ===       ==

    TOTAL         4,384    3,485    3,276    2,984    2,425
</TABLE>
                  =====    =====    =====    =====    =====

---------------------------


          (1)   The Company acquired nine stores from Harris in August 1998,
          closing one of the stores acquired on January 31, 1999. Two of the
          stores acquired are located in malls with pre-existing Gottschalks
          locations. The Company combines separate locations within the same
          mall  for  the purpose of determining the total number  of  stores
          being  operated,  resulting in a net addition  of  six  department
          stores in fiscal 1998.

          (2)         The  Company  has  continued to  close  certain  free-
          standing   Village  East  stores  as  their  leases   expire   and
          incorporate  those  stores into nearby larger  Company  department
          stores   as  separate  departments.  Sales  generated   by   these
          departments  are  combined with total specialty  store  sales  for
          reporting purposes.
          
      As  of  the  end  of  fiscal  1999, the  Company  operated  thirty-six
department  stores in California, two in Nevada and one each in  Oregon  and
Washington.  The Company's stores range in size from 25,000 to over  200,000
gross  square  feet.  Management  believes the  Company  has  a  competitive
advantage  in being able to accommodate diverse locations into its operation
that  may  not  be  desired  by its larger competitors  that  adopt  a  more
standardized approach to expansion.  Following is a summary of the Company's
department store locations, by store size:

<TABLE>
<CAPTION>
                                          # of
                                          stores
                                           open

<S>                                        <C>
Larger than 200,000 gross square feet       3
150,000 - 199,000 gross square feet         7
100,000 - 149,999 gross square feet         8
 50,000 -  99,000 gross square feet        19
 25,000 -  49,000 gross square feet         3
                                           --
          TOTAL                            40
                                           ==
</TABLE>

See  Part I, Item 2, "Properties--Store Leases and Locations" for additional
information related to the Company's store locations.

                 Sales Promotion Strategy.  The Company commits considerable
resources  to  advertising, using a combination  of  media  types  which  it
believes  to  be  most  efficient and effective by  market  area,  including
newspapers, television, radio, direct mail and catalogs. The Company's sales
promotion  strategy  includes seasonal promotions,  promotions  directed  at
selected  items and frequent storewide sales events to highlight  brand-name
merchandise and promotional prices. The Company also conducts a  variety  of
special events including fashion shows, bridal shows and wardrobing seminars
in  its  stores and in the communities in which they are located  to  convey
fashion  trends  to  its customers. The Company receives  reimbursement  for
certain of its promotional activities from certain of its vendors.

           Management  has  continued to focus on enhancing its  information
systems  as  a  means  to improve the effectiveness of its  sales  promotion
strategy.  The  Company  uses direct marketing techniques  to  access  niche
markets by generating specific lists of customers who may be most responsive
to specific promotional mailings and sending mailings only to those specific
customers. The Company has also implemented a telemarketing program,  which,
through  the  use  of an advanced call management system and  the  Company's
existing  credit  department personnel, the Company  is  able  to  auto-dial
potential customers within a selected market area and deliver a personalized
message regarding current promotions and events. In fiscal 1998, the Company
completed the installation of a new targeted marketing system through  which
the  Company  is now able to analyze the purchasing patterns of third  party
bank  card  users  and,  for  the  first  time,  direct  targeted  marketing
activities at those customers. (See Part I, Item I, "Business--Private-Label
Credit Card")

          In addition to targeted advertising efforts, the Company also uses
a variety of other marketing formats in its sales promotion strategy. One of
the Company's most significant recent marketing efforts is the inception  of
"Emil's Market", named after the Company's founder, Emil Gottschalk.  Emil's
Market,  introduced in the Company's stores in fiscal 1998,  is  a  complete
marketing  strategy  for  the  Company's housewares  division,  intended  to
present  houseware  products in a specialty store  format  within  the  main
department   store  using  a  consistent  theme  with  visual  presentation,
advertising and packaging. A portion of the initial funding for the  project
and  certain  annual recurring costs are paid by participating  vendors.  In
fiscal  1998,  the Company also launched its new "KidZone" program  for  the
children's division and the new "Get It" program for the junior's and  young
men's  divisions,  through  which members receive additional  discounts  and
special  services. The primary objectives of these programs are  to  improve
customer loyalty and increase sales in these divisions.

           The  Company  offers  selected  merchandise,  a  complete  Bridal
Registry service, and other general corporate information on the World  Wide
Web  at  http://www.gottschalks.com.  The  Company  also  sells  merchandise
through  its mail order department. In addition to the previously  described
marketing  efforts,  the Company also has a wide variety  of  credit-related
programs  aimed  at  improving sales, including  the  "Gottschalks  Rewards"
program. (See Part I, Item I, "Business--Private-Label Credit Card.")

           Customer  Service.  Management believes one way the  Company  can
differentiate itself from its competitors is to provide a consistently  high
level  of  customer service. The Company has a "Four Star" customer  service
program,  designed  to continually emphasize and reward  high  standards  of
customer service in the Company's stores. Sales associates are encouraged to
keep  notebooks  of customers' names, clothing sizes, birthdays,  and  major
purchases, to telephone customers about promotional sales and send thank-you
notes  and  other greetings to their customers during their  normal  working
hours.  The  "Four  Star"  customer service program  also  emphasizes  sales
associate and store management training. Product seminars and other training
programs  are frequently conducted in the Company's stores and its corporate
headquarters to ensure that sales associates will be able to provide  useful
product information to customers.  The Company also offers opportunities for
management  training and leadership classes for those associates  identified
for  promotion within the Company. Various financial incentives are  offered
to  the  Company's  sales  associates to reward reaching  sales  performance
goals.

            In  addition  to  providing  a  high  level  of  personal  sales
assistance,  management believes that well-stocked stores, a liberal  return
and  exchange  policy, frequent sales promotions and a conveniently  located
and   attractive  shopping  environment  enhance  the  customer's   shopping
experience  and  increase customer loyalty. Management  also  believes  that
maintaining appropriate staffing levels in its stores, particularly at  peak
selling  periods,  is  essential for providing  a  high  level  of  customer
service.  In  fiscal  1999, the Company expects to  implement  a  new  labor
scheduling system, through which management believes it will be able to more
efficiently  match  staffing levels to projected  sales,  thereby  improving
customer   service   and  maximizing  the  return  on  its   store   payroll
expenditures.


           Distribution of Merchandise.  The Company's 420,000  square  foot
distribution  center is centrally located in Madera, California  and  serves
all  of the Company's store locations, including its store locations outside
California.  Completed in 1989, the distribution center  presently  has  the
capacity  to  process  merchandise for up to seventy-five  department  store
locations, and the capacity may be expanded beyond that amount. The  Company
receives substantially all of its merchandise at the distribution center and
makes daily distributions to the stores.

           The  Company  has  continued to focus  on  the  adoption  of  new
technology  and operational best practices at its distribution  center  with
the goals of receiving, processing and distributing merchandise to stores at
a  faster  rate  and at a lower cost per unit. In fiscal 1998,  the  Company
completed  the implementation of a new logistical system at its distribution
center,  which  is  the  same  system that  many  of  the  Company's  larger
competitors have also put into place. The new system enables the Company  to
minimize  the manual handling of a large percentage of incoming  merchandise
and provides for the processing of such merchandise through the distribution
center and to the stores in minutes and hours as compared to several days in
the  past.  Currently, approximately 50% of merchandise  is  purchased  from
vendors  which provide the Company with an advanced shipping notice ("ASN"),
which  is  an  electronic document transmitted by a vendor that details  the
contents  of each carton en route to the distribution center. These  vendors
also  ship only "floor-ready" merchandise which arrives on approved  hangers
pre-tagged  with universal product code ("UPC") tickets, a bar  coded  price
label  containing retail prices that can be electronically  translated  into
the Company's inventory systems.

          The Company also has formal guidelines for vendors with respect to
shipping,  receiving and invoicing for merchandise under  its  "Partners  in
Technology"  program.  Vendors that do not comply with  the  guidelines  for
shipping  merchandise  using  ASN's and in floor-ready  status  are  charged
specified fees depending upon the instance of non-compliance. Such fees  are
intended  to  offset  higher costs associated with the  processing  of  such
merchandise.  Vendors can obtain the Company's shipping  guidelines  through
the Company's Web site.

          Private-Label  Credit  Card.  The Company issues  its  own  credit
card,  which management believes enhances the Company's ability to  generate
and  retain market acceptance and increase sales and other revenues for  the
Company.  As  described  more  fully  in  Part  II,  Item  7,  "Management's
Discussion  and Analysis of Financial Condition and Results of  Operations--
Liquidity and Capital Resources," the Company sells its customer credit card
receivables   on  an  ongoing  basis  in  connection  with   a   receivables
securitization program. The Company has continued to service and  administer
the receivables under the program.
          
          The  following represents a summary of information related to  the
Company's credit card receivable portfolio for the fiscal years indicated:

<TABLE>
<CAPTION>
                 1998       1997     1996     1995     1994                  
               (In thousands of dollars, except selected data)

Average credit
 card receivables
 <S>            <C>       <C>      <C>      <C>      <C>
 serviced (1)   $69,143   $64,612  $64,162  $62,492  $57,613
          
Service charge
  income         13,431    11,618   10,493   10,937    8,904
          
Credit sales as a
  % of total
  sales (2)        43.1%     43.7%    43.1%    43.6%   42.2%
          
# of days credit
  sales in
  receivables (3) 115.6     119.3    123.7    127.5   146.2
</TABLE>
_______________________

               (1)        Includes receivables sold, the retained
                          interest in receivables sold, and other
                          receivables, which are all serviced
                          by the Company.

          (2)    The decrease in credit sales as a percentage of total sales
          in  fiscal  1998  is  primarily due to the new  Harris/Gottschalks
          locations, which generally have a lower credit sales
           volume than that of the rest of the Company.

     (3)   Excludes receivables acquired from Harris on August 20, 1998.


          The  Company  has  a  variety  of  credit-related  programs  which
management  believes  have  improved customer  service  and  have  increased
service charge revenues. Such programs include:
          
            -  an  "Instant Credit" program, through which successful credit
               applicants  receive  a  discount  ranging  from  10%  to  50%
               (depending  on the results of the Instant Credit  scratch-off
               card)  on  the first days' purchases made with the  Company's
               credit card;
            
            -  a  "55-Plus" charge account program, which offers  additional
               merchandise  and service discounts to customers 55  years  of
               age and older;
            
            -  "Gold  Card"  and "55-Plus Gold Card" programs,  which  offer
               special services at a discount for customers who have  a  net
               minimum  spending history on their charge accounts of  $1,000
               per year;
            
            -  The  "Gottschalks  Rewards" program which  offers  an  annual
               rebate certificate for up to 5% of annual credit purchases on
               the  Company's  credit card (up to a maximum  of  $10,000  of
               annual   purchases)  which  can  be  applied  towards  future
               purchases of merchandise; and
            
            -  Ongoing   credit  card  reactivation  programs  designed   to
               recapture  credit  cardholders who have  not  utilized  their
               credit card for a specified period of time.

           The  Company had approximately 589,000 active credit card holders
as of February 28, 1999 as compared to 460,000 as of February 28, 1998. This
increase is primarily due to the acquisition of approximately 100,000 credit
card accounts from Harris in August 1998. Management believes holders of the
Company's  credit card typically buy more merchandise from the Company  than
other customers.

          The  Company's  credit  management software system  has  automated
substantially all aspects of the Company's credit authorization,  collection
and  billing  processes,  and  enhances the  Company's  ability  to  provide
customer  service.  This  system, combined with  a  credit  scoring  system,
enables the Company to process thousands of credit applications daily  at  a
rate  of  less than three minutes per application. The Company also  has  an
automated advanced call management system through which the Company  manages
the  process  of collecting delinquent customer accounts. As described  more
fully  in Part I, Item I, "Business--Sales Promotion Strategy", the  Company
is  also  able to utilize the credit management and advanced call management
systems for direct marketing and telemarketing activities.
          
          The  credit authorization process is centralized at the  Company's
corporate  headquarters  in  Fresno,  California.  Credit  is  extended   to
applicants  based  on  a scoring model. Applicants who  meet  pre-determined
criteria  based  on prior credit history, occupation, number  of  months  at
current  address,  income  level and geographic location  are  automatically
assigned an account number and awarded a credit limit ranging from  $300  to
$2,000.  Credit  limits may be periodically revised.  The  Company's  credit
system also provides full on-line positive authorization lookup capabilities
at  the  point-of-sale.  Within seconds, each  charge,  credit  and  payment
transaction  is approved or referred to the Company's credit department  for
further  review.  Sales associates speed-dial the credit department  for  an
approval when a transaction has been referred by the system.

          The  Company  offers  credit to customers  under  several  payment
plans:  the  "Option Plan", under which the Company bills customers  monthly
for  charges  without a minimum purchase requirement; the  "Time-Pay  Plan",
under  which  customers  may make monthly payments  for  purchases  of  home
furnishings, major appliances and other qualified items of more  than  $100;
and  the  "Club Plan", under which customers may make monthly  payments  for
purchases of fine china, silver, crystal and collectibles of more than $100.
The  Company also periodically offers special promotions to its credit  card
holders  through  which  customers  are  given  the  opportunity  to  obtain
discounts  on  merchandise purchases or purchase merchandise  under  special
deferred  billing  and  deferred  interest plans.  Finance  charges  may  be
assessed on unpaid balances at an annual percentage rate of up to 21.6%, and
a late charge fee on delinquent charge accounts may be assessed at a rate of
up  to  $15 per late payment occurrence. Such charges may vary depending  on
applicable state law.

          Information Systems and Technology.  The Company has continued  to
invest  in  technology and systems improvements in its  efforts  to  improve
customer  service  and  increase  the  profitability  of  the  Company.  The
Company's information systems include IBM mainframe technology, supplemented
by   applications  on  client  servers,  mid-range  and  personal  computers
connected  through  a  local area network. All of the Company's  transaction
processing  and reporting activities are computerized, including its  sales,
inventory,  credit,  accounts  payable,  payroll  and  financial   reporting
systems.  Every store processes each sales transaction through point-of-sale
("POS") terminals that connect on-line with the Company's mainframe computer
located at its corporate offices in Fresno, California. This system provides
detailed  reports on a real-time basis of sales, gross margin and  inventory
levels by store, department, vendor, class, style, color, and size.

          Management  believes the continued enhancement of its merchandise-
related  systems  is  essential for gross margin improvement  and  shrinkage
control. The Company has an automatic markdown system which has assisted  in
the  more  timely and accurate processing of markdowns and reduced inventory
shortage  resulting  from paperwork errors. The Company's  price  management
system  has  improved  the  Company's POS price  verification  capabilities,
resulting  in fewer POS errors and enhanced customer service. Combined  with
enhanced physical inventory procedures and improved security systems in  the
Company's  stores,  these systems have resulted in the  Company's  inventory
shrinkage  decreasing from approximately 1.4% in fiscal  1994  and  1.3%  in
fiscal  1995  to  approximately 1.1% of net sales in fiscal 1996,  1997  and
1998.
          
          Management  also  believes  improved technology  is  critical  for
future   reductions  in  costs  related  to  the  purchase,   handling   and
distribution  of  merchandise,  traditionally  labor-intensive  tasks.   The
Company's  merchandise management and allocation system, upgraded in  fiscal
1998,  has enhanced the Company's ability to allocate merchandise to  stores
more  efficiently  and  make prompt reordering and  pricing  decisions.  The
system  also provides merchandise-related information used by the  Company's
buying  division  in  its  analysis  of  market  trends  and  specific  item
performance  in  stores.  The  Company has also  implemented  a  variety  of
programs  with  its vendors, including an automatic replenishment  inventory
system  for  certain  basic merchandise and an electronic  data  interchange
("EDI")  system  providing for on-line purchase order entry  and  electronic
invoicing. Such systems have automated certain processes associated with the
purchasing and payment for merchandise.
          
          Management  is  also focused on improving systems as  a  means  to
reduce  operating  costs  and improve efficiencies throughout  the  Company.
Recent  system  implementations include the previously described  logistical
system installed at the Company's distribution center, which has resulted in
lower  distribution center payroll and other overhead costs. A workflow  and
imaging  system was also recently installed, which has created a "paperless"
environment in the Company's accounts payables department and has  automated
certain tasks that were previously manual. Efficiencies gained through  this
system  have enabled the department to process a significantly higher volume
of  invoices  and payments without increasing staffing levels.  The  Company
also intends to utilize the imaging technology to reduce operating costs and
improve efficiencies in other areas of the Company, including the credit and
human resources departments. In fiscal 1999, the Company expects to complete
a  strategic  review  of its information systems and formulate  a  long-term
strategy for further system improvements.
          
          The  Company's Year 2000 readiness is described more fully in Part
II, Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources".
          
          Competition.   The  Company  operates  in  a  highly   competitive
environment,  competing with national, regional, and local chain  department
and  specialty  stores,  some  of which are  considerably  larger  and  have
substantially  greater  financial  and other  resources  than  the  Company.
Competition  has  intensified in recent years as new competitors,  including
specialty   stores,  general  merchandise  stores,  discount  and  off-price
retailers and outlet malls, have entered the Company's primary market areas.
Increased  use  and  acceptance  of the internet  and  other  home  shopping
formats,  and  the  trend  towards consolidation of competitors  within  the
retail  industry, have also created additional competition for the  Company.
The   Company  competes  primarily  on  the  basis  of  current  merchandise
availability,   customer  service,  price  and  store   location   and   the
availability of services, including credit and product delivery.

          The  Company's larger national and regional competitors  have  the
ability  to  purchase  larger  quantities of merchandise  at  lower  prices.
Management   believes  its  buying  practices  partially   counteract   this
competitive  pressure.  Such practices include: (i) the  ability  to  accept
smaller  or  odd-sized orders of merchandise from vendors  than  its  larger
competitors  may  be  able  to accept; (ii) the  ability  to  structure  its
merchandise  mix to more closely reflect the different regional,  local  and
ethnic  needs of its customers; and (iii) the ability to react  quickly  and
make  opportunistic purchases of individual items. The Company's  membership
in  Frederick  Atkins also provides it with increased buying  power  in  the
marketplace.  Management  also believes that its knowledge  of  its  primary
market  areas,  developed over more than 94 years of continuous  operations,
and  its focus on those markets as its primary areas of operations, give the
Company an advantage that its competitors cannot readily duplicate. Many  of
the  Company's  competitors are national chains  whose  operations  are  not
focused specifically on non-major metropolitan cities in the western  United
States. One aspect of the Company's strategy is to differentiate itself as a
home-town,  locally-oriented  store  versus  its  more  nationally   focused
competitors.  The Company encourages its store management and associates  to
actively participate in local charitable activities.
          
          Seasonality.    The Company's stores experience seasonal sales and
earnings  patterns typical of the retail industry.  Peak sales occur  during
the  Christmas  selling months of November and December,  and  to  a  lesser
extent,  during the Easter and Back-to-School selling seasons.  The  Company
generally increases its inventory levels and sales staff for these  seasons.
(See  Part  II, Item 7, "Management's Discussion and Analysis  of  Financial
Condition and Results of Operations--Seasonality").

          Employees.    As  of  January  30, 1999,  the  Company  had  6,600
employees, including 1,780 employees working part-time (less than  20  hours
per  week  on  a  regular  basis). The Company  hires  additional  temporary
employees  and  increases the hours of part-time employees  during  seasonal
peak  selling  periods. None of the Company's employees  are  covered  by  a
collective   bargaining  agreement.   Management  considers   its   employee
relations to be good.

          To  attract and retain qualified employees, the Company  offers  a
25%  discount  on  most  merchandise purchases; participation  in  a  401(k)
Retirement  Savings  Plan to which the Company makes  quarterly  and  annual
contributions depending upon the profitability of the Company; and vacation,
sick  and  holiday  pay  benefits as well as health care,  accident,  death,
disability,  dental  and  vision insurance at  a  competitive  cost  to  the
employee  and  eligible  beneficiaries  and  dependents.  The  Company   has
performance-based incentive pay programs for its officers and certain of its
key employees and has stock option plans that provide for the grant of stock
options  to  officers  and  key  employees of  the  Company.  The  Company's
stockholders have also approved a stock purchase plan, which is expected  to
be  implemented in fiscal 1999. The Company also offers management  training
and  leadership classes for those associates identified for promotion within
the Company.

          Executive Officers of the Registrant.  Information relating to the
Company's executive officers is included in Part III, Item 10 of this report
and is incorporated herein by reference.

FORWARD-LOOKING STATEMENTS

           This  Form  10-K  contains  certain "forward-looking  statements"
regarding   activities,  developments  and  conditions  that   the   Company
anticipates may occur or exist in the future relating to things such as:

             revenues and earnings;
             savings or synergies from acquisitions;
             future capital expenditures;
             its   expansion   strategy  (including  store  and   department
             openings);
             the  impact  of sales promotions and customer service  programs
             on consumer spending;
             the utilization of consumer credit programs;
             its Year 2000 readiness.

Such  forward-looking  statements  can  be  identified  by  words  such  as:
"believes", "anticipates", "expects", "intends", "seeks", "may", "will"  and
"estimates".   The  Company  bases  its forward-looking  statements  on  its
current views and assumptions. As a result, those statements are subject  to
risks and uncertainties that could cause actual results to differ materially
from  those  predicted. Some of the factors that could cause  the  Company's
results to differ from those predicted include the following:

RISK FACTORS

           General Economic and Market Conditions.  The Company's stores are
located  primarily in non-major metropolitan and agricultural areas  in  the
western  United States.  A substantial portion of the stores are located  in
California.  The Company's success depends upon consumer spending, which may
be  materially  and  adversely affected by any of the  following  events  or
conditions:
             a  downturn  in  the  national economy  or  in  the  California
             economy;
             a  downturn  in  the  local economies  where  the  stores  are
             located;
             a decline in consumer confidence;
             an increase in interest rates;
             inflation or deflation;
             consumer credit availability;
             consumer debt levels;
             tax rates and policy; and
             unemployment trends.

          Seasonality and Weather.  Seasonal influences affect the Company's
sales and profits.  The Company experiences its highest levels of sales  and
profits during the Christmas selling months of November and December, and to
a  lesser extent, during the Easter holiday and Back-to-School seasons.  The
Company  also  has  increased working capital needs prior to  the  Christmas
season  to  carry significantly higher inventory levels to meet  anticipated
demands.  Any  substantial  decrease in sales during  its  traditional  peak
selling  periods  could materially adversely impact the Company's  business,
financial  condition and results of operations.  Factors  that  could  cause
results to vary include:

             the timing and level of sales promotions;
             the weather;
             fashion trends;
             local unemployment levels; and
             the overall health of the national and local economies.

          The Company depends on normal weather patterns across its markets.
Historically,  unusual  weather  patterns have  significantly  impacted  its
business.

           Consumer Trends.  The Company's success partially depends on  its
ability  to  anticipate  and respond to changing  consumer  preferences  and
fashion trends in a timely manner.  However, it is difficult to predict what
merchandise  consumers will demand, particularly merchandise that  is  trend
driven.   Failure to accurately predict constantly changing consumer tastes,
preferences and spending patterns could adversely affect short and long term
results.

           Expansion Strategy - Future Growth and Recent Acquisitions.   The
Company's  expansion  strategy involves remodeling  and  expanding  existing
stores  and acquiring or opening new stores. Achieving such expansion  plans
(including any potential acquisitions) depends upon many factors,  including
the ability of the  Company to:

          -  identify,  negotiate,  finance,  obtain,  construct,  lease  or
             refurbish suitable store sites;
          -  hire, train and retain qualified personnel; and 
          -  integrate  new  stores  into existing information  systems  and
             operations.
             

           The  Company  also expects to achieve synergies from  its  recent
acquisition  of  the Harris stores.  Achieving such synergies  depends  upon
many factors, including the ability of the Company to:

          -  leverage  the additional sales volume of the Harris  stores
             over existing overhead;
          -  increase the Company's purchasing power; 
          -  increase  usage  of the Company's credit card  by  the  new
             Harris customers; and
          -  successfully assume the operation of its shoe business.
     
           The Company cannot guarantee that it will achieve its targets for
remodeling or expanding existing stores or for opening new stores,  or  that
such stores will operate profitably when opened or acquired, or that it will
achieve the expected synergies from the Harris acquisition.  If the Company
fails to effectively implement its expansion strategy, it could materially
and adversely affect the Company's business, financial condition and results
of operations.

           Competition.   The  retail business is  highly  competitive.  The
Company's  primary competitors include:  national, regional and local  chain
department  and specialty stores, general merchandise stores,  discount  and
off-price  retailers and outlet malls. Increased use and acceptance  of  the
internet and other home shopping formats also creates increased competition.
Some  of  these competitors offer similar or better branded merchandise  and
are   larger  and  have  greater  financial  resources  to  purchase  larger
quantities  of  merchandise  at  lower prices.   The  Company's  success  in
counteracting these competitive pressures depends on its ability to:

          -  offer  merchandise which reflects the different  regional
             and  local needs of its customers;
          -  differentiate and market itself as a home-town,  locally-
             oriented  store  (as  opposed to its  more  nationally  focused
             competitors);
          -  continue  to  shift  its  merchandise  mix  to  a  higher
             proportion of better branded merchandise.
          -  increase its buying power as a member of Fredrick Atkins; and
          -  accept smaller or odd-sized orders of merchandise.

            Existing  or new competitors, however, may begin to  carry  such
brand-name  merchandise  or  increase  their  offering  of  better  quality
merchandise  which  may negatively impact the Company's business,  financial
condition and results of operations.

           Vendor  Relations.   The Company believes its close  relationship
with its key vendors enhances its ability to purchase brand-name merchandise
at  competitive prices.  If the Company loses key vendor support, is  unable
to participate in group purchasing activities or its vendors withdraw brand-
name  merchandise, it could have a material adverse effect on the  Company's
business, financial condition and results of operations.  The Company cannot
guarantee  that  it  will  be  able  to acquire  brand-name  merchandise  at
competitive prices or on competitive terms in the future.

           Leverage  and  Restrictive Covenants.  Due to the  level  of  the
Company's  indebtedness,  any  material adverse  development  affecting  the
Company  could  significantly  limit its ability  to  withstand  competitive
pressures  and  adverse  economic conditions, take  advantage  of  expansion
opportunities or to meet its obligations as they become due.  The  Company's
existing  debt  imposes  operating  and financial  restrictions  that  limit
the Company's ability to make dividend payments and grant liens.

           Interest  Rate Risk.  The Company's borrowings under its revolving
line  of  credit  facility bear a variable interest rate. If interest  rates
increase,  the Company's financial results  could  be  materially  adversely
affected.   See  Item  7A, "Quantitative and Qualitative  Disclosures  About
Market Risk."

           Consumer  Credit Risks.  The Company's private-label credit  card
facilitates  sales and generates additional revenue from credit  card  fees.
Changes  in  credit  card use, default rates or in the laws  regulating  the
granting  or  servicing of credit (including late fees and  finance  charges
applied  to  outstanding  balances) could materially  adversely  affect  the
Company's  business,  financial condition and  results  of  operations.   In
addition, the Company cannot guarantee that the credit card programs it  has
implemented will increase or maintain customer spending.

           Securitization  of Accounts Receivable.  The Company  securitizes
the  receivables  generated under its private-label credit card.  Under  the
securitization program, the Company transfers such receivables to a  special
purpose entity which issues interests in the receivables to investors.   The
Company  cannot  guarantee that it will continue to generate receivables  by
credit  card holders at the same rate, or that it will establish new  credit
card  accounts at the rate it has in the past.  Any material decline in  the
generation of receivables or in the rate of cardholder payments on  accounts
could  have  a material adverse effect on the Company's financial  condition
and results of operations.

          Year 2000 Readiness.  If computer hardware, software or technology
improperly  function using dates after December 31, 1999, then  the  Company
may  be  adversely affected.  The Company estimated its costs and completion
dates  for  its  Year 2000 readiness based on assumptions of  future  events
including:

          -  the  continued  availability  of  internal  and  external
             resources, such as human resources and capital;
          -  the  ability  of  third parties doing business  with  the
             Company  to  timely  modify their computer systems; and
          -  the Company's contingency plans.

           The Company cannot guarantee that it or the third parties it does
do  business with will successfully complete the Year 2000 conversion  on  a
timely  basis.  If either the Company or any third party with whom  it  does
substantial business fails to complete its Year 2000 conversion on a  timely
basis,  it  may adversely affect the Company's business, financial condition
and results of operations.

           Dependence on Key Personnel.  The Company's success depends to  a
large  extent on its executive management team. The loss of the services  of
any such executive could have a material adverse effect on the Company.  
The Company  cannot guarantee that it will be able to retain such key  
personnel or  attract  additional  qualified members to its  management  
team  in  the future.

          Labor Conditions.  The Company depends on attracting and retaining
a  large number of qualified employees to maintain and increase sales and to
execute  its customer service programs.  Many of the employees are in  entry
level or part-time positions with historically high levels of turnover.  The
Company's ability to meet its employment needs is dependent on a number
of factors, including the following factors which affect the Company's  
ability to hire or retain qualified employees:

           - unemployment levels;
           - minimum wage legislation; and
           - changing  demographics in the local economies where stores  are
             located.

           The foregoing list of important factors is not exclusive and  the
Company  does  not  undertake  to revise any forward-looking  statement  to
reflect events or circumstances that occur after the statement is made.

Item 2.   PROPERTIES

          Corporate   Offices  and  Distribution  Center.    The   Company's
corporate  headquarters  are  located in an  office  building  in  northeast
Fresno,  California, constructed in 1991 by a limited partnership  of  which
the  Company is the sole limited partner holding a 36% interest. The Company
leases 89,000 square feet of the 176,000 square foot building under a twenty-
year lease expiring in the year 2011. The lease contains two consecutive ten-
year  renewal options and the Company receives favorable rental terms  under
the  lease.  (See  Note  1  to the Consolidated Financial  Statements.)  The
Company believes that its current office space is adequate to meet its long-
term office space requirements.

          The   Company's  distribution  center,  completed  in  1989,   was
constructed  and  equipped  to  meet  the  Company's  long-term  merchandise
distribution  needs.  The  420,000  square  foot  distribution  facility  is
strategically  located  in  Madera, California to service  economically  the
Company's  existing  store locations in the western United  States  and  its
projected future market areas. The Company leases the distribution  facility
from  an  unrelated party under a 20-year lease expiring in the  year  2009,
with six consecutive five-year renewal options.

           Store  Leases and Locations.   The Company owns six of its  forty
department  stores, and leases the remaining thirty-four  department  stores
and all of its twenty-two specialty stores. While there is no assurance that
the  Company will be able to negotiate further extensions of any  particular
lease,   management  believes  that  satisfactory  extensions  or   suitable
alternative  store  locations  will  be  available.  Additional  information
pertaining  to  the Company's store leases is included  in  Note  6  to  the
Consolidated Financial Statements.

           The  following table contains specific information about each  of
the Company's stores open as of the end of fiscal 1998:

<TABLE>
<CAPTION>
                                         Expiration
                     Gross(1)             Date of
                     Square      Date     Current
                      Feet      Opened     Lease     Owned or Leased(2)
DEPARTMENT STORES:

Northern Region (17 Gottschalks locations):
<S>                  <C>        <C>        <S> <C>        <S>
Antioch............. 80,000     1989       N/A (3)       Own
Auburn.............. 40,000     1995       2005         Lease
Carson City, Nevada. 68,000     1995       2005         Lease
Chico............... 85,000     1988       2017         Lease
Eureka.............. 96,900     1989       N/A (3)       Own
Klamath Falls,
  Oregon............ 65,400     1992       2007         Lease
Modesto:
  Vintage Faire.....161,500     1977       2007         Lease    
  Century Center.... 65,000     1984       2013         Lease
Reno, Nevada........138,000     1996       2016         Lease
Sacramento..........194,400     1994       2014         Lease
Santa Rosa..........131,300     1997       2017         Lease
Sonora.............. 59,800     1997       2017         Lease
Stockton............ 90,800     1987       2009         Lease
Tacoma, Washington..119,300     1992       2012         Lease
Tracy...............113,000     1995       2015         Lease
Woodland............ 57,300     1987       2017         Lease
Yuba City........... 80,000     1989       N/A(3)        Own

Central Region (13 Gottschalks locations):
Bakersfield,
  Valley Plaza...... 90,000      1987      2017         Lease
Capitola............105,000      1990      2015         Lease
Clovis..............101,400      1988      2018         Lease
Fresno:
  Fashion Fair......163,000      1970      2016         Lease
  Fig Garden........ 36,000      1983      2005         Lease
  Manchester........175,600      1979      2009         Lease
Hanford............. 98,800      1993      N/A(3)        Own
Merced.............. 60,000      1983      2013         Lease
Oakhurst............ 25,600      1994      2005         Lease
San Luis Obispo..... 99,300      1986      N/A(3)        Own
Santa Maria.........114,000      1976      2006         Lease
Visalia.............150,000      1995      2014         Lease
Watsonville......... 75,000      1995      2006         Lease

Southern Region (10 Harris/Gottschalks locations) (4):

Bakersfield, East
 Hills:
  Women's, Shoes and
    Accessories.....105,000      1998     2008(5)       Lease
  Men's, Children's
    and Home........ 92,900      1988     2009          Lease
Hemet............... 51,000      1998     2005          Lease
Indio............... 60,000      1998     2005          Lease
Moreno Valley.......153,000      1998     2008(5)       Lease
Palmdale:
  Women's, Shoes and
    Accessories.....114,000      1998     2008(5)       Lease
  Men's, Children's
   and Home.........114,900      1990     N/A(3)         Own
Palm Springs........ 82,000      1991     2015          Lease
Redlands............106,000      1998     2007          Lease
Riverside...........208,000      1998     2002          Lease
San Bernardino......204,000      1995     2017          Lease
Victorville......... 71,000      1998     2006          Lease

Total Department
  Store Square
  Footage........ 4,301,200


SPECIALTY STORES:

Gottschalks:
Aptos............... 11,200     1988      2004           Lease
Redding.............  7,800     1993    Automatically    Lease
                                        renews every
                                          60 days
Scotts Valley....... 11,200     1988      2001           Lease

Village East:
Antioch.............  2,100     1989      1999(6)        Lease
Capitola............  2,360     1991      2009           Lease
Carson City, Nevada.  3,400     1995      2005           Lease
Chico...............  2,300     1988      2000           Lease
Clovis..............  2,300     1988      2009           Lease
Eureka..............  2,820     1989      2004           Lease
Fresno, Fig Garden..  2,800     1986      30 days(7)     Lease
Hanford.............  2,800     1993      2008           Lease
Modesto,
  Century Center....  2,730     1986      2005           Lease
Palmdale............  2,716     1990      2000           Lease
Sacramento..........  2,700     1994      2004           Lease
San Luis Obispo.....  2,500     1987      2011           Lease
Santa Maria.........  3,000     1976      2001           Lease
Stockton............  1,799     1989      30 days(7)     Lease
Tacoma..............  4,000     1992      2012           Lease
Tracy...............  3,428     1995      2006           Lease
Visalia.............  3,400     1975      1999(6)        Lease
Woodland............  2,022     1987      1999(8)        Lease
Yuba City...........  3,200     1990      2000           Lease

Total Specialty Store
  Square Footage.... 82,575

Total Square
  Footage.........4,383,775

</TABLE>
__________________________

     (1)  Reflects  total  store  square footage,  including  office  space,
          storage, service and other support space that is not dedicated  to
          direct merchandise sales.
    
     (2)  Most of the Company's department store leases contain renewal
          options.  Leases for specialty store locations generally do not
          contain renewal options.  
     
     (3)  These  stores are Company owned and have been pledged as  security
          for  various debt obligations of the Company. (See Note 5  to  the
          Consolidated Financial Statements.)
     
     (4)  Locations  opened in fiscal 1998  were  acquired  from
          Harris.   Locations  open  prior  to  that  date   were   original
          Gottschalks    locations    that   are    now    operated    under
          Harris/Gottschalks nameplates.

     (5)  These leases are with ECI, an affiliate of the Company.
     
     (6)  The  Company  expects to renegotiate these leases  prior  to
          their expiration.
     
     (7)  These leases are renewable on a month-to-month basis.

     (8)  The Company expects to close this location upon the expiration  of
          its  lease  and  incorporate it into the nearby  department  store
          location as a separate department.


Item 3.   LEGAL PROCEEDINGS
          
          Not Applicable.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

          No  matter  was  submitted to a vote of security  holders  of  the
Company during the fourth quarter of the fiscal year covered in this report.

                      PART II

Item 5.   MARKET  FOR  REGISTRANT'S  COMMON EQUITY AND  RELATED  STOCKHOLDER
          MATTERS

          The  Company's stock is listed for trading on both  the  New  York
Stock Exchange ("NYSE") and the Pacific Stock Exchange.  The following table
sets  forth  the  high and low sales prices per share  of  common  stock  as
reported  on  the  NYSE  Composite Tape under the symbol  "GOT"  during  the
periods indicated:

<TABLE>
<CAPTION>
                          1998               1997
Fiscal Quarters     High        Low      High       Low
<C> <S>            <C>       <C>        <C>       <C>
1st Quarter....... 9  1/4    6 13/16    6 1/2     5 1/8
2nd Quarter....... 8  7/8    7   3/4    9         5 1/2
3rd Quarter....... 8 3/4     6  9/16    9 7/8   7 11/16
4th Quarter....... 7 15/16   6   7/8    9 1/8     6 3/4

</TABLE>

          On  March  31, 1999, the Company had 894 stockholders  of  record,
some  of  which  were brokerage firms or other nominees holding  shares  for
multiple  stockholders.  The sales price of the Company's  common  stock  as
reported by the NYSE on March 31, 1999 was $7 1/16 per share.

          The  Company has not paid a cash dividend since its initial public
offering  in  1986. The Board of Directors has no present intention  to  pay
cash  dividends  in  the foreseeable future, and will determine  whether  to
declare  cash  dividends in the future depending on the Company's  earnings,
financial  condition  and capital requirements. In addition,  the  Company's
credit  agreement with Congress Financial Corporation prohibits the  Company
from paying dividends without prior written consent from that lender.

          On  August 20, 1998, in connection with completing the acquisition
of  substantially  all  of the assets and business of  Harris,  the  Company
issued  2,095,900  shares of its common stock and the Subordinated  Note  to
Harris   (see  Note  2  to  the  Consolidated  Financial  Statements).   The
transaction was a private placement involving one offeree and one  purchaser
exempt  from registration pursuant to Section 4(2) of the Securities Act  of
1933.

Item 6.   SELECTED FINANCIAL DATA

          The  Company  reports on a 52/53 week fiscal year  ending  on  the
Saturday  nearest  to January 31. The fiscal years ended January  30,  1999,
January  31, 1998, February 1, 1997, February 3, 1996 and January  28,  1995
are  referred  to  herein  as  fiscal  1998,  1997,  1996,  1995  and  1994,
respectively.   All fiscal years noted include 52 weeks, except  for  fiscal
1995 which includes 53 weeks.

          The  selected  financial data below should be read in  conjunction
with  Part  II, Item 7, "Management's Discussion and Analysis  of  Financial
Condition  and  Results  of  Operations,"  and  the  Consolidated  Financial
Statements  of the Company and related notes included elsewhere herein.  The
Company  completed the acquisition of nine stores from Harris on August  20,
1998,  closing one of the acquired stores on January 31, 1999,  as  planned.
The  acquisition  has affected the comparability of the Company's  financial
results.

RESULTS OF OPERATIONS:

<TABLE>
<CAPTION>
                          1998     1997      1996      1995       1994
                              (In thousands, except share data)
<S>                    <C>       <C>        <C>       <C>        <C>
Net sales...........   $517,140  $448,192   $422,159  $401,041   $363,603
Net credit revenues..     6,897     6,385      4,198     4,896      4,210
                        -------   -------    -------   -------    -------
                        524,037   454,577    426,357   405,937    367,813
Costs and expenses:
  Cost of sales......   347,531   304,558    287,164   278,827    247,423
  Selling, general and
    administrative
    expenses.........   150,719   130,922    123,860   120,637    101,516
  Depreciation and
    amortization(1)...    8,461     6,667      6,922     8,092      5,860
  Acquisition related
    expenses...........     859       673
  Unusual items(2).....                                             3,833
                        -------    -------   -------   -------    -------
                        507,570    442,820   417,946   407,556    358,632
                        =======    =======   =======   =======    =======
Operating income (loss)  16,467     11,757     8,411    (1,619)     9,181

Other (income) expense:
 Interest expense......   9,470      7,325     8,111     7,718      7,599
 Miscellaneous income..  (2,032)    (1,955)   (2,792)     (726)      (755)
                        -------    -------   -------   -------    -------
                          7,438      5,370     5,319     6,992      6,844
                        =======    =======   =======   =======    =======
Income (loss) before
  income tax expense
  (benefit)...........    9,029      6,387     3,092    (8,611)     2,337

Income tax expense
  (benefit)...........    3,747      2,657     1,258    (2,972)       821
                        -------    -------    ------    ------     ------
Net income (loss)..... $  5,282   $  3,730   $ 1,834   $(5,639)   $ 1,516
                        =======    =======    ======    ======     ======
Net income (loss)
 per common share -
  basic and diluted..  $   0.46   $   0.36   $  0.18   $ (0.54)   $  0.15
                        =======    =======    ======    ======     ======
Weighted-average
  number of common
  shares outstanding 
basic and diluted  11,418     10,474    10,461    10,416    10,413

</TABLE>

<TABLE>
<CAPTION>

SELECTED BALANCE SHEET DATA:

                       1998     1997     1996     1995   1994
(In thousands of dollars)

Retained interest in
 <S>                <C>       <C>       <C>       <C>      <C>
 receivables sold...$ 37,399  $ 15,813  $ 20,871  $ 25,892 $ 25,745 
Receivables, net....  16,136     3,085     1,818     1,575    1,566
Merchandise
 inventories........ 123,118    99,294    89,472    87,507   80,678
Property and
 equipment, net..... 113,645    99,057    87,370    89,250   93,809
Total assets........ 324,364   242,311   232,400   239,041  233,353
Working capital.....  96,231    67,579    70,231    42,904   37,900
Long-term obligations,
 less current portion.74,114    62,420    60,241    34,872   33,672
Subordinated note
 payable to affiliate.20,618      ---       ---     ---       ---
Stockholders' equity.103,468    83,905    80,139    77,917   83,577
</TABLE>


OTHER SELECTED DATA:
<TABLE>
<CAPTION>
                        1998    1997    1996    1995    1994                   
                 (In thousands of dollars, except other selected data)
Sales growth:
 <S>                   <C>      <C>     <C>    <C>       <C>
 Total store sales.... 15.4%    6.2%    5.3%   10.3%     6.2%
 Comparable store
   sales.               2.1%    3.3%    1.4%   (3.1%)    3.3%

Comparable stores data:
 Sales per selling
  square foot          $170    $160    $170    $181     $195
 Selling square
  footage             2,621   2,642   2,161   1,892    1,747
Gross margin percent:
  Owned.............   34.3%   33.5%   33.4%   31.8%    33.3%
  Leased.............  14.8%   14.6%   14.6%   14.4%    14.1%

EBITDA(3)...........$31,133 $24,631 $21,689 $10,777  $22,268
Capital
  expenditures...   $16,801 $14,976 $ 6,845 $12,773  $ 4,539 
Current ratio.....   1.98:1  2.01:1  2.10:1  1.45:1   1.43:1 
Inventory turnover
 ratio.............     2.6     2.6     2.6     2.7      2.9
</TABLE>

-----------------------------------
     
     (1)  Includes the amortization of new store pre-opening costs  of
          $421,000, $589,000, $1.3 million, $2.5 million and  $438,000
          in  fiscal  1998,  1997, 1996, 1995 and 1994,  respectively.
          This amount also  includes the amortization of goodwill of  
          $291,000  in fiscal  1998  and  $116,000 in each  of  fiscal  
          years  1997 through 1994.
     
     (2)  Represents  legal fees  and  other
          costs  incurred  to settle litigation against  the  Company.
          (See  the  Company's 1997 Annual Report  on  Form  10-K  for
          additional information.)

     (3)  "EBITDA"  is  defined  as  earnings  before
          interest,  income taxes, depreciation and amortization,  and
          other  unusual items. EBITDA also excludes interest  expense
          on  securitized receivables which is included in net  credit
          revenues.   EBITDA  is not intended  to  represent  cash
          flows  from operations, to be an indicator of the  Company's
          operating performance or to be a measure of its liquidity.

Item 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS
     
           Following  is management's discussion and analysis of significant
factors which have affected the Company's financial position and its results
of  operations  for  the periods presented in the accompanying  Consolidated
Financial  Statements.  As described more fully in  "Liquidity  and  Capital
Resources", the Company completed the acquisition of nine stores from Harris
on  August 20, 1998, closing one of the acquired stores on January 31, 1999,
as  planned. The acquisition has affected the comparability of the Company's
financial results.

Results of Operations
     
           The  following table sets forth for the periods indicated certain
items  from  the  Company's Consolidated Income Statements, expressed  as  a
percent of net sales:

<TABLE>
<CAPTION>
                                     1998          1997         1996

<S>                                 <C>           <C>          <C>
Net sales........................   100.0%        100.0%       100.0%
Net credit revenues..............     1.3           1.4          1.0
                                    -----         -----        -----
                                    101.3         101.4        101.0

Costs and expenses:
   Cost of sales.................    67.2          68.0         68.0
   Selling, general and
     administrative expenses.....    29.1          29.2         29.3
   Depreciation and amortization.     1.6           1.5          1.7
   Acquisition related expenses..     0.2           0.1
                                    -----         -----        -----
                                     98.1          98.8         99.0
                                    -----         -----        -----
Operating income ................     3.2           2.6          2.0

Other (income) expense:
   Interest expense..............     1.8           1.6          1.9
   Miscellaneous income..........    (0.3)         (0.4)        (0.6)
                                     -----         -----        -----
                                      1.5           1.2          1.3
                                     -----         -----        -----
Income before income tax expense.     1.7           1.4          0.7
     Income   tax   expense......     0.7           0.6          0.3
                                     -----         -----        -----

Net    income   .................     1.0%          0.8%         0.4%
                                     =====         =====        =====
</TABLE>


Fiscal 1998 Compared to Fiscal 1997

Net Sales

           In  fiscal 1998, net sales exceeded a half-a-billion dollars  for
the  first time in the Company's history. Net sales in fiscal 1998 increased
by  $68.9 million to $517.1 million as compared to $448.2 million in  fiscal
1997,  a 15.4% increase. This increase is primarily due to additional  sales
volume  generated  by  the nine new Harris/Gottschalks locations,  beginning
August  20,  1998,  and by two new stores not open for the  entire  year  in
fiscal 1997. As planned, the Company closed one of the stores acquired  from
Harris on January 31, 1999. Comparable store sales, which increased by  2.1%
in  fiscal  1998 as compared to the prior year, were negatively impacted  by
unseasonably  cold and wet weather conditions caused by the El Nino  weather
system.

Net Credit Revenues

            Net  credit  revenues  related  to  the  Company's  credit  card
receivables portfolio consist of the following:
<TABLE>
<CAPTION>

(In thousands of dollars)          1998      1997

<S>                          <C>            <C>
Service charge revenues      $13,431        $11,618
Gain (loss) on sale of
  receivables                    (45)         1,050
Interest expense on
  securitized receivables     (3,314)        (3,579)
Charge-offs on receivables
  sold and provision for
  credit losses on
  receivables ineligible
  for sale                    (3,175)        (2,704)
                              ------         ------
                             $ 6,897        $ 6,385
                              ======         ======
</TABLE>

           Net  credit revenues associated with the Company's private  label
credit  card  increased by $512,000, or 8.0%, in fiscal 1998 as compared  to
fiscal 1997. As a percent of net sales, net credit revenues was 1.3% of  net
sales  in fiscal 1998 as compared to 1.4% in fiscal 1997. As described  more
fully  in Note 3 to the Consolidated Financial Statements, the gain on  sale
of  receivables  in  fiscal  1997 relates to the adoption  of  Statement  of
Financial  Accounting Standards ("SFAS") No. 125, "Accounting for  Transfers
and  Servicing of Financial Assets and Extinguishments of Liabilities",  and
includes  a  non-recurring credit of $898,000 related to  a  change  in  the
estimate for the allowance for doubtful accounts for receivables which  were
ineligible for sale. SFAS No. 125 has not materially affected the  Company's
operating results since its initial implementation in fiscal 1997.

           Service  charge revenues increased by approximately $1.8 million,
or  15.6%,  in  fiscal  1998 as compared to fiscal 1997.  This  increase  is
primarily  due to additional service charge revenues generated  by  customer
credit  card receivables acquired from Harris, combined with an increase  in
the volume of late charge fees collected on delinquent credit card balances.
This  increase  was  partially offset by lower  revenues  resulting  from  a
decrease  in credit sales as a percent of total sales (43.1% in fiscal  1998
as  compared  to 43.7% in fiscal 1997), partially due to lower credit  sales
volume   in   the  Harris/Gottschalks  locations  than  in  the  Gottschalks
locations.

          Interest expense on securitized receivables decreased by $265,000,
or 7.4%, in fiscal 1998 as compared to fiscal 1997. This decrease relates to
lower  outstanding  borrowings against securitized  receivables  during  the
period.  (See Note 3 to the Consolidated Financial Statements and "Liquidity
and  Capital Resources".) Charge-offs on receivables sold and the  provision
for  credit losses on receivables ineligible for sale increased by $471,000,
or  17.4%,  in  fiscal  1998 as compared to 1997. As  a  percent  of  sales,
however, such amounts remained unchanged at 0.6% in fiscal 1998 and 1997.

Cost of Sales

           Cost  of sales, which includes costs associated with the  buying,
handling  and distribution of merchandise, increased by approximately  $43.0
million  to  $347.5 million in fiscal 1998 as compared to $304.6 million  in
fiscal  1997,  an  increase of 14.1%. The Company's gross margin  percentage
increased  to  32.8%  in fiscal 1998 as compared to 32.0%  in  fiscal  1997,
primarily  due  to  increased  sales  of  higher  gross  margin  merchandise
categories  in  certain of the Company's stores, combined with  lower  costs
associated  with the processing of merchandise at the Company's distribution
center.  Inventory  shrinkage remained unchanged at 1.1%  of  net  sales  in
fiscal 1998 and 1997.

Selling, General and Administrative Expenses

            Selling,  general  and  administrative  expenses  increased   by
approximately $19.8 million to $150.7 million in fiscal 1998 as compared  to
$130.9  million  in fiscal 1997, an increase of 15.1%. As a percent  of  net
sales,  selling, general and administrative expenses decreased to  29.1%  in
fiscal  1998  as compared to 29.2% in fiscal 1997, primarily due  to  higher
sales  volume  gained  through the acquisition of the  Harris  stores.  This
decrease  also reflects lower rental expense resulting from the modification
of certain store lease agreements and from the refinancing and conversion of
certain  operating equipment leases into capital leases. This  decrease  was
partially  offset  by  increased payroll and payroll related  costs  in  the
Company's  stores  as  a result of the mandatory minimum  wage  increase  in
California (from $5.15 to $5.75 per hour, an 11.7% increase) effective March
1,  1998, and other competitive wage adjustments. The Company also increased
advertising  and  credit solicitation expenditures during  the  year  in  an
attempt to improve sluggish apparel sales during the first half of the  year
and in connection with the integration of the Harris stores.

Depreciation and Amortization

           Depreciation  and amortization expense increased by approximately
$1.8  million to $8.5 million in fiscal 1998 as compared to $6.7 million  in
fiscal  1997, an increase of 26.9%.  As a percent of net sales, depreciation
and  amortization increased to 1.6% in fiscal 1998 as compared  to  1.5%  in
fiscal  1997.  These increases are primarily due to additional  depreciation
related  to  capital expenditures for new stores and for the  renovation  of
existing  stores,  new capital lease obligations, and assets  acquired  from
Harris.  These  increases  are  also due to  the  amortization  of  goodwill
associated with the recent acquisition of the Harris stores.

Acquisition Related Expenses

           Acquisition related expenses of $859,000 were incurred in  fiscal
1998,  consisting  primarily of costs incurred prior to the  elimination  of
certain  duplicative operations of Harris, including certain  merchandising,
advertising,  credit and distribution functions. As of  the  end  of  fiscal
1998, all duplicative operations of Harris have been eliminated.

           The  Company  had  previously entered into negotiations  for  the
acquisition  of Harris in fiscal 1997. The parties were unable to  agree  on
the  terms  of the transaction, however, and negotiations were discontinued.
Fiscal  1997  results  include $673,000 of costs  related  to  the  proposed
transaction,  consisting  primarily  of  legal,  accounting  and  investment
banking fees.

Interest Expense

           Interest  expense,  which includes the amortization  of  deferred
financing costs, increased by approximately $2.1 million to $9.5 million  in
fiscal  1998  as  compared to $7.3 million in fiscal 1997,  an  increase  of
29.3%.   As  a percent of net sales, interest expense increased to  1.8%  in
fiscal  1998  as  compared  to  1.6% in fiscal  1997.  These  increases  are
primarily  due to higher average outstanding borrowings under the  Company's
working  capital  facilities, and additional interest  associated  with  the
Subordinated Note issued to Harris (see Note 2 to the Consolidated Financial
Statements).  These increases were partially offset by  a  decrease  in  the
weighted-average  interest rate applicable to outstanding  borrowings  under
the  Company's working capital facilities (7.88% in fiscal 1998 as  compared
to  8.16% in fiscal 1997) resulting from interest rate reductions during the
year.

          Interest  expense related to securitized receivables is  reflected
as  a  reduction  to  net credit revenues and is not  included  in  interest
expense for financial reporting purposes.

Miscellaneous Income

           Miscellaneous income, which includes the amortization of deferred
income   and  other  miscellaneous  income  and  expense  amounts,  remained
unchanged at approximately $2.0 million in fiscal 1998 and 1997.

Income Taxes

           The  Company's  effective tax rate was 41.5% in  fiscal  1998  as
compared  to 41.6% in fiscal 1997. (See Note 7 to the Consolidated Financial
Statements.)

Net Income

           As  a result of the foregoing, the Company's net income increased
by  $1.6  million to $5.3 million in fiscal 1998 as compared to $3.7 million
in  fiscal  1997. On a per share basis (basic and diluted), net  income  per
share  increased to $0.46 per share in fiscal 1998 as compared to $0.36  per
share in fiscal 1997.

Fiscal 1997 Compared to Fiscal 1996

Net Sales

           Net  sales  increased by approximately $26.0  million  to  $448.2
million  in  fiscal 1997 as compared to $422.2 million in  fiscal  1996,  an
increase  of 6.2%. This increase resulted from a 3.3% increase in comparable
store  sales, combined with additional sales volume generated by  new  store
openings   in  fiscal  1997  and  1996.  The  Company  operated  thirty-four
department stores as of the end of fiscal 1997 as compared to thirty-two  as
of the end of fiscal 1996.

Net Credit Revenues

Net credit revenues consist of the following:

<TABLE>
<CAPTION>

(In thousands of dollars)         1997       1996

<S>                             <C>       <C>
Service charge revenues         $11,618   $10,493
Gain on sale of receivables       1,050
Interest expense on
  securitized receivables        (3,579)   (3,564)
Charge-offs on receivables
  sold and provision for
  credit losses on receivables
  ineligible for sale            (2,704)   (2,731)
                                 ------    ------
                                $ 6,385   $ 4,198
                                 ======    ======
</TABLE>


           Net  credit revenues increased by approximately $2.2 million,  or
52.1%, in fiscal 1997 as compared to fiscal 1996. As a percent of net sales,
net credit revenues increased to 1.4% in fiscal 1997 as compared to 1.0%  in
fiscal 1996. The gain on sale of receivables in fiscal 1997 includes a  non-
recurring  credit  of $898,000 related to a change in the estimate  for  the
allowance  for  doubtful accounts for receivables which were ineligible  for
sale.  Because  the  provisions of SFAS No. 125 were  not  permitted  to  be
applied retroactively to prior periods presented, there was no gain or  loss
on  receivables  sold  in  fiscal 1996. (See  Note  3  to  the  Consolidated
Financial Statements.)

           Service  charge revenues increased by approximately $1.1 million,
or  10.7%,  in  fiscal  1997 as compared to fiscal 1996.  This  increase  is
primarily  due  to an increase in credit sales as a percent of  total  sales
(43.7%  in fiscal 1997 as compared to 43.1% in fiscal 1996), driven  by  the
success  of  the  Company's "Gottschalks Rewards" customer loyalty  program,
introduced  in  early fiscal 1997. This increase is also due  to  additional
income  generated by modifications made to credit terms in selected  states,
initiated in late fiscal 1996.

      Interest expense on securitized receivables remained unchanged at $3.6
million in fiscal 1997 and 1996, and charge-offs on receivables sold and the
provision  for  credit losses on receivables ineligible  for  sale  remained
unchanged at $2.7 million in fiscal 1997 and 1996.

Cost of Sales

           Cost  of sales increased by approximately $17.4 million to $304.6
million  in  fiscal 1997 as compared to $287.2 million in  fiscal  1996,  an
increase  of 6.1%. As a percentage of sales, cost of sales and the Company's
gross margin percentage remained unchanged at 68.0% and 32.0% in fiscal 1997
and 1996, respectively. Due to additional promotional activity, markdowns as
a percentage of net sales increased in fiscal 1997 as compared to 1996. This
increase was offset by lower costs related to the buying and distribution of
merchandise  in  fiscal  1997,  primarily  driven  by  improved   technology
implemented at the Company's distribution center during the year.  Inventory
shrinkage remained unchanged at 1.1% of net sales in fiscal 1997 and 1996.

Selling, General and Administrative Expenses

            Selling,  general  and  administrative  expenses  increased   by
approximately $7.0 million to $130.9 million in fiscal 1997 as  compared  to
$123.9  million in fiscal 1996, an increase of 5.7%. Due to the increase  in
sales  volume  and  ongoing Company-wide expense control measures,  selling,
general  and administrative expenses as a percent of net sales decreased  to
29.2% in fiscal 1997 as compared to 29.3% in fiscal 1996.
          
Depreciation and Amortization

            Depreciation  and  amortization  expense,  which  includes   the
amortization  of  new  store pre-opening costs, decreased  by  approximately
$200,000  to  $6.7 million in fiscal 1997 as compared to   $6.9  million  in
fiscal 1996, a decrease of 3.7%. As a percent of net sales, depreciation and
amortization expense decreased to 1.5% in fiscal 1997 as compared to 1.7% in
fiscal 1996. The decrease in dollars is primarily due to a $748,000 decrease
in  the amortization of new store pre-opening costs as compared to the prior
year,  partially  offset  by  additional  depreciation  related  to  capital
expenditures  for  new stores opened and capital lease  obligations  entered
into  during  the year. Excluding the amortization of new store  pre-opening
costs,  depreciation  and amortization expense as a  percent  of  net  sales
increased to 1.4% in fiscal 1997 as compared to 1.3% in fiscal 1996.

Interest Expense

           Interest  expense,  which includes the amortization  of  deferred
financing  costs,  decreased by approximately $800,000 to  $7.3  million  in
fiscal 1997 as compared to $8.1 million in fiscal 1996, a decrease of  9.7%.
Due  to  the increase in sales volume, interest expense as a percent of  net
sales  decreased to 1.6% in fiscal 1997 as compared to 1.9% in fiscal  1996.
The  decrease  in  dollars is primarily due to a decrease in  the  weighted-
average  interest rate charged on outstanding borrowings under the Company's
working  capital facilities (8.16% in fiscal 1997 as compared  to  8.62%  in
fiscal 1996), resulting from interest rate reductions during the period, and
lower  average outstanding borrowings under those facilities in fiscal  1997
as  compared  to fiscal 1996. This decrease was partially offset  by  higher
interest expense associated with additional long-term financing arrangements
entered  into during late fiscal 1996, including the issuance  of  the  $6.0
million  1996-1  Series certificate and a $6.0 million mortgage  loan.  (See
"Liquidity and Capital Resources".)

Miscellaneous Income
          
           Miscellaneous income, which includes the amortization of deferred
income  and  other  miscellaneous income and  expense  items,  decreased  by
approximately  $800,000 to $2.0 million in fiscal 1997 as compared  to  $2.8
million  in  fiscal 1996. Other income in fiscal 1997 includes a  credit  of
$400,000  from  a  deferred lease incentive resulting from the  revision  of
certain  terms of the related lease. Other income in fiscal 1996 includes  a
pre-tax  gain of $1.3 million resulting from the termination of  two  leases
previously accounted for as capital leases by the Company. (See  Note  6  to
Consolidated Financial Statements.)

Acquisition Related Expenses

           Acquisition related expenses of $673,000 were incurred in  fiscal
1997  in  connection  with a proposed acquisition  of  Harris.  Such  costs,
consisting primarily of legal, accounting and investment banking fees,  were
recognized  by  the Company after the parties were unable to  agree  on  the
terms  of  the  transaction  and discontinued  negotiations.  The  companies
resumed  negotiations and successfully completed the acquisition  in  fiscal
1998.

Income Taxes

           The  Company's  effective tax rate was 41.6% in  fiscal  1997  as
compared  to 40.7% in fiscal 1996. (See Note 7 to the Consolidated Financial
Statements.)

Net Income

           As  a result of the foregoing, the Company's net income increased
by  approximately $1.9 million to $3.7 million in fiscal 1997 as compared to
$1.8  million in fiscal 1996. On a per share basis (basic and diluted),  net
income  increased by $0.18 per share to $0.36 per share in  fiscal  1997  as
compared to $0.18 per share in fiscal 1996.

Liquidity and Capital Resources

           The  Company's  working capital requirements  are  currently  met
through  a  combination  of  cash provided by operations,  short-term  trade
credit,  and  by  borrowings under its revolving  line  of  credit  and  its
receivables  securitization  program. Working  capital  increased  by  $28.6
million  to  $96.2  million in fiscal 1998 as compared to $67.6  million  in
fiscal  1997.  The  Company's liquidity position and capital  structure  was
enhanced in fiscal 1998 by a business acquisition through which the  Company
acquired  net  current  assets  that were  readily  convertible  into  cash,
including  merchandise inventories and customer credit card receivables  and
funded  the  acquisition of those assets through the issuance  of  long-term
unsecured subordinated debt and equity. The increase is also due to a  $15.0
million increase ($40.0 million as of the end of fiscal 1998 as compared  to
$25.0  million as of the end of fiscal 1997) in the amount of line of credit
borrowings  that  are  classified  as  long-term  for  financial   reporting
purposes.  The  Company's  ratio of current assets  to  current  liabilities
decreased  slightly to 1.98:1 as of the end of fiscal 1998  as  compared  to
2.01:1 as of the end of fiscal 1997.

           Business Acquisition.   As described more fully in Note 2 to  the
Consolidated Financial Statements, the Company completed the acquisition  of
substantially all of the assets and business of Harris on August  20,  1998.
The assets acquired consisted primarily of merchandise inventories, customer
credit card receivables, fixtures and equipment and certain intangibles. The
Company also assumed certain liabilities relating to the business, including
vendor  payables,  store  leases and certain other contracts.  The  purchase
price  for  the  assets was the issuance to Harris of  2,095,900  shares  of
common  stock  of  the  Company  and the issuance  of  a  $22.2  million  8%
Subordinated Note due August 20, 2003. Interest on the Subordinated Note  is
payable semi-annually beginning in February 1999, with the principal portion
due and payable upon its maturity date, unless such payment would result  in
the  default on any of the Company's other credit facilities, in which  case
the  maturity  of the note would be extended by three years to August  2006.
The  Company  also  incurred additional costs related  to  the  transaction,
including  professional  fees and transaction costs,  severance  pay,  costs
related  to the consolidation of duplicative distribution and administrative
functions, and costs associated with the closure of the former Harris  store
located in San Bernardino on January 31, 1999.
     
          Revolving  Line  of  Credit.   The Company has  a  $110.0  million
revolving  line  of credit facility with Congress through  March  30,  2001.
Borrowings under the arrangement are limited to a restrictive borrowing base
equal to 65% of eligible merchandise inventories, increasing to 70% of  such
inventories  during the period of September 1 through December  20  of  each
year  (except for fiscal 1998, which was extended to February 28,  1999)  to
fund  increased seasonal inventory requirements. Interest under the facility
is  charged  at a rate of approximately LIBOR plus 2.25% (reduced  to  LIBOR
plus 2.00% on March 1, 1999), with no interest charged on the unused portion
of the line of credit. The maximum amount available for borrowings under the
line  of  credit with Congress was $79.9 million as of January 30, 1999,  of
which  $60.3  million was outstanding as of that date. As  described  below,
such  outstanding borrowings were reduced by $25.3 million on March 1,  1999
by  proceeds  from  the issuance of a new certificate  under  the  Company's
receivables securitization program.
          
           Receivables  Securitization Program.  The  Company's  receivables
securitization  program provides the Company with an  additional  source  of
working  capital  and  long-term financing  that  is  generally  more  cost-
effective than traditional debt financing.
     
           As  of January 30, 1999, the Company had three outstanding series
of  certificates  issued  through  private  placements  under  the  program,
including  $40.0 million principal amount 7.35% Fixed Base Class A-1  Credit
Card  Certificates  (the 1994-1 Series), a $6.0 million  principal  amount
6.79%  Fixed  Base  Certificate (the "1996-1 Series") and  a  Variable  Base
Certificate  in  the principal amount of up to $15.0 million (the  "Variable
Series").  As  described more fully in Note 3 to the Consolidated  Financial
Statements, the Company commenced the repayment of the outstanding principal
balances  of the 1994-1 and 1996-1 Series certificates on October 15,  1998,
making total principal reductions of $15.8 million through January 30, 1999.
The  Company  also reduced amounts outstanding against the  Variable  Series
certificate  to  $700,000  from $7.7 million as of  January  31,  1998.  The
outstanding  principal balances of the certificates, totaling $30.9  million
and $53.7 million as of January 30, 1999 and January 31, 1998, respectively,
are off-balance sheet for financial reporting purposes.

          On  March  1,  1999, the Company issued a $53.0 million  principal
amount  7.66%  Fixed  Base  Class A-1 Credit Card Certificate  (the  "1999-1
Series") to a single investor through a private placement. Proceeds from the
issuance of the 1999-1 Series were used to repay the outstanding balances of
the  1994-1, 1996-1 and Variable Series certificates, totaling $26.9 million
as of that date, reduce outstanding borrowings under the Company's revolving
line  of  credit by $25.3 million and pay certain costs associated with  the
transaction. Interest on the 1999-1 Series will be earned by the certificate
holder  on  a  monthly  basis at a fixed interest rate  of  7.66%,  and  the
outstanding  principal balance of the certificate will be repaid  in  twelve
equal  monthly installments commencing September 2003 and continuing through
August  2004.  Monthly  cash flows generated by the  Company's  credit  card
portfolio, consisting of principal and interest collections, are first  used
to  pay certain costs of the program, which include interest payable to  the
investor, and are then available to fund the working capital requirements of
the  Company.  Subject  to certain conditions, the Company  may  expand  the
securitization program to meet future receivables growth.
          
          Other  Financings.   As described more fully  in  Note  5  to  the
Consolidated   Financial  Statements,  the  Company  has   other   long-term
obligations with total outstanding balances of $30.2 million at January  30,
1999  ($32.7  million  as of January 31, 1998). The loans  mature  at  dates
ranging  from 2001 to 2010, bear interest at fixed rates ranging from  9.23%
to 10.45%, and are collateralized by various properties and equipment of the
Company. The scheduled annual principal maturities on the Company's  various
long-term  obligations are $2.7 million, $2.8 million,  $2.5  million,  $1.4
million  and  $1.4 million for fiscal 1999 through fiscal 2003,  with  $19.4
million due thereafter.
     
           The Company's revolving line of credit agreement, and certain  of
its  long-term  debt  and  lease arrangements  contain  various  restrictive
covenants. The Company was in compliance with all such restrictive covenants
as of January 30, 1999.
     
           The  Company  has  entered  into an agreement  to  open  one  new
department store in the second half of fiscal 1999 and is in the process  of
remodeling  certain  existing store locations. The estimated  cost  of  such
projects,  totaling  $6.4  million, is expected  to  be  provided  for  from
existing  financial  resources.  Such projects  are  expected  to  be  fully
complete  in  fiscal  1999.  However, there can be  no  assurance  that  the
completion  of  such projects will not be delayed subject to  a  variety  of
conditions precedent or other factors.

           Management believes the previously described sources of liquidity
are  adequate to meet the Company's working capital, capital expenditure and
debt  service requirements for fiscal 1999. Management also believes it  has
sufficient  sources of liquidity for its long-term growth plans at  moderate
levels.  The  Company may engage in other financing activities if  they  are
deemed to be advantageous.
     
Year 2000 Readiness

           The  year  2000 problem is pervasive, with almost every business,
large  and  small, affected. The year 2000 problem impacts both  information
technology ("IT"), including hardware (mainframes, client/server systems and
personal  computers) and software (packaged software and  custom  designed),
and   impacts  non-information  technology  ("non-IT"),  including  building
security,  climate control and telephone systems. The Company also exchanges
data  with certain trade suppliers and other third parties. Like many  other
companies, the year 2000 computer issue creates risks and uncertainties  for
the Company. If internal systems do not correctly recognize and process date
information  beyond the year 1999, there could be a material adverse  impact
on  the  Company's  operations. To address year  2000  issues,  the  Company
established  a  task force in fiscal 1997 to coordinate the  identification,
evaluation   and   implementation  of  changes  to  computer   systems   and
applications  necessary  to  achieve a year 2000  date  conversion  with  no
disruption  to  business operations. Plans and progress  against  plans  are
reviewed  by  the  year 2000 task force and are reported  to  the  Company's
senior executive officers and the Board of Directors on a regular basis.  It
is expected that activities related to the year 2000 issues will be continue
through  mid-fiscal  1999  with  the goal  of  appropriately  resolving  all
material internal systems and third party issues.

The Company's State of Readiness.

           As  of  January 30, 1999, the Company's efforts towards  becoming
year  2000  compliant  with  respect to its IT systems  are  progressing  on
schedule  with  a  projected completion date of mid-fiscal  1999.  Based  on
testing  to  date,  management  believes  its  mainframe  operating   system
environment  and  point-of-sale systems are  already  year  2000  compliant.
Modifications  to  the Company's proprietary, or custom  designed  software,
have  been  substantially completed and tested. Upgrades have been scheduled
for  certain purchased software packages and are expected to be complete  by
mid-fiscal  1999.  The  Company's  operating  system  contains   a   testing
environment specifically designed to test year 2000 compliance.  IT  systems
acquired  from  Harris  are limited to point-of-sale  equipment,  which  has
already been converted to Gottschalks technology and is year 2000 compliant.

           The  Company has also completed the identification and evaluation
of all of its non-IT systems, which include, among other things, store alarm
and security systems, air conditioners and lighting, fire control, elevators
and  escalators.  The Company has already communicated with  its  suppliers,
dealers, financial institutions and other third parties with which  it  does
business  to  determine that the supplier's operations and the  products  or
services  they provide are year 2000 compliant or to monitor their  progress
toward  year 2000 compliance. Some providers are not yet year 2000 compliant
and the Company is monitoring their progress on a continual basis.

Costs Associated with Year 2000 Issues.
     
           The costs incurred to date related to the IT year 2000 conversion
are  approximately $316,000. The Company currently expects  that  the  total
remaining cost of these efforts, including both incremental spending and re-
deployed  resources,  will  be  approximately $330,000.  Such  costs,  which
represent  approximately  10.9%  of the Company's  fiscal  1999  IT  budget,
consist primarily of internal personnel costs, external consulting fees  and
costs  in  excess of normal hardware and software upgrades and  replacements
and  do not include potential costs related to the cost of internal software
and  hardware replaced in the normal course of business. Management  expects
such  costs  will  be  funded with working capital. Purchased  hardware  and
software  are being capitalized in accordance with normal policy.  Personnel
and  all other costs related to the year 2000 project are being expensed  as
incurred.  In some instances, the installation schedule of new software  and
hardware in the normal course of business has been accelerated, or deferred,
in  order  to  resolve year 2000 compatibility issues. The acceleration,  or
delay of such projects, however, will not have a materiel adverse effect  on
the Company's financial position or results of operations.
     
     The cost of the project and the estimated completion dates for the year
2000  conversion are based on the Company's best estimates, which have  been
derived  based  on  a number of assumptions of future events  including  the
continued  availability  of  internal and  external  resources,  the  timely
completion of third party modifications and other factors. The ultimate cost
of  the  project  is  subject  to change as the project  progresses.  Actual
results  may  differ  from  original estimates.  The  Company  has  not  yet
completed  its assessment of costs that may be associated with  non-IT  year
2000  issues,  as such determination will be dependant upon the  results  of
communications with the related suppliers.

Contingency Plans.

           Management believes its efforts towards year 2000 compliance will
be completed on schedule in mid-fiscal 1999. In the event the Company is not
able  to  progress according to schedule, however, the Company has developed
contingency  plans.  The  Company's year 2000 conversion  schedule  contains
"trigger" dates to implement the contingency plan specifically designed  for
each  system  in the event the conversion has not progressed accordingly  to
schedule.  If  necessary, the Company has the ability to  divert  additional
internal  IT  staff  onto  the  year 2000  project.  The  Company  also  has
additional sources of contract programming specialists who are familiar with
the  Company's operating environment. The Company also believes that it  has
alternate  sources of suppliers for substantially all of its non-IT  systems
to replace suppliers that are unable to become year 2000 compliant within an
appropriate time frame.

           Based  on  currently available information, management  does  not
believe  that  the  year 2000 matters discussed above  related  to  internal
systems  will  have  a  material adverse impact on the  Company's  financial
condition  or  its results of operations; however, it is uncertain  to  what
extent  the Company may be affected by such matters and no assurance can  be
given.  In  addition, there can be no assurance that the failure  to  ensure
year  2000 capability by a supplier or another third party would not have  a
material adverse effect on the Company.

Inflation

          Although inflation has not been a material factor to the Company's
operations  during  the  past  several years, the  Company  does  experience
increases  in  the  cost of certain of its merchandise,  salaries,  employee
benefits  and  other  general  and  administrative  costs.  The  Company  is
generally able to offset these increases by adjusting its selling prices  or
by  modifying its operations. The Company's ability to adjust selling prices
is limited by competitive pressures in its market areas.

          The Company accounts for its merchandise inventories on the retail
method using last-in, first-out (LIFO) cost using the department store price
indexes published by the Bureau of Labor Statistics.  Under this method, the
cost  of  products  sold  reported in the financial statements  approximates
current  costs  and thus reduces the impact of inflation on reported  income
due to increasing costs.

Seasonality

          The Company's business, like that of most retailers, is subject to
seasonal  influences, with the major portion of net sales, gross profit  and
operating  results realized during the Christmas selling months of  November
and  December  of each year, and to a lesser extent, during the  Easter  and
Back-to-School  selling seasons. The Company's results may  also  vary  from
quarter to quarter as a result of, among other things, the timing and  level
of  the  Company's sales promotions, weather, fashion trends and the overall
health  of  the economy, both nationally and in the Company's market  areas.
Working  capital  requirements also fluctuate during  the  year,  increasing
substantially  prior to the Christmas selling season when the  Company  must
carry significantly higher inventory levels.

           The  following  table sets forth unaudited quarterly  results  of
operations  for fiscal 1998 and 1997 (in thousands, except per share  data).
(See Note 11 to the Consolidated Financial Statements.)
<TABLE>
<CAPTION>

                                             1998
Quarter Ended             May 2    August 1    October 31   January 30

<S>                     <C>        <C>           <C>          <C>
Net sales               $95,468    $104,131      $123,118     $194,423
Gross profit             29,941      32,601        43,188       63,879
Income (loss) before
  income tax expense
  (benefit)              (3,408)     (2,310)          604       14,143
Net income (loss)        (1,994)     (1,352)          345        8,283
Net income (loss)
  per common share
  -basic and
   diluted              $ (0.19)   $  (0.13)     $   0.03     $   0.66

Weighted-average
  number of common
  shares outstanding(1)  10,479      10,479        12,138       12,575

</TABLE>

<TABLE>
<CAPTION>
                                              1997
Quarter Ended               May 3    August 2    November 1 January 31

<S>                       <C>         <C>          <C>        <C>
Net sales                 $90,506     $99,997      $101,466   $156,223
Gross profit                28,510     32,279        32,871     49,974
Income (loss) before
  income tax expense
  (benefit)                 (1,673)   (   422)       (2,516)    10,998
Net income (loss)           (  987)   (   248)       (1,485)     6,450
Net income (loss)
  per common share
  -basic and diluted       $ (0.09)   $ (0.02)     $  (0.14)  $   0.62

Weighted-average
  number of common
  shares outstanding        10,473     10,473        10,473     10,477
</TABLE>

------------------------------

          (1)             The  increase  in the weighted-average  number  of
          common  shares  outstanding  during fiscal  1998  is  due  to  the
          issuance  of 2,095,900 shares of common stock to Harris on  August
          20, 1998 in connection with a business acquisition (see Note 2  to
          the Consolidated Financial Statements.)


Recently Issued Accounting Standards

          AICPA Statement of Position (SOP) 98-5, "Reporting on the Costs of
Start-Up  Activities" was recently issued and is effective for fiscal  1999.
This statement requires start-up costs, such as new store pre-opening costs,
to  be expensed as incurred. SOP 98-1, "Accounting for the Costs of Computer
Software  Developed  or Obtained for Internal Use" was also  issued  and  is
effective  for fiscal 1999. SOP 98-1 requires certain internal and  external
software  development costs to be capitalized upon meeting certain criteria.
The  Company does not expect the adoption of these new accounting  standards
will have a material effect on its financial position or the results of  its
operations.
_________________________________


Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

           The  Company is exposed to market risks in the normal  course  of
business,   due  to  changes  in  interest  rates  on  short-term
borrowings under its revolving line of credit. As of January 30, 1999,  line
of  credit borrowings subject to a variable interest rate represented  46.5%
of  the  Company's  total outstanding borrowings (both  on  and  off-balance
sheet).   The  Company  does  not  engage  in  financial  transactions   for
speculative or trading purposes, nor does the Company purchase or  hold  any
derivative financial instruments.

           The interest payable on the Company's revolving line of credit is
based  on  a variable interest rate and is therefore affected by changes  in
market  interest rates. An increase of 51 basis points on existing  line  of
credit borrowings (a 10% change from the Company's weighted-average interest
rate as of January 30, 1999, less a scheduled interest rate reduction of  25
basis points on March 1, 1999) would reduce the Company's pre-tax net income
and  cash  flow by approximately $375,000. This 51 basis point  increase  in
interest  rates would not materially affect the fair value of the  Company's
fixed  rate financial instruments. (See Note 1 to the Consolidated Financial
Statements.)

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          
          The response to this item is set forth under Part IV, Item 14,
included elsewhere herein.


Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE

          Not applicable.
                                      
                                  PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

          The  information required by Item 10 of Form 10-K, other than  the
following information required by Paragraph (b) of Item 401 of Regulation S-
K,  is  incorporated  by  reference from those  portions  of  the  Company's
definitive proxy statement with respect to the Annual Stockholders'  Meeting
scheduled  to  be held on June 24, 1999, to be filed pursuant to  Regulation
14A  (the  "1999  Proxy")  under  the headings  "Nominees  for  Election  as
Director" and "Section 16(a) Beneficial Ownership Reporting Compliance."

          The following table lists the executive officers of the Company:

<TABLE>
<CAPTION>

Name                  Age(1)      Position

<S>                    <C>        <S>
Joe W. Levy            67         Chairman and Chief
                                  Executive Officer

James R. Famalette     46         President and Chief
Operating Officer

Gary L. Gladding       59         Executive Vice
President/
                                  General Merchandise
Manager

Michael S. Geele       48         Senior Vice President
                                  and Chief Financial Officer

Michael J. Schmidt     57         Senior Vice
President/
                                  Director of Stores
</TABLE>

---------------------------------
(1) As of March 31, 1999


          Joe  W.  Levy became Chairman and Chief Executive Officer  of  the
Company's predecessor and former subsidiary, E. Gottschalk & Co., Inc.  ("E.
Gottschalk") in 1982 and of the Company in 1986. Mr. Levy was Executive Vice
President  from  1972  to 1982 and first joined E. Gottschalk  in  1956.  He
serves  on the Board of Directors of the National Retail Federation and  the
Executive  Committee of Frederick Atkins. He was formerly  Chairman  of  the
California Transportation Commission and served on the Board of Directors of
Community  Hospitals  of Central California. Mr. Levy  has  also  served  on
numerous other state and local commissions and public service agencies.
          
          James R. Famalette became President and Chief Operating Officer of
the  Company on April 14, 1997. Prior to joining the Company, Mr.  Famalette
was President and Chief Executive Officer of Liberty House, a department and
specialty store chain based in Honolulu, Hawaii, from 1993 through 1997, and
served  in a variety of other positions with Liberty House from 1987 through
1993,   including  Vice  President,  Stores  and  Vice  President,   General
Merchandise  Manager.  From 1982 through 1987, he served as Vice  President,
General Merchandise Manager and later as President of Village Fashions/Cameo
Stores  in  Philadelphia, Pennsylvania, and from 1975 to 1982  served  as  a
Divisional Merchandise Manager for Colonies, a specialty store chain,  based
in  Allentown, Pennsylvania. Mr. Famalette serves on the Board of  Directors
of the National Retail Federation and Frederick Atkins.

          Gary  L. Gladding has been Executive Vice President of the Company
since  1987,  and joined E. Gottschalk as Vice President/General Merchandise
Manager  in  1983.   From  1980 to 1983, he was Vice President  and  General
Merchandise  Manager for Lazarus Department Stores, a division of  Federated
Department  Stores,  Inc.,  and  he previously  held  merchandising  manager
positions with the May Department Stores Co.

          Michael  S. Geele became Senior Vice President and Chief Financial
Officer  of  the Company on January 21, 1999. Prior to joining the  Company,
Mr.  Geele was Chief Financial Officer of Southwest Supermarkets in Phoenix,
Arizona  from  1995  to 1998. From 1991 to 1995, Mr. Geele  served  as  Vice
President of Finance for Smitty's Super Valu in Phoenix, Arizona,  and  from
1981  to 1991 served in various financial positions with Smitty's, including
Senior  Director  and Corporate Controller. Mr. Geele is a Certified  Public
Accountant.

          Michael J. Schmidt became Senior Vice President/Director of Stores
of E. Gottschalk in 1985 and of the Company in 1986. From 1983 through 1985,
he  was Manager of the Gottschalks Fashion Fair store. Prior to joining  the
Company,  he  was General Manager of the Liberty House store in Fresno  from
1981  to  1983,  and  before  1981, held management  positions  with  Allied
Corporation and R.H. Macy & Co., Inc.

Item 11.  EXECUTIVE COMPENSATION

          The information required by this item is incorporated by reference
from  those  portions  of  the  Company's  1999  Proxy  under  the  headings
"Executive Compensation" and "Director Compensation For Fiscal Year 1998."

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND    MANAGEMENT

          The information required by this item is incorporated by reference
from  the  portion  of the Company's 1999 Proxy under the heading  "Security
Ownership of Certain Beneficial Owners and Management."

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The information required by this item is incorporated by reference
from  the  portion  of the Company's 1999 Proxy under the  heading  "Certain
Relationships and Related Transactions."


                            PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

(a)(1)    The  following  consolidated financial statements  of  Gottschalks
          Inc. and Subsidiary as required by Item 8 are included in Part IV,
          Item 14 of this report:

          Consolidated  balance sheets -- January 30, 1999 and  January  31,
          1998

          Consolidated income statements -- Fiscal years ended  January  30,
          1999, January 31, 1998 and February 1, 1997

          Consolidated  statements of stockholders' equity --  Fiscal  years
          ended January 30, 1999, January 31, 1998 and February 1, 1997

          Consolidated  statements  of  cash flows  --  Fiscal  years  ended
          January 30, 1999, January 31, 1998 and February 1, 1997

          Notes  to  consolidated financial statements -- Three years  ended
          January 30, 1999

          Independent auditors' report

(a)(2)    The following financial statement schedule of Gottschalks Inc. and
          Subsidiary is included in Item 14(d):

          Schedule II -- Valuation and qualifying accounts

           All other schedules for which provision is made in the applicable
accounting  regulations  of  the  Securities  and  Exchange  Commission  are
included  in  the consolidated financial statements, are not required  under
the  related  instructions  or are inapplicable,  and  therefore  have  been
omitted.

(a)(3)    The following exhibits are required by Item 601 of the
          Regulation S-K and Item 14(c):


                                            Incorporated by
                                            Reference From
                                                 the
Exhibit                                        Following
  No.     Description                           Document

3.1       Certificate of Incorporation         Registration
          of the Registrant, as amended        Statement on Form
                                               S-1 (File No. 33-3949)

3.2       By-Laws of the Registrant,           Annual Report on
          as amended                           Form 10-K for the
                                               year ended January
                                               28, 1995 (File No.
                                               1-09100)

10.1      Agreement of Limited Partnership     Annual Report on
          dated March 16, 1990, by and         Form 10-K for the
          between River Park Properties I      year ended February
          and Gottschalks Inc. relating to     2, 1991 (File No.
          the Company's corporate              1-09100)
          headquarters

10.2      Gottschalks Inc. Retirement           Registration
          Savings Plan(*)                       Statement on Form
                                                S-1 (File No.
                                                33-3949)

10.3      Participation Agreement dated         Annual Report on
          as of December 1, 1988 among          Form 10-K for the
          Gottschalks Inc., General Foods       year ended January
          Credit Investors No. 2 Corporation    29, 1994 (File No.
          and Manufacturers Hanover Trust       1-09100)
          Company of California relating to
          the sale-leaseback of the Stockton
          and Bakersfield department stores
          and the Madera distribution facility

10.4      Lease Agreement dated December 1,     Annual Report on
          1988 by and between Manufacturers     Form 10-K for the
          Hanover Trust Company of California   year ended January
          and Gottschalks Inc. relating to      29, 1994 (File No.
          the sale-leaseback of department      1-09100)
          stores in Stockton and Bakersfield,
          California and the Madera
          distribution facility

10.5      Ground Lease dated December 1,        Annual Report on
          1988 by and between Gottschalks       Form 10-K for the
          Inc. and Manufacturers Hanover        year ended January
          Trust Company of California           29, 1994 (File No.
          relating to the sale-leaseback        1-09100)
          of the Bakersfield department store

10.6      Memorandum of Lease and Lease         Annual Report on
          Supplement dated July 1, 1989 by      Form 10-K for the
          and between Manufacturers Hanover     year ended January
          Trust  Company  of  California and    29, 1994 (File No.
          Gottschalks Inc. relating to the      1-09100)
          sale-leaseback of the Stockton
          department store

10.7      Ground Lease dated August 17,         Annual Report on 1989
          by and between Gottschalks            Form 10-K for the
          Inc. and Manufacturers Hanover        year ended January
          Trust Company of California           29, 1994 (File No.
          relating to the sale-leaseback of     1-09100)
          the Madera distribution facility

10.8      Lease Supplement dated as of          Annual Report on
          August 17, 1989 by and between        Form 10-K for the
          Manufacturers Hanover Trust           year ended January
          Company of California and             29, 1994 (File No.
          Gottschalks Inc. relating to the      1-09100)
          sale-leaseback of the Madera
          distribution facility

10.9      Tax Indemnification Agreement         Annual Report on
          dated as of August 1, 1989 by         Form 10-K for the
          and between Gottschalks Inc.          year ended January
          and General Foods Credit              29, 1994 (File No.
          Investors No. 2 Corporation           1-09100)
          relating to the sale-leaseback
          of the Stockton and Bakersfield
          department stores and the
          Madera distribution facility

10.10     Lease Agreement dated as of           Annual Report on
          March 16, 1990 by and between         Form 10-K for the
          Gottschalks Inc. and River            year ended January
          Park Properties I relating to the     29, 1994 (File No.
          Company's corporate headquarters      1-09100)

10.11     Consulting Agreement dated            Quarterly Report on
          June 1, 1994 by and between           Form 10-Q for the
          Gottschalks Inc. and Gerald           quarter ended April
          H. Blum(*)                            30, 1994 (File No.
                                                1-09100)

10.12     Form of Severance Agreement           Annual Report on
          dated March 31, 1995 by and           Form 10-K for the
          between Gottschalks Inc. and          year ended January
          the following senior executives       28, 1995 (File No.
          of the Company: Joseph W. Levy,       1-09100)
          Gary L. Gladding and Michael
          J. Schmidt(*)

10.13     1994 Key Employee Incentive           Registration
          Stock Option Plan(*)                  Statement on Form
                                                S-8 (File #33-54783)

10.14     1994 Director Nonqualified            Registration
          Stock Option Plan(*)                  Statement on Form
                                                S-8 (File #33-54789)

10.15     Promissory Note and Security          Annual Report on
          Agreement dated December 16,          Form 10-K for the
          1994 by and between                   year ended January
          Gottschalks Inc. and                  28, 1995 (File No.
          Heller Financial, Inc.                1-09100)

10.16     Agreement of Sale dated June 27,      Quarterly Report on
          1995, by and between Gottschalks      Form 10-Q for the
          Inc. and Jack Baskin relating to      quarter ended July
          the sale and leaseback of the         29, 1995 (File No.
          Capitola, California property         1-09100)

10.17     Lease and Agreement dated June 27,    Quarterly Report on
          1995, by and between Jack Baskin      Form 10-Q for the
          and Gottschalks Inc. relating to      quarter ended July
          the sale and leaseback of the         29, 1995 (File No.
          Capitola, California property         1-09100)

10.18     Promissory Notes and Security         Quarterly Report on
          Agreements dated October 4, 1995      Form 10-Q for the
          and October 10, 1995 by and           quarter ended
          between Gottschalks Inc. and          October 28, 1995
          Midland Commercial Funding            (File No. 1-09100)

10.19     Promissory Note and Security          Annual Report on
          Agreement dated October 2,            Form 10-K for the
          1996, by and between Gottschalks      year ended February
          Inc. and Heller Financial, Inc.       3, 1996 (File No.
                                                1-09100)

10.20     Loan and Security Agreement dated     Annual Report on
          December 29, 1996, by and between     Form 10-K for the
          Gottschalks Inc. and Congress         year ended February
          Financial Corporation                 1, 1997 (File No.
                                                1-09100)

10.21     Promissory Notes dated March 28,      Annual Report on
          1996 and September 11, 1996,          Form 10-K for the
          by and between Gottschalks            year ended February
          Inc. and Broadway Stores,             1, 1997 (File No.
          Inc., a wholly-owned division         1-09100)
          of Federated Department Stores, Inc.

10.22     Employment Agreement dated            Annual Report on
          March 14, 1997 by and between         Form 10-K for the
          Gottschalks Inc. and                  year ended February
          James R. Famalette(*)                 1, 1997 (File No.
                                                1-09100)

10.23     Gottschalks Inc. 1998 Stock           Registration
          Option Plan(*)                        Statement on Form
                                                S-8 (File #33-
                                                61471)

10.24     Gottschalks Inc. 1998                 Registration
          Employee Stock Purchase               Statement on Form
          Plan(*)                               S-8 (File #33-
                                                61473)

10.25     Asset Purchase Agreement dated        Current Report on
          as of July 21, 1998 among             Form 8-K dated July
          Gottschalks Inc., The Harris          21, 1998 (File No.
          Company and El Corte Ingles,          1-09100)
          S. A. together with all
          Exhibits thereto

10.26     Non-Negotiable, Extendable,           Current Report on
          Subordinated Note due                 Form 8-K dated
          August 20, 2003 issued to             August 20, 1998
          The Harris Company                    (File No. 1-09100)

10.27     Registration Rights Agreement         Current Report on
          between The Harris Company and        Form 8-K dated
          Gottschalks Inc. dated                August 20, 1998
          August 20, 1998                       (File No. 1-09100)

10.28     Employee Lease Agreement between      Current Report on
          The Harris Company and Gottschalks    Form 8-K dated
          Inc. dated August 20, 1998            August 20, 1998
                                                (File No. 1-09100)

10.29     Tradename License Agreement           Current Report on
          between The Harris Company and        Form 8-K dated
          Gottschalks Inc. dated                August 20, 1998
          August 20, 1998                       (File No. 1-09100)

10.30     Stockholders' Agreement among         Current Report on
          El Corte Ingles, S. A., Gottschalks   Form 8-K dated
          Inc., Joseph Levy and Bret Levy       August 20, 1998
          dated August 20, 1998                 (File No. 1-09100)

10.31     Standstill Agreement between          Current Report on
          El Corte Ingles, S. A., and           Form 8-K dated
          Gottschalks Inc. dated                August 20, 1998
          August 20, 1998                       (File No. 1-09100)

10.32     Store Lease Agreement between         Current Report on
          El Corte Ingles, S. A., and           Form 8-K dated
          Gottschalks Inc. dated                August 20, 1998
          August 20, 1998 re: East Hills        (File No. 1-09100)
          Mall, Bakersfield, California

10.33     Store Lease Agreement between         Current Report on
          El Corte Ingles, S. A., and           Form 8-K dated
          Gottschalks Inc. dated                August 20, 1998
          August 20, 1998 re: Moreno            (File No. 1-09100)
          Valley Mall at Towngate,
          Moreno Valley, California

10.34     Store Lease Agreement between         Current Report on
          El Corte Ingles, S. A., and           Form 8-K dated
          Gottschalks Inc. dated                August 20, 1998
          August 20, 1998 re: Antelope          (File No. 1-09100)
          Valley Mall at Palmdale, California

10.35     Store Lease Agreement between         Current Report on
          El Corte Ingles, S. A., and           Form 8-K dated
          Gottschalks Inc. dated                August 20, 1998
          August 20, 1998 re: Carousel          (File No. 1-09100)
          Mall at San Bernardino, California

10.36     Waiver Agreement dated                Quarterly Report on
          December 15, 1998 by and between      Form 10-Q for the
          Gottschalks Inc. and Congress         quarter ended
          Financial Corporation                 October 31, 1998
                                                (File No. 1-09100)

10.37     Form of Severance Agreement           Filed electronically
          dated January 21, 1999 by             herewith
          and between Gottschalks Inc.
          and Michael S. Geele (*)

10.38     Receivables Purchase                  Filed electronically
          Agreement dated March 1, 1999         herewith
          By and between Gottschalks
          Credit Receivables Corporation
          and Gottschalks Inc.

10.39     Pooling and Servicing                 Filed electronically
          Agreement dated as of March 1,        herewith
          1999 by and among Gottschalks
          Credit Receivables Corporation,
          Gottschalks Inc. and Bankers
          Trust Company

10.40     Series 1999-1 Supplement to           Filed electronically
          Pooling and Servicing                 herewith
          Agreement dated March 1, 1999
          by and among Gottschalks Credit
          Receivables Corporation,
          Gottschalks Inc. and Bankers
          Trust Company

21.       Subsidiary of the Registrant          Annual Report on
                                                Form 10-K for the
                                                year ended January
                                                28, 1995 (File No.
                                                1-09100)

23.       Independent Auditors' Consent         Filed electronically
                                                herewith

27.       Financial Data Schedule               Filed electronically
                                                herewith

(*)       Management contract, compensatory plan or arrangement.
---------------------------------

          (b)  Reports on Form 8-K -- The Company filed the following Report
               on Form 8-K during the fourth quarter of fiscal 1998:

                    --  Current Report on Form 8-K/A dated November 2, 1998,
                    amending  the  Form 8-K which was filed on September  2,
                    1998,  (for  an event dated August 20, 1998) to  provide
                    the  required financial information pursuant to Item  2,
                    Acquisition   or   Disposition  of   Assets,   for   the
                    acquisition  of  substantially all  of  the  assets  and
                    business of The Harris Company.

          (c)  Exhibits  --  The  response to this portion  of  Item  14  is
               submitted as a separate section of this report.
          
          (d)  Financial Statement Schedule--The response to this portion of
               Item 14 is submitted as a separate section of this report.

                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
             ANNUAL REPORT ON FORM 10-K

         ITEM 8, 14(a)(1) and (2), (c) and (d)

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  CERTAIN EXHIBITS

           FINANCIAL STATEMENT SCHEDULE

           YEAR ENDED JANUARY 30, 1999

         GOTTSCHALKS INC. AND SUBSIDIARY

                 FRESNO, CALIFORNIA










INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
of Gottschalks Inc.
Fresno, California

We  have audited the accompanying consolidated balance sheets of Gottschalks
Inc.  and  Subsidiary as of January 30, 1999 and January 31, 1998,  and  the
related consolidated income statements, stockholders' equity and cash  flows
for each of the three years in the period ended January 30, 1999. Our audits
also  included the financial statement schedule listed in the Index at  Item
14(a)(2).  These financial statements and financial statement  schedule  are
the  responsibility  of the Company's management. Our responsibility  is  to
express  an  opinion  on these financial statements and financial  statement
schedule based on our audits.

We  conducted  our  audits  in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform  the  audit  to
obtain reasonable assurance about whether the financial statements are  free
of  material  misstatement. An audit includes examining, on  a  test  basis,
evidence supporting the amounts and disclosures in the financial statements.
An  audit  also  includes  assessing  the  accounting  principles  used  and
significant estimates made by management, as well as evaluating the  overall
financial  statement  presentation. We believe that  our  audits  provide  a
reasonable basis for our opinion.

In  our  opinion, such consolidated financial statements present fairly,  in
all  material  respects,  the financial position  of  Gottschalks  Inc.  and
Subsidiary  as of January 30, 1999 and January 31, 1998, and the results  of
their  operations and their cash flows for each of the three  years  in  the
period  ended  January  30,  1999,  in conformity  with  generally  accepted
accounting  principles.  Also,  in  our opinion,  such  financial  statement
schedule,  when  considered  in relation to the basic  financial  statements
taken  as  a whole, presents fairly in all material respects the information
set forth therein.


/s/ Deloitte & Touche LLP
Deloitte & Touche LLP

Fresno, California
February 23, 1999 (March 1, 1999 as to Note 3)

<TABLE>
<CAPTION>


GOTTSCHALKS INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)

                                          January 30,   January 31,
ASSETS                                       1999          1998

CURRENT ASSETS:
  <S>                                      <C>          <C>
  Cash                                     $  1,693     $  1,601
  Retained interest in
   receivables sold (Note 3)                 37,399       15,813
  Receivables:
    Credit card receivables, less
      allowances of $1,195 in 1998
      and $437 in 1997 (Note 3)              16,136        3,085
    Vendor claims, less allowances of
     $121 in 1998 and $80 in 1997             2,849        3,475
                                            -------      -------
                                             18,985        6,560
  Merchandise inventories                   123,118       99,294
  Other                                      12,836       11,444
                                            -------      -------
    Total current assets                    194,031      134,712

PROPERTY AND EQUIPMENT (Note 6):
  Land and land improvements                 15,102       15,101
  Buildings and leasehold improvements       62,561       52,339
  Furniture, fixtures and equipment          77,060       64,993
  Buildings and equipment under capital
    leases                                   12,148       10,875
  Construction in progress                      909        1,858
                                            -------      -------
                                            167,780      145,166
  Less accumulated depreciation and
    amortization                             54,135       46,109
                                            -------      -------
                                            113,645       99,057
OTHER ASSETS:
  Goodwill, less accumulated amortization
    of $1,554 in 1998 and $1,263 in 1997
    (Note 2)                                  9,244        1,136
  Other                                       7,444        7,406
                                            -------      -------
                                             16,688        8,542
                                            -------      -------
                                           $324,364     $242,311
                                            =======      =======
</TABLE>

See notes to consolidated financial statements.

<TABLE>
<CAPTION>

GOTTSCHALKS INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
                                                  January 30,   January 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                1999          1998
CURRENT LIABILITIES:
  <S>                                               <C>         <C>
  Trade accounts payable
    and accrued expenses (Note 4)                   $ 68,623    $ 53,633
  Revolving line of credit (Note 5)                   20,273       5,767
  Current portion of long-term debt (Note 5)           2,710       2,641
  Current portion of capitalized lease
    obligations (Note 6)                               1,724       1,309
  Deferred income taxes (Note 7)                       4,470       3,783
                                                     -------     -------
    Total current liabilities                         97,800      67,133

LONG-TERM OBLIGATIONS, less current portion
  (Notes 5 and 6):
  Line of credit                                      40,000      25,000
  Notes and mortgage loans payable                    27,506      30,083
  Capitalized lease obligations                        6,608       7,337
                                                     -------     -------
                                                      74,114      62,420

DEFERRED INCOME AND OTHER (Note 6)                    24,111      25,061

DEFERRED INCOME TAXES (Note 7)                         4,253       3,792
SUBORDINATED NOTE PAYABLE TO AFFILIATE,
  net of discount of $1,561 (Note 2)                  20,618

COMMITMENTS AND CONTINGENCIES (Notes 3, 6 and 10)

STOCKHOLDERS' EQUITY:
  Preferred stock, par value of $.10 per share;
    2,000,000 shares authorized; none issued
  Common stock, par value of $.01 per share;
    30,000,000 shares authorized;
    12,575,565 and 10,478,415 issued
  Common stock                                           126         105
  Additional paid-in capital                          70,626      56,366
  Retained earnings                                   32,716      27,434
                                                     -------     -------
                                                     103,468      83,905
                                                     -------     -------
                                                    $324,364    $242,311

</TABLE>
                                                     =======     =======

See notes to consolidated financial statements.


<TABLE>
<CAPTION>

GOTTSCHALKS INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
(In thousands of dollars, except per share data)


                                            1998       1997       1996

<S>                                       <C>        <C>        <C>
Net sales                                 $517,140   $448,192   $422,159
Net credit revenues (Note 3)                 6,897      6,385      4,198
                                           -------    -------    -------
                                           524,037    454,577    426,357
Costs and expenses:
  Cost of sales                            347,531    304,558    287,164
  Selling, general and
    administrative expenses                150,719    130,922    123,860
  Depreciation and amortization              8,461      6,667      6,922
  Acquisition related expenses (Note 2)        859        673
                                           -------    -------    -------
                                           507,570    442,820    417,946
                                           =======    =======    =======

Operating income                            16,467     11,757      8,411

Other (income) expense:
  Interest expense                           9,470      7,325      8,111
  Miscellaneous income                      (2,032)    (1,955)    (2,792)
                                           -------    -------    -------
                                            7,438      5,370      5,319
                                           -------    -------    -------

Income before income tax expense             9,029      6,387      3,092

  Income tax expense (Note 7)                3,747      2,657      1,258
                                           -------    -------    -------
Net income                                $  5,282   $  3,730   $  1,834
                                           =======    =======    =======
Net income per common share -
  basic and diluted                       $   0.46   $   0.36   $   0.18
                                           =======    =======    =======

</TABLE>




See notes to consolidated financial statements.


<TABLE>
<CAPTION>


GOTTSCHALKS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands of dollars, except share data)
                                             Additional
                          Common Stock        Paid-In      Retained
                       Shares     Amount      Capital       Earnings    Total

BALANCE, 
  <C>                <C>          <C>        <C>           <C>       <C>
  FEBRUARY 4, 1996   10,416,520   $104       $55,943       $21,870   $ 77,917
  Net income                                                 1,834      1,834
  Shares issued to
   Retirement 
   Savings Plan         56,395       1           387                      388
                     ----------    ---        ------         ------    ------
BALANCE, 
  FEBRUARY 1, 1997  10,472,915     105        56,330         23,704    80,139
  Net income                                                  3,730     3,730
  Shares issued under
   stock option plan     5,500                    36                       36
                    ----------     ---        ------         ------    ------
BALANCE, 
  JANUARY 31, 1998  10,478,415     105        56,366         27,434    83,905
  Net income                                                  5,282     5,282
  Shares issued for
   business acquisition
   (Note 2)          2,095,900      21        14,252                   14,273
  Shares issued under
   stock option plan     1,250                     8                        8
                    ----------     ---        ------          ------   -------
BALANCE, 
  JANUARY 30, 1999  12,575,565    $126       $70,626         $32,716  $103,468
                    ==========     ===        ======          ======   =======



</TABLE>


See notes to consolidated financial statements.


<TABLE>
<CAPTION>

GOTTSCHALKS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
                                              1998       1997      1996
OPERATING ACTIVITIES:
<S>                                        <C>        <C>        <C>
Net income                                 $  5,282   $  3,730   $  1,834
  Adjustments:
  Depreciation and amortization               8,461      6,667      6,922
  Deferred income taxes                         633      2,557        419
  Amortization of deferred items               (950)      (888)      (300)
  Provision for credit losses                   992        470      2,724
  Net loss (gain) from sale of assets            26        (72)
  Other non-cash items, net                    (106)    (1,170)    (1,457)
  Decrease (increase) in assets, excluding
    effect of business acquisition (Note 2):
      Receivables                             (1,312)    (1,346)       (9)
      Retained interest in receivables sold                          (979)
      Merchandise inventories                 (4,524)    (9,227)   (1,370)
      Other current and long-term assets       2,958      2,594    (6,518)
  Increase (decrease) in liabilities,
    excluding effect of business acquisition
    (Note 2):
      Trade accounts payable and accrued
        expenses                              (2,571)     1,873     2,570
      Other current and long-term
       liabilities                             2,605     (1,546)    6,421
                                             -------    -------   -------
           Net cash provided by operating
             activities                       11,494      3,642    10,257

INVESTING ACTIVITIES:
Available-for-sale securities (Note 3):
  Maturities                                (262,357)  (230,433)
  Purchases                                  256,571    235,491
Acquisition of business (Note 2)              (1,369)
Purchases of property and equipment          (16,801)   (14,976)   (6,845)
Proceeds from property and equipment sales       680        365     2,026
Distributions from limited partnership           198        229       112
                                             -------    -------    ------
           Net cash used in investing
             activities                      (23,078)    (9,324)   (4,707)

FINANCING ACTIVITIES:
Net proceeds (repayments) under revolving
  line of credit                              29,506     (8,137)   (6,260)
Proceeds from long-term obligations                       3,214     3,878
Principal payments on long-term obligations   (4,065)    (3,054)   (4,850)
Proceeds from issuance of 1996-1 Series
  certificate (Note 3)                                              6,000
Principal payments on outstanding Series
  certificates (Note 3)                      (15,800)
Changes in cash management liability
  and other                                    2,035     13,764    (4,304)
                                             -------    -------   -------
           Net cash provided by (used in)
             financing activities             11,676      5,787    (5,536)
                                             -------    -------   -------

INCREASE IN CASH                                  92        105        14
CASH AT BEGINNING OF YEAR                      1,601      1,496     1,482
                                             -------    -------   -------
CASH AT END OF YEAR                         $  1,693   $  1,601  $  1,496
                                             =======    =======   =======

SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITY:
OPERATING ACTIVITY:
  Issuance of common stock to Retirement
    Savings Plan                                                 $    388

INVESTING ACTIVITIES:
  Consideration for acquisition of business (Note 2):
    Issuance of 2,095,900 shares of
      common stock                          $ 14,273
    Issuance of 8% Subordinated Note          20,467
                                             -------
                                            $ 34,740
                                             =======
FINANCING ACTIVITIES:
  Acquisition of equipment under capital
    leases                                  $  1,273   $  3,562
  Acquisition of fixtures under long-term
    debt obligation                                             $  2,650


</TABLE>



See notes to consolidated financial statements.



GOTTSCHALKS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Gottschalks Inc. is a regional department and specialty store chain based in
Fresno,  California,  currently  consisting of  forty  full-line  department
stores,   including   thirty  "Gottschalks"  and  ten   "Harris/Gottschalks"
department  stores, and twenty-two specialty stores which  carry  a  limited
selection  of  merchandise.  The  Company's department  stores  are  located
primarily  in  non-major metropolitan cities throughout  California  and  in
Oregon,  Washington and Nevada, and typically offer a wide range of moderate
and  better  brand-name  and  private-label  merchandise,  including  men's,
women's,  junior's and children's apparel, cosmetics, shoes and accessories,
home  furnishings  and  other consumer goods. The Company  operates  in  one
reportable operating segment.

Use of Estimates - The preparation of the financial statements in conformity
with  generally accepted accounting principles requires management  to  make
estimates  and  assumptions that affect the reported amounts of  assets  and
liabilities at the date of the financial statements and the reported amounts
of  revenues  and expenses during the reporting periods. Such estimates  and
assumptions  are  subject to inherent uncertainties which may  cause  actual
results to differ from reported amounts.

Principles of Consolidation - The accompanying financial statements  include
the   accounts  of  Gottschalks  Inc.,  and  its  wholly-owned   subsidiary,
Gottschalks  Credit  Receivables Corporation  ("GCRC"),  (collectively,  the
"Company"). All significant intercompany transactions and balances have been
eliminated in consolidation.
     
Fiscal Year - The Company's fiscal year ends on the Saturday nearest January
31.   Fiscal  years  1998, 1997 and 1996, which ended on January  30,  1999,
January  31,  1998 and February 1, 1997, respectively, each  consist  of  52
weeks.
     
Transfers  and  Servicing  of Financial Assets -  The  Company  adopted  the
provisions of Statement of Financial Accounting Standards ("SFAS") No.  125,
"Accounting   for   Transfers  and  Servicing  of   Financial   Assets   and
Extinguishments  of Liabilities" in fiscal 1997. SFAS No. 125  requires  the
Company  to  recognize  gains and losses on transfers  of  financial  assets
(securitizations) that qualify as sales and to recognize as  assets  certain
financial  components  that are retained as a result  of  such  sales.  Such
assets  consist primarily of the retained interest in receivables sold,  the
right  to  service  the  receivables sold, if  any,  which  is  based  on  a
contractually  specified servicing fee, and the retained  rights  to  future
interest  income  from  the serviced assets in excess of  the  contractually
specified servicing fee.

Retained Interest in Receivables Sold - The retained interest in receivables
sold  consists  of  securities backed by receivables sold  pursuant  to  the
Company's  receivables  securitization program and  the  retained  right  to
future  income resulting from such sales which are recorded pursuant to  the
provisions  of  SFAS No. 125. The retained right to future  interest  income
($237,000  at January 30, 1999 and $211,000 at January 31, 1998) is  carried
at  fair  value. As of January 30, 1999 and January 31, 1998, the  estimated
cost to service the assets is equal to the contractually specified servicing
fee, resulting in no servicing asset or liability.

The  certificated  portion of the retained interest  is  considered  readily
marketable and is classified as available-for-sale in accordance  with  SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity Securities".
Due  to  the  short-term revolving nature of the credit card portfolio,  the
carrying  value  of  the Company's retained interest approximates  its  fair
value, resulting in no unrealized gains or losses.

Receivables  -   Receivables  consist  primarily  of  customer  credit  card
receivables  that  do  not  meet  certain eligibility  requirements  of  the
Company's  receivables securitization program, and as of January  30,  1999,
also  includes  $12,708,000  of  recently acquired  receivables  which  were
incorporated into the securitization program in early fiscal 1999. (See Note
2).  Such  receivables  are  not certificated and include  revolving  charge
accounts with terms which, in some cases, provide for payments with terms in
excess  of  one  year.  In  accordance with  usual  industry  practice  such
receivables are included in current assets.

The  Company  maintains  a  reserve  for  possible  credit  losses  on  such
receivables  which  is  based  on  the  expected  collectibility  of   those
receivables.
     
Concentrations  of Credit Risk -  The Company extends credit  to  individual
customers  based  on  their  credit worthiness  and  generally  requires  no
collateral  from such customers. Concentrations of credit risk with  respect
to the Company's credit card receivables are limited due to the large number
of customers comprising the Company's customer base.

Merchandise Inventories - Inventories, which consist of merchandise held for
resale, are valued by the retail method and are stated at last-in, first-out
(LIFO)  cost,  which  is  not  in  excess of  market.  Current  cost,  which
approximates  replacement cost, under the first-in, first-out (FIFO)  method
is  equal  to the LIFO value of inventories at January 30, 1999 and  January
31, 1998.

The  Company  includes in inventory the capitalization of  certain  indirect
purchasing, merchandise handling and inventory storage costs to better match
sales with these related costs.

Store   Pre-Opening  Costs  -  Store  pre-opening  costs  represent  certain
expenditures incurred prior to the opening of a new store that are  deferred
and  amortized  generally on a straight-line basis not to  exceed  a  twelve
month  period  commencing with the store opening. All new store  pre-opening
costs  were fully amortized as of January 30, 1999. Store pre-opening costs,
net of accumulated amortization, of $421,000 at January 31, 1998 is included
in  other  current assets. The amortization of new store pre-opening  costs,
totaling  $421,000,  $589,000  and  $1,337,000  in  1998,  1997  and   1996,
respectively,   is  included  in  depreciation  and  amortization   in   the
accompanying income statements.

Property  and Equipment - Property and equipment is stated on the  basis  of
cost  or  appraised value as to certain contributed land.  Depreciation  and
amortization is computed by the straight-line method for financial reporting
purposes over the estimated useful lives of the assets, which range from  20
to  40 years for buildings, land improvements and leasehold improvements and
3 to 15 years for furniture, fixtures and equipment. Reimbursements received
for  certain capital expenditures are reported as reductions to the original
cost  of  the related assets. Amortization of buildings and equipment  under
capital  leases is generally computed by the straight-line method  over  the
term of the lease or the estimated economic life of the asset, depending  on
the  criteria used to classify the lease, and such amortization is  combined
with depreciation in the accompanying income statements.
          
Investment in Limited Partnership - The Company is the limited partner in  a
partnership  that  was  formed for the purpose of  acquiring  the  land  and
constructing  and maintaining the building in which the Company's  corporate
headquarters  are located. The Company made an initial capital  contribution
of  $5,000,000  to acquire a 36% ownership interest in the  partnership  and
receives  favorable rental terms for the space occupied in the building.  Of
the initial $5,000,000 capital contribution, $3,212,000 was allocated to the
investment  in limited partnership based on the estimated fair market  value
of  the  land  and  building and the remaining $1,788,000 was  allocated  to
prepaid  rent and is being amortized to rent expense over the 20 year  lease
term.

The  Company accounts for its investment in the limited partnership  on  the
equity  method of accounting. As of January 30, 1999 and January  31,  1998,
the investment is $2,632,000 and $2,679,000, respectively, and prepaid rent,
net  of  accumulated  amortization, is $675,000 and $793,000,  respectively.
Such amounts are included in other long-term assets. The Company's equity in
the  income of the partnership, totaling $140,000 in 1998, $141,000 in  1997
and $133,000 in 1996, is included in miscellaneous income.
     
Goodwill  - The excess of acquisition costs over the fair value of  the  net
assets  acquired is amortized on a straight-line basis over  20  years.  The
Company  periodically analyzes the value of net assets acquired to determine
whether any impairment in the value of such assets has occurred. The primary
indicators  of recoverability used by the Company are current or  forecasted
profitability  of the related acquired assets as compared to their  carrying
values.

Cash  Management  Liability - Under the Company's cash  management  program,
checks  issued  by the Company and not yet presented for payment  frequently
result in overdraft balances for accounting purposes. Such amounts represent
interest-free, short-term borrowings to the Company.
     
Deferred  Income  - Deferred income consists primarily of donated  land  and
cash  incentives  received  to construct a store  and  enter  into  a  lease
arrangement.  Land  contributed  to the Company  is  included  in  land  and
recorded  at  appraised fair market values. Donated income is  amortized  to
income  over the average depreciable life of the related fixed assets  built
on  the  land  for  locations that are owned by the Company,  and  over  the
minimum  lease  periods  of  the related building  leases  with  respect  to
locations  that  are leased by the Company, ranging from  10  to  32  years.
Deferred  income,  net  of accumulated amortization, is  $16,347,000  as  of
January 30, 1999 and $17,574,000 as of January 31, 1998.
     
Leased  Department  Sales -  Net sales include leased  department  sales  of
$40,216,000,   $35,179,000  and  $32,781,000  in  1998,   1997   and   1996,
respectively.   Cost  of  sales  include  related  costs   of   $34,271,000,
$30,044,000 and $28,006,000 in 1998, 1997 and 1996, respectively.
          
Income  Taxes - Deferred tax assets and liabilities are generally recognized
for  the  expected future tax consequences of events that have been included
in  the  financial  statements  or  tax returns,  determined  based  on  the
differences  between  the financial statement and tax basis  of  assets  and
liabilities  and  net  operating loss and tax credit carryforwards,  and  by
using  enacted  tax  rates in effect when the differences  are  expected  to
reverse.

Net  Income  Per Common Share - Basic earnings per common share is  computed
based on the weighted average number of common shares outstanding which were
11,417,744,  10,473,682 and 10,461,424 in 1998, 1997 and 1996, respectively.
Diluted  earnings per share includes the effect of stock options  and  other
potentially  dilutive securities, if any. In 1998, 1997  and  1996,  diluted
earnings  per  common  share  is equal to basic earnings  per  common  share
because the effect of potentially dilutive securities under the stock option
plans were antidilutive and therefore not included.

Fair  Value  of Financial Instruments - The carrying value of the  Company's
cash  and  cash  management liability, receivables, notes receivable,  trade
payables  and other accrued expenses, revolving line of credit and  stand-by
letters  of  credit approximate their estimated fair values because  of  the
short  maturities  or variable interest rates underlying those  instruments.
The  retained  interest  in receivables sold and the Subordinated  Note  are
carried   at  their  estimated  fair  values.  The  following  methods   and
assumptions were used to estimate the fair value for each remaining class of
financial instruments:
          
     Long-Term  Obligations  - The fair values of the  Company's  notes  and
     mortgage  loans  payable  are  estimated  using  discounted  cash  flow
     analysis,  based  on the Company's current incremental borrowing  rates
     for  similar types of borrowing arrangements. Borrowings with aggregate
     carrying values of $30,216,000 and $32,724,000 at January 30, 1999  and
     January  31,  1998,  had  estimated  fair  values  of  $27,809,000  and
     $31,207,000 at January 30, 1999 and January 31, 1998, respectively.
          
     Off-Balance  Sheet  Financial Instruments - The  Company's  off-balance
     sheet  financial  instruments consist primarily of certificates  issued
     under the securitization program. (See Note 3.) The aggregate estimated
     fair  values  of  the 1994-1 and 1996-1 Series certificates,  based  on
     similar  issues of certificates at current rates for the same remaining
     maturities,  with aggregate face values of $30,667,000 at  January  30,
     1999   and  $46,000,000  at  January  31,  1998  are  $30,154,000   and
     $44,408,000,  respectively. The estimated fair value  of  the  Variable
     Series  certificate approximates its reported value due to  the  short-
     term revolving nature of the credit card portfolio.

Stock-Based  Compensation - The Company accounts for stock-based  awards  to
employees  using the intrinsic value method in accordance with APB  No.  25,
"Accounting  for  Stock Issued to Employees". Accordingly,  no  compensation
expense  has been recognized in the 1998, 1997 or 1996 financial  statements
for  employee stock arrangements. Pro-forma information regarding net income
and  earnings per share, as calculated under the provisions of SFAS No. 123,
"Accounting for Stock Based Compensation", is disclosed in Note 8.

Long-Lived Assets - The Company periodically evaluates the carrying value of
long-lived  assets  to  be  held  and used,  including  goodwill  and  other
intangible assets, when events and circumstances warrant such a review. When
the  anticipated undiscounted cash flow from a long-lived asset is less than
its  carrying value, a loss is recognized based on the amount by  which  its
carrying  value  exceeds  its  fair  market  value.  Fair  market  value  is
determined primarily using the anticipated cash flows discounted at  a  rate
commensurate  with the risks involved. Based on such a review,  the  Company
recognized no impairment loss in 1998, 1997 or 1996.

Recently Issued Accounting Standards - AICPA Statement of Position (SOP) 98-
5,  "Reporting on the Costs of Start-Up Activities" was recently issued  and
is  effective for fiscal 1999. This statement requires start-up costs,  such
as  new  store  pre-opening costs, to be expensed  as  incurred.  SOP  98-1,
"Accounting  for  the Costs of Computer Software Developed or  Obtained  for
Internal  Use"  was also issued and is effective for fiscal 1999.  SOP  98-1
requires  certain  internal and external software development  costs  to  be
capitalized upon meeting certain criteria. The Company does not  expect  the
adoption  of these new accounting standards will have a material  effect  on
its financial position or the results of its operations.

Reclassifications  -  Certain  amounts in the  accompanying  1997  and  1996
consolidated financial statements have been reclassified to conform with the
1998 presentation.

2.   BUSINESS ACQUISITION

On  August  20, 1998, the Company completed the acquisition of substantially
all of the assets and business of The Harris Company ("Harris"), pursuant to
an Asset Purchase Agreement entered into with Harris and El Corte Ingles, S.
A. ("ECI") of Spain, the parent company of Harris. Harris operated nine full-
line  department stores located throughout southern California.  The  assets
acquired  consisted  primarily of merchandise inventories,  customer  credit
card  receivables,  fixtures  and equipment  and  certain  intangibles.  The
Company also assumed certain liabilities relating to the business, including
vendor  payables,  store  leases and certain other contracts.  The  purchase
price for the assets consisted of the issuance to Harris of 2,095,900 shares
of  common  stock  of the Company and the issuance of an 8%  Non-Negotiable,
Extendable, Subordinated Note (the "Subordinated Note") due August 20,  2003
in  the principal amount of $22,179,000.  Interest on the Subordinated  Note
is  payable  semi-annually beginning in February 1999,  with  the  principal
portion  due  and payable upon its maturity date, unless such payment  would
result  in  the  default  on any of the Company's other  credit  facilities,
whereby  the  maturity date of the Subordinated Note would  be  extended  by
three years to August 2006. Additional purchase liabilities recorded include
costs  related  to the transaction, severance and related  costs  and  costs
associated  with  the  closure of the former Harris  store  located  in  San
Bernardino. The acquisition was accounted for under the purchase  method  of
accounting  and,  accordingly, the results of  operations  of  the  acquired
stores  are  included  in  the  Company's  financial  statements  from   the
acquisition date of August 20, 1998.

The  purchase  price has been allocated to the acquired assets  and  assumed
liabilities  on the basis of their estimated fair values as of the  date  of
the acquisition. The financial statements reflect the preliminary allocation
of  the  purchase  price, as estimates of certain direct costs  and  certain
store  closure  costs have not yet been finalized. The  fair  value  of  the
assets acquired and liabilities assumed, based on the preliminary allocation
of the purchase price, is summarized as follows (in thousands of dollars):

<TABLE>
<CAPTION>

<S>                                            <C>
Fair value of common stock issued to Harris    $14,273
Fair value of Subordinated Note                 20,467
  Total estimated direct fees and expenses       1,369
                                                ------
          Total purchase price                 $36,109
                                                ======
Customer credit card and other receivables     $11,827
Merchandise inventories                         18,570
Other current and long-term assets               3,809
Leaseholds, fixtures and other equipment         5,731
Trade accounts payable and other current
  liabilities                                  (11,713)
     Deferred income taxes                          (515)
     Excess of purchase price over
       the estimated fair value of
       identifiable net assets acquired
       to be amortized over 20 years             8,400
                                                ------
          Total purchase price                 $36,109
                                                ======
</TABLE>



Unaudited Pro Forma Financial Information.

The  following  unaudited pro forma financial information  for  the  Company
gives  effect  to the acquisition as if it had occurred at the beginning  of
fiscal  1998  and  1997,  and  includes certain adjustments,  including  the
amortization of goodwill, interest expense associated with acquisition debt,
adjustments  to  rental expense to reflect new store leases, adjustments  to
depreciation  expense to reflect the fair value of assets acquired  and  the
related  income tax effects. These pro forma results have been prepared  for
comparative purposes only and are not necessarily indicative of  what  would
have  occurred if the acquisition had been completed as of those  dates.  In
addition, pro forma information is not intended to be a projection of future
results and does not reflect expected cost savings or synergies expected  to
result  from  the  integration  of  the Harris  stores  into  the  Company's
business.

<TABLE>
<CAPTION>

(In thousands, except share data)   1998       1997
 
     <S>                          <C>        <C>
     Net sales                    $565,745   $545,595
     Net income (loss)            $    870   $ (2,771)
     Net income (loss) per
       common share -
       basic and diluted          $   0.07   $  (0.22)

     Weighted-average number of
       common shares outstanding -
       basic and diluted            12,575     12,569

</TABLE>


Acquisition Related Expenses.

Acquisition  related  expenses  of $859,000 were  incurred  in  fiscal  1998
consisting  primarily of costs incurred prior to the elimination of  certain
duplicative   operations   of  Harris,  including   certain   merchandising,
advertising,  credit and distribution functions. As of  the  end  of  fiscal
1998, all duplicative operations of Harris have been eliminated.

The Company had previously entered into negotiations for the acquisition  of
the  stores from Harris in fiscal 1997. The parties were unable to agree  on
the  terms  of  the transaction, however, and negotiations were discontinued
during  that year. Fiscal 1997 results include $673,000 of costs related  to
the  proposed  acquisition, consisting primarily of  legal,  accounting  and
investment banking fees.

3.   CREDIT CARD RECEIVABLES

Securitization Program.

The Company's receivables securitization program provides the Company with a
source  of  long-term  financing that is generally more cost-effective  than
traditional  debt  financing. Under the program, the  Company  automatically
sells  all  of  its  accounts receivable arising  under  its  private  label
customer  credit  cards,  servicing retained, to a wholly-owned  subsidiary,
Gottschalks  Credit Receivables Corporation ("GCRC"), and those  receivables
are  subsequently  conveyed to Gottschalks Credit Card  Master  Trust  ("GCC
Trust"),  to  be used as collateral for securities issued to investors.  GCC
Trust is a qualified special purpose entity under SFAS No. 125. Accordingly,
all  transfers of receivables to GCC Trust are accounted for  as  sales  for
financial  reporting purposes and such transferred receivables  are  removed
from  the Company's balance sheet. The Company retains an ownership interest
in  certain  of  the  receivables sold under  the  program,  represented  by
Exchangeable   and   Subordinated  Certificates,   and   also   retains   an
uncertificated  ownership interest in receivables that do not  meet  certain
eligibility  requirements  of  the program. As  of  January  30,  1999,  the
uncertificated receivables also include $12,708,000 of receivables  acquired
from  Harris  which  were  incorporated into the securitization  program  in
connection with the fiscal 1999 refinancing of the program.

As  of  January  30,  1999,  the  Company had three  outstanding  series  of
certificates issued through private placements under the program,  including
$40.0  million  principal  amount 7.35% Fixed Base  Class  A-1  Credit  Card
Certificates  (the  "1994-1 Series"), a $6,000,000  principal  amount  6.79%
Fixed  Base Class A-1 Credit Card Certificate (the "1996-1 Series"),  and  a
Variable  Base  Certificate in the principal amount of up to  $15.0  million
(the "Variable Series"). Interest on the certificates is earned on a monthly
basis  and  the principal portion of the certificates is payable  in  twelve
equal  monthly  installments which commenced on  October  15,  1998.  As  of
January  30,  1999,  the Company had repaid a total of  $15,800,000  of  the
outstanding balances of the 1994-1 and 1996-1 Series certificates,  and  had
reduced  amounts  outstanding  against the Variable  Series  certificate  to
$700,000 from $7.7 million as of January 31, 1998. The outstanding principal
balances  of  the certificates, totaling $30,900,000 and $53,700,000  as  of
January  30, 1999 and January 31, 1998, respectively, are off-balance  sheet
for financial reporting purposes.

On  March 1, 1999, the Company issued a $53.0 million principal amount 7.66%
Fixed  Base  Class A-1 Credit Card Certificate (the "1999-1  Series")  to  a
single  investor through a private placement. Proceeds from the issuance  of
the 1999-1 Series were used to repay the outstanding balances of the 1994-1,
1996-1  and  Variable Series certificates, totaling $26,950,000 as  of  that
date,  reduce outstanding borrowings under the Company's revolving  line  of
credit  (Note  5)  and  pay certain costs associated with  the  transaction.
Interest on the 1999-1 Series certificate is to be earned by the certificate
holder  on  a  monthly  basis at a fixed interest rate  of  7.66%,  and  the
outstanding principal balance of the certificate is to be repaid  in  twelve
equal  monthly installments commencing September 2003 and continuing through
August  2004.  The  Company  is required, among other  things,  to  maintain
certain  portfolio  performance  standards under  the  program.  Subject  to
certain  conditions,  the  master trust permits  further  expansion  of  the
program to meet future receivables growth.

Net Credit Revenues.
     
Net  credit  revenues associated with the Company's credit  card  receivable
portfolio, including securitized receivables, consists of the following:

<TABLE>
<CAPTION>

     
(In thousands of dollars)       1998      1997     1996

 <S>                         <C>       <C>     <C>
 Service charge revenues     $13,431   $11,618 $10,493
 Gain (loss) on sale of
   receivables                   (45)    1,050
 Interest expense on
   securitized receivables    (3,314)   (3,579) (3,564)
 Charge-offs on receivables
   sold and provision for
   credit losses on
   receivables ineligible
   for sale                   (3,175)   (2,704) (2,731)
                              ------    ------  ------
                             $ 6,897   $ 6,385 $ 4,198
                              ======    ======  ======
</TABLE>


The  Company  adopted  the provisions of SFAS No. 125 in  fiscal  1997.  The
provisions  of  the statement were not permitted to be applied retroactively
to  prior periods presented. Accordingly, the Company had no gain or loss on
the  sale of receivables in fiscal 1996. The gain on sale of receivables  of
$1,050,000  in  1997 includes a credit of $898,000 related to  a  change  in
estimate for the allowance for doubtful accounts for receivables which  were
ineligible for sale.

4.   TRADE ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Trade accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>

                                      January 30,      January 31,
(In thousands of dollars)                1999             1998
<S>                                    <C>               <C>
Trade accounts payable                 $23,178           $20,950
Cash management liability               12,176            10,141
Taxes, other than income taxes          11,078             8,723
Accrued expenses                        10,597             5,861
Accrued payroll and
  related liabilities                    6,416             5,734
Federal and state
  income taxes payable                   5,178             2,224
                                        ------            ------
                                       $68,623           $53,633
                                        ======            ======
</TABLE>

5.   DEBT OBLIGATIONS
     
Revolving Line of Credit.

The  Company  has  a  revolving  line of credit  arrangement  with  Congress
Financial  Corporation  ("Congress")  which  provides  the  Company  with  a
$110,000,000  working  capital facility through March 30,  2001.  Borrowings
under  the arrangement are limited to a restrictive borrowing base equal  to
65%   of  eligible  merchandise  inventories,  increasing  to  70%  of  such
inventories  during the period of September 1 through December  20  of  each
year  (except  in  1998, which was extended to February 28,  1999)  to  fund
increased   seasonal   inventory  requirements.  Interest   on   outstanding
borrowings  under  the facility is charged at a rate of approximately  LIBOR
plus  2.25%  (7.39% at January 30, 1999), with no interest  charged  on  the
unused  portion of the line of credit. On March 1, 1999, the  interest  rate
applicable to the line of credit was reduced by 1/4% to approximately  LIBOR
plus  2.00%. The maximum amount available for borrowings under the  line  of
credit  was  $79,871,000 as of January 30, 1999, of  which  $60,273,000  was
outstanding as of that date. Of that amount, $40,000,000 has been classified
as long-term in the accompanying financial statements as of January 30, 1999
($25,000,000  as  of  January 31, 1998) as the Company does  not  anticipate
repaying  that  amount prior to one year from the balance  sheet  date.  The
agreement contains one financial covenant, pertaining to the maintenance  of
a minimum tangible net worth, with which the Company was in compliance as of
January 30, 1999.
     
Long-Term Obligations.

<TABLE>
<CAPTION>

Notes and mortgage loans payable consist of the following:

                                        January 30,     January 31,
(In thousands of dollars)                  1999           1998
<S>
Mortgage loans payable to financial
  institution, payable in monthly
  principal installments of $173
  including interest at 9.23% and
  9.39%, principal due and
  payable October 1, 2010 and
  November 1, 2010; collateralized
  by certain real property, assets
  <S>                                    <C>           <C>
  and certain property and equipment     $19,242       $19,501

Mortgage loan payable to financial
  institution, payable in monthly
  principal installments of $79 plus
  interest at 10.45%, principal due
  and payable January 1, 2002;
  collateralized by certain real
  property, assets and certain
  property and equipment                   2,850          3,800

Mortgage loan payable to financial
  institution, payable in monthly
  principal installments of $71 plus
  interest at 9.97%, principal due
  and payable April 1, 2004;
  collateralized by certain real
  property, assets and certain
  property and equipment                   4,429          5,286

Notes payable to Federated
  Department Stores, Inc., payable in
  quarterly principal installments of
  $169 including interest at 10.0%,
  principal due and payable
  March and July 2001                      1,384          1,892

Other                                      2,311          2,245
                                          ------         ------
                                          30,216         32,724
  Less current portion                     2,710          2,641
                                          ------         ------
                                         $27,506        $30,083
                                          ======         ======

</TABLE>

The  scheduled  annual  principal maturities on notes payable  and  mortgage
loans are $2,710,000, $2,842,000, $2,472,000, $1,362,000 and $1,412,000  for
1999 through 2003, with $19,418,000 payable thereafter.

Deferred  debt  issuance  costs related to the Company's  various  financing
arrangements  are  included in other current and long-term  assets  and  are
charged  to  income as additional interest expense on a straight-line  basis
over  the  life of the related indebtedness. Such costs, net of  accumulated
amortization,  totaled  $1,263,000 at January 30,  1999  and  $1,734,000  at
January 31, 1998.

Interest  paid,  net  of  amounts  capitalized,  was  $12,063,000  in  1998,
$10,302,000  in 1997 and  $11,059,000 in 1996. Capitalized interest  expense
was  $134,000  in 1998, $114,000 in 1997 and $37,000 in 1996. The  weighted-
average  interest  rate charged on the Company's various revolving  line  of
credit arrangements was 7.88% in 1998, 8.16% in 1997 and 8.62% in 1996.
     
Certain  of  the Company's long-term financing arrangements include  various
restrictive covenants. The Company was in compliance with all such covenants
as of January 30, 1999.

6.   LEASES

The Company leases certain retail department stores, furniture and equipment
under capital leases that expire in various years through 2020.  The Company
also  leases  certain  retail  department stores,  specialty  stores,  land,
furniture, fixtures and equipment under noncancellable operating leases that
expire in various years through 2021. Certain of the leases provide for  the
payment  of additional contingent rentals based on a percentage of sales  in
excess  of specified minimum levels, require the payment of property  taxes,
insurance  and maintenance costs and have renewal options for  one  or  more
periods  ranging from five to twenty years. During 1998, the Company entered
into  leases  with  ECI,  an  affiliate of the Company,  for  three  of  the
department  stores  acquired from Harris. (See Note 2.) Management  believes
the terms of the leases with ECI reflect current market rates. Rent paid  to
ECI totaled $457,000 in fiscal 1998.

Certain of the Company's department store operating leases also provide  for
rent  abatements  and scheduled rent increases during the lease  terms.  The
Company  recognizes rental expense for such leases on a straight-line  basis
over  the  lease term and records the difference between expense charged  to
income  and  amounts  payable under the leases as deferred  lease  payments.
Deferred  lease  payments  totaled  $6,850,000  at  January  30,  1999   and
$6,463,000 at January 31, 1998.

Future  minimum lease payments, by year and in the aggregate, under  capital
leases  and noncancellable operating leases with initial or remaining  terms
of one year or more consist of the following at January 30, 1999:

<TABLE>
<CAPTION>

                                 Capital             Operating
(In thousands of dollars)        Leases               Leases
 
     <C>                       <C>                 <C>
     1999                      $ 2,475             $ 19,217
     2000                        2,095               17,232
     2001                          918               16,504
     2002                          902               16,181
     2003                          889               15,940
     Thereafter                  6,142              127,539
                                ------              -------
     Total minimum
      lease payments            13,421             $212,613
                                ======              =======
     Amount representing
      interest                  (5,089)
                                ------
     Present value of
      minimum lease payments     8,332
     Less current portion       (1,724)
                                ------
                               $ 6,608
                                ======

</TABLE>

<TABLE>
<CAPTION>


Rental expense consists of the following:

(In thousands of dollars)           1998         1997        1996
Operating leases:
  Buildings:
    <S>                           <C>         <C>         <C>
    Minimum rentals               $14,395     $13,099     $11,897
    Contingent rentals              2,173       1,911       2,213
Fixtures and equipment              3,275       4,358       5,439
                                   ------      ------      ------
                                  $19,843     $19,368     $19,549
                                   ======      ======      ======
</TABLE>


One  of  the  Company's  lease agreements contains  a  restrictive  covenant
pertaining  to the debt to tangible net worth ratio with which  the  Company
was in compliance at January 30, 1999.

The  Company terminated two capital leases in fiscal 1996 in connection with
the relocation of two of its department stores to new locations. The Company
recognized a pre-tax gain of $1,344,000 upon the termination of the  leases,
representing  the difference between the capital lease obligations  and  the
net  book value of the related assets recorded under the capital leases, and
such gain is included in miscellaneous income in fiscal 1996. The new leases
have  been  accounted  for  as  operating  leases  for  financial  reporting
purposes.

7.   INCOME TAXES

<TABLE>
<CAPTION>

The components of income tax expense are as follows:

(In thousands of dollars)            1998        1997       1996
Current:
  <S>                               <C>         <C>      <C> 
  Federal                           $2,737      $   92   $   375
  State                                377           8       464

                                     3,114         100       839
Deferred:
  Federal                              210       1,976       704
  State                                423         581      (285)
                                     -----       -----     -----
                                       633       2,557       419
                                     -----       -----     -----
                                    $3,747      $2,657    $1,258
                                     =====       =====     =====

</TABLE>

The principal components of deferred tax assets and liabilities
are as follows (in thousands of dollars):

<TABLE>
<CAPTION>

                                       January 30,            January 31,
                                         1999                    1998
                                 Deferred   Deferred     Deferred   Deferred
                                   Tax         Tax        Tax         Tax
                                Assets   Liabilities    Assets     Liabilities
Current:
  Vacation accrual and
    employee vacation
    <S>                        <C>                    <C> 
    benefits                   $   762                $   689
  Credit losses                    658                    572
  Accrued employee benefits        257                    353
  State income taxes               125                    332
  LIFO inventory reserve                 $ (3,636)                $(2,942)
  Workers' compensation
    insurance premiums                       (760)                   (574)
  Supplies inventory                       (1,340)                 (1,429)
  Gain from adoption
    of SFAS No. 125                           (65)                   (450)
  Other items, net                 322       (793)        803      (1,137)
                                 -----     ------      ------       ------
                                 2,124     (6,594)      2,749      (6,532)
Long-Term:
  Net operating loss
    carryforwards                2,500                  4,541
  General business credits       2,242                  2,034
  Alternative minimum tax
    credits                      3,243                    777
  State income taxes               504
  Depreciation expense                     (9,221)                 (8,503)
  Accounting for leases            945     (3,364)        913      (3,408)
  Deferred income                1,495     (2,313)      1,699      (1,958)
  Other items, net                 724     (1,008)        567        (454)
                                ------    -------      ------      -------
                                11,653    (15,906)     10,531     (14,323)

                               $13,777   $(22,500)    $13,280    $(20,855)
                                ======    =======      ======      =======

</TABLE>

Income tax expense varies from the amount computed by applying the statutory
federal  income tax rate to the income before income taxes. The reasons  for
this difference are as follows:

<TABLE>
<CAPTION>

                                   1998         1997       1996
<S>                               <C>          <C>         <C>
Statutory rate                    35.0%        35.0%       35.0%
State income taxes, net of
 federal income tax benefit        5.8          5.9         5.7
Amortization of goodwill            .4           .6         1.3
General business credit           (1.7)        (1.2)
Other items, net                   2.0          1.3        (1.3)
                                  ----         ----        ----
Effective rate                    41.5%        41.6%       40.7%
                                  ====         ====        ====

</TABLE>

The  Company  paid income taxes, net of refunds, of $138,000  in  1998.  The
Company  received income tax refunds, net of payments, of $195,000 in  1997.
At  January  30,  1999,  the  Company has, for  federal  tax  purposes,  net
operating loss carryforwards of approximately $7,300,000 which expire in the
years   2008   through  2011,  general  business  credits  of  approximately
$1,146,000  which  expire in the years 2007 through  2018,  and  alternative
minimum  tax  credits of approximately $2,864,000 which may be used  for  an
indefinite  period.  At January 30, 1999, the Company  has,  for  state  tax
purposes,   enterprise   zone  credits  of  approximately   $1,096,000   and
alternative minimum tax credits of approximately $378,000 which may be  used
for an indefinite period. These carryforwards are available to offset future
taxable income and are expected to be fully utilized.

8.   STOCK OPTION PLANS

The Company has stock option plans for directors, officers and key employees
which  provide  for the grant of non-qualified and incentive stock  options.
Under the plans, the option exercise price may not be lower than 100% of the
fair  market value of such shares at the date of the grant. Options  granted
generally  vest on a cumulative basis over five years and expire  ten  years
from  the date of the grant. At January 30, 1999, options for 794,500 shares
were available for future grants under the plans.

Option activity under the plans is as follows:

<TABLE>
<CAPTION>
                                                                    Weighted-
                                                                    Average
                                                 Number of          Exercise
                                                  Shares             Price

Outstanding, February 4, 1996
  (138,000 exercisable at a weighted-
   <S>                                            <C>                <C>
   average price of $9.92)                        500,000            $9.74
  Granted (weighted-average fair value
    of $3.54)                                      45,000             5.75
  Canceled                                        (36,000)            9.88
                                                  -------            -----
Outstanding, February 1, 1997
  (221,000 exercisable at a weighted-
   average price of $9.83)                        509,000             9.36
  Granted (weighted-average fair value
    of $4.26)                                      74,000             5.87
  Exercised                                        (5,500)            6.55
  Canceled                                        (77,000)            9.46
                                                  =======             ====
Outstanding, January 31, 1998
  (298,500 exercisable at a weighted-
   average price of $9.72)                        500,500             9.05
  Granted (weighted-average fair value
     of $4.38)                                    336,000             7.73
  Exercised                                        (1,250)            5.75
  Canceled                                        (57,250)            9.46
                                                  -------             ----
Outstanding, January 30, 1999
  (366,000 exercisable at a weighted-
   average price of $9.50)                        778,000            $8.45
                                                  =======             ====
</TABLE>


Additional information regarding options outstanding as of
January 30, 1999 is as follows:
<TABLE>

<CAPTION>
                    Options Outstanding        Options Exercisable
                       Weighted-Avg.           -------------------
                        Remaining
Range of     Number    Contractual   Weighted-Avg.    Number     Exercise
Exercise  Outstanding  Life (yrs.)  Exercise Price  Exercisable   Price
Prices

$5.38  
<S><C>       <C>         <C> <S>        <C>           <C>         <C>
to $10.87    778,000     7.4 yrs.       $8.45         366,000     $9.50


</TABLE>

Additional Stock Plan Information.

SFAS  No.  123 requires the disclosure of pro-forma net income and  earnings
per  share had the Company adopted the fair value method as of the beginning
of  fiscal  1996.  Under SFAS 123, the fair value of stock-based  awards  to
employees  is  calculated  through the use of option  pricing  models,  even
though  such  models  were developed to estimate the fair  value  of  freely
tradable,  fully  transferable options without vesting  restrictions,  which
significantly  differ from the Company's stock option awards.  These  models
also require subjective assumptions, including future stock price volatility
and  expected time to exercise, which greatly affect the calculated  values.
The  Company's calculations were made using the Black-Scholes option pricing
model  with  the following weighted-average assumptions:  expected  life,  5
years; stock volatility, 51.08% in 1998, 51.09% in 1997 and 49.74% in  1996;
risk-free interest rates, 4.6% in 1998, 5.41% in 1997 and 6.30% in 1996; and
no  dividends during the expected term. The Company's calculations are based
on  a  multiple option valuation approach and forfeitures are recognized  as
they  occur. Had the computed fair values of the 1998, 1997 and 1996  awards
been  amortized to expense over the vesting period of the awards,  pro-forma
net  income and earnings per share would have been $5,282,000, or $0.46  per
share  in  1998,  $3,693,000, or $0.35 per share in 1997 and $1,816,000,  or
$0.17 per share in 1996.

9.   EMPLOYEE BENEFIT PLANS

The  Company  has a Retirement Savings Plan ("Plan") which qualifies  as  an
employee retirement plan under Section 401(k) of the Internal Revenue  Code.
Full-time employees meeting certain requirements are eligible to participate
in  the  Plan  and  may  elect to have up to 20% of  their  annual  eligible
compensation, subject to certain limitations, deferred and deposited with  a
qualified trustee. Participants in the Plan may receive an employer matching
contribution  of  up  to  4%  of  the participants'  eligible  compensation,
depending  on the Company's quarterly and annual financial performance.  The
Company recognized $424,000, $875,000 and $197,000 in expense related to the
Plan in 1998, 1997 and 1996, respectively.

The   Company   has  also  established  a  Voluntary  Employee   Beneficiary
Association  ("VEBA")  trust for the purpose of funding   employee  vacation
benefits.
10.  COMMITMENTS AND CONTINGENCIES

The  Company  is  party to legal proceedings and claims  which  have  arisen
during  the  ordinary course of business. In the opinion of management,  the
ultimate  outcome of such litigation and claims is not expected  to  have  a
material  adverse effect on the Company's financial position or  results  of
its operations.
     
The  Company arranges for the issuance of letters of credit in the  ordinary
course  of  business.  As of January 30, 1999, the Company  had  outstanding
letters   of  credit  amounting  to  $2,868,000.  Management  believes   the
likelihood of non-performance under such contracts is remote.

The  Company  is in process of remodeling certain existing store  locations.
The  estimated  cost of such projects as of January 30, 1999 is  $6,418,000,
and such costs are expected to be funded through working capital.


11.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The  following is a summary of the unaudited quarterly results of operations
for 1998 and 1997 (in thousands, except per share data):

<TABLE>
<CAPTION>

                                       1998
                      -------------------------------------------
Quarter Ended         May 2    August 1   October 31   January 30

<S>                  <C>       <C>         <C>          <C>
Net sales            $95,468   $104,131    $123,118     $194,423
Gross profit          29,941     32,601      43,188       63,879
Income (loss) before
  income tax expense
  (benefit)           (3,408)    (2,310)        604       14,143
Net income (loss)     (1,994)    (1,352)        345        8,283
Net income (loss)
  per common share
  -basic and diluted $ (0.19)  $  (0.13)   $   0.03     $   0.66

</TABLE>

<TABLE>
<CAPTION>
                                    1997
                      ------------------------------------------ 
Quarter Ended         May 3    August 2   November 1   January 31

<S>                  <C>       <C>         <C>          <C>
Net sales            $90,506   $ 99,997    $101,466     $156,223
Gross profit          28,510     32,279      32,871       49,974
Income (loss) before
  income tax expense
  (benefit)           (1,673)   (   422)     (2,516)      10,998
Net income (loss)     (  987)   (   248)     (1,485)       6,450
Net income (loss)
  per common share
  -basic and diluted $ (0.09)  $  (0.02)   $  (0.14)    $   0.62


</TABLE>

Net income for the three month period ended January 31, 1998 includes
a pre-tax adjustment to the inventory shrinkage reserve resulting in
a $637,000 increase in the gross margin, and also includes an $898,000
credit related to a change in estimate for the allowance for doubtful
accounts. (See Note 3.)


                                 **********

<TABLE>
<CAPTION>


               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                       GOTTSCHALKS INC. AND SUBSIDIARY

COL. A            COL. B     COL. C      COL. D        COL. E       COL. F
----------------------------------------------------------------------------
                                           ADDITIONS
                Balance at   Charged to    Charged to               Balance at
                Beginning    Costs and   Other Accounts  Deductions   End of
DESCRIPTION     of Period     Expenses      Describe      Describe    Period

Year ended 
  January 30, 1999:
  Allowance for 
  doubtful
    <S>       <C>         <C>        <C> <C>           <C>       <C><C>
    accounts. $  437,179  $  991,523 (1) $  541,759(2) $(775,296)(3)$1,195,165
               =========   =========      ==========   ==========    =========
  Allowance 
  for vendor
   claims 
   receivable $   80,000  $                  40,700(4)              $  120,700
               =========   =========      ==========   ==========    =========
  Allowance for 
   notes
   receivable $      -0-  $                                         $      -0-
                =========  =========      ==========   ==========    =========
 Year ended 
  January 31, 1998:
   Allowance for 
   doubtful
    accounts..$1,322,107  $ 469,935 (1) $( 898,000)(5) $(456,863)(3)$  437,179
               =========   =========     ==========     ==========   =========
  Allowance 
   for vendor
   claims 
   receivable.$   80,000                                            $   80,000
               =========   =========     ==========     ==========   =========
  Allowance
   for notes
   receivable.$      -0-                                            $      -0-
               =========   =========     ==========     ==========   =========
 Year ended 
  February 1, 1997:
  Allowance for 
  doubtful
  accounts... $1,261,983  $2,730,502 (1)             $(2,670,378)(3)$1,322,107
               =========   =========     ==========   ==========     =========
  Allowance 
   for vendor
   claims 
   receivable.$   90,000  $  (10,000)(6)                            $   80,000
               =========   =========     ==========    ==========    =========
Allowance 
 for notes
 receivable.. $  282,767  $ (282,767)(7)                            $      -0-
               =========   =========     ==========    ==========    =========


</TABLE>

 Notes:

            (1)  Represents the provision for credit losses on receivables
                 ineligible for sale.
            (2)   Represents  the  allowance for  doubtful  accounts
                  applicable to the receivables acquired from Harris 
                  (see  Note  2 to the Consolidated Financial Statements).
            (3)   Represents uncollectible accounts written off,
                  net  of  recoveries,  pertaining to receivables  
                  ineligible  for sale.
            (4)   Represents  the allowance for  vendor  claims
                  receivable applicable to the outstanding vendor 
                  claims  acquired  from   Harris   (see  Note  2  
                  to  the  Consolidated   Financial Statements.)
            (5)   Represents a change in estimate for the allowance
                  for   doubtful  accounts  related  to  receivables  
                  which   were ineligible  for sale. (See Note 3 to 
                  the Consolidated  Financial Statements.) This amount 
                  is included in net credit  revenues  in the fiscal 
                  1997 consolidated income statement.
            (6)   Reduction in provision for uncollectible vendor claims 
                  receivable.
            (7)   Reversal of uncollectible portion of note receivable
                  recorded in connection with transferring related asset 
                  to a held for sale classification during the year ended 
                  February 1, 1997.






                                 SIGNATURES


       Pursuant  to  the  requirements  of  Section  13  or  15(d)  of   the
Securities Exchange Act of 1934, the Registrant has duly caused this  report
to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: April 30, 1999                     GOTTSCHALKS INC.


                                       By: \s\ Joseph W. Levy
                                               Joseph W. Levy
                                               Chairman and Chief
                                               Executive Officer


       Pursuant to the requirements of the Securities Exchange Act of  1934,
this report has been signed below by the following persons on behalf of  the
Registrant and in the capacities and on the dates indicated.

Signature                        Title                  Date
       
                                Chairman and Chief
                                Executive Officer
                                (principal executive
 /s/ Joseph W. Levy              officer)              April 30, 1999
Joseph W. Levy
       
       
                                President, Chief
                                 Operating Officer    April 30, 1999
_/s/ James R. Famalett e         and Director
James R. Famalette
       
       
                                Senior Vice President
                                and Chief Financial
                                Officer (principal     April 30, 1999
                                financial and
_/s/ Michael S. Geele           accounting officer)
Michael S. Geele
       
       
       
       
       
 /s/ O. James Woodward III       Director              April 30, 1999
O. James Woodward III
       
       
       
/s/  Bret W. Levy                Director              April 30, 1999
Bret W. Levy

/s/  Sharon    Levy              Director              April 30, 1999
Sharon Levy


/s/ Joseph J. Penbera            Director              April 30, 1999
Joseph J. Penbera


/s/    Fred    Ruiz              Director               April 30, 1999
Fred Ruiz

/s/ Max Gutmann                  Director               April 30, 1999
Max Gutmann

/s/    Isidoro    Alvarez        Director               April 30, 1999
Isidoro Alvarez


/s/ Jorge Pont                   Director               April 30, 1999
Jorge Pont