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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 10 - Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 1, 2003

Commission File No. 1-6695



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JO-ANN STORES, INC.(Exact name of Registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Ohio
(State or other jurisdiction of
incorporation or organization)     |  | 34-0720629
(I.R.S. Employer Identification No.)
|                                                                       
|5555 Darrow Road, Hudson, Ohio
(Address of principal executive offices) |  | 44236
(Zip Code)                               

Registrants telephone number, including area code: (330) 656-2600

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 
o

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes  x   No 
o

Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date: Common Shares,
without par value, as of December 9, 2003: 21,804,576.



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TABLE OF CONTENTS



|                                                  |                                                                                               |                                                        |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------ |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                     
|                                                  | Item 1. Financial Statements                                                                 
|                                                  |                                                                                               | Consolidated Balance Sheets                           
|                                                  |                                                                                               | Consolidated Statements of Operations                 
|                                                  |                                                                                               | Consolidated Statements of Cash Flows                 
|                                                  |                                                                                               | Notes to Consolidated Financial Statements (Unaudited)
|                                                  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                  | Item 4. Controls and Procedures                                                              
|PART II OTHER INFORMATION                        
|                                                  | Item 1. Legal Proceedings                                                                    
|                                                  | Item 2. Changes in Securities and Use of Proceeds                                            
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                                  | Item 5. Other Information                                                                    
|                                                  | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                       
|Exhibit 3.1 Amended and Restated Articles of Inc.
|Exhibit 3.2 Amended and Restated Code of Regs    
|Exhibit 31.1 Section 302 Certification by CEO    
|Exhibit 31.2 Section 302 Certification by CFO    
|Exhibit 32.1 Section 906 Certification of CEO    
|Exhibit 32.2 Section 906 Certification of CFO    



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##### Table of Contents



Jo-Ann Stores, Inc.
Form 10-Q Index
For the Quarter Ended November 1, 2003

|         |                       |                                                                                                                                    |  |         |    | 
|-------- | --------------------- | ---------------------------------------------------------------------------------------------------------------------------------- |  | ------- | -- | 
|         |                       |                                                                                                                                    |  | Page   
|         |                       |                                                                                                                                    |  | Numbers
|         |                       |                                                                                                                                    |  |        
|Part I.  | Financial Information |                                                                                                                                    |  |        
|        
|         | Item 1.               | Financial Statements                                                                                                               |  |         |   
|        
|         |                       | Consolidated Balance Sheets  November 1, 2003 (Unaudited),
February 1, 2003 and November 2, 2002 (Unaudited)                      |  |         | 3  | 
|        
|         |                       | Unaudited Consolidated Statements of Operations for the Thirteen and
Thirty-Nine Weeks Ended November 1, 2003 and November 2, 2002 |  |         | 4  | 
|        
|         |                       | Unaudited Consolidated Statements of Cash Flows for the
Thirty-Nine Weeks Ended November 1, 2003 and November 2, 2002              |  |         | 5  | 
|        
|         |                       | Notes to Unaudited Consolidated Financial Statements                                                                               |  |         | 6  | 
|        
|         | Item 2.               | Managements Discussion and Analysis of Financial Condition
and Results of Operations                                              |  |         | 17 | 
|        
|         | Item 3.               | Quantitative and Qualitative Disclosures about Market Risk                                                                         |  |         | 22 | 
|        
|         | Item 4.               | Controls and Procedures                                                                                                            |  |         | 23 | 
|        
|Part II. | Other Information     |                                                                                                                                    |  |        
|        
|         | Item 1.               | Legal Proceedings                                                                                                                  |  |         | 23 | 
|        
|         | Item 2.               | Changes in Securities and Use of Proceeds                                                                                          |  |         | 23 | 
|        
|         | Item 4.               | Submission of Matters to a Vote of Security Holders                                                                                |  |         | 23 | 
|        
|         | Item 5.               | Other Information                                                                                                                  |  |         | 24 | 
|        
|         | Item 6.               | Exhibits and Reports on Form 8-K                                                                                                   |  |         | 24 | 
|        
|         | Signatures            |                                                                                                                                    |  | 26      |   

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##### Table of Contents






PART I FINANCIAL INFORMATION




Item 1.  Financial
Statements





Jo-Ann Stores, Inc.
Consolidated Balance Sheets

|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |       |   | 
|--------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | - | ----- | ------------------------------------------------------ | - | ----------- | ----- | ----------- | - | ----------- | ----- | ----- | - | 
|                                                    |                                                                                                                                        |   |       | (Unaudited)                                            |   |             |       |             |   | (Unaudited)
|                                                    |                                                                                                                                        |   |       | November 1,                                            |   | February 1, |       | November 2,
|                                                    |                                                                                                                                        |   |       | 2003                                                   |   | 2003        |       | 2002       
|                                                   
|                                                    |                                                                                                                                        |   |       | (Dollars in millions, except share and per share data)
|Assets                                              |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Current assets:                                     |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|                                                    | Cash and cash equivalents                                                                                                              |   | $     | 21.2                                                   |   |             | $     | 63.2        |   |             | $     | 21.6  |  
|                                                    | Inventories                                                                                                                            |   |       | 520.3                                                  |   |             |       | 363.1       |   |             |       | 483.4 |  
|                                                    | Deferred income taxes                                                                                                                  |   |       | 28.9                                                   |   |             |       | 28.2        |   |             |       | 31.2  |  
|                                                    | Prepaid expenses and other current assets                                                                                              |   |       | 23.0                                                   |   |             |       | 17.2        |   |             |       | 15.2  |  
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Total current assets                                |                                                                                                                                        |   | 593.4 |                                                        |   |             | 471.7 |             |   |             | 551.4 |      
|Property, equipment and leasehold improvements, net |                                                                                                                                        |   | 193.3 |                                                        |   |             | 190.3 |             |   |             | 195.6 |      
|Goodwill, net                                       |                                                                                                                                        |   | 26.5  |                                                        |   |             | 26.5  |             |   |             | 26.5  |      
|Other assets                                        |                                                                                                                                        |   | 9.5   |                                                        |   |             | 16.0  |             |   |             | 17.0  |      
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Total assets                                        |                                                                                                                                        | $ | 822.7 |                                                        |   | $           | 704.5 |             |   | $           | 790.5 |      
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Liabilities and Shareholders Equity                |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Current liabilities:                                |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|                                                    | Accounts payable                                                                                                                       |   | $     | 155.9                                                  |   |             | $     | 129.9       |   |             | $     | 140.9 |  
|                                                    | Accrued expenses                                                                                                                       |   |       | 65.5                                                   |   |             |       | 75.9        |   |             |       | 80.4  |  
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Total current liabilities                           |                                                                                                                                        |   | 221.4 |                                                        |   |             | 205.8 |             |   |             | 221.3 |      
|Long-term debt                                      |                                                                                                                                        |   | 237.4 |                                                        |   |             | 162.9 |             |   |             | 276.2 |      
|Deferred income taxes                               |                                                                                                                                        |   | 37.5  |                                                        |   |             | 37.2  |             |   |             | 23.7  |      
|Other long-term liabilities                         |                                                                                                                                        |   | 9.9   |                                                        |   |             | 9.2   |             |   |             | 8.9   |      
|                                                   
|Shareholders equity:                               |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|                                                    | Preferred stock, no par value, 5,000,000 shares
authorized, none issued                                                                |   |       |                                                       |   |             |       |            |   |             |       |      |  
|                                                    | Common stock, stated value $0.05 per share;
150,000,000 authorized and outstanding 21,774,731; 21,079,103
and 21,037,637, respectively |   |       | 1.1                                                    |   |             |       | 1.1         |   |             |       | 1.1   |  
|                                                    | Additional paid-in capital                                                                                                             |   |       | 129.2                                                  |   |             |       | 113.8       |   |             |       | 109.6 |  
|                                                    | Unamortized restricted stock awards                                                                                                    |   |       | (2.6                                                   | ) |             |       | (0.4        | ) |             |       | (0.3  | )
|                                                    | Retained earnings                                                                                                                      |   |       | 231.7                                                  |   |             |       | 217.8       |   |             |       | 192.5 |  
|                                                    | Accumulated other comprehensive loss                                                                                                   |   |       | (1.8                                                   | ) |             |       | (2.6        | ) |             |       | (3.1  | )
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|                                                    |                                                                                                                                        |   | 357.6 |                                                        |   |             | 329.7 |             |   |             | 299.8 |      
|                                                    | Treasury stock, at cost                                                                                                                |   |       | (41.1                                                  | ) |             |       | (40.3       | ) |             |       | (39.4 | )
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Total shareholders equity                          |                                                                                                                                        |   | 316.5 |                                                        |   |             | 289.4 |             |   |             | 260.4 |      
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      
|Total liabilities and shareholders equity          |                                                                                                                                        | $ | 822.7 |                                                        |   | $           | 704.5 |             |   | $           | 790.5 |      
|                                                    |                                                                                                                                        |   |       |                                                        |   |             |       |             |   |             |       |      

See notes to unaudited consolidated financial statements

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Jo-Ann Stores, Inc.
Consolidated Statements of Operations
(Unaudited)

|                                                    |                            |   |                                                        |       |                         |   |             |       |             |   |         |       |  |   |         |       | 
|--------------------------------------------------- | -------------------------- | - | ------------------------------------------------------ | ----- | ----------------------- | - | ----------- | ----- | ----------- | - | ------- | ----- |  | - | ------- | ----- | 
|                                                    |                            |   | Thirteen Weeks Ended                                   |       | Thirty-Nine Weeks Ended
|                                                    |                            |   |                                                        |       |                        
|                                                    |                            |   | November 1,                                            |       | November 2,             |   | November 1, |       | November 2,
|                                                    |                            |   | 2003                                                   |       | 2002                    |   | 2003        |       | 2002       
|                                                   
|                                                    |                            |   | (Dollars in millions, except share and per share data)
|                                                   
|Net sales                                           |                            | $ | 447.5                                                  |       |                         | $ | 430.1       |       |             | $ | 1,181.5 |       |  | $ | 1,156.2 |      
|Cost of sales                                       |                            |   | 232.4                                                  |       |                         |   | 232.7       |       |             |   | 613.3   |       |  |   | 606.4   |      
|                                                    |                            |   |                                                        |      
|                                                    | Gross margin               |   |                                                        | 215.1 |                         |   |             | 197.4 |             |   |         | 568.2 |  |   |         | 549.8 | 
|Selling, general and administrative expenses        |                            |   | 177.0                                                  |       |                         |   | 165.7       |       |             |   | 488.2   |       |  |   | 466.1   |      
|Store pre-opening and closing costs                 |                            |   | 2.4                                                    |       |                         |   | 0.7         |       |             |   | 7.1     |       |  |   | 3.1     |      
|Depreciation and amortization                       |                            |   | 9.6                                                    |       |                         |   | 9.1         |       |             |   | 27.8    |       |  |   | 27.0    |      
|Stock-based compensation expense                    |                            |   | 1.5                                                    |       |                         |   |            |       |             |   | 4.1     |       |  |   |        |      
|Debt repurchase and share reclassification expenses |                            |   | 0.5                                                    |       |                         |   | 0.5         |       |             |   | 4.6     |       |  |   | 1.9     |      
|                                                    |                            |   |                                                        |      
|                                                    | Operating profit           |   |                                                        | 24.1  |                         |   |             | 21.4  |             |   |         | 36.4  |  |   |         | 51.7  | 
|Interest expense                                    |                            |   | 4.7                                                    |       |                         |   | 7.1         |       |             |   | 13.9    |       |  |   | 20.1    |      
|                                                    |                            |   |                                                        |      
|                                                    | Income before income taxes |   |                                                        | 19.4  |                         |   |             | 14.3  |             |   |         | 22.5  |  |   |         | 31.6  | 
|Income tax provision                                |                            |   | 7.4                                                    |       |                         |   | 5.4         |       |             |   | 8.6     |       |  |   | 12.0    |      
|                                                    |                            |   |                                                        |      
|Net income                                          |                            | $ | 12.0                                                   |       |                         | $ | 8.9         |       |             | $ | 13.9    |       |  | $ | 19.6    |      
|                                                    |                            |   |                                                        |      
|Net income per common share  basic:                |                            | $ | 0.55                                                   |       |                         | $ | 0.43        |       |             | $ | 0.65    |       |  | $ | 0.95    |      
|                                                    |                            |   |                                                        |      
|Net income per common share  diluted:              |                            | $ | 0.54                                                   |       |                         | $ | 0.40        |       |             | $ | 0.63    |       |  | $ | 0.91    |      
|                                                    |                            |   |                                                        |      
|Weighted average shares outstanding (in millions):  |                            |   |                                                        |       |                         |   |             |       |             |   |         |       |  |   |         |      
|                                                    | Basic                      |   |                                                        | 21.7  |                         |   |             | 20.9  |             |   |         | 21.5  |  |   |         | 20.6  | 
|                                                    |                            |   |                                                        |      
|                                                    | Diluted                    |   |                                                        | 22.4  |                         |   |             | 22.0  |             |   |         | 22.1  |  |   |         | 21.5  | 
|                                                    |                            |   |                                                        |      

See notes to unaudited consolidated financial statements

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Jo-Ann Stores, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

|                                                     |                                                                                |                                                            |       |                         |        |             |       |       |        |  
|---------------------------------------------------- | ------------------------------------------------------------------------------ | ---------------------------------------------------------- | ----- | ----------------------- | ------ | ----------- | ----- | ----- | ------ | -
|                                                     |                                                                                |                                                            |       | Thirty-Nine Weeks Ended
|                                                     |                                                                                |                                                            |       |                        
|                                                     |                                                                                |                                                            |       | November 1,             |        | November 2,
|                                                     |                                                                                |                                                            |       | 2003                    |        | 2002       
|                                                    
|                                                     |                                                                                |                                                            |       | (Dollars in millions)  
|Net cash flows used for operating activities:        |                                                                                |                                                            |       |                         |        |             |       |      
|                                                     | Net income                                                                     |                                                            | $     | 13.9                    |        |             | $     | 19.6  |       
|                                                     | Adjustments to reconcile net income to net cash
used for operating activities: |                                                            |       |                         |        |             |       |       |       
|                                                     |                                                                                | Depreciation and amortization                              |       |                         | 27.8   |             |       |       | 27.0   |  
|                                                     |                                                                                | Deferred income taxes                                      |       |                         | (0.4   | )           |       |       | (0.5   | )
|                                                     |                                                                                | Stock-based compensation expense                           |       |                         | 4.1    |             |       |       |       |  
|                                                     |                                                                                | Loss on disposal of fixed assets                           |       |                         | 0.4    |             |       |       |       |  
|                                                     |                                                                                | Loss associated with purchase of senior subordinated notes |       |                         | 3.4    |             |       |       | 1.9    |  
|                                                     | Changes in operating assets and liabilities:                                   |                                                            |       |                         |        |             |       |       |       
|                                                     |                                                                                | Increase in inventories                                    |       |                         | (157.2 | )           |       |       | (114.4 | )
|                                                     |                                                                                | Increase in accounts payable                               |       |                         | 26.0   |             |       |       | 17.8   |  
|                                                     |                                                                                | Increase (decrease) in accrued expenses                    |       |                         | (10.4  | )           |       |       | 0.1    |  
|                                                     |                                                                                | Other, net                                                 |       |                         | 2.0    |             |       |       | 2.2    |  
|                                                     |                                                                                |                                                            |       |                         |        |             |       |      
|Net cash used for operating activities               |                                                                                |                                                            | (90.4 | )                       |        |             | (46.3 | )    
|Net cash flows used for investing activities:        |                                                                                |                                                            |       |                         |        |             |       |      
|                                                     | Capital expenditures                                                           |                                                            |       | (31.1                   | )      |             |       | (12.4 | )     
|                                                     | Proceeds from sale of equity investment                                        |                                                            |       | 1.9                     |        |             |       |      |       
|                                                     |                                                                                |                                                            |       |                         |        |             |       |      
|Net cash used for investing activities               |                                                                                |                                                            | (29.2 | )                       |        |             | (12.4 | )    
|Net cash flows provided by financing activities:     |                                                                                |                                                            |       |                         |        |             |       |      
|                                                     | Net increase in revolving credit facility                                      |                                                            |       | 120.4                   |        |             |       | 79.6  |       
|                                                     | Purchase of senior subordinated notes                                          |                                                            |       | (48.4                   | )      |             |       | (28.3 | )     
|                                                     | Proceeds from exercise of stock options                                        |                                                            |       | 4.1                     |        |             |       | 7.2   |       
|                                                     | Other, net                                                                     |                                                            |       | 1.5                     |        |             |       | 0.7   |       
|                                                     |                                                                                |                                                            |       |                         |        |             |       |      
|Net cash provided by financing activities            |                                                                                |                                                            | 77.6  |                         |        |             | 59.2  |      
|                                                     |                                                                                |                                                            |       |                         |        |             |       |      
|Net (decrease) increase in cash and cash equivalents |                                                                                |                                                            | (42.0 | )                       |        |             | 0.5   |      
|Cash and cash equivalents at beginning of period     |                                                                                |                                                            | 63.2  |                         |        |             | 21.1  |      
|                                                     |                                                                                |                                                            |       |                         |        |             |       |      
|Cash and cash equivalents at end of period           |                                                                                | $                                                          | 21.2  |                         |        | $           | 21.6  |      
|                                                     |                                                                                |                                                            |       |                         |        |             |       |      
|Supplemental disclosures of cash flow information:   |                                                                                |                                                            |       |                         |        |             |       |      
|                                                     | Cash paid during the period for:                                               |                                                            |       |                         |        |             |       |       |       
|                                                     |                                                                                | Interest                                                   |       | $                       | 15.5   |             |       | $     | 21.8   |  
|                                                     |                                                                                | Income taxes, net of refunds                               |       |                         | 4.4    |             |       |       | 4.2    |  

See notes to unaudited consolidated financial statements

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Notes to Consolidated Financial Statements (Unaudited)
Jo-Ann Stores, Inc.

Note 1    Basis of Presentation

Jo-Ann Stores, Inc. (the Company), an Ohio corporation, is a fabric and
craft retailer operating 902 retail stores in 47 states at November 1, 2003.
The 815 traditional stores and 87 superstores feature a broad line of apparel,
craft and home decorating fabrics, notions, crafts, seasonal and home
accessories and floral and framing products.

The consolidated interim financial statements include the accounts
of the Company and its subsidiaries and have been prepared without
audit, pursuant to the rules of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted
pursuant to those rules and regulations, although the Company believes
that the disclosures herein are adequate to make the information not
misleading. Certain amounts in the fiscal 2003 year-end and interim
financial statements have been reclassified in order to conform to the
current year presentation. The statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
the Companys Annual Report on Form 10-K for the fiscal year ended
February 1, 2003.

Typical of most retail companies, the Companys business is highly
seasonal with the majority of revenues and operating profits generated in the
second half of the fiscal year. Accordingly, earnings or losses for a
particular interim period are not indicative of full year results. Due to the
seasonal nature of the Companys business, a comparable balance sheet as of
November 2, 2002 has been provided. In the opinion of management, the
consolidated financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary for a fair statement of results for the
interim periods presented.

The Companys fiscal year ends on the Saturday closest to January 31.
Fiscal years consist of 52 weeks, unless noted otherwise. The fiscal year
refers to the year in which the period ends (e.g., fiscal 2004 refers to the
year ended January 31, 2004).

Note 2   Share Reclassification

On November 4, 2003, the Company announced that shareholders approved the
reclassification of its Class A and Class B Common Shares into a single class
of stock. Shareholders also approved certain other governance proposals. On
November 5th, shares of the single class of stock began trading on the New York
Stock Exchange, under the symbol JAS.

Under the reclassification, shares of the Companys Class B Common Shares,
which did not have voting rights other than as required by law, were amended to
have one vote per share and were re-designated as the Companys Common
Shares. Each of the Companys Class A Common Shares, which had one vote per
share, were reclassified into 1.15 Common Shares. This resulted in
approximately 1.6 million incremental Common Shares being issued at the time of
the reclassification, increasing the number of Common Shares outstanding by
approximately 8%.

Shares outstanding, as well as average basic and diluted shares
outstanding used to calculate earnings per share, have been retroactively
restated to reflect the impact of the increased shares outstanding as a result
of the share reclassification as of the beginning of all periods presented.

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Note 3    Earnings Per Share

Basic earnings per common share are computed by dividing net income by
the weighted average number of shares outstanding during the period. Diluted
earnings per share include the effect of the assumed exercise of dilutive
stock options under the treasury stock method.

The following table presents information necessary to calculate basic and
diluted earnings per common share for the periods presented (shares in
millions).

|                                                          |  |                      |      |                         |  |             |      |             |  |  |      |  |  |  |      | 
|--------------------------------------------------------- |  | -------------------- | ---- | ----------------------- |  | ----------- | ---- | ----------- |  |  | ---- |  |  |  | ---- | 
|                                                          |  | Thirteen Weeks Ended |      | Thirty-Nine Weeks Ended
|                                                          |  |                      |      |                        
|                                                          |  | November 1,          |      | November 2,             |  | November 1, |      | November 2,
|                                                          |  | 2003                 |      | 2002                    |  | 2003        |      | 2002       
|                                                         
|Weighted average shares outstanding:                      |  |                      |      |                         |  |             |      |             |  |  |      |  |  |  |      | 
|Basic common shares                                       |  |                      | 21.7 |                         |  |             | 20.9 |             |  |  | 21.5 |  |  |  | 20.6 | 
|Incremental shares from assumed
exercise of stock options |  |                      | 0.7  |                         |  |             | 1.1  |             |  |  | 0.6  |  |  |  | 0.9  | 
|                                                          |  |                      |      |                        
|Diluted common shares                                     |  |                      | 22.4 |                         |  |             | 22.0 |             |  |  | 22.1 |  |  |  | 21.5 | 
|                                                          |  |                      |      |                        

Note 4   Stock-Based Compensation

Effective February 2, 2003, the Company adopted the fair value
recognition provisions of Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation. Under the modified
prospective method of adoption selected by the Company under the provisions of
SFAS No. 148, Accounting for Stock-Based Compensation-Transition and
Disclosure an Amendment of FASB Statement No. 123, compensation cost
recognized in fiscal year 2004 is the same as that which would have been
recognized had the recognition provisions of SFAS No. 123 been applied from
its original effective date. The Company believes that this change is to the
preferred method of accounting for stock-based compensation. Prior to fiscal
2004, the Company accounted for these plans under the recognition and
measurement provisions of Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related Interpretations.
Therefore, no stock-based employee compensation for stock options is reflected
in fiscal 2003 net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant.

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The following table illustrates the effect on net income and earnings per
share if the fair value based method had been applied to all outstanding and
unvested awards in each period (dollars in millions, except per share data):

|                                                                                          |                       |   |                      |      |                         |   |             |      |             |   |      |      |  |   |      |      | 
|----------------------------------------------------------------------------------------- | --------------------- | - | -------------------- | ---- | ----------------------- | - | ----------- | ---- | ----------- | - | ---- | ---- |  | - | ---- | ---- | 
|                                                                                          |                       |   | Thirteen Weeks Ended |      | Thirty-Nine Weeks Ended
|                                                                                          |                       |   |                      |      |                        
|                                                                                          |                       |   | November 1,          |      | November 2,             |   | November 1, |      | November 2,
|                                                                                          |                       |   | 2003                 |      | 2002                    |   | 2003        |      | 2002       
|                                                                                          |                       |   |                      |      |                         |   |             |      |            
|Net income, as reported                                                                   |                       | $ | 12.0                 |      |                         | $ | 8.9         |      |             | $ | 13.9 |      |  | $ | 19.6 |     
|Add: Stock-based
compensation expense
included in reported net
income, net of tax         |                       |   | 0.9                  |      |                         |   |            |      |             |   | 2.5  |      |  |   |     |     
|Less: Stock-based
compensation expense
determined under the fair
value method, net of tax |                       |   | (0.9                 | )    |                         |   | (0.5        | )    |             |   | (2.5 | )    |  |   | (1.7 | )   
|                                                                                          |                       |   |                      |      |                         |   |             |      |             |   |      |      |  |   |      |     
|Pro forma net income                                                                      |                       | $ | 12.0                 |      |                         | $ | 8.4         |      |             | $ | 13.9 |      |  | $ | 17.9 |     
|                                                                                          |                       |   |                      |      |                         |   |             |      |             |   |      |      |  |   |      |     
|Earnings per share:                                                                       |                       |   |                      |      |                         |   |             |      |             |   |      |      |  |   |      |     
|                                                                                          | Basic  as reported   |   | $                    | 0.55 |                         |   | $           | 0.43 |             |   | $    | 0.65 |  |   | $    | 0.95 | 
|                                                                                          | Basic  pro forma     |   | $                    | 0.55 |                         |   | $           | 0.40 |             |   | $    | 0.65 |  |   | $    | 0.87 | 
|                                                                                          | Diluted  as reported |   | $                    | 0.54 |                         |   | $           | 0.40 |             |   | $    | 0.63 |  |   | $    | 0.91 | 
|                                                                                          | Diluted  pro forma   |   | $                    | 0.54 |                         |   | $           | 0.38 |             |   | $    | 0.63 |  |   | $    | 0.83 | 

Note 5    Store Closing Charges

The Company is pursuing a growth strategy that is driven by the
replacement of its traditional stores with superstores. In addition, the
Company continually reviews the productivity of its store base, actively
manages its real estate to preserve maximum flexibility in lease terms, and
closes locations that do not meet certain financial performance thresholds.
Through the first three quarters of the year, the Company opened 12 new
superstores, three larger traditional stores, and closed 32 traditional
stores. The Company also converted four larger traditional stores to
superstores.

The charges to the statement of operations for the year-to-date period
ending November 1, 2003 related to store closings and a roll-forward of the
store closing reserve balances from February 1, 2003 is summarized in the
following table.

|                            |          |             |                      |             |       |       |       |       |   |   |     |      |   |   |     |      |  
|--------------------------- | -------- | ----------- | -------------------- | ----------- | ----- | ----- | ----- | ----- | - | - | --- | ---- | - | - | --- | ---- | -
|                            |          |             | Non-cancelable lease |             | Asset |       | Other |       |   |   |    
|Dollars in millions         |          | obligations |                      | Impairments |       | Costs |       | Total
|                            |          |             |                      |             |       |       |       |      
|Balance at February 1, 2003 |          | $           | 3.5                  |             |       | $     |      |       |   | $ | 0.9 |      |   | $ | 4.4 |     
|Amounts charged to income   |          |             |                     |             |       |       | 0.5   |       |   |   |    |      |   |   | 0.5 |     
|Utilization:                |          |             |                      |             |       |       |       |       |   |   |     |      |   |   |     |     
|                            | Cash     |             |                      | (1.4        | )     |       |       |      |   |   |     | (0.4 | ) |   |     | (1.8 | )
|                            | Non-Cash |             |                      |            |       |       |       | (0.5  | ) |   |     |     |   |   |     | (0.5 | )
|                            |          |             |                      |             |       |       |       |       |   |   |     |      |   |   |     |     
|Balance at November 1, 2003 |          | $           | 2.1                  |             |       | $     |      |       |   | $ | 0.5 |      |   | $ | 2.6 |     
|                            |          |             |                      |             |       |       |       |       |   |   |     |      |   |   |     |     

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The Company has segregated the costs of store openings and closings as a
separate line item in the statement of operations. Over the next several
years, as the Company pursues its strategy of growing sales and market share
with the expansion of the superstore concept, management believes that
segregating the costs of real estate activity provides better insight into the
core performance of the Company.

Note 6    Fair Value of Derivative Financial Instruments

The Company is subject to risk resulting from interest rate fluctuations,
as interest on the Companys Credit Facility is based on variable rates. The
Companys objective in managing its interest rate exposure is to limit the
impact of interest rate changes on earnings and cash flows. Interest rate
swaps are primarily utilized to achieve this objective, effectively converting
a portion of its variable-rate exposures to fixed interest rates. The Company
does not enter into financial instruments for trading purposes.

At November 1, 2003, the Company had a $40.0 million interest rate swap
with a fixed LIBOR rate of 6.72% that expires on April 30, 2005. The interest
rate swap agreement requires the Company to pay a fixed interest rate while
receiving a floating interest rate based on LIBOR. In accordance with SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, the
Company has reviewed and designated its interest rate swap agreement as a cash
flow hedge and recognizes the fair value of its interest rate swap agreement
on the balance sheet. Changes in the fair value of this agreement are
recorded in other comprehensive income and reclassified into earnings as the
underlying hedged item affects earnings.

Other comprehensive income includes the effects of derivative
transactions accounted for under SFAS No. 133, net of related tax.
Comprehensive income consists of the following:

|                                              |  |                      |      |                         |  |             |     |             |  |   |      |  |  |   |      |  
|--------------------------------------------- |  | -------------------- | ---- | ----------------------- |  | ----------- | --- | ----------- |  | - | ---- |  |  | - | ---- | -
|                                              |  | Thirteen Weeks Ended |      | Thirty-Nine Weeks Ended
|                                              |  |                      |      |                        
|                                              |  | November 1,          |      | November 2,             |  | November 1, |     | November 2,
|Dollars in millions                           |  | 2003                 |      | 2002                    |  | 2003        |     | 2002       
|                                              |  |                      |      |                         |  |             |     |            
|Net income                                    |  | $                    | 12.0 |                         |  | $           | 8.9 |             |  | $ | 13.9 |  |  | $ | 19.6 |  
|Other comprehensive income (loss), net of tax |  |                      | 0.3  |                         |  |             | 0.1 |             |  |   | 0.8  |  |  |   | (0.1 | )
|                                              |  |                      |      |                         |  |             |     |             |  |   |      |  |  |   |      |  
|Comprehensive income                          |  | $                    | 12.3 |                         |  | $           | 9.0 |             |  | $ | 14.7 |  |  | $ | 19.5 |  
|                                              |  |                      |      |                         |  |             |     |             |  |   |      |  |  |   |      |  

Note 7   Shareholders Equity

The Company has various stock-based compensation plans that it utilizes
as long-term compensation for its board of directors, executive officers,
senior management and other key employees. The Company issues stock under
these various stock-award compensation plans and uses treasury shares to fund
the Companys match under the 401(k) savings plan. Deferred compensation
expense is recorded as Unamortized restricted stock awards at the time of
the issuance of restricted stock and is amortized over the vesting period of
the award (typically five years). Through the third quarter of fiscal 2004,
shares outstanding increased by 695,628 as follows:

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|                                                                        |  |                                                 |            |               |  |                           |     |                                  |  |   |                |  |  |   |      |   |  |   |       |  
|----------------------------------------------------------------------- |  | ----------------------------------------------- | ---------- | ------------- |  | ------------------------- | --- | -------------------------------- |  | - | -------------- |  |  | - | ---- | - |  | - | ----- | -
|Dollars in millions                                                     |  | Common
SharesOutstanding, Net of TreasuryShares |            | Common
Shares |  | Additional
Paid-InCapital |     | UnamortizedRestrictedStockAwards |  |   | Treasury Stock | 
|                                                                        |  |                                                 |            |               |  |                           |     |                                  |  |  
|Balance at February 1, 2003                                             |  |                                                 | 21,079,103 |               |  | $                         | 1.1 |                                  |  | $ | 113.8          |  |  | $ | (0.4 | ) |  | $ | (40.3 | )
|Options exercised, net                                                  |  |                                                 | 362,280    |               |  |                           |    |                                  |  |   | 5.7            |  |  |   |     |   |  |   | (1.0  | )
|Restricted stock awards
activity, net                                   |  |                                                 | 147,085    |               |  |                           |    |                                  |  |   | 2.8            |  |  |   | (2.2 | ) |  |   |      |  
|Issuance of common stock 
Associate stock ownership
plan and 401K plan |  |                                                 | 186,263    |               |  |                           |    |                                  |  |   | 2.8            |  |  |   |     |   |  |   | 0.2   |  
|Stock-based compensation                                                |  |                                                 |           |               |  |                           |    |                                  |  |   | 4.1            |  |  |   |     |   |  |   |      |  
|                                                                        |  |                                                 |            |               |  |                           |     |                                  |  |   |                |  |  |   |      |   |  |   |       |  
|Balance at November 1, 2003                                             |  |                                                 | 21,774,731 |               |  | $                         | 1.1 |                                  |  | $ | 129.2          |  |  | $ | (2.6 | ) |  | $ | (41.1 | )
|                                                                        |  |                                                 |            |               |  |                           |     |                                  |  |   |                |  |  |   |      |   |  |   |       |  

Note 8    Recent Accounting Pronouncements

During May 2003, the Financial Accounting Standards Board (FASB) issued
SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS No. 150 clarifies the
accounting for certain financial instruments with characteristics of both
liabilities and equity and requires that those instruments be classified as
liabilities in the statement of financial position. Previously, many of those
financial instruments were classified as equity. SFAS No. 150 is effective
for financial instruments entered into or modified after May 31, 2003 and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The adoption of SFAS No. 150 had no impact on the
Companys overall financial position or results of operations.

During April 2003, the FASB issued SFAS No. 149, Amendment of Statement
133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends
and clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under Statement 133. SFAS No. 149, the provisions of which are to be applied
prospectively, is effective for contracts entered into or modified after June
30, 2003 and for hedging relationships designated after June 30, 2003. The
adoption of SFAS No. 149 had no impact on the Companys consolidated financial
statements.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. FIN 46 clarifies the
application of Accounting Research Bulletin No. 51, Consolidated Financial
Statements, for certain entities which do not have sufficient equity at risk
for the entity to finance its activities without additional subordinated
financial support from other parties or in which equity investors do not have
the characteristics of a controlling financial interest (variable interest
entities). Variable interest entities will be required to be consolidated by
their primary beneficiary. The primary beneficiary of a variable interest
entity is determined to be the party that absorbs a majority of the entitys
expected losses, receives a majority of its expected returns, or both, as a
result of holding variable interests, which are ownership, contractual, or
other pecuniary interests in an entity. FIN 46 applies immediately to variable
interest entities created after January 31, 2003 and to variable interest
entities in which an enterprise obtains an interest after that date. At its
October 2003 meeting, the FASB amended FIN 46 to defer the adoption
requirements until the first interim or annual period ending after December 15,
2003. Accordingly, the Company will adopt FIN No. 46 on January 31, 2004, as
required. The Company expects to complete its analysis and adopt FIN No. 46
during the fourth quarter of 2003. The Company is in the process of
determining what impact, if any, the adoption of the provisions of FIN 46 will
have upon its financial condition or results of operations.

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In November 2002, the EITF reached a consensus on EITF 02-16, Accounting
by a Customer (including a Reseller) for Certain Consideration Received from a
Vendor. Among other conclusions reached, EITF 02-16 requires that
consideration received from a vendor be presumed to be a reduction of the cost
of the vendors products or services. This presumption can be overcome if the
consideration can be shown to represent either a payment for assets or
services delivered to the vendor or a reimbursement of costs incurred by the
reseller to sell the vendors products. Under the transition rules set forth
in EITF 02-16 this treatment is required for all agreements entered into or
modified after December 31, 2002. This guidance was adopted by the Company
and did not have a material impact on its results of operations or financial
position.

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Note 9   Consolidating Financial Statements (Unaudited)

The Companys 10-3/8% senior subordinated notes and Credit Facility are
fully and unconditionally guaranteed, on a joint and several basis, by the
wholly-owned subsidiaries of the Company. The senior subordinated notes are
subordinated to the Companys Credit Facility. Summarized consolidating
financial information of the Company (excluding its subsidiaries) and the
guarantor subsidiaries as of November 1, 2003 and February 1, 2003 and for the
thirteen and thirty-nine weeks ended November 1, 2003 and November 2, 2002 are
as follows:

Consolidating Balance Sheets
November 1, 2003

|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |       |  
|--------------------------------------------------- | ----------------------------------------- | - | --------------------- | ----- | ------------ | - | ------------ | ----- | ------------ | - | ------ | ----- | - | - | ----- | ----- | -
|                                                    |                                           |   |                       |       |              |   | Guarantor    |       |              |   |        |       |   |   |      
|                                                    |                                           |   | Parent                |       | Subsidiaries |   | Eliminations |       | Consolidated
|                                                    |                                           |   |                       |       |              |   |              |       |             
|                                                    |                                           |   | (Dollars in
millions)
|Assets                                              |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Current assets:                                     |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|                                                    | Cash and cash equivalents                 |   | $                     | 17.8  |              |   | $            | 3.4   |              |   | $      |      |   |   | $     | 21.2  |  
|                                                    | Inventories                               |   |                       | 189.9 |              |   |              | 330.4 |              |   |        |      |   |   |       | 520.3 |  
|                                                    | Deferred income taxes                     |   |                       | 22.0  |              |   |              | 6.9   |              |   |        |      |   |   |       | 28.9  |  
|                                                    | Prepaid expenses and other current assets |   |                       | 17.3  |              |   |              | 5.7   |              |   |        |      |   |   |       | 23.0  |  
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Total current assets                                |                                           |   | 247.0                 |       |              |   | 346.4        |       |              |   |       |       |   |   | 593.4 |      
|Property, equipment and leasehold improvements, net |                                           |   | 71.7                  |       |              |   | 121.6        |       |              |   |       |       |   |   | 193.3 |      
|Goodwill, net                                       |                                           |   |                      |       |              |   | 26.5         |       |              |   |       |       |   |   | 26.5  |      
|Other assets                                        |                                           |   | 8.2                   |       |              |   | 1.3          |       |              |   |       |       |   |   | 9.5   |      
|Investment in subsidiaries                          |                                           |   | 64.5                  |       |              |   |             |       |              |   | (64.5  | )     |   |   |      |      
|Intercompany receivable                             |                                           |   | 369.6                 |       |              |   |             |       |              |   | (369.6 | )     |   |   |      |      
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Total assets                                        |                                           | $ | 761.0                 |       |              | $ | 495.8        |       |              | $ | (434.1 | )     |   | $ | 822.7 |      
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Liabilities and Shareholders Equity                |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Current liabilities:                                |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|                                                    | Accounts payable                          |   | $                     | 101.2 |              |   | $            | 54.7  |              |   | $      |      |   |   | $     | 155.9 |  
|                                                    | Accrued expenses                          |   |                       | 82.2  |              |   |              | (16.7 | )            |   |        |      |   |   |       | 65.5  |  
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Total current liabilities                           |                                           |   | 183.4                 |       |              |   | 38.0         |       |              |   |       |       |   |   | 221.4 |      
|Long-term debt                                      |                                           |   | 237.4                 |       |              |   |             |       |              |   |       |       |   |   | 237.4 |      
|Deferred income taxes                               |                                           |   | 17.6                  |       |              |   | 19.9         |       |              |   |       |       |   |   | 37.5  |      
|Other long-term liabilities                         |                                           |   | 6.1                   |       |              |   | 3.8          |       |              |   |       |       |   |   | 9.9   |      
|Intercompany payable                                |                                           |   |                      |       |              |   | 369.6        |       |              |   | (369.6 | )     |   |   |      |      
|Shareholders equity:                               |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|                                                    | Common stock                              |   |                       | 1.1   |              |   |              |      |              |   |        |      |   |   |       | 1.1   |  
|                                                    | Additional paid-in capital                |   |                       | 129.2 |              |   |              |      |              |   |        |      |   |   |       | 129.2 |  
|                                                    | Unamortized restricted stock awards       |   |                       | (2.6  | )            |   |              |      |              |   |        |      |   |   |       | (2.6  | )
|                                                    | Retained earnings                         |   |                       | 231.7 |              |   |              | 64.5  |              |   |        | (64.5 | ) |   |       | 231.7 |  
|                                                    | Accumulated other comprehensive loss      |   |                       | (1.8  | )            |   |              |      |              |   |        |      |   |   |       | (1.8  | )
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|                                                    |                                           |   | 357.6                 |       |              |   | 64.5         |       |              |   | (64.5  | )     |   |   | 357.6 |      
|                                                    | Treasury stock, at cost                   |   |                       | (41.1 | )            |   |              |      |              |   |        |      |   |   |       | (41.1 | )
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Total shareholders equity                          |                                           |   | 316.5                 |       |              |   | 64.5         |       |              |   | (64.5  | )     |   |   | 316.5 |      
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      
|Total liabilities and shareholders equity          |                                           | $ | 761.0                 |       |              | $ | 495.8        |       |              | $ | (434.1 | )     |   | $ | 822.7 |      
|                                                    |                                           |   |                       |       |              |   |              |       |              |   |        |       |   |   |       |      

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Note 9   Consolidating Financial Statements (Unaudited)  CONTINUED

Consolidating Balance Sheets
February 1, 2003

|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |       |  
|--------------------------------------------------- | ----------------------------------------- | ------ | --------------------- | ------------ | - | ------------ | --------- | ------------ | - | - | ------ | ----- | - | - | ----- | ----- | -
|                                                    |                                           |        |                       |              |   |              | Guarantor |              |   |   |        |       |   |   |      
|Consolidating Balance Sheets                        |                                           | Parent |                       | Subsidiaries |   | Eliminations |           | Consolidated
|                                                    |                                           |        |                       |              |   |              |           |             
|                                                    |                                           |        | (Dollars in
millions)
|Assets                                              |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Current assets:                                     |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|                                                    | Cash and cash equivalents                 |        | $                     | 60.2         |   |              | $         | 3.0          |   |   | $      |      |   |   | $     | 63.2  |  
|                                                    | Inventories                               |        |                       | 132.9        |   |              |           | 230.2        |   |   |        |      |   |   |       | 363.1 |  
|                                                    | Deferred income taxes                     |        |                       | 21.5         |   |              |           | 6.7          |   |   |        |      |   |   |       | 28.2  |  
|                                                    | Prepaid expenses and other current assets |        |                       | 11.2         |   |              |           | 6.0          |   |   |        |      |   |   |       | 17.2  |  
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Total current assets                                |                                           |        | 225.8                 |              |   |              | 245.9     |              |   |   |       |       |   |   | 471.7 |      
|Property, equipment and leasehold
improvements, net |                                           |        | 65.8                  |              |   |              | 124.5     |              |   |   |       |       |   |   | 190.3 |      
|Goodwill, net                                       |                                           |        |                      |              |   |              | 26.5      |              |   |   |       |       |   |   | 26.5  |      
|Other assets                                        |                                           |        | 14.6                  |              |   |              | 1.4       |              |   |   |       |       |   |   | 16.0  |      
|Investment in subsidiaries                          |                                           |        | 22.6                  |              |   |              |          |              |   |   | (22.6  | )     |   |   |      |      
|Intercompany receivable                             |                                           |        | 371.4                 |              |   |              |          |              |   |   | (371.4 | )     |   |   |      |      
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Total assets                                        |                                           | $      | 700.2                 |              |   | $            | 398.3     |              |   | $ | (394.0 | )     |   | $ | 704.5 |      
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Liabilities and Shareholders Equity                |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Current liabilities:                                |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|                                                    | Accounts payable                          |        | $                     | 130.3        |   |              | $         | (0.4         | ) |   | $      |      |   |   | $     | 129.9 |  
|                                                    | Accrued expenses                          |        |                       | 94.7         |   |              |           | (18.8        | ) |   |        |      |   |   |       | 75.9  |  
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Total current liabilities                           |                                           |        | 225.0                 |              |   |              | (19.2     | )            |   |   |       |       |   |   | 205.8 |      
|Long-term debt                                      |                                           |        | 162.9                 |              |   |              |          |              |   |   |       |       |   |   | 162.9 |      
|Deferred income taxes                               |                                           |        | 17.6                  |              |   |              | 19.6      |              |   |   |       |       |   |   | 37.2  |      
|Other long-term liabilities                         |                                           |        | 5.3                   |              |   |              | 3.9       |              |   |   |       |       |   |   | 9.2   |      
|Intercompany payable                                |                                           |        |                      |              |   |              | 371.4     |              |   |   | (371.4 | )     |   |   |      |      
|Shareholders equity:                               |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|                                                    | Common stock                              |        |                       | 1.1          |   |              |           |             |   |   |        |      |   |   |       | 1.1   |  
|                                                    | Additional paid-in capital                |        |                       | 113.8        |   |              |           |             |   |   |        |      |   |   |       | 113.8 |  
|                                                    | Unamortized restricted stock awards       |        |                       | (0.4         | ) |              |           |             |   |   |        |      |   |   |       | (0.4  | )
|                                                    | Retained earnings                         |        |                       | 217.8        |   |              |           | 22.6         |   |   |        | (22.6 | ) |   |       | 217.8 |  
|                                                    | Accumulated other comprehensive
Loss      |        |                       | (2.6         | ) |              |           |             |   |   |        |      |   |   |       | (2.6  | )
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|                                                    |                                           |        | 329.7                 |              |   |              | 22.6      |              |   |   | (22.6  | )     |   |   | 329.7 |      
|                                                    | Treasury stock, at cost                   |        |                       | (40.3        | ) |              |           |             |   |   |        |      |   |   |       | (40.3 | )
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Total shareholders equity                          |                                           |        | 289.4                 |              |   |              | 22.6      |              |   |   | (22.6  | )     |   |   | 289.4 |      
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      
|Total liabilities and shareholders equity          |                                           | $      | 700.2                 |              |   | $            | 398.3     |              |   | $ | (394.0 | )     |   | $ | 704.5 |      
|                                                    |                                           |        |                       |              |   |              |           |              |   |   |        |       |   |   |       |      

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##### Table of Contents



Note 9   Consolidating Financial Statements (Unaudited)  CONTINUED

Consolidating Statements of Operations
Thirteen Weeks Ended November 1, 2003 and November 2, 2002

|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |       | 
|--------------------------------------------------- | ---------------------------------- | - | --------------------- | ---- | ------------ | - | ------------ | ----- | ------------ | - | ------ | - |  | - | ----- | ----- | 
|                                                    |                                    |   | November 1, 2003     
|                                                    |                                    |   |                      
|                                                    |                                    |   |                       |      |              |   | Guarantor    |       |              |   |        |   |  |   |      
|                                                    |                                    |   | Parent                |      | Subsidiaries |   | Eliminations |       | Consolidated
|                                                    |                                    |   |                       |      |              |   |              |       |             
|                                                    |                                    |   | (Dollars in
millions)
|Net sales                                           |                                    | $ | 244.5                 |      |              | $ | 365.2        |       |              | $ | (162.2 | ) |  | $ | 447.5 |      
|Cost of sales                                       |                                    |   | 148.1                 |      |              |   | 246.5        |       |              |   | (162.2 | ) |  |   | 232.4 |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Gross margin                       |   |                       | 96.4 |              |   |              | 118.7 |              |   |        |  |  |   |       | 215.1 | 
|Selling, general and administrative expenses        |                                    |   | 86.5                  |      |              |   | 90.5         |       |              |   |       |   |  |   | 177.0 |      
|Store pre-opening and closing costs                 |                                    |   | 1.1                   |      |              |   | 1.3          |       |              |   |       |   |  |   | 2.4   |      
|Depreciation and amortization                       |                                    |   | 3.9                   |      |              |   | 5.7          |       |              |   |       |   |  |   | 9.6   |      
|Stock-based compensation expense                    |                                    |   | 1.5                   |      |              |   |             |       |              |   |       |   |  |   | 1.5   |      
|Debt repurchase and share reclassification expenses |                                    |   | 0.5                   |      |              |   |             |       |              |   |       |   |  |   | 0.5   |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Operating profit                   |   |                       | 2.9  |              |   |              | 21.2  |              |   |        |  |  |   |       | 24.1  | 
|Interest expense                                    |                                    |   | 1.9                   |      |              |   | 2.8          |       |              |   |       |   |  |   | 4.7   |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Income before income taxes         |   |                       | 1.0  |              |   |              | 18.4  |              |   |        |  |  |   |       | 19.4  | 
|Income tax provision (benefit)                      |                                    |   | 7.4                   |      |              |   |             |       |              |   |       |   |  |   | 7.4   |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Income (loss) before equity income |   |                       | (6.4 | )            |   |              | 18.4  |              |   |        |  |  |   |       | 12.0  | 
|Equity income from subsidiaries                     |                                    |   | 18.4                  |      |              |   |             |       |              |   | (18.4  | ) |  |   |      |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|Net income                                          |                                    | $ | 12.0                  |      |              | $ | 18.4         |       |              | $ | (18.4  | ) |  | $ | 12.0  |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      

|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |       | 
|--------------------------------------------------- | ---------------------------------- | - | --------------------- | ---- | ------------ | - | ------------ | ----- | ------------ | - | ------ | - |  | - | ----- | ----- | 
|                                                    |                                    |   | November 2, 2002     
|                                                    |                                    |   |                      
|                                                    |                                    |   |                       |      |              |   | Guarantor    |       |              |   |        |   |  |   |      
|                                                    |                                    |   | Parent                |      | Subsidiaries |   | Eliminations |       | Consolidated
|                                                    |                                    |   |                       |      |              |   |              |       |             
|                                                    |                                    |   | (Dollars in
millions)
|Net sales                                           |                                    | $ | 236.0                 |      |              | $ | 335.0        |       |              | $ | (140.9 | ) |  | $ | 430.1 |      
|Cost of sales                                       |                                    |   | 139.4                 |      |              |   | 234.2        |       |              |   | (140.9 | ) |  |   | 232.7 |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Gross margin                       |   |                       | 96.6 |              |   |              | 100.8 |              |   |        |  |  |   |       | 197.4 | 
|Selling, general and administrative expenses        |                                    |   | 85.3                  |      |              |   | 80.4         |       |              |   |       |   |  |   | 165.7 |      
|Store pre-opening and closing costs                 |                                    |   | 0.5                   |      |              |   | 0.2          |       |              |   |       |   |  |   | 0.7   |      
|Depreciation and amortization                       |                                    |   | 3.3                   |      |              |   | 5.8          |       |              |   |       |   |  |   | 9.1   |      
|Stock-based compensation expense                    |                                    |   |                      |      |              |   |             |       |              |   |       |   |  |   |      |      
|Debt repurchase and share reclassification expenses |                                    |   | 0.5                   |      |              |   |             |       |              |   |        |   |  |   | 0.5   |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Operating profit                   |   |                       | 7.0  |              |   |              | 14.4  |              |   |        |  |  |   |       | 21.4  | 
|Interest expense                                    |                                    |   | 2.8                   |      |              |   | 4.3          |       |              |   |       |   |  |   | 7.1   |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Income before income taxes         |   |                       | 4.2  |              |   |              | 10.1  |              |   |        |  |  |   |       | 14.3  | 
|Income tax provision (benefit)                      |                                    |   | 5.5                   |      |              |   | (0.1         | )     |              |   |       |   |  |   | 5.4   |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|                                                    | Income (loss) before equity income |   |                       | (1.3 | )            |   |              | 10.2  |              |   |        |  |  |   |       | 8.9   | 
|Equity income from subsidiaries                     |                                    |   | 10.2                  |      |              |   |             |       |              |   | (10.2  | ) |  |   |      |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      
|Net income                                          |                                    | $ | 8.9                   |      |              | $ | 10.2         |       |              | $ | (10.2  | ) |  | $ | 8.9   |      
|                                                    |                                    |   |                       |      |              |   |              |       |              |   |        |   |  |   |       |      

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##### Table of Contents



Note 9   Consolidating Financial Statements (Unaudited)  CONTINUED

Consolidating Statements of Operations
Thirty-Nine Weeks Ended November 1, 2003 and November 2, 2002

|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |       | 
|--------------------------------------------------- | ---------------------------------- | - | --------------------- | ----- | ------------ | - | ------------ | ----- | ------------ | - | ------ | - |  | - | ------- | ----- | 
|                                                    |                                    |   | November 1, 2003     
|                                                    |                                    |   |                      
|                                                    |                                    |   |                       |       |              |   | Guarantor    |       |              |   |        |   |  |   |        
|                                                    |                                    |   | Parent                |       | Subsidiaries |   | Eliminations |       | Consolidated
|                                                    |                                    |   |                       |       |              |   |              |       |             
|                                                    |                                    |   | (Dollars in
millions)
|Net sales                                           |                                    | $ | 645.4                 |       |              | $ | 946.7        |       |              | $ | (410.6 | ) |  | $ | 1,181.5 |      
|Cost of sales                                       |                                    |   | 391.7                 |       |              |   | 632.2        |       |              |   | (410.6 | ) |  |   | 613.3   |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Gross margin                       |   |                       | 253.7 |              |   |              | 314.5 |              |   |        |  |  |   |         | 568.2 | 
|Selling, general and administrative expenses        |                                    |   | 244.2                 |       |              |   | 244.0        |       |              |   |       |   |  |   | 488.2   |      
|Store pre-opening and closing costs                 |                                    |   | 3.5                   |       |              |   | 3.6          |       |              |   |       |   |  |   | 7.1     |      
|Depreciation and amortization                       |                                    |   | 10.7                  |       |              |   | 17.1         |       |              |   |       |   |  |   | 27.8    |      
|Stock-based compensation expense                    |                                    |   | 4.1                   |       |              |   |             |       |              |   |       |   |  |   | 4.1     |      
|Debt repurchase and share reclassification expenses |                                    |   | 4.6                   |       |              |   |             |       |              |   |       |   |  |   | 4.6     |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Operating profit                   |   |                       | (13.4 | )            |   |              | 49.8  |              |   |        |  |  |   |         | 36.4  | 
|Interest expense                                    |                                    |   | 5.8                   |       |              |   | 8.1          |       |              |   |       |   |  |   | 13.9    |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Income before income taxes         |   |                       | (19.2 | )            |   |              | 41.7  |              |   |        |  |  |   |         | 22.5  | 
|Income tax provision (benefit)                      |                                    |   | 8.8                   |       |              |   | (0.2         | )     |              |   |       |   |  |   | 8.6     |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Income (loss) before equity income |   |                       | (28.0 | )            |   |              | 41.9  |              |   |        |  |  |   |         | 13.9  | 
|Equity income from subsidiaries                     |                                    |   | 41.9                  |       |              |   |             |       |              |   | (41.9  | ) |  |   |        |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|Net income                                          |                                    | $ | 13.9                  |       |              | $ | 41.9         |       |              | $ | (41.9  | ) |  | $ | 13.9    |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      

|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |       | 
|--------------------------------------------------- | ---------------------------------- | - | --------------------- | ----- | ------------ | - | ------------ | ----- | ------------ | - | ------ | - |  | - | ------- | ----- | 
|                                                    |                                    |   | November 2, 2002     
|                                                    |                                    |   |                      
|                                                    |                                    |   |                       |       |              |   | Guarantor    |       |              |   |        |   |  |   |        
|                                                    |                                    |   | Parent                |       | Subsidiaries |   | Eliminations |       | Consolidated
|                                                    |                                    |   |                       |       |              |   |              |       |             
|                                                    |                                    |   | (Dollars in
millions)
|Net sales                                           |                                    | $ | 632.1                 |       |              | $ | 883.9        |       |              | $ | (359.8 | ) |  | $ | 1,156.2 |      
|Cost of sales                                       |                                    |   | 367.4                 |       |              |   | 598.8        |       |              |   | (359.8 | ) |  |   | 606.4   |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Gross margin                       |   |                       | 264.7 |              |   |              | 285.1 |              |   |        |  |  |   |         | 549.8 | 
|Selling, general and administrative expenses        |                                    |   | 232.0                 |       |              |   | 234.1        |       |              |   |       |   |  |   | 466.1   |      
|Store pre-opening and closing costs                 |                                    |   | 2.2                   |       |              |   | 0.9          |       |              |   |       |   |  |   | 3.1     |      
|Depreciation and amortization                       |                                    |   | 9.8                   |       |              |   | 17.2         |       |              |   |       |   |  |   | 27.0    |      
|Stock-based compensation expense                    |                                    |   |                      |       |              |   |             |       |              |   |       |   |  |   |        |      
|Debt repurchase and share reclassification expenses |                                    |   | 1.9                   |       |              |   |             |       |              |   |       |   |  |   | 1.9     |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Operating profit                   |   |                       | 18.8  |              |   |              | 32.9  |              |   |        |  |  |   |         | 51.7  | 
|Interest expense                                    |                                    |   | 8.4                   |       |              |   | 11.7         |       |              |   |       |   |  |   | 20.1    |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Income before income taxes         |   |                       | 10.4  |              |   |              | 21.2  |              |   |        |  |  |   |         | 31.6  | 
|Income tax provision (benefit)                      |                                    |   | 12.3                  |       |              |   | (0.3         | )     |              |   |       |   |  |   | 12.0    |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|                                                    | Income (loss) before equity income |   |                       | (1.9  | )            |   |              | 21.5  |              |   |        |  |  |   |         | 19.6  | 
|Equity income from subsidiaries                     |                                    |   | 21.5                  |       |              |   |             |       |              |   | (21.5  | ) |  |   |        |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      
|Net income                                          |                                    | $ | 19.6                  |       |              | $ | 21.5         |       |              | $ | (21.5  | ) |  | $ | 19.6    |      
|                                                    |                                    |   |                       |       |              |   |              |       |              |   |        |   |  |   |         |      

Page 15



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##### Table of Contents



Note 9   Consolidating Financial Statements (Unaudited)  CONTINUED

Consolidating Statements of Cash Flows
Thirty-Nine Weeks Ended November 1, 2003 and November 2, 2002

|                                                     |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |       |  
|---------------------------------------------------- | --------------------------------------- | - | --------------------- | ----- | ------------ | - | ------------ | ----- | ------------ | - | - | - |  | - | ----- | ----- | -
|                                                     |                                         |   | November 1, 2003     
|                                                     |                                         |   |                      
|                                                     |                                         |   |                       |       |              |   | Guarantor    |       |              |   |   |   |  |   |      
|                                                     |                                         |   | Parent                |       | Subsidiaries |   | Eliminations |       | Consolidated
|                                                     |                                         |   |                       |       |              |   |              |       |             
|                                                     |                                         |   | (Dollars in
millions)
|Net cash (used for) provided by operating activities |                                         | $ | (105.8                | )     |              | $ | 15.4         |       |              | $ |  |   |  | $ | (90.4 | )    
|Net cash flows used for investing activities:        |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |      
|                                                     | Capital expenditures                    |   |                       | (16.1 | )            |   |              | (15.0 | )            |   |   |  |  |   |       | (31.1 | )
|                                                     | Proceeds form sale of equity investment |   |                       | 1.9   |              |   |              |      |              |   |   |  |  |   |       | 1.9   |  
|                                                     |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |      
|Net cash used for investing activities               |                                         |   | (14.2                 | )     |              |   | (15.0        | )     |              |   |  |   |  |   | (29.2 | )    
|Net cash flows provided by financing activities:     |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |      
|                                                     | Net increase in credit facilities       |   |                       | 120.4 |              |   |              |      |              |   |   |  |  |   |       | 120.4 |  
|                                                     | Purchase of senior subordinated notes   |   |                       | (48.4 | )            |   |              |      |              |   |   |  |  |   |       | (48.4 | )
|                                                     | Proceeds from exercise of stock options |   |                       | 4.1   |              |   |              |      |              |   |   |  |  |   |       | 4.1   |  
|                                                     | Other, net                              |   |                       | 1.5   |              |   |              |      |              |   |   |  |  |   |       | 1.5   |  
|                                                     |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |      
|Net cash provided by financing activities            |                                         |   | 77.6                  |       |              |   |             |       |              |   |  |   |  |   | 77.6  |      
|                                                     |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |      
|Net increase (decrease) in cash and cash equivalents |                                         |   | (42.4                 | )     |              |   | 0.4          |       |              |   |  |   |  |   | (42.0 | )    
|Cash and cash equivalents at beginning of period     |                                         |   | 60.2                  |       |              |   | 3.0          |       |              |   |  |   |  |   | 63.2  |      
|                                                     |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |      
|Cash and cash equivalents at end of period           |                                         | $ | 17.8                  |       |              | $ | 3.4          |       |              | $ |  |   |  | $ | 21.2  |      
|                                                     |                                         |   |                       |       |              |   |              |       |              |   |   |   |  |   |       |      

|                                                     |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |       |  
|---------------------------------------------------- | --------------------------------------- | - | --------------------- | ----- | ------------ | - | ------------ | ---- | ------------ | - | - | - |  | - | ----- | ----- | -
|                                                     |                                         |   | November 2, 2002     
|                                                     |                                         |   |                      
|                                                     |                                         |   |                       |       |              |   | Guarantor    |      |              |   |   |   |  |   |      
|                                                     |                                         |   | Parent                |       | Subsidiaries |   | Eliminations |      | Consolidated
|                                                     |                                         |   |                       |       |              |   |              |      |             
|                                                     |                                         |   | (Dollars in
millions)
|Net cash (used for) provided by operating activities |                                         | $ | (49.8                 | )     |              | $ | 3.5          |      |              | $ |  |   |  | $ | (46.3 | )    
|Net cash flows used for investing activities:        |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |      
|                                                     | Capital expenditures                    |   |                       | (8.9  | )            |   |              | (3.5 | )            |   |   |  |  |   |       | (12.4 | )
|                                                     |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |      
|Net cash used for investing activities               |                                         |   | (8.9                  | )     |              |   | (3.5         | )    |              |   |  |   |  |   | (12.4 | )    
|Net cash flows provided by financing activities:     |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |      
|                                                     | Net increase in credit facilities       |   |                       | 79.6  |              |   |              |     |              |   |   |  |  |   |       | 79.6  |  
|                                                     | Purchase of senior subordinated notes   |   |                       | (28.3 | )            |   |              |     |              |   |   |  |  |   |       | (28.3 | )
|                                                     | Proceeds from exercise of stock options |   |                       | 7.2   |              |   |              |     |              |   |   |  |  |   |       | 7.2   |  
|                                                     | Other, net                              |   |                       | 0.7   |              |   |              |     |              |   |   |  |  |   |       | 0.7   |  
|                                                     |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |      
|Net cash provided by financing activities            |                                         |   | 59.2                  |       |              |   |             |      |              |   |  |   |  |   | 59.2  |      
|                                                     |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |      
|Net increase in cash and cash equivalents            |                                         |   | 0.5                   |       |              |   |             |      |              |   |  |   |  |   | 0.5   |      
|Cash and cash equivalents at beginning of period     |                                         |   | 17.5                  |       |              |   | 3.6          |      |              |   |  |   |  |   | 21.1  |      
|                                                     |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |      
|Cash and cash equivalents at end of period           |                                         | $ | 18.0                  |       |              | $ | 3.6          |      |              | $ |  |   |  | $ | 21.6  |      
|                                                     |                                         |   |                       |       |              |   |              |      |              |   |   |   |  |   |       |      

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Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table sets forth our results of operations through
operating profit, expressed as a percentage of net sales. The following
discussion should be read in conjunction with our consolidated financial
statements and related notes thereto.

|                                                    |                  |  |                         |      |                         |  |             |      |             |  |       |      |   |  |       |      |  
|--------------------------------------------------- | ---------------- |  | ----------------------- | ---- | ----------------------- |  | ----------- | ---- | ----------- |  | ----- | ---- | - |  | ----- | ---- | -
|                                                    |                  |  | Percentage of Net Sales
|                                                    |                  |  |                        
|                                                    |                  |  | Thirteen Weeks Ended    |      | Thirty-Nine Weeks Ended
|                                                    |                  |  |                         |      |                        
|                                                    |                  |  | Nov 1, 2003             |      | Nov 2, 2002             |  | Nov 1, 2003 |      | Nov 2, 2002
|                                                    |                  |  |                         |      |                         |  |             |      |            
|Net sales                                           |                  |  | 100.0                   | %    |                         |  | 100.0       | %    |             |  | 100.0 | %    |   |  | 100.0 | %   
|                                                    | Gross margin     |  |                         | 48.1 | %                       |  |             | 45.9 | %           |  |       | 48.1 | % |  |       | 47.6 | %
|Selling, general and administrative expenses        |                  |  | 39.6                    | %    |                         |  | 38.5        | %    |             |  | 41.3  | %    |   |  | 40.3  | %   
|Store pre-opening and closing costs                 |                  |  | 0.5                     | %    |                         |  | 0.2         | %    |             |  | 0.6   | %    |   |  | 0.3   | %   
|Depreciation and amortization                       |                  |  | 2.1                     | %    |                         |  | 2.1         | %    |             |  | 2.4   | %    |   |  | 2.3   | %   
|Stock-based compensation expense                    |                  |  | 0.3                     | %    |                         |  |            |      |             |  | 0.3   | %    |   |  |      |     
|Debt repurchase and share reclassification expenses |                  |  | 0.1                     | %    |                         |  | 0.1         | %    |             |  | 0.4   | %    |   |  | 0.2   | %   
|                                                    |                  |  |                         |      |                         |  |             |      |             |  |       |      |   |  |       |     
|                                                    | Operating profit |  |                         | 5.4  | %                       |  |             | 5.0  | %           |  |       | 3.1  | % |  |       | 4.5  | %
|                                                    |                  |  |                         |      |                         |  |             |      |             |  |       |      |   |  |       |     

Comparison of the Thirteen Weeks Ended November 1, 2003 and November 2, 2002

Net sales for the third quarter of fiscal 2004 increased 4.0%, or $17.4
million, to $447.5 million from $430.1 million in the prior year. Sales
from stores open one year or more (same-store sales) increased 4.2%
compared with a same-store sales increase of 6.5% for the prior year third
quarter. Same-store sales generated all of the overall net sales increase,
as we operated fewer stores in the third quarter versus a year ago. The
Companys total store count at the end of the quarter was down 39 units, or
4.1% from last years third quarter; however, the number of superstores in
operation increased to 87 from 71 in last years third quarter. Total store
square footage decreased 1.8% from last years third quarter. The 87
superstores in operation accounted for approximately 29% of the total sales
for the third quarter.

By store format, our same-store sales performance for traditional
stores increased 4.1% versus a same-store sales increase of 6.2% for the
prior year third quarter. All of the traditional store increase was due to
an increased average ticket, with customer traffic down slightly.
Same-store sales for superstores increased 4.5% for the quarter versus a
same-store sales increase of 7.6% for the prior year third quarter.
Approximately 80% of the superstore increase was driven by an increase in
traffic, with average ticket comprising the rest of the increase.

Same-store sales for the quarter were aided by promotional activity
during the month of August celebrating the Companys 60th anniversary. This
promotion, which included special pricing offers and a newspaper insert,
covering approximately 60% of our store base, drove strong same-store sales
increases during the month of August. During the quarter, we saw sales
strength in all of our major product categories with the exception of
finished seasonal goods, which was down approximately 11% on a same-store
sales basis for the quarter (although at a significantly higher gross margin
rate). We made the decision to be less aggressive in our promotional pricing
during the third quarter this year versus the third quarter of last year.
The finished seasonal business, specifically Fall and Halloween merchandise,
was the category that felt the largest negative impact resulting from the
less promotional stance.

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As a percent of net sales, gross margin was 48.1% for the third quarter
of fiscal 2004 compared with 45.9% for the same quarter a year earlier, an
improvement of 220 basis points. The primary contributors to the
improvement in gross margins were higher selling margin rates (approximately
150 basis points) in all product lines resulting from our less promotional
pricing strategy as well as reduced levels of clearance activity, and
continued improvements in store shrink rates (approximately 40 basis
points). The selling margin rate for the finished seasonal category, which
was the only major category that experienced a same-store sales decline for
the quarter, increased 670 basis points over last years third quarter due
to our reduced promotional strategy.

Selling, general and administrative (SG&A) expenses, excluding other
expenses separately identified in the statement of operations, were $177.0
million in the third quarter, representing a 6.8% increase from the $165.7
million in SG&A expenses in the prior year third quarter. As a percentage
of net sales, SG&A expenses increased to 39.6% versus 38.5% for the third
quarter of fiscal 2003. This increase in expense leverage was principally
from higher advertising costs (approximately 120 basis points), primarily
due to the promotion for the Companys 60th anniversary sale, and higher
distribution costs (approximately 60 basis points), due to changes in the
management of seasonal merchandise distribution that involved the temporary
storage of seasonal goods in order to replenish in-season. These increases
were partially offset by positive expense leverage in store and corporate
expenses.

Store pre-opening and closing costs increased $1.7 million during the
third quarter of fiscal 2004, to $2.4 million due to increased store opening
activity. We opened three superstores and one traditional store in this
years third quarter, compared with one superstore opening in the prior year
third quarter. We also converted two traditional stores to the superstore
format during the third quarter.

Depreciation and amortization expense increased $0.5 million to $9.6
million from $9.1 million, primarily due to the increased level of capital
expenditures year-over-year.

Stock-based compensation expense of $1.5 million resulted from our
adoption of the fair-value based method of accounting for stock options
under SFAS No. 123 Accounting for Stock-Based Compensation Expense. We
adopted SFAS No. 123 in the first quarter of fiscal 2004 under the
modified-prospective method allowed under the transition provisions provided
for under SFAS No. 148 Accounting for Stock-Based CompensationTransition
and Disclosure an Amendment of FASB Statement No. 123.

Debt repurchase and share reclassification expenses were flat for the
third quarter year-over-year. Share reclassification (discussed further
below) expenses of $0.5 million were incurred during the third quarter of
fiscal 2004. During the third quarter of the prior year, debt repurchase
expenses of $0.5 million were incurred to repurchase approximately $7.4
million of our 10-3/8% senior subordinated notes. The charge recorded
includes the cash premium paid for early redemption and a write-off of the
related deferred finance charges.

Operating profit for the third quarter of fiscal 2004 was $24.1
million, compared to $21.4 million for the third quarter of fiscal 2003.

Interest expense in the third quarter of fiscal 2004 decreased $2.4
million to $4.7 million from $7.1 million in the third quarter of fiscal
2003. The decrease is primarily due to a decrease of approximately $70
million in our average debt levels between periods. Our average debt levels
during the third quarter of fiscal 2004 were approximately $230 million,
compared with approximately $300 million in the prior year third quarter.

Our effective income tax rate of 38.0% for the third quarter of fiscal
2004 was consistent with the rate for the third quarter of fiscal 2003.

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Comparison of the Thirty-Nine Weeks Ended November 1, 2003 and November 2, 2002

Net sales for the first three quarters of fiscal 2004 increased 2.2% to
$1.181 billion from $1.156 billion in the prior year. Same-store sales
increased 3.1% compared with a same-store sales increase of 9.0% for the
fiscal 2003 third quarter year-to-date. Approximately 60% of this increase
was driven by an increase in customer traffic. Same-store sales generated
all of the overall net sales increase, as we operated fewer stores versus a
year ago. The Companys total store count at the end of the quarter was
down 39 units, or 4.1% from last years third quarter; however, the number
of superstores in operation increased to 87 from 71 in last years third
quarter. Store square footage decreased 1.8% from last years third
quarter. The 87 superstores in operation accounted for more than 27% of the
total sales for the third quarter year-to-date.

By store format, our same-store sales performance for traditional
stores increased 3.1% versus a same-store sales increase of 8.9% in the
prior year-to-date period. Approximately 70% of this increase was driven by
a higher average ticket. Same-store sales for superstores increased 3.3%
year-to-date versus a same-store sales increase of 9.5% for the prior
year-to-date period. The increase was driven entirely by customer traffic
with average ticket down slightly.

As a percent of net sales, gross margin was 48.1% for the first three
quarters of fiscal 2004 compared with 47.6% for the same period a year
earlier, an increase of 50 basis points. This increase in margin rate was
primarily due to the improvement in store shrink rates, partially offset by
reduced selling margins caused by a more promotional stance taken by the
Company in the first half of fiscal 2004. Store shrink expense rates
improved approximately 100 basis points, while overall selling gross margins
decreased 60 basis points.

SG&A expenses were $488.2 million in the first three quarters of fiscal
2004 versus $466.1 million in the prior year. As a percentage of net sales,
SG&A expenses increased to 41.3% versus 40.3% for fiscal 2003. This
increase in expense leverage primarily related to higher advertising costs
(approximately 60 basis points) and higher distribution costs due, in part,
to the acceleration of seasonal product flow into the stores, as well as
temporary outside storage costs of seasonal goods, incurred in the third
quarter.

Store pre-opening and closing costs increased $4.0 million during the
third quarter year-to-date period of fiscal 2004, to $7.1 million due to
increased store opening activity. We opened 12 superstores year-to-date,
compared with one store opening through the third quarter of the prior year.

Depreciation and amortization expense increased $0.8 million to $27.8
million from $27.0 million, due to the increased level of capital
expenditures year-over-year.

Stock-based compensation expense of $4.1 million resulted from our
adoption of the fair-value based method of accounting for stock options
under SFAS No. 123 Accounting for Stock-Based Compensation Expense (See
Note 4  Stock-Based Compensation).

Debt repurchase and share reclassification expenses for the third
quarter year-to-date were $4.6 million versus $1.9 million last year, a $2.7
million increase. Share reclassification expenses of $1.2 million were
incurred through the end of the third quarter of fiscal 2004. Debt
repurchase expenses of $3.4 million were incurred to repurchase
approximately $46.0 million of our 10-3/8% senior subordinated notes in
fiscal 2004 versus $1.9 million of expenses incurred to repurchase $27.1
million of senior subordinated notes in the prior year. The charges include
the cash premium paid for early redemption and the write-off of the related
deferred finance charges.

Operating profit was $36.4 million in fiscal 2004, compared with $51.7
million for fiscal 2003.

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Interest expense for fiscal 2004 decreased $6.2 million to $13.9
million from $20.1 million in fiscal 2003. The decrease is primarily due to
a decrease of approximately $75 million in our average debt levels between
years. Our average debt levels year-to-date in fiscal 2004 were
approximately $180 million, compared with approximately $255 million in
fiscal 2003 year-to-date.

Our effective income tax rate of 38.0% for fiscal 2004 is consistent
with the rate for fiscal 2003.

Liquidity and Capital Resources

We believe that our credit facility, coupled with cash on hand and cash
from operations, will be sufficient to cover our working capital, capital
expenditure and debt service requirement needs for the foreseeable future.

Cash and cash equivalents decreased $42.0 million during fiscal 2004 to
$21.2 million as of November 1, 2003.

Net cash used for operating activities was $90.4 million in fiscal 2004
compared to $46.3 million in fiscal 2003. Inventories, net of payable support,
increased $131.2 million, compared with an increase of $96.6 million in fiscal
2003. Inventory typically builds during the first three quarters of the fiscal
year, as we prepare for the peak selling season in the fourth quarter. The
higher use of cash related to the increase in inventory, coupled with an
increased use of cash for accrued expenses, due primarily to payments of fiscal
2003 annual incentive compensation in fiscal 2004 and a lower accrued interest
balance, comprised the majority of the increase in cash used for operating
activities year over year.

Net cash used for investing activities, totaled $29.2 million in fiscal
2004 compared with $12.4 million in fiscal 2003. The increase was due to an
increase in capital expenditures, primarily due to new store openings.
Partially offsetting the increase in capital expenditures were proceeds of $1.9
million from the sale of our equity investment in BouClair, Inc., a Canadian
fabric retailer. Total consideration for the sale of BouClair was $6.5
million, $1.9 of which was received in the third quarter. There was no
material impact on the statement of operations from the sale of this
investment.

We anticipate capital expenditures for the full fiscal year 2004 to be
approximately $50 million. The majority of this spending will pertain to new
store openings and continued improvements in the existing store base. During
the third quarter year-to-date period of fiscal 2004, we opened 12 superstores
and three larger traditional stores. We converted four larger traditional
stores to our superstore format and we closed 32 traditional stores. During the
fourth quarter of fiscal 2004, we will open four more superstores and one
larger traditional store. We anticipate closing an additional ten traditional
stores before year-end.

Net cash provided by financing activities was $77.6 million during fiscal
2004 compared with $59.2 million during fiscal 2003. Debt borrowings
increased $72.0 million during fiscal 2004, compared with a net increase of
$51.3 million in the prior year. During fiscal 2004, we redeemed or
repurchased in the open market, approximately $46.0 million of senior
subordinated notes at an aggregate premium of 105.4% to par value. These
purchases were made utilizing excess cash on hand and borrowings under the
credit facility as of the beginning of the period. The $3.4 million pre-tax
charge for debt repurchase expenses recorded in the year-to-date statement of
operations includes the cash premium to par value and the write-off of related
deferred costs.

Our debt-to-capitalization ratio was 42.9% at November 1, 2003, 36.0% at
February 1, 2003 and 51.5% at November 2, 2003. We have a goal to further
reduce debt levels during fiscal 2004 utilizing cash provided by operating
activities in the fourth quarter.

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Business Outlook

In a press release dated November 17, 2003, which was furnished to the
Securities and Exchange Commission on Form 8-K, the Company provided guidance
for the fourth quarter and lowered its guidance for the full fiscal year.
Fourth quarter earnings are estimated to be $1.05 to $1.15 per share, versus
last years fourth quarter performance of $1.15 per share, after adjusting for
the increased shares outstanding resulting from the share reclassification
approved by shareholders on November 4, 2003. We reduced our full year
earnings estimate by $0.30 to $1.70 to $1.80 per diluted share, from our
previously stated guidance of $2.00 to $2.10 per diluted share.

The change in guidance was predicated on our experience in the third
quarter, particularly with our Fall and Halloween merchandise sales, as well as
the moderation in same-store sales growth overall in our industry.
Specifically, the revised guidance was based on the following assumptions:



| |  | Expectations for fourth-quarter same-store sales have been reduced to
2-3%. This compares to a 6.9% same-store sales performance in the
prior year fourth quarter. Earlier guidance was predicated on
same-store sales growth of 4% for the full fiscal year. Based on the
revised fourth quarter same-store sales guidance provided, full year
same-store sales are now expected to increase 2.5-3.0%.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | The level of improvement in the gross margin rate in the fourth quarter
has been reduced from earlier expectations.                                                                                                                                                                                                                                                                                    

Our actual results in the fourth quarter are highly dependent on the sales
and operating margin performance we are able to achieve. As a result, our
estimates are subject to further refinement, which we will provide, if
necessary, prior to the end of the fiscal year. On December 4, 2003, we
reported our November sales results on Form 8-K. Although, our same-store
sales decreased 0.2% for the month, the gross margin dollars generated were in
line with our planned expectations and we made no changes to our guidance for
fourth quarter earnings.

Share Reclassification and Other Matters

On November 4, 2003, shareholders approved the reclassification of our
former Class A and Class B Common Shares into a single class of stock. Shares
of the single class of stock began trading on the New York Stock Exchange on
November 5th, under the symbol JAS.

Under the reclassification, Class B Common Shares, which did not have
voting rights other than as required by law, were amended to have one vote per
share and were redesignated as Common Shares. Each of the Class A Common
Shares, which had one vote per share, were reclassified into 1.15 Common
Shares.

Shareholders also approved certain other governance proposals, as set
forth in the proxy statement for the shareholders meeting. One of the
governance proposals requires an 80% shareholder vote for any change in the
number of directors that is not approved by the Board of Directors. Another
requires an 80% shareholder vote to eliminate any of the shareholder protective
measures or the staggered board. The Corporate Governance Committee of the
Board of Directors is considering the advisability of changing the percentage
vote required in each of these regulation amendments from 80% to 66-2/3%, which
would require shareholder approval.

On November 24, 2003, our Board of Directors announced the appointment of
Patty Morrison, Executive Vice-President, Chief Information Officer for Office
Depot, Inc. to the Board of Directors.

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Seasonality and Inflation

Our business exhibits seasonality, which is typical for most retail
companies. Our sales are much stronger in the second half of the year than
the first half of the year. Net earnings are highest during the months of
September through December when sales volumes provide significant operating
leverage. Working capital requirements needed to finance our operations
fluctuate during the year and reach their highest levels during the second and
third fiscal quarters as we increase our inventory in preparation for our peak
selling season.

We believe that inflation has not had a significant effect on net sales
or on net income. There can be no assurance, however, that our operating
results will not be affected by inflation in the future.

Critical Accounting Policies

Our condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
of America. Preparation of these statements requires management to make
judgments and estimates. Some accounting policies have a significant impact
on amounts reported in these financial statements. A summary of significant
accounting policies and a description of accounting policies that are
considered critical may be found in our 2003 Annual Report on Form 10-K, in
the notes to the consolidated financial statements, Note 1 and the Critical
Accounting Policies section.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this report that are not historical facts
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements, which reflect
the Companys current views of future events and financial performance,
involve certain risks and uncertainties. When used herein, the terms
anticipates, plans, estimates, expects, believes, and similar
expressions as they relate to us or future or conditional verbs such as
will, should, would, may, and could are intended to identify such
forward-looking statements. Our actual results, performance or achievements
may materially differ from those expressed or implied in the forward-looking
statements. Risks and uncertainties that could cause or contribute to such
material differences include, but are not limited to, general economic
conditions, changes in customer demand, changes in trends in the fabric and
craft industry, seasonality, the availability of merchandise, changes in the
competitive pricing for products, and the impact of our and our competitors
store openings and closings, fuel and energy costs, changes in tariff and
freight rates, consumer debt levels, and other capital market and
geo-political conditions. We caution readers not to place undue reliance on
these forward-looking statements. We assume no obligation to update any of
the forward-looking statements.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

We use derivative financial instruments at various times to manage the
risk associated with interest rate fluctuations. The Company is subject to
risk resulting from interest rate fluctuations, as interest on the Companys
credit facility is based on variable rates. The Companys objective in
managing its interest rate exposure is to limit the impact of interest rate
changes on earnings and cash flows. Interest rate swaps are primarily
utilized to achieve this objective, effectively converting a portion of our
variable-rate exposures to fixed interest rates (See Note 6  Fair Value of
Derivative Financial Instruments).

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##### Table of Contents






Item 4.  Controls and Procedures

As of the end of the period covered by this report, the Company conducted
an evaluation, under the supervision and with the participation of the
principal executive officer and principal financial officer, of the Companys
disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)).
Based on this evaluation, the principal executive officer and principal
financial officer concluded that the Companys disclosure controls and
procedures are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. There was no change in
the Companys internal control over financial reporting during the Companys
most recently completed fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over
financial reporting.




PART II OTHER INFORMATION




Item 1.  Legal
Proceedings

We are involved in various litigation matters in the ordinary course of
our business. We are not currently involved in any litigation which we expect,
either individually or in the aggregate, will have a material adverse effect on
our financial condition or results of operations.




Item 2.  Changes in Securities and Use of Proceeds

On November 4, 2003, shareholders approved the reclassification of our
former Class A and Class B Common Shares into a single class of stock. Shares
of the single class of stock began trading on the New York Stock Exchange on
November 5, under the symbol JAS.

Under
the reclassification, Class B Common Shares, which did not have
voting rights other than as required by law, were amended to have one vote per
share and were redesignated as Common Shares. Each of the Class A Common
Shares, which had one vote per share, were reclassified into 1.15 Common
Shares.




Item 4.  Submission of Matters to a Vote of Security Holders

A Special Meeting of Shareholders of the Company was held on November 4, 2003.

Shareholders voted to approve an amendment to the Companys Articles
of Incorporation providing for a reclassification of the Companys shares
pursuant to which:



| |  |  | each of the Class A Common Shares, which had one vote per
share, were reclassified into 1.15 Class B Common Shares; and                                                                                                            
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | each of the Class B Common Shares, which currently did
not have voting rights other than as required by law, were amended
to have one vote per share and were redesignated as the
Companys Common Shares, by the following vote:

|                      |  |           |           |               |  |             |           |  |  |  |        | 
|--------------------- |  | --------- | --------- | ------------- |  | ----------- | --------- |  |  |  | ------ | 
|                     
|Class                 |  | Votes For |           | Votes Against |  | Abstentions
|                     
|Class A Common Shares |  |           | 8,059,261 |               |  |             | 815,119   |  |  |  | 15,505 | 
|                     
|Class B Common Shares |  |           | 5,152,144 |               |  |             | 2,265,350 |  |  |  | 3,126  | 
|                     

Also at the special meeting, shareholders of Class A Common Shares
voted to approve amendments to the Companys Code of Regulations that
would:

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| |  |  | raise from 25% to 50% the percentage of shares
required to call a special meeting of shareholders, by the
following vote:
| | - |  | -------------------------------------------------------------------------------------------------------------------------

|          |  |               |           |             |  |  |         | 
|--------- |  | ------------- | --------- | ----------- |  |  | ------- | 
|Votes For |  | Votes Against |           | Abstentions
|          |  |               |           |            
|5,507,689 |  |               | 3,254,090 |             |  |  | 128,106 | 



| |  |  | provide for 90 days advance notice of any proposals
or director nominations to be made by shareholders at any
shareholders meeting, by the following vote:
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|          |  |               |           |             |  |  |         | 
|--------- |  | ------------- | --------- | ----------- |  |  | ------- | 
|Votes For |  | Votes Against |           | Abstentions
|          |  |               |           |            
|5,734,736 |  |               | 3,032,032 |             |  |  | 123,117 | 



| |  |  | require an 80% shareholder vote for any change in the
number of directors that is not approved by the Companys
Board of Directors, by the following vote:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|          |  |               |           |             |  |  |         | 
|--------- |  | ------------- | --------- | ----------- |  |  | ------- | 
|Votes For |  | Votes Against |           | Abstentions
|          |  |               |           |            
|5,451,659 |  |               | 3,315,273 |             |  |  | 122,953 | 



| |  |  | require an 80% shareholder vote to eliminate any of
these shareholder protective measures or our staggered board,
by the following vote:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------

|          |  |               |           |             |  |  |         | 
|--------- |  | ------------- | --------- | ----------- |  |  | ------- | 
|Votes For |  | Votes Against |           | Abstentions
|          |  |               |           |            
|5,442,508 |  |               | 3,322,723 |             |  |  | 124,654 | 




Item 5.  Other Information

As a result of amendments to the Companys Code of Regulations, approved
by the Companys shareholders at a special meeting held on November 4, 2003,
the deadline for shareholders to submit proposals to be considered at the
Companys annual meeting has changed.

The deadline for shareholders to submit proposals to be considered for
inclusion in the proxy statement for the 2004 annual meeting of shareholders is
January 2, 2004. Additionally, a shareholder who wishes to present a proposal
at the 2004 annual meeting of shareholders must notify the Company of such
proposal by no earlier than February 11, 2004 and no later than March 12, 2004.
For business to be properly requested by a shareholder to be brought before an
annual meeting of shareholders, the shareholder must comply with all of the
requirements of the Companys Code of Regulations, not just the timeliness
requirements described above.




Item 6.  Exhibits and Reports on Form 8-K



| | a) |  | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Exhibit 3.1  Amended
and Restated Articles of Incorporation of Jo-Ann Stores Inc.
Exhibit 3.2  Amended and Restated Code of Regulations
Exhibit 31.1  Section 302 Certification By Chief Executive Officer
Exhibit 31.2  Section 302 Certification By Chief Financial Officer
Exhibit 32.1  Section 906 Certification of Principal Executive Officer
Exhibit 32.2  Section 906 Certification of Principal Financial Officer

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| | b) |  | Reports on Form 8-K                                                                                                                                                                                                                                                                                            
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The Company furnished a Current Report on Form 8-K dated
August 6, 2003 to report the issuance of a press release
announcing its net sales for the four weeks, thirteen weeks and
year-to-date periods ended August 2, 2003.                                                                                   
|
| |    |  | The Company furnished a Current Report on Form 8-K dated
August 18, 2003 to report the issuance of a press release
announcing the election of a new Board member.                                                                                                                                              
|
| |    |  | The Company furnished a Current Report on Form 8-K dated
August 18, 2003 to report the issuance of a press release
announcing its earnings for the second quarter and year-to-date
periods ended August 2, 2003 and to provide an earnings outlook
for the second half and fiscal year ending January 31, 2004.
|
| |    |  | The Company furnished a Current Report on Form 8-K dated
September 4, 2003 to report the issuance of a press release
announcing its net sales for the four weeks and year-to-date
periods ended August 30, 2003.                                                                                               
|
| |    |  | The Company furnished a Current Report on Form 8-K dated October
9, 2003 to report the issuance of a press release announcing its
sales for the five weeks, nine weeks and year-to-date periods ended
October 4, 2003.                                                                                         

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##### Table of Contents






SIGNATURES

Pursuant to the requirements 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.

|                        |  |                                                                                         
|----------------------- |  | ----------------------------------------------------------------------------------------
|                        |  | JO-ANN STORES, INC.                                                                     
|                       
|DATE: December 15, 2003 |  | /s/ Alan RosskammAlan Rosskamm,
President and Chief Executive Officer                   
|                       
|                        |  | /s/ Brian P. CarneyBrian P. Carney,
Executive Vice President and Chief Financial Officer

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