FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

          [X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
                         Securities Exchange Act of 1934

                 For the quarterly period ended November 2, 2003

                                       OR

          [ ] Transition Report Pursuant to Section 13 or 15 (d) of the
                         Securities Exchange Act of 1934

            For the transition period from_____________to___________.

                         Commission File Number 1 - 9482

                              HANCOCK FABRICS, INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                               64-0740905
 (State or other jurisdiction                               (I. R. S. Employer
of incorporation or organization)                           Identification No.)

   3406 West Main Street, Tupelo, MS                               38801
(Address of principal executive offices)                         (Zip Code)


               Registrant's telephone number, including area code
                                 (662) 842-2834

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

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practical date.

As of  November  2,  2003,  the  registrant  had  outstanding  an  aggregate  of
18,790,531 shares of common stock, $.01 par value.

<PAGE>


INDEX

Part I.  Financial Information:
                                                                   Page Numbers
  Item 1.  Financial Statements (unaudited)

    Consolidated Balance Sheet as of November 2, 2003
     and February 2, 2003                                                 3

    Consolidated Statement of Earnings for the Thirteen
     Weeks and Thirty-nine Weeks Ended November 2, 2003
     and November 3, 2002                                                 4

    Consolidated Statement of Shareholders' Equity for the
     Thirty-nine Weeks Ended November 2, 2003                             5

    Consolidated Statement of Cash Flows for the Thirty-nine
     Weeks Ended November 2, 2003 and November 3, 2002                    6

    Notes to Consolidated Financial Statements                          7 - 10

  Item 2.  Management's Discussion and Analysis of Financial
   Condition and Results of Operations                                 10 - 13

  Item 3.  Quantitative and Qualitative Disclosures about Market
   Risks                                                                 13

  Item 4.  Controls and Procedures                                       14

Part II.  Other Information:

  Item 6.  Exhibits and Reports on Form 8-K                              14

Signature                                                                14


                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION
<TABLE>
<S>                                                          <C>             <C>
HANCOCK FABRICS, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
------------------------------------------------------------------------------------------
(in thousands, except for share and per share amounts)          November 2,     February 2,
                                                                   2003            2003
------------------------------------------------------------------------------------------

Assets
Current assets:
    Cash and cash equivalents                                      $4,679          $4,589
    Receivables, less allowance for doubtful accounts               1,177           1,100
    Inventories                                                   151,895         144,061
    Prepaid expenses                                                2,810           2,570
------------------------------------------------------------------------------------------
    Total current assets                                          160,561         152,320

Property and equipment, at depreciated cost                        49,499          41,853
Deferred tax asset                                                  4,465           4,465
Pension payment in excess of required contribution                 16,660          18,829
Goodwill                                                            4,480           4,480
Other assets                                                        3,668           3,563
------------------------------------------------------------------------------------------
    Total assets                                                 $239,333        $225,510
==========================================================================================

Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable                                              $39,227         $44,357
    Accrued liabilities                                            18,064          21,039
    Deferred tax liabilities                                        3,078           3,078
    Income taxes                                                    3,929           5,089
------------------------------------------------------------------------------------------
    Total current liabilities                                      64,298          73,563

Long-term debt obligations                                         23,000               -
Postretirement benefits other than pensions                        22,292          21,976
Reserve for store closings                                            471             878
Other liabilities                                                   4,948           4,862
------------------------------------------------------------------------------------------
    Total liabilities                                             115,009         101,279
------------------------------------------------------------------------------------------

Commitments and contingencies

Shareholders' equity:
  Common stock, $.01 par value; 80,000,000 shares authorized;
  31,878,669 and 31,481,715 issued and outstanding, respectively      319             315
  Additional paid-in capital                                       69,312          63,805
  Retained earnings                                               212,915         208,659
  Treasury stock, at cost, 13,088,138 and 12,431,937
   shares held, respectively                                     (151,813)       (142,545)
  Deferred compensation on restricted stock
   incentive plan                                                  (6,409)         (6,003)
------------------------------------------------------------------------------------------
    Total shareholders' equity                                    124,324         124,231
------------------------------------------------------------------------------------------
    Total liabilities and shareholders' equity                   $239,333        $225,510
==========================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3

<PAGE>

<TABLE>
<S>                                                        <C>                  <C>              <C>                 <C>

HANCOCK FABRICS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(unaudited)

---------------------------------------------------------------------------------------------------------------------------------
(in thousands, except                                       Thirteen Weeks Ended                 Thirty-nine Weeks Ended
  per share amounts)                             --------------------------------------------------------------------------------
                                                          November 2,          November 3,       November 2,        November 3,
                                                             2003                 2002              2003               2002
---------------------------------------------------------------------------------------------------------------------------------

Sales                                                      $112,699             $112,933         $316,438            $309,663
Cost of goods sold                                           55,274               55,643          154,505             152,287
---------------------------------------------------------------------------------------------------------------------------------
  Gross profit                                               57,425               57,290          161,933             157,376
---------------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative expense                  49,022               46,757          141,386             135,937
Depreciation and amortization                                 1,608                1,373            4,645               4,048
---------------------------------------------------------------------------------------------------------------------------------
  Operating income                                            6,795                9,160           15,902              17,391
Other expense (income)
  Interest expense                                              189                  148              463                 302
  Interest income                                                (9)                 (23)             (43)                (73)
------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes                                  6,615                9,035           15,482              17,162
Income taxes                                                  2,401                3,279            5,620               6,230
------------------------------------------------------------------------------------------------------------------------------
Net earnings and comprehensive income                        $4,214               $5,756           $9,862             $10,932
=================================================================================================================================

Earnings per share
      Basic                                                   $0.24                $0.32            $0.56               $0.61
      Diluted                                                 $0.23                $0.31            $0.53               $0.58

=================================================================================================================================

Weighted average shares outstanding
      Basic                                                  17,673               17,843           17,659              17,826
      Diluted                                                18,560               18,773           18,509              18,877

=================================================================================================================================

Dividends per share                                           $0.10                $0.08            $0.30               $0.24
=================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.



                                       4

<PAGE>

<TABLE>
<S>                                  <C>              <C>    <C>      <C>      <C>         <C>

HANCOCK FABRICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(unaudited)

----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except for
  number of shares)                      Common Stock      Additional             Treasury Stock                         Total
                                   ----------------------  Paid-in   Retained    ------------------     Deferred      Shareholders'
                                       Shares      Amount  Capital   Earnings    Shares      Amount   Compensation       Equity

----------------------------------------------------------------------------------------------------------------------------------
Thirty-nine weeks ended November 2, 2003
----------------------------------------------------------------------------------------------------------------------------------

Balance February 2, 2003             31,481,715       $315   $63,805  $208,659 (12,431,937)($142,545)       ($6,003)     $124,231
Net earnings                                                             9,862                                              9,862
Cash dividend - $.10 per
 share on a quarterly basis                                             (5,606)                                            (5,606)
Issuance of restricted stock            149,000          1     2,359                                         (2,360)
Cancellation of restricted stock        (41,500)                (359)                                           359
Amortization and vesting of
 deferred compensation on restricted
 stock incentive plan                                            133                                          1,595         1,728
Purchase of treasury stock                                                        (656,201)   (9,268)                      (9,268)
Issurance of shares as compensation
  for professional services               1,423                   22                                                           22
Issuance of shares under directors'
  stock plan                              8,631                  135                                                          135
Exercise of stock options               279,400          3     3,217                                                        3,220

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

Balance November 2, 2003             31,878,669       $319   $69,312  $212,915 (13,088,138)($151,813)       ($6,409)     $124,324
==================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial
statements.


                                       5

<PAGE>

<TABLE>
<S>                                                        <C>            <C>

HANCOCK FABRICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
--------------------------------------------------------------------------------------
(in thousands)
                                                           Thirty-Nine Weeks Ended
                                                        ------------------------------
                                                           November 2,    November 3,
                                                              2003            2002
--------------------------------------------------------------------------------------
Cash flows from operating activities:
  Net earnings                                                 $9,862         $10,932
  Adjustments to reconcile net earnings to cash
    flows from operating activities:
       Depreciation and amortization                            4,645           4,048
       LIFO                                                      (500)         (1,000)
       Amortization of deferred compensation on
        restricted stock incentive plan                         1,595           1,664
       Interest expense on closed store accrual                    98             123
       Gain on the disposition of real property                     -             691
       Issuance of shares as compensation for                      22              17
        professional services
  (Increase) decrease in assets:
      Receivables and prepaid expenses                           (317)         (1,181)
      Inventory at current cost                                (7,334)        (12,737)
      Pension payment in excess of required contribution        2,169            (980)
      Other noncurrent assets                                    (105)            548
  Increase (decrease) in liabilities:
      Accounts payable                                         (5,130)          3,084
      Accrued liabilities                                      (2,975)         (1,205)
      Current income tax obligations                           (1,027)            328
      Postretirement benefits other than pensions                 316              33
      Reserve for store closings                                 (505)           (717)
      Other liabilities                                            86            (454)
--------------------------------------------------------------------------------------
     Net cash provided by operating activities                    900           3,194
--------------------------------------------------------------------------------------
Cash flows from investing activities:
  Additions to property and equipment                         (12,291)        (15,697)
  Proceeds from the disposition of real property                    -             993
--------------------------------------------------------------------------------------
     Net cash used in investing activities                    (12,291)        (14,704)
--------------------------------------------------------------------------------------
Cash flows from financing activities:
  Net borrowings on revolving
    credit agreement                                           23,000           7,000
  Purchase of treasury stock                                   (9,268)         (6,220)
  Issuance of shares under directors' stock plan                  135             134
  Exercise of stock options                                     3,220          12,814
  Cash dividends paid                                          (5,606)         (4,551)
--------------------------------------------------------------------------------------
     Net cash provided by financing activities                 11,481           9,177
--------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                   90          (2,333)

Cash and cash equivalents:
  Beginning of period                                           4,589           6,914
--------------------------------------------------------------------------------------
  End of period                                                $4,679          $4,581
======================================================================================
Supplemental disclosures:
  Cash paid during the period for:
    Interest                                                     $360            $136
    Income taxes                                               $5,732          $3,497
======================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       6

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1:  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Hancock Fabrics,
Inc.  ("Hancock" or the  "Company")  have been  prepared in accordance  with the
instructions  to Form 10-Q and  therefore  do not  include all  information  and
footnotes  necessary for a fair presentation of financial  position,  results of
operations  and cash flows in  conformity  with  generally  accepted  accounting
principles. The statements do reflect all adjustments (consisting of only normal
recurring  entries),  which are, in the opinion of  management,  necessary for a
fair  presentation of financial  position in conformity with generally  accepted
accounting  principles.  The statements  should be read in conjunction  with the
Notes  to the  Consolidated  Financial  Statements  for the  fiscal  year  ended
February 2, 2003 incorporated into the Company's Annual Report on Form 10-K/A.

The results of operations for the thirteen and thirty-nine  week periods are not
necessarily indicative of the results to be expected for the full fiscal year.

NOTE 2: STOCK OPTIONS

Stock  options are  accounted  for using the methods  prescribed  by  Accounting
Principles  Board  Opinion No. 25,  Accounting  for Stock  Issued to  Employees.
Compensation  cost for stock  options is measured as the excess,  if any, of the
quoted  market price of Hancock's  stock at the date of grant over the amount an
employee  must pay to acquire the stock.  Pro forma  information  regarding  net
income and earnings per share as  calculated  under the  provisions  of SFAS No.
123,  Accounting for Stock-Based  Compensation,  based on the options' estimated
fair value net of tax at the grant dates, is presented below:

<TABLE>
<S>                                                  <C>              <C>                <C>             <C>

                                                         Thirteen Weeks Ended              Thirty-nine Weeks Ended
                                                   ---------------------------------   ---------------------------------
                                                      November 2,     November 3,        November 2,     November 3,
                                                         2003            2002               2003             2002
                                                   ---------------  ----------------   -------------   -----------------

Net earnings, as reported                          $       4,214    $       5,756      $      9,862    $     10,932
Deduct:  Total stock-based employee compensation
  expense determined under fair value based method
  for all awards, net of related tax effects                (265)           (174)              (689)           (433)
                                                   ---------------  ---------------    -------------   -----------------
Pro forma net earnings                             $       3,949    $       5,582      $      9,173    $     10,499
                                                   ===============  ===============    =============   =================

Earnings per share:
   Basic - as reported                                     $0.24            $0.32             $0.56           $0.61
                                                   ===============  ===============    =============   =================
   Basic - pro forma                                       $0.22            $0.31             $0.52           $0.59
                                                   ===============  ===============    =============   =================

   Diluted - as reported                                   $0.23            $0.31             $0.53           $0.58
                                                   ===============  ===============    =============   =================
   Diluted - pro forma                                     $0.21            $0.30             $0.50           $0.56
                                                   ===============  ===============    =============   =================
</TABLE>

                                       7

<PAGE>

NOTE 3:  EARNINGS PER SHARE

Basic  earnings per share excludes  dilution and is computed by dividing  income
available to common shareholders by the weighted-average number of common shares
outstanding  for the period.  Diluted  earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were  exercised  or  converted  into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company.

<TABLE>
<S>                                                                 <C>          <C>             <C>             <C>

COMPUTATION OF EARNINGS PER SHARE
(unaudited)
-------------------------------------------------------------------------------------------------------------------------------
(in thousands, except for share and                                    Thirteen Weeks Ended        Thirty-nine Weeks Ended
  per share amounts)                                                -----------------------------------------------------------
                                                                     November 2,  November 3,     November 2,     November 3,
                                                                        2003         2002            2003             2002
-------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share:

  Net earnings                                                           $4,214       $5,756            $9,862         $10,932
                                                                    ============ ============  ================ ===============

  Weighted average number of common shares outstanding during
    period                                                           17,673,313   17,842,533        17,659,362      17,826,394
                                                                    ============ ============  ================ ===============

Basic earnings per share                                                  $0.24        $0.32             $0.56           $0.61
                                                                    ============ ============  ================ ===============

Diluted earnings per share:

  Net earnings                                                           $4,214       $5,756            $9,862         $10,932
                                                                    ============ ============  ================ ===============

  Weighted average number of common shares outstanding during
    period                                                           17,673,313   17,842,533        17,659,362      17,826,394

   Stock options                                                        440,456      516,155           450,581         639,166

   Restricted stock and deferred stock units                            446,102      414,347           398,718         411,220
                                                                    ------------ ------------  ---------------- ---------------
  Weighted average number of common shares outstanding during
    period adjusted for dilutive securities                          18,559,871   18,773,035        18,508,661      18,876,780
                                                                    ============ ============  ================ ===============

Diluted earnings per share                                                $0.23        $0.31             $0.53           $0.58
                                                                    ============ ============  ================ ===============

Weighted average common stock equivalents not included in EPS
  (stock options) because the effect would be anti-dilutive             421,658      449,964           431,795         237,965
                                                                    ------------ ------------  ---------------- ---------------
</TABLE>

NOTE 4:  RESERVE FOR STORE CLOSINGS

Reserves  for store  closings  are  established  based on estimates of net lease
obligations and other store closing costs.

At  November  2,  2003,  the total  reserve  balance  included  in  current  and
noncurrent  liabilities was $1,342,000 which represents the present value of the
future net lease obligations  required for the locations which have been closed.
The 2003 activity in the reserve is as follows (in thousands):

<TABLE>
<S>                <C>            <C>             <C>          <C>          <C>

                   February 2,    Additions to                              November 2,
                      2003          Reserve       Interest     Payments        2003
                   -----------    ------------    --------     --------     -----------

Lease Obligations    $1,749            $0           $98         ($505)         $1,342
                   ===========    ============    ========     ========     ===========
</TABLE>


                                       8

<PAGE>

NOTE 5: RECENT ACCOUNTING PRONOUNCEMENTS



In June 2001,  the FASB  issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations.  SFAS  No.  143  requires  that  obligations  associated  with  the
retirement of a tangible  long-lived asset be recorded as a liability when those
obligations are incurred, with the amount of the liability initially measured at
fair value.  Upon  initially  recognizing  a liability  for an asset  retirement
obligation  ("ARO"),  an  entity  must  capitalize  the cost by  recognizing  an
increase in the carrying amount of the related  long-lived asset. Over time, the
liability is accreted to its present value each period, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability,  an entity either settles the  obligation for its recorded  amount or
incurs a gain or loss upon settlement.  The Statement is effective for financial
statements for fiscal years beginning after June 15, 2002.  Hancock adopted SFAS
No.  143 as of  February  3,  2003,  and  there  was no  material  impact on its
financial statements.


In May 2002, the FASB issued SFAS No. 145,  Rescission of FASB Statements No. 4,
44, and 64,  Amendment of FASB Statement No. 13 and Technical  Corrections as of
April 2002.  This  Statement  eliminates an  inconsistency  between the required
accounting  for  sale-leaseback  transactions  and the required  accounting  for
certain  lease  modifications  that have  economic  effects  that are similar to
sale-leaseback   transactions.   This   Statement  also  amends  other  existing
authoritative  pronouncements  to make various  technical  corrections,  clarify
meanings,  or describe  their  applicability  under changed  conditions,  and it
eliminates  the  treatment  of early  extinguishments  of debt as  extraordinary
items. The provisions of this Statement  related to the rescission of SFAS No. 4
are  effective for fiscal years  beginning  after May 15, 2002.  The  provisions
related to SFAS No. 13 are effective for  transactions  occurring  after May 15,
2002.  All other  provisions  of this  Statement  are  effective  for  financial
statements  issued on or after May 15, 2002.  Hancock adopted SFAS No. 145 as of
May 15,  2002 and  February  3, 2003,  and there was no  material  impact on its
financial statements.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal  Activities.  This Statement addresses financial accounting and
reporting for costs  associated  with exit or disposal  activities and nullifies
Emerging  Issues Task Force  (EITF) Issue No. 94-3,  Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including  Certain Costs Incurred in a Restructuring).  This Statement requires
that a liability  for a cost  associated  with an exit or  disposal  activity be
recognized when the liability is incurred rather than at the date of an entity's
commitment as provided under Issue 94-3.  This Statement also  establishes  that
fair value is the  objective  for  initial  measurement  of the  liability.  The
provisions of this Statement are effective for exit or disposal  activities that
are  initiated  after  December  31,  2002.  Hancock  adopted SFAS No. 146 as of
January 1, 2003, and there was no material impact on its financial statements.

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities.  This  Statement  amends  and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including  derivative  instruments  embedded in other  contracts and for hedging
activities  under FASB  Statement No. 133. The  provisions of this Statement are
effective  for  contracts  entered into or modified  after June 30, 2003 and for
hedging  relationships  designated after that date. Hancock adopted SFAS No. 149
as of July 1, 2003, and there was no impact on its financial statements.

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity. The Statement
establishes   standards  on  how  to  classify  and  measure  certain  financial
instruments with  characteristics of both liabilities and equity. This Statement
is effective for financial  instruments  entered into or modified  after May 31,
2003, and otherwise for interim periods  beginning after June 15, 2003.  Hancock
adopted  SFAS No. 150 as of June 1, 2003 and  August 4,  2003,  and there was no
impact on its financial statements.

                                       9
<PAGE>


During  January  2003,  the FASB  issued FIN No. 46,  Consolidation  of Variable
Interest  Entities.  FIN No. 46 provides guidance for companies having ownership
of  variable  interest  entities,  typically  referred  to  as  special  purpose
entities, in determining whether to consolidate such variable interest entities.
FIN No. 46 has immediate  applicability  for variable  interest entities created
after January 31, 2003 or interests in variable interest entities obtained after
that date.  For  interests  in  variable  interest  entities  obtained  prior to
February 1, 2003, FIN No. 46 becomes effective on February 1, 2004.  Because the
Company  does not hold an interest in an entity  governed by the  pronouncement,
Hancock  does  not  believe  the  adoption  of this  pronouncement  will  have a
material impact on the Company's financial statements.

During  2002,  the EITF reached a consensus  on Issue  02-16,  "Accounting  by a
Customer  (Including  a Reseller)  for  Certain  Consideration  Received  From a
Vendor".  EITF  Issue  02-16  addresses  the  accounting  treatment  for  vendor
allowances and co-operative advertising programs and is effective for agreements
modified or entered into after January 1, 2003. Hancock adopted EITF Issue 02-16
as of February 3, 2003, and there was no impact on its financial statements.

During November 2003, the EITF reached a consensus on Issue 03-10,  "Application
of Issue No.  02-16 by  Resellers  to Sales  Incentives  Offered to Consumers by
Manufacturers". EITF 03-10 addresses the accounting and disclosure treatment for
consideration  received by a reseller from a vendor that is a  reimbursement  by
the vendor for  honoring  the  vendor's  sales  incentives  offered  directly to
consumers.  EITF 03-10 is effective for sales  incentives  tendered to consumers
for fiscal years beginning after December 15, 2003. Hancock does not believe the
application  of  EITF  03-10  will  have a  material  impact  on  its  financial
statements.

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

Historically,  cash flow from  operations  has been  sufficient  to finance  the
expansion  and  operation of Hancock's  business.  Hancock's  principal  capital
requirements  are for the  financing of  inventories  and to a lesser extent for
capital  expenditures   relating  to  store  locations  and  its  warehouse  and
distribution  facility.  Funds for such  purposes are generated  from  Hancock's
operations  and,  if  necessary,  supplemented  by  borrowings  from  commercial
lenders.  In addition to cash dividends,  Hancock has  historically  used excess
cash and, if necessary,  borrowings from commercial lenders to purchase treasury
stock as market and financial conditions dictate.

During the  thirty-nine  weeks ended November 2, 2003, net earnings and non-cash
charges and credits,  including  depreciation and  amortization,  totaling $15.7
million,  borrowings  of $23 million and proceeds  from stock  option  exercises
totaling  $3.2  million were used to fund a $7.3  million  seasonal  increase in
inventory,  $9.3  million of  treasury  stock  purchases,  $5.6  million in cash
dividends,  an $8.1 million decrease in accounts payable and accrued liabilities
and $12.3 million in additions to property and  equipment.  At November 2, 2003,
Hancock had outstanding debt of $23 million,  or 15.6% of total  capitalization,
compared  to $7  million,  or 6% of total  capitalization  at  November 3, 2002.
Hancock opened six stores and closed five stores during the thirteen weeks ended
November 2, 2003,  resulting  in a total of 432 stores at quarter  end.  Hancock
opened 21  stores  and  closed 19 stores  during  the  thirty-nine  weeks  ended
November 2, 2003.


                                       10
<PAGE>

RESULTS OF OPERATIONS

Thirteen  weeks  ended  November  2, 2003  compared  with  thirteen  weeks ended
November 3, 2002


Net earnings were $4.2 million,  or $.23 per diluted  share,  compared with $5.8
million,  or $.31 per diluted  share,  in the same  period of the prior year.  A
decrease in comparable  store sales and increases in advertising and other fixed
expenses contributed to the earnings decline. In addition,  the recognition of a
$440,000  after-tax  gain on the sale of real  estate  along with a higher  LIFO
credit  in the  third  quarter  of  2002  further  contributed  to the  earnings
decrease.

Sales  decreased  to $112.7  million  from $112.9  million in last year's  third
quarter, as the result of a decrease of .5% in comparable store sales. While our
average sales ticket increased,  customer traffic in our stores was lower during
the third quarter of 2003 versus 2002.  The  weakening of the general  retailing
environment was the most significant  factor in the quarter's sales results.  In
addition,  extended warm weather around the country had an adverse effect on our
fall and winter  merchandise  sales.  Sales in some of our east coast  districts
were also  negatively  impacted  by  Hurricane  Isabel in the first  part of the
quarter.

Gross margins  increased to 51% from 50.7% last year as a result of the shift in
our merchandise mix towards more higher-margin home decorating  products and our
ability  to  control  promotional  activities.  The gross  margin  increase  was
partially  offset by a decrease in the LIFO  credit  from  $500,000 in the third
quarter of 2002 to $300,000 in the third quarter of 2003.

In the third quarter of 2003, total selling, general and administrative expenses
as a percentage  of sales rose to 43.5% from 41.4% in the third  quarter of 2002
due primarily to higher advertising expenditures,  the absence of sales leverage
on fixed expenses and a gain on the sale of real estate that reduced expenses in
2002.  Advertising  costs  increased  due to our efforts to expand our  customer
base.  Expenses  also  increased  as a result  of the  Company's  incurrence  of
duplicate  costs,  such as  depreciation  and  utilities,  associated  with  the
transition of our distribution operations to a new facility in Baldwyn, MS.

Interest expense increased due to higher average outstanding debt of $28 million
during the third quarter of 2003 versus $13 million  during the third quarter of
2002, which was partially offset by lower interest rates.

Thirty-nine  weeks ended November 2, 2003 compared with thirty-nine  weeks ended
November 3, 2002


Net earnings were $9.9 million,  or $.53 per diluted share,  compared with $10.9
million,  or $.58 per diluted  share,  in the same period of the prior year. The
earnings  decline  was due to  costs  associated  with the  transition  to a new
distribution  center, the third quarter 2002 recognition of a $440,000 after-tax
gain on the sale of real estate and a higher 2002 LIFO credit.

Sales  increased  to $316.4  million  from  $309.7  million  in the first  three
quarters of 2003 as the result of an increase of 2.4% in comparable store sales.
Sales benefited from the continuing  positive effects of our store repositioning
efforts  and their  related  impact on our home  decorating  product  line.  The
Company also experienced increases in quilting,  active wear, sewing machine and
seasonal  product line sales due, in part, to our 2003  partnering  efforts with
exclusive suppliers and industry personalities.  In addition, Hancock's focus on
teaching  activities in all of our store  locations has contributed to increased
sales.

Gross  margins  increased  to 51.2%  from  50.8%  last  year as a result  of mix
improvements and the Company's  ability to refrain from significant  promotional
activities which compromise margin. The increase was partially offset,  however,
by a decrease in the LIFO  credit from $1 million in 2002 to $500,000  this year
due to less product cost deflation in 2003.

                                       11
<PAGE>

In the first three quarters of 2003, total selling,  general and  administrative
expenses  as a  percentage  of sales  increased  to 44.7% from 43.9% in the same
period of 2002.  The  increase  was  primarily  due to the  duplicate  costs the
Company  continues to incur for items such as  depreciation  and utilities as we
transition  operations to our new distribution  center and a gain on the sale of
real estate that reduced expenses in 2002.

Interest expense increased over the prior year due to an increase in the average
level of debt  outstanding  which was partially  offset by lower  interest rates
during 2003.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  recorded  amount of  assets  and
liabilities  at the date of the financial  statements  and revenues and expenses
during  the  period.   Significant  accounting  policies  employed  by  Hancock,
including  the use of estimates and  assumptions,  are presented in the Notes to
Consolidated  Financial  Statements  contained in the Company's Annual Report on
Form  10-K/A.  Management  bases its  estimates  on its  historical  experience,
together  with  other  relevant  factors,  in order to form the basis for making
judgments,  which will affect the carrying values of assets and liabilities.  On
an ongoing  basis,  management  evaluates  its  estimates  and makes  changes to
carrying values as deemed necessary.

OFF-BALANCE SHEET ARRANGEMENTS


Hancock has no off-balance sheet financing arrangements.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS


Hancock has an arrangement  to secure up to $5 million in letters of credit.  At
November 2, 2003,  Hancock had  commitments of $1.9 million on issued letters of
credit which support  purchase  orders for  merchandise to be imported.  Hancock
also has a $4.7  million  standby  letter  of  credit to  guarantee  payment  of
potential future workers' compensation claims.  Hancock leases its retail fabric
store locations under operating leases expiring at various dates through 2022.

Hancock has no standby  repurchase  obligations or guarantees of other entities'
debt.

EFFECTS OF INFLATION


The impact of inflation on labor and occupancy  costs can  significantly  affect
Hancock's operations.  Many of Hancock's employees are paid hourly rates related
to Federal and State minimum wage requirements;  accordingly, any increases will
affect Hancock. In addition, payroll taxes, employee benefits and other employee
costs continue to increase.  Health insurance and workers compensation insurance
costs,  in  particular,  continue  to rise at an  unsettling  rate in the United
States each year, and higher employer  contributions  to Hancock's  pension plan
have been necessary  recently in light of weaker  investment  returns.  Costs of
leases for new store locations remain stable,  but renewal costs of older leases
continue  to  increase.   Property  and  casualty  insurance  premiums  are  now
increasing  substantially  after  several years of soft pricing in the insurance
industry.  Hancock  believes  the  practice of  maintaining  adequate  operating
margins through a combination of price  adjustments  and cost controls,  careful
evaluation of occupancy  needs and efficient  purchasing  practices are the most
effective tools for coping with increased costs and expenses.

                                       12
<PAGE>

Inflation is one of the key factors used in the  calculation  of the LIFO charge
or credit to Cost of Sales.  During the first  three  quarters of 2003 and 2002,
decreases in the Producer  Price Index  resulted in LIFO credits of $500,000 and
$1,000,000, respectively.

SEASONALITY

Hancock's  business is slightly  seasonal.  Peak sales  periods occur during the
fall and  pre-Easter  weeks,  while the lowest  sales  periods  occur during the
summer and the month of January.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 5 of Notes to Consolidated Financial Statements,  above, for the effect
of recent accounting pronouncements on Hancock.

FORWARD-LOOKING STATEMENTS

This  Report  contains  forward-looking  statements  within  the  meaning of the
Private  Litigation Reform Act of 1995. Such statements are not historical facts
and reflect the Company's current views regarding matters such as operations and
financial performance. In general,  forward-looking statements are identified by
such words or phrases as "anticipates", "believes", "approximates", "estimates",
"expects",  "intends"  or  "plans"  or the  negative  of  those  words  or other
terminology.    Forward-looking    statements   involve   inherent   risks   and
uncertainties;  the Company's actual results could differ  materially from those
expressed in our  forward-looking  statements.  The risks and uncertainties that
could  cause  our  actual  results  to  differ  from  those   expressed  in  our
forward-looking statements include, but are not limited to:

    o     Transition of operations to the Company's new distribution  center and
          corporate  offices  will  result in  higher  operating  expenses  than
          historically experienced and may disrupt our operations

    o     Changes in customer demand or purchase patterns

    o     Competitive  changes,  including but not limited to,  liquidations  of
          inventory in Hancock's markets in connection with a competitor's store
          closing or need to dispose of old inventory

    o     Adverse general economic trends

    o     Delays or interruptions in the flow of merchandise  between  Hancock's
          suppliers and/or its distribution center and its stores

    o     Disruption in the Company's data processing services

    o     The stability of interest rates during periods of borrowing

Forward-looking  statements  speak only as of the date made, and neither Hancock
Fabrics nor its  management  undertakes  any  obligation to update or revise any
forward-looking statement.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Hancock does not hold derivative financial or commodity  instruments at November
2, 2003.  Hancock is exposed to financial  market  risks,  including  changes in
interest rates. All borrowings  under Hancock's  Revolving Credit Agreement bear
interest at a negotiated  rate, a floating rate (the higher of the federal funds
rate plus 1/2% or the prime rate), a rate derived from the money market rate, or
a rate derived from the London  Interbank  Offered Rate. An increase in interest
rates of 100 basis points would not significantly  affect Hancock's results. All
of Hancock's business is transacted in U. S. dollars and,  accordingly,  foreign
exchange rate fluctuations have never had a significant  impact on Hancock,  and
they are not expected to in the foreseeable future.

                                       13
<PAGE>

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Hancock  carried  out an  evaluation  of  the  effectiveness  of its  disclosure
controls  and  procedures  (as defined in Rule  13a-15(e)  under the  Securities
Exchange  Act of 1934) as of the end of the period  covered by this report under
the supervision  and with the  participation  of its  management,  including its
chief executive officer and chief financial  officer.  Based on that evaluation,
Hancock's  chief executive  officer and chief  financial  officer have concluded
that its  disclosure  controls  and  procedures  are  effective  to ensure  that
material   information   relating  to  Hancock,   including   its   consolidated
subsidiaries, is made known to them by others within such entities, particularly
during the period in which this report was  prepared,  in order to allow  timely
decisions regarding required disclosure.

Change in Internal Control Over Financial Reporting

There was no change in Hancock's  internal control over financial  reporting (as
defined  in Rule  13a-15(f)  under the  Securities  Exchange  Act of 1934)  that
occurred during its most recent fiscal quarter that has materially affected,  or
is reasonably likely to materially  affect,  its internal control over financial
reporting.

PART II.  OTHER INFORMATION:

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         31.1  Certification of Chief Executive Officer

         31.2  Certification of Chief Financial Officer

         32    Certification of Chief Executive Officer and Chief Financial
                 Officer Pursuant to 18 U.S.C. Section 1350

(b)      Reports on Form 8-K

- Current Report on Form 8-K filed  September 22, 2003 announcing the retirement
   of Jack W.Busby, Jr.
- Current  Report  on Form 8-K  filed  August  20,  2003  announcing  quarterly
   earnings.

SIGNATURE

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.



                                                HANCOCK FABRICS, INC.

                                                    (Registrant)


                                                By:  /s/ Bruce D. Smith
                                                   --------------------------
                                                         Bruce D. Smith

                                                 Senior Vice President and
                                                  Chief Financial Officer
                                                 (Principal Financial and
                                                     Accounting Officer)

December 12, 2003

                                       14
<PAGE>

                                                                   Exhibit 31.1

                    Certification of Chief Executive Officer


I, Larry G. Kirk, certify that:

1.     I have reviewed this  quarterly  report on Form 10-Q of Hancock  Fabrics,
       Inc.;

2.     Based on my knowledge,  this report does not contain any untrue statement
       of a material fact or omit to state a material fact necessary to make the
       statements  made,  in  light  of  the  circumstances   under  which  such
       statements  were made, not misleading  with respect to the period covered
       by this report;

3.     Based on my knowledge,  the  financial  statements,  and other  financial
       information  included  in this  report,  fairly  present in all  material
       respects the financial condition, results of operations and cash flows of
       the registrant as of, and for, the periods presented in this report;

4.     The  registrant's  other  certifying  officer and I are  responsible  for
       establishing  and  maintaining  disclosure  controls and  procedures  (as
       defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
       and we have:

       a)     designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to be  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       b)     evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       c)     disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's  most  recent  fiscal  quarter  that  has  materially
              affected,  or is  reasonably  likely to affect,  the  registrant's
              internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed,  based on
       our most recent evaluation of internal control over financial  reporting,
       to the  registrant's  auditors and the audit  committee  of  registrant's
       board of directors:

       a)     all significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       b)     any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.


Date:  December 12, 2003


/s/ Larry G. Kirk
--------------------------
Larry G. Kirk
Chairman of the Board and Chief Executive Officer

                                       15
<PAGE>

                                                                   Exhibit 31.2

                    Certification of Chief Financial Officer


I, Bruce D. Smith, certify that:

1.     I have reviewed this  quarterly  report on Form 10-Q of Hancock  Fabrics,
       Inc.;

2.     Based on my knowledge,  this report does not contain any untrue statement
       of a material fact or omit to state a material fact necessary to make the
       statements  made,  in  light  of  the  circumstances   under  which  such
       statements  were made, not misleading  with respect to the period covered
       by this report;

3.     Based on my knowledge,  the  financial  statements,  and other  financial
       information  included  in this  report,  fairly  present in all  material
       respects the financial condition, results of operations and cash flows of
       the registrant as of, and for, the periods presented in this report;

4.     The  registrant's  other  certifying  officer and I are  responsible  for
       establishing  and  maintaining  disclosure  controls and  procedures  (as
       defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
       and we have:

       a)     designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to be  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       b)     evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       c)     disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's  most  recent  fiscal  quarter  that  has  materially
              affected,  or is  reasonably  likely to affect,  the  registrant's
              internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed,  based on
       our most recent evaluation of internal control over financial  reporting,
       to the  registrant's  auditors and the audit  committee  of  registrant's
       board of directors:

       a)     all significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       b)     any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.


Date:  December 12, 2003


/s/ Bruce D. Smith
--------------------------
Bruce D. Smith
Senior Vice President and
Chief Financial Officer


                                       16
<PAGE>

                                                                     Exhibit 32



      Certification of Chief Executive Officer and Chief Financial Officer
                       Pursuant to 18 U.S.C. Section 1350


Each of the undersigned, Larry G. Kirk and Bruce D. Smith, certifies pursuant 18
U.S.C.  Section  1350 that:  (1) this  quarterly  report on Form 10-Q of Hancock
Fabrics,  Inc. ("Hancock") for the quarter ended November 2, 2003 fully complies
with the  requirements of Section 13(a) or 15(d) of the Securities  Exchange Act
of 1934,  and (2) the  information  contained in this  quarterly  report  fairly
presents,  in all material  respects,  the  financial  condition  and results of
operations of Hancock.


Date:  December 12, 2003



/s/ Larry G. Kirk
--------------------------

Larry G. Kirk
Chairman of the Board and Chief Executive Officer




/s/ Bruce D. Smith
---------------------------

Bruce D. Smith
Senior Vice President and Chief Financial Officer


                                       17