<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

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


             FOR THE QUARTERLY PERIOD ENDED       APRIL 29, 2001
                                            -------------------------

                                       OR

           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 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 of                      (I. R. S. Employer
    incorporation or organization)                      Identification No.)

                     3406 WEST MAIN STREET, TUPELO, MS 38803
                    (Address of principal executive offices)
                                   (Zip Code)

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


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

As of April 29, 2001, the registrant had outstanding an aggregate of 17,209,664
shares of common stock, $.01 par value.
<PAGE>   2

INDEX

<TABLE>
<CAPTION>
PART I.    FINANCIAL INFORMATION:

  Item 1.  Financial Statements (unaudited)                                                   Page Numbers
<S>                                                                                           <C>
    Consolidated Balance Sheet as of April 29, 2001 and January 28, 2001                              3

    Consolidated Statement of Earnings for the Thirteen Weeks Ended
      April 29, 2001 and April  30, 2000                                                              4

    Consolidated Statement of Shareholders' Equity for the Thirteen Weeks
      Ended April 29, 2001                                                                            5

    Consolidated Statement of Cash Flows for the Thirteen Weeks Ended
      April 29, 2001 and April 30, 2000                                                               6

    Notes to Consolidated Financial Statements                                                    7 - 8

  Item 2.  Management's Discussion and Analysis of  Financial Condition
     and Results of Operations                                                                   8 - 10

PART II.   OTHER INFORMATION:

  Item 3.  Quantitative and Qualitative Disclosures about Market Risks                               10

  Item 6.  Exhibits and Reports on Form 8-K                                                          10

SIGNATURE                                                                                            10
</TABLE>


                                      -2-
<PAGE>   3
PART I. FINANCIAL INFORMATION


CONSOLIDATED BALANCE SHEET
(unaudited)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
(in thousands, except for                                                  April 29,          January 28,
  share and per share amounts)                                               2001                2001
----------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                <C>
ASSETS
Current assets:
    Cash and cash equivalents                                              $   4,038           $   3,891
    Receivables, less allowance for doubtful accounts                            647                 589
    Inventories                                                              135,285             138,657
    Prepaid expenses                                                           1,298               1,677
----------------------------------------------------------------------------------------------------------
    Total current assets                                                     141,268             144,814

Property and equipment, at depreciated cost                                   27,471              25,616
Deferred tax asset                                                             8,042              10,486
Pension payment in excess of required contribution                             2,845               3,078
Other assets                                                                   8,673               8,735
----------------------------------------------------------------------------------------------------------
    Total assets                                                           $ 188,299           $ 192,729
==========================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                       $  34,110           $  38,665
    Accrued liabilities                                                       12,810              15,367
    Deferred tax liabilities                                                   2,952               4,726
    Income taxes                                                               2,483               6,179
----------------------------------------------------------------------------------------------------------
    Total current liabilities                                                 52,355              64,937

Long-term debt obligations                                                    23,000              16,000
Postretirement benefits other than pensions                                   21,412              21,278
Reserve for store closings                                                     2,498               3,012
Other liabilities                                                              4,833               4,950
----------------------------------------------------------------------------------------------------------
    Total liabilities                                                        104,098             110,177
----------------------------------------------------------------------------------------------------------

Commitments and contingencies

Shareholders' equity:

  Common stock, $.01 par value; 80,000,000 shares authorized;
   29,199,021 and 29,190,335 issued and outstanding, respectively                292                 292
  Additional paid-in capital                                                  39,044              39,094
  Retained earnings                                                          185,717             183,917

  Treasury stock, at cost, 11,989,357 and 11,905,738
   shares held, respectively                                                (136,156)           (135,583)
  Deferred compensation on restricted stock
   incentive plan                                                             (4,696)             (5,168)
----------------------------------------------------------------------------------------------------------
    Total shareholders' equity                                                84,201              82,552
----------------------------------------------------------------------------------------------------------
    Total liabilities and shareholders' equity                             $ 188,299           $ 192,729
==========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -3-
<PAGE>   4

CONSOLIDATED STATEMENT OF EARNINGS
(unaudited)


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
(in thousands, except
  per share amounts)                                                           Thirteen Weeks Ended
                                                                          -------------------------------
                                                                           April 29,           April 30,
                                                                             2001                2000
---------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                  <C>
Sales                                                                      $ 97,616            $ 98,123
Cost of goods sold                                                           49,197              50,158
---------------------------------------------------------------------------------------------------------
  Gross profit                                                               48,419              47,965
---------------------------------------------------------------------------------------------------------

Expenses (income)
  Selling, general and administrative                                        42,819              42,624
  Depreciation and amortization                                               1,336               1,269
  Interest expense                                                              397                 691
  Interest income                                                               (38)                (39)
---------------------------------------------------------------------------------------------------------
  Total operating and interest expenses                                      44,514              44,545
---------------------------------------------------------------------------------------------------------

Earnings before taxes                                                         3,905               3,420
Income taxes                                                                  1,417               1,237
---------------------------------------------------------------------------------------------------------

Net earnings and comprehensive income                                      $  2,488            $  2,183
=========================================================================================================

Earnings per share
         Basic                                                             $   0.15            $   0.12
         Diluted                                                           $   0.15            $   0.12
=========================================================================================================

Weighted average shares outstanding
         Basic                                                               16,489              17,492
         Diluted                                                             16,696              17,492
=========================================================================================================

Dividends per share                                                        $   0.04            $  0.025
=========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -4-
<PAGE>   5

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


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except for                Common Stock     Additional               Treasury Stock                        Total
  number of shares)                    -----------------   Paid-in    Retained   -------------------       Deferred   Shareholders'
                                       Shares     Amount   Capital    Earnings   Shares       Amount     Compensation    Equity
-----------------------------------------------------------------------------------------------------------------------------------
Thirteen weeks ended April 29, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>     <C>         <C>       <C>           <C>        <C>          <C>
Balance January 28, 2001               29,190,335   $292   $39,094    $183,917  (11,905,738)  $(135,583)    $(5,168)    $82,552
Net earnings                                                             2,488                                            2,488
Cash dividend - $.04 per
 share on a quarterly basis                                               (688)                                            (688)
Amortization and vesting of deferred
 compensation on restricted stock
 incentive plan                                               (106)                                             472         366
Purchase of treasury stock                                                          (83,619)       (573)                   (573)
Issuance of shares under directors'
  stock plan                                4,436               32                                                           32
Exercise of stock options                   4,250               24                                                           24
-----------------------------------------------------------------------------------------------------------------------------------
Balance April 29, 2001                 29,199,021   $292   $39,044    $185,717  (11,989,357)  $(136,156)    $(4,696)    $84,201
===================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -5-
<PAGE>   6

HANCOCK FABRICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
(in thousands)
                                                                                   Thirteen Weeks Ended
                                                                               ----------------------------
                                                                               April 29,          April 30,
                                                                                  2001              2000
-----------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                <C>
Cash flows from operating activities:
  Net earnings                                                                  $  2,488          $  2,183
  Adjustments to reconcile net earnings to cash
   provided by (used in) operating activities
    Depreciation and amortization                                                  1,336             1,269
    Deferred income taxes                                                            670               603
    Amortization of deferred compensation on
     restricted stock incentive plan                                                 472               460
    Interest expense on closed stores                                                 54                70
    (Increase) decrease in assets
      Receivables and prepaid expenses                                               321             2,522
      Inventory at current cost                                                    3,372             8,731
      Pension payment in excess of required contribution                             233
      Other noncurrent assets                                                         62            (2,392)
      Issuance of shares as compensation for professional services                                      20
    Increase (decrease) in liabilities
      Accounts payable                                                            (4,555)          (10,001)
      Accrued liabilities                                                         (2,557)              191
      Current income tax obligations                                              (3,802)             (625)
      Postretirement benefits other than pensions                                    134               124
      Payments against closed store accrual                                         (568)             (778)
      Other liabilities                                                             (117)              395

-----------------------------------------------------------------------------------------------------------
     Net cash (used in) provided by operating activities                          (2,457)            2,772

-----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Additions to property and equipment                                             (3,191)           (1,352)
  Other                                                                                                268

-----------------------------------------------------------------------------------------------------------
     Net cash used in investing activities                                        (3,191)           (1,084)

-----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Net borrowings (repayments) on revolving
    credit agreement                                                               7,000            (3,000)
  Purchase of treasury stock                                                        (573)           (1,644)
  Issuance of shares under directors' stock plan                                      32
  Exercise of stock options                                                           24
  Cash dividends paid                                                               (688)             (457)

-----------------------------------------------------------------------------------------------------------
     Net cash provided by (used in) financing activities                           5,795            (5,101)

-----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                                     147            (3,413)

Cash and cash equivalents:
  Beginning of period                                                              3,891             6,904
-----------------------------------------------------------------------------------------------------------

  End of period                                                                 $  4,038          $  3,491
===========================================================================================================

Supplemental disclosures:
  Cash paid during the period for:
    Interest                                                                    $    296          $    580
    Income taxes                                                                $  5,453          $  1,259
===========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -6-
<PAGE>   7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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 January
29, 2001 incorporated into the Company's Annual Report on Form 10-K.

The results of operations for the thirteen week period are not necessarily
indicative of the results to be expected for the full fiscal year.

NOTE 2:  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.

COMPUTATION OF EARNINGS PER SHARE
(unaudited)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
(dollars in thousands, except for share and                                       Thirteen Weeks Ended
    per share amounts)                                                     ---------------------------------
                                                                            April 29,            April 30,
                                                                              2001                 2000
------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                  <C>
Basic earnings per share

  Net earnings                                                             $     2,488          $     2,183
                                                                           ===========          ===========

  Weighted average number of common shares outstanding during period        16,488,743           17,492,409
                                                                           ===========          ===========

Basic earnings per share                                                   $      0.15          $      0.12
                                                                           ===========          ===========

Diluted earnings per share

  Net earnings                                                             $     2,488          $     2,183
                                                                           ===========          ===========

  Weighted average number of common shares outstanding during period        16,488,743           17,492,409

  Common stock equivalents                                                     148,865                    0

  Contingently issuable shares                                                  58,365                    0
                                                                           -----------          -----------

                                                                            16,695,973           17,492,409
                                                                           ===========          ===========

Diluted earnings per share                                                 $      0.15          $      0.12
                                                                           ===========          ===========

Weighted average common stock equivalents not included in EPS
  because the effect would be anti-dilutive                                          0              849,932
                                                                           ===========          ===========
</TABLE>


                                      -7-
<PAGE>   8

NOTE 3:  RESERVE FOR STORE CLOSINGS

Store closing reserves are established based on estimates of net lease
obligations and other store closing costs. During the fourth quarter of 1998,
the Company recorded a charge of $8,604,000 for revised estimates of net lease
obligations for stores closed at January 31, 1999 and stores committed to be
closed in fiscal 1999. This charge, when combined with an already existing
reserve, resulted in a total reserve of $9,022,000 at January 31, 1999.

At April 29, 2001, the balance in this reserve was $3,562,000 which represents
the present value of the future net lease obligations required for the locations
which have been closed. The first quarter 2001 activity in the reserve is as
follows:

<TABLE>
<CAPTION>
                                                          Imputed                  Lease
(in thousands)              January 29, 2001              Interest                Payments              April 29, 2001
                            ----------------              --------                --------              --------------
<S>                         <C>                           <C>                     <C>                   <C>
Lease obligations                $4,076                     $54                    $(568)                   $3,562
</TABLE>

NOTE 4:  RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("FAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, subsequently amended by SFAS 137 and 138.
FAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, (collectively referred to as derivatives) and for hedging activities.
The company was not holding any derivative financial or commodity instruments
during the quarter ended April 29, 2001 and the adoption of FAS 133 did not have
any financial statement impact.

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. Hancock opened 3 stores and
closed 7 stores during the thirteen weeks ended April 29, 2001, resulting in a
total of 439 stores at period end.

During the thirteen weeks ended April 29, 2001, net earnings of $2.5 million,
decreases in inventory of $3.3 million and additional borrowings of $7.0 million
were used to fund additions to property and equipment of $2.8 million and
reductions in accounts payable of $4.5 million, accrued liabilities of $2.6
million and income tax obligations of $3.8 million. At April 29, 2001, the
Company had $23 million in outstanding debt, or about 21% of total
capitalization, compared to $28 million in outstanding debt at the end of last
year's first quarter.

RESULTS OF OPERATIONS

Thirteen weeks ended April 29, 2001 compared to thirteen weeks ended April 30,
2000

Net earnings were $2.5 million, or $.15 per share, compared with $2.2 million,
or $.12 per share in the same period of the prior year. The increase in earnings
resulted from improved gross margins and lower interest costs.


                                      -8-
<PAGE>   9

Sales decreased to $97.6 million from $98.1 million in last year's first
quarter, as the result of an increase of 1.2% in comparable store sales, offset
by a $1.6 million decrease in sales from net store opening and closing activity.
Sales benefited from the store repositioning strategy, aggressive store
remodeling and product mix changes that the Company has implemented, but were
offset by having thirteen fewer stores than a year ago.

Gross margins improved to 49.6% from 48.9% last year due to the addition of
higher margin products, less reliance being placed on price promotions and
tighter inventory control resulting in fewer markdowns.

In the first quarter of 2001, total selling, general and administrative expenses
as a percentage of sales increased to 43.9% from 43.4% due to a lack of expense
leverage from a marginal comparable store sales increase.

Interest expense was lower due to a reduction in the debt level and a decrease
in interest rates by the Federal Reserve Bank.

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 the Federal minimum wage; accordingly, any increases will affect Hancock. In
addition, payroll taxes, employee benefits and other employee related costs
continue to increase. Costs of leases for new store locations remain stable, but
renewal costs of older leases continue to increase. Taxes, maintenance and
insurance costs have also risen. 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 is the most effective tool for coping with increasing costs and
expenses.

Inflation is one of the key factors used in the calculation of the LIFO charge
to Cost of Sales. In the last fiscal year, an increase in the PPI indices
resulted in a LIFO charge of $650 thousand.

SEASONALITY

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

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("FAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. FAS 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. The company was not holding any derivative financial or
commodity instruments during the quarter ended April 29, 2001 and the adoption
of FAS 133 did not have any financial statement impact.


                                      -9-
<PAGE>   10

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain qualifying forward-looking statements. Certain information included
in this Form 10-Q contains statements that are forward-looking, such as
statements related to financial items and results, plans for future expansion,
store closure and other business development activities, capital spending or
financing sources, capital structure, stability of interest rates during periods
of borrowings and the effects of regulation, general economic trends, changes in
consumer demand or purchase patterns, delays or interruptions in the flow of
merchandise between the Company's suppliers and/or its distribution center and
its stores, a disruption in the Company's data processing services and
competition. Such forward-looking information involves important risks and
uncertainties that could significantly impact anticipated results in the future.
Accordingly, such results may differ materially from those expressed in any
forward-looking statements by or on behalf of Hancock. These risks and
uncertainties include, but are not limited to, those described above.

PART II. OTHER INFORMATION:

ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not holding any derivative financial or commodity instruments at
April 29, 2001. The Company is exposed to financial market risks, including
changes in interest rates. All borrowings under the Company'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
the Company's income. All of the Company's business is transacted in U. S.
dollars and, accordingly, foreign exchange rate fluctuations have never had a
significant impact on the Company, and they are not expected to in the
foreseeable future.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (b)      Reports on Form 8-K

                  None

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)
June 12, 2001


                                      -10-