| Delaware                                 |   | 64-0740905          |
|------------------------------------------|--------|---------------------|
| (State or other jurisdiction             |   | (I.R.S. Employer    |
| of incorporation or organization)        |   | Identification No.) |
|                                     |   |                |
| One Fashion Way, Baldwyn, MS             |   | 38824               |
| (Address of principal executive offices) |   | (Zip Code)          |

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|                                                                                                           | Page   |
|----------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                           |   |
| Part I.  Financial Information                                                                       |   |
|                                                                                                           |   |
| Item 1.  Condensed Financial Statements (unaudited)                                                  |   |
|                                                                                                           |   |
| Consolidated Balance Sheets as of April 30, 2011, May 1, 2010 and January 29, 2011                             | 3      |
|                                                                                                           |   |
| Consolidated Statements of Operations for the Thirteen Weeks Ended April 30, 2011 and May 1, 2010              | 4      |
|                                                                                                           |   |
| Consolidated Statement of Shareholders’ Equity for the Thirteen Weeks Ended April 30, 2011               | 5      |
|                                                                                                           |   |
| Consolidated Statements of Cash Flows for the Thirteen Weeks Ended April 30, 2011 and May 1, 2010              | 6      |
|                                                                                                           |   |
| Notes to Consolidated Financial Statements                                                                     | 7      |
|                                                                                                           |   |
| Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11     |
|                                                                                                           |   |
| Item 3.  Quantitative and Qualitative Disclosures about Market Risks                                 | 19     |
|                                                                                                           |   |
| Item 4T.  Controls and Procedures                                                                    | 19     |
|                                                                                                           |   |
| Part II.  Other Information                                                                          |   |
|                                                                                                           |   |
| Item 1. Legal Proceedings                                                                                      | 20     |
|                                                                                                           |   |
| Item 1A. Risk Factors                                                                                          | 20     |
|                                                                                                           |   |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                            | 20     |
|                                                                                                           |   |
| Item 3. Defaults Upon Senior Securities                                                                        | 20     |
|                                                                                                           |   |
| Item 4. Removed and Reserved                                                                                   | 20     |
|                                                                                                           |   |
| Item 5. Other Information                                                                                      | 20     |
|                                                                                                           |   |
| Item 6. Exhibits                                                                                               | 20     |
|                                                                                                           |   |
| Signatures                                                                                                     | 21     |

----

|                                                                                                                                                                          |   | (unaudited)    |     |   |        |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|----------|--------|-------------|--------|
|                                                                                                                                                                          |   | April 30, |     |   | May 1, |   |   | January 29, |   |
| (in thousands, except for share amounts)                                                                                                             |   | 2011           |     |   | 2010        |   |   | 2011(1) |   |
| Assets                                                                                                                                                                        |   |           |     |   |        |   |   |   |   |
| Current assets:                                                                                                                                                               |   |           |     |   |        |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                     |   | $              | 2,363    |   |        | $      | 2,573 |   |   | $ | 2,372 |   |
| Receivables, less allowance for doubtful accounts                                                                                                                             |   |           | 3,203    |   |        |   | 3,165 |   |   |   | 3,841 |   |
| Inventories, net                                                                                                                                                              |   |           | 86,729   |   |        |   | 93,003 |   |   |   | 87,804 |   |
| Prepaid expenses                                                                                                                                                              |   |           | 2,416    |   |        |   | 2,162 |   |   |   | 2,465 |   |
| Total current assets                                                                                                                                                          |   |           | 94,711   |   |        |   | 100,903 |   |   |   | 96,482 |   |
|                                                                                                                                                                          |   |           |     |   |        |   |   |   |   |   |   |   |
| Property and equipment, net                                                                                                                                                   |   |           | 38,279   |   |        |   | 41,700 |   |   |   | 39,335 |   |
| Goodwill                                                                                                                                                                      |   |           | 3,139    |   |        |   | 3,210 |   |   |   | 3,139 |   |
| Other assets                                                                                                                                                                  |   |           | 1,850    |   |        |   | 4,325 |   |   |   | 1,967 |   |
| Total assets                                                                                                                                                                  |   | $              | 137,979  |   |        | $      | 150,138 |   |   | $ | 140,923 |   |
|                                                                                                                                                                          |   |           |     |   |        |   |   |   |   |   |   |   |
| Liabilities and Shareholders' Equity                                                                                                                                          |   |           |     |   |        |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                                          |   |           |     |   |        |   |   |   |   |   |   |   |
| Accounts payable                                                                                                                                                              |   | $              | 19,758   |   |        | $      | 23,271 |   |   | $ | 17,842 |   |
| Accrued liabilities                                                                                                                                                           |   |           | 13,390   |   |        |   | 12,859 |   |   |   | 14,937 |   |
| Other pre-petition obligations                                                                                                                                                |   |           | 725      |   |        |   | 824 |   |   |   | 730 |   |
| Total current liabilities                                                                                                                                                     |   |           | 33,873   |   |        |   | 36,954 |   |   |   | 33,509 |   |
|                                                                                                                                                                          |   |           |     |   |        |   |   |   |   |   |   |   |
| Long-term debt obligations, net                                                                                                                                               |   |           | 28,847   |   |        |   | 27,627 |   |   |   | 28,784 |   |
| Capital lease obligations                                                                                                                                                     |   |           | 3,040    |   |        |   | 3,159 |   |   |   | 3,072 |   |
| Postretirement benefits other than pensions                                                                                                                                   |   |           | 2,392    |   |        |   | 2,199 |   |   |   | 2,337 |   |
| Pension and SERP liabilities                                                                                                                                                  |   |           | 29,376   |   |        |   | 27,286 |   |   |   | 30,506 |   |
| Other liabilities                                                                                                                                                             |   |           | 7,699    |   |        |   | 6,892 |   |   |   | 7,878 |   |
| Total liabilities                                                                                                                                                             |   |           | 105,227  |   |        |   | 104,117 |   |   |   | 106,086 |   |
|                                                                                                                                                                          |   |           |     |   |        |   |   |   |   |   |   |   |
| Commitments and contingencies                                                                                                                                                 |   |           |     |   |        |   |   |   |   |   |   |   |
|                                                                                                                                                                          |   |           |     |   |        |   |   |   |   |   |   |   |
| Shareholders' equity:                                                                                                                                                         |   |           |     |   |        |   |   |   |   |   |   |   |
| Common stock, $.01 par value; 80,000,000 shares authorized; 33,468,455, 33,308,944, and 33,283,944 issued and 20,068,543, 19,915,813 and 19,902,148 outstanding, respectively |   |           | 335      |   |        |   | 333 |   |   |   | 335 |   |
| Additional paid-in capital                                                                                                                                                    |   |           | 89,764   |   |        |   | 89,293 |   |   |   | 89,671 |   |
| Retained earnings                                                                                                                                                             |   |           | 114,082  |   |        |   | 125,394 |   |   |   | 116,234 |   |
| Treasury stock, at cost, 13,399,912 13,393,131, and 13,381,796 shares held, respectively                                                                                      |   |           | (153,733 | )      |        |   | (153,723 | ) |   |   | (153,731 | ) |
| Accumulated other comprehensive loss                                                                                                                                          |   |           | (17,696  | )      |        |   | (15,276 | ) |   |   | (17,672 | ) |
| Total shareholders' equity                                                                                                                                                    |   |           | 32,752   |   |        |   | 46,021 |   |   |   | 34,837 |   |
| Total liabilities and shareholders' equity                                                                                                                                    |   | $              | 137,979  |   |        | $      | 150,138 |   |   | $ | 140,923 |   |

----

----

|                                                                    |   | Thirteen WeeksEnded |   |   | Thirteen WeeksEnded |   |
|-------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                                                    |   | April 30,           |   |   | May 1,              |   |
| (in thousands, except per share amounts)       |   | 2011                     |   |   | 2010                     |   |
| Net Sales                                                               |   | $                        | 61,977 |   |                     | $      | 63,103 |   |
| Cost of goods sold                                                      |   |                     | 34,605 |   |                     |   | 35,370 |   |
| Gross profit                                                            |   |                     | 27,372 |   |                     |   | 27,733 |   |
| Selling, general and administrative expense                             |   |                     | 27,340 |   |                     |   | 26,644 |   |
| Depreciation and amortization                                           |   |                     | 1,037  |   |                     |   | 1,072 |   |
| Operating income (loss)                                                 |   |                     | (1,005 | )      |                     |   | 17 |   |
| Reorganization expense, net                                             |   |                     | -      |   |                     |   | 196 |   |
| Interest expense, net                                                   |   |                     | 1,147  |   |                     |   | 1,144 |   |
| Loss from continuing operations before income taxes                     |   |                     | (2,152 | )      |                     |   | (1,323 | ) |
| Income taxes                                                            |   |                     | -      |   |                     |   | - |   |
| Loss from continuing operations                                         |   |                     | (2,152 | )      |                     |   | (1,323 | ) |
| Earnings from discontinued operations (net of tax expense of $0 and $0) |   |                     | -      |   |                     |   | 22 |   |
| Net loss                                                                |   | $                        | (2,152 | )      |                     | $      | (1,301 | ) |
| Basic and diluted loss per share:                                       |   |                     |   |   |                     |   |   |   |
| Loss from continuing operations                                         |   | $                        | (0.11  | )      |                     | $      | (0.07 | ) |
| Earnings from discontinued operations                                   |   |                     | -      |   |                     |   | - |   |
| Net loss                                                                |   | $                        | (0.11  | )      |                     | $      | (0.07 | ) |
| Weighted average shares outstanding:                                    |   |                     |   |   |                     |   |   |   |
| Basic and diluted                                                       |   |                     | 19,781 |   |                     |   | 19,590 |   |

----

----

|                                                                            |   |              |       |   |    |   |   |       |   |   |                |   |   |          |    |   |          |   |        | Accumulated        |   |   |     |   |
|--------------------------------------------------------------------------------------|--------|-------------------|------------|--------|---------|--------|--------|------------|--------|--------|---------------------|--------|--------|---------------|---------|--------|---------------|--------|-------------|--------------------|--------|--------|----------|--------|
| (in thousands, except for                                        |   |              |       |   |    |   |   | Additional |   |   |                |   |   |          |    |   |          |   |        | Other              |   |   | Total    |   |
| number of shares)                                                          |   | Common Stock |       |   | Paid-in |   |   | Retained   |   |   | Treasury Stock |   |   | Comprehensive |    |   | Shareholders' |   |
|                                                                                 |   | Shares            |       |   | Amount  |   |   | Capital    |   |   | Earnings            |   |   | Shares        |    |   | Amount        |   |        | Income (Loss) |   |   | Equity   |   |
| Balance January 29, 2011                                                             |   |              | 33,466,455 |   |    | $      | 335    |       |   | $      | 89,671              |   |   | $             | 116,234 |   |          |   | (13,398,128 | )                  |   | $      | (153,731 | )      |   | $ | (17,672 | ) |   | $ | 34,837 |   |
| Comprehensive loss:                                                                  |   |              |       |   |    |   |   |       |   |   |                |   |   |          |    |   |          |   |        |               |   |   |     |   |   |   |   |   |   |   |   |   |
| Net loss                                                                             |   |              |       |   |    |   |   |       |   |   |                |   |   |          | (2,152  | )      |          |   |        |               |   |   |     |   |   |   |   |   |   |   | (2,152 | ) |
| Minimum pension, SERP and  OPEB  liabilities, net of taxes of $0 |   |              |       |   |    |   |   |       |   |   |                |   |   |          |    |   |          |   |        |               |   |   |     |   |   |   | (24 | ) |   |   | (24 | ) |
| Total comprehensive loss                                                             |   |              |       |   |    |   |   |       |   |   |                |   |   |          |    |   |          |   |        |               |   |   |     |   |   |   |   |   |   |   | (2,176 | ) |
| Issuance of restricted stock                                                         |   |              | 4,000      |   |    |   |   |       |   |   | (1                  | )      |   |          |    |   |          |   |        |               |   |   |     |   |   |   |   |   |   |   | (1 | ) |
| Cancellation of restricted stock                                                     |   |              | (2,000     | )      |    |   |   |       |   |   |                |   |   |          |    |   |          |   |        |               |   |   |     |   |   |   |   |   |   |   |   |   |
| Purchase of treasury stock                                                           |   |              |       |   |    |   |   |       |   |   |                |   |   |          |    |   |          |   | (1,784      | )                  |   |   | (2       | )      |   |   |   |   |   |   | (2 | ) |
| Stock compensation expense                                                           |   |              |       |   |    |   |   |       |   |   | 94                  |   |   |          |    |   |          |   |        |               |   |   |     |   |   |   |   |   |   |   | 94 |   |
| Balance April 30, 2011                                                               |   |              | 33,468,455 |   |    | $      | 335    |       |   | $      | 89,764              |   |   | $             | 114,082 |   |          |   | (13,399,912 | )                  |   | $      | (153,733 | )      |   | $ | (17,696 | ) |   | $ | 32,752 |   |

----

----

|                                                                       |   | Thirteen Weeks Ended |   |
|----------------------------------------------------------------------------|--------|----------------------|--------|
|                                                                       |   | April 30,            |   |   | May 1, |   |
| (in thousands)                                                             |   | 2011                 |   |   | 2010 |   |
| Cash flows from operating activities:                                      |   |                 |   |   |   |   |
| Net loss                                                                   |   | $                    | (2,152 | ) |   | $ | (1,301 | ) |
| Adjustments to reconcile net loss to cash flows from operating activities  |   |                 |   |   |   |   |   |   |
| Depreciation and amortization, including cost of goods sold                |   |                 | 1,557  |   |   |   | 1,567 |   |
| Amortization of deferred loan costs                                        |   |                 | 62     |   |   |   | 62 |   |
| Amortization of bond discount                                              |   |                 | 583    |   |   |   | 583 |   |
| Stock compensation expense                                                 |   |                 | 94     |   |   |   | 157 |   |
| Reserve for store closings credits, including interest expense             |   |                 | -      |   |   |   | (33 | ) |
| Inventory valuation reserve                                                |   |                 | (860   | ) |   |   | 91 |   |
| Other                                                                      |   |                 | 78     |   |   |   | 42 |   |
| Reorganization expense, net                                                |   |                 | -      |   |   |   | 196 |   |
| (Increase) decrease in assets                                              |   |                 |   |   |   |   |   |   |
| Receivables and prepaid expenses                                           |   |                 | 802    |   |   |   | (373 | ) |
| Inventory at current cost                                                  |   |                 | 1,901  |   |   |   | (1,602 | ) |
| Other noncurrent assets                                                    |   |                 | 10     |   |   |   | 320 |   |
| Increase (decrease) in liabilities                                         |   |                 |   |   |   |   |   |   |
| Accounts payable                                                           |   |                 | 1,916  |   |   |   | 4,633 |   |
| Accrued liabilities                                                        |   |                 | (1,550 | ) |   |   | (2,315 | ) |
| Postretirement benefits other than pensions                                |   |                 | (192   | ) |   |   | (222 | ) |
| Long-term pension and SERP liabilities                                     |   |                 | (907   | ) |   |   | 510 |   |
| Other liabilities                                                          |   |                 | (227   | ) |   |   | (234 | ) |
| Net cash provided by operating activities before reorganization activities |   |                 | 1,115  |   |   |   | 2,081 |   |
| Net cash provided by (used for) reorganization activities                  |   |                 | -      |   |   |   | (244 | ) |
| Net cash provided by operating activities                                  |   |                 | 1,115  |   |   |   | 1,837 |   |
| Cash flows from investing activities:                                      |   |                 |   |   |   |   |   |   |
| Additions to property and equipment                                        |   |                 | (607   | ) |   |   | (1,599 | ) |
| Proceeds from the disposition of property and equipment                    |   |                 | 31     |   |   |   | 9 |   |
| Net cash used for investing activities                                     |   |                 | (576   | ) |   |   | (1,590 | ) |
| Cash flows from financing activities:                                      |   |                 |   |   |   |   |   |   |
| Net borrowings (payments) on revolving credit facility                     |   |                 | (520   | ) |   |   | 102 |   |
| Payments for pre-petition liabilities and other                            |   |                 | (28    | ) |   |   | (269 | ) |
| Net cash used for financing activities                                     |   |                 | (548   | ) |   |   | (167 | ) |
| Increase (decrease) in cash and cash equivalents                           |   |                 | (9     | ) |   |   | 80 |   |
| Cash and cash equivalents:                                                 |   |                 |   |   |   |   |   |   |
| Beginning of period                                                        |   |                 | 2,372  |   |   |   | 2,493 |   |
| End of period                                                              |   | $                    | 2,363  |   |   | $ | 2,573 |   |
| Supplemental disclosures:                                                  |   |                 |   |   |   |   |   |   |
| Cash paid during the period for:                                           |   |                 |   |   |   |   |   |   |
| Interest                                                                   |   | $                    | 486    |   |   | $ | 509 |   |
| Income taxes                                                               |   |                 | 35     |   |   |   | 200 |   |
| Non-cash activities:                                                       |   |                 |   |   |   |   |   |   |
| Noncash change in funded status of benefit plans                           |   | $                    | (24    | ) |   | $ | (30 | ) |

----

----

|                      |   | April 30, |   |   | May 1, |   |   | January 29, |   |
|---------------------------|--------|----------------|--------|--------|-------------|--------|--------|------------------|--------|
|                      |   | 2011           |   |   | 2010        |   |   | 2011             |   |
| Real estate claims        |   | $              | -      |   |        | $      | 99     |             |   | $ | 5 |   |
| Professional fee claim    |   |           | 725    |   |        |   | 725    |             |   |   | 725 |   |
| Total pre-petition claims |   | $              | 725    |   |        | $      | 824    |             |   | $ | 730 |   |

----

|                                 |   | Retirement Plan           |   |   | Postretirement Benefit Plan |   |
|--------------------------------------|--------|--------------------------------|--------|--------|---------------------------------------|--------|
|                                 |   | Thirteen Weeks Ended |   |   | Thirteen Weeks Ended        |   |
|                                 |   | April 30,                 |   |   | May 1,                           |   |   | April 30, |   |   | May 1, |   |
|                                 |   | 2011                           |   |   | 2010                                  |   |   | 2011 |   |   | 2010 |   |
| Service costs                        |   | $                              | 127    |   |                                  | $      | 107 |   |   | $ | 21 |   |   | $ | 17 |   |
| Interest cost                        |   |                           | 1,138  |   |                                  |   | 1,139 |   |   |   | 34 |   |   |   | 33 |   |
| Expected return on assets            |   |                           | (1,012 | )      |                                  |   | (959 | ) |   |   | - |   |   |   | - |   |
| Amortization of prior service costs  |   |                           | -      |   |                                  |   | - |   |   |   | (181 | ) |   |   | (199 | ) |
| Recognized net actuarial (gain) loss |   |                           | 254    |   |                                  |   | 240 |   |   |   | (66 | ) |   |   | (72 | ) |
| Net periodic benefit cost            |   | $                              | 507    |   |                                  | $      | 527 |   |   | $ | (192 | ) |   | $ | (221 | ) |

----

| (in thousands, except for share and       |   | Thirteen Weeks Ended |       |
|--------------------------------------------------------------------|--------|--------------------------------|------------|
| per share amounts)                                       |   | April 30,                 |       |   | May 1, |   |
|                                                               |   | 2011                           |       |   | 2010 |   |
| Basic and diluted loss per share:                                  |   |                           |       |   |   |   |
| Net loss                                                           |   | $                              | (2,152     | ) |   | $ | (1,301 | ) |
|                                                               |   |                           |       |   |   |   |   |   |
| Weighted average number of common shares outstanding during period |   |                           | 19,781,280 |   |   |   | 19,590,236 |   |
|                                                               |   |                           |       |   |   |   |   |   |
| Basic and diluted loss per share                                   |   | $                              | (0.11      | ) |   | $ | (0.07 | ) |

----

| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

----

|   | · | Net sales for the first quarter of fiscal 2011 were $62.0 million compared to $63.1 million for first quarter of fiscal 2010, and comparable store sales decreased 1.3% in the first quarter of 2011 and decreased 2.0% in the first quarter of 2010. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our online sales for the first quarter of fiscal 2011, which are included in the comparable sales number above, increased 1.8% to $1.0 million. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Gross margin for the first quarter of fiscal 2011 was 44.2% compared with 43.9% for the first quarter of fiscal 2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Operating loss was $1.0 million in the first quarter of fiscal 2011 compared to operating income of $17,000 in the first quarter of fiscal 2010. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net loss was $2.2 million, or $0.11 per basic share, in the first quarter of fiscal 2011 compared to a net loss of $1.3 million, or $0.07 per share in the first quarter of fiscal 2010. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The amount of cash generated from operations before reorganization activities decreased by $1.0 to $1.1 million during the first thirteen weeks of fiscal 2011 compared to $2.1 million for the same period of fiscal 2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | Thirteen Weeks Ended |   |
|---------------------------------------------------------|--------|--------------------------------|--------|
|                                                    |   | April 30,                 |   |   | May 1, |   |
|                                                    |   | 2011                           |   |   | 2010 |   |
|                                                    |   |                           |   |   |   |   |
| Net sales (in thousands)                                |   | $                              | 61,977 |   |   | $ | 63,103 |   |
|                                                    |   |                           |   |   |   |   |   |   |
| Gross margin percentage                                 |   |                           | 44.2   | % |   |   | 43.9 | % |
|                                                    |   |                           |   |   |   |   |   |   |
| Number of stores                                        |   |                           |   |   |   |   |   |   |
| Open at end of period(1)                                |   |                           | 264    |   |   |   | 266 |   |
| Comparable stores at period end (2)                     |   |                           | 264    |   |   |   | 264 |   |
|                                                    |   |                           |   |   |   |   |   |   |
| Sales growth                                            |   |                           |   |   |   |   |   |   |
| All retail outlets                                      |   |                           | (1.8   | )% |   |   | (1.5 | )% |
| Comparable retail outlets (3)                           |   |                           | (1.3   | )% |   |   | (2.0 | )% |
|                                                    |   |                           |   |   |   |   |   |   |
| Total store square footage at period end (in thousands) |   |                           | 3,780  |   |   |   | 3,809 |   |
|                                                    |   |                           |   |   |   |   |   |   |
| Net sales per total square footage                      |   | $                              | 16.40  |   |   | $ | 16.57 |   |

| (1) | Open store count does not include the internet store. |
|-----|-------------------------------------------------------|

----

| (2) | A new store is included in the comparable sales computation immediately upon reaching its one-year anniversary. Comparable sales computation also includes net sales derived from e-commerce. In those rare instances where stores are either expanded or down-sized, the store is not treated as a new store and, therefore, remains in the computation of comparable sales. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Comparable sales growth computation also includes net sales derived from e-commerce. |
|-----|--------------------------------------------------------------------------------------|

|                                                |   | Thirteen Weeks Ended |   |
|-----------------------------------------------------|--------|--------------------------------|--------|
| (as percent of sales)                |   | April 30,                 |   |   | May 1, |   |
|                                                |   | 2011                           |   |   | 2010 |   |
| Net Sales                                           |   |                           | 100.0  | % |   |   | 100.0 | % |
| Cost of goods sold                                  |   |                           | 55.8   |   |   |   | 56.1 |   |
| Gross profit                                        |   |                           | 44.2   |   |   |   | 43.9 |   |
| Selling, general and administrative expense         |   |                           | 44.1   |   |   |   | 42.2 |   |
| Depreciation and amortization                       |   |                           | 1.7    |   |   |   | 1.7 |   |
| Operating income (loss)                             |   |                           | -1.6   |   |   |   | 0.0 |   |
| Reorganization expense, net                         |   |                           | 0.0    |   |   |   | 0.3 |   |
| Interest expense, net                               |   |                           | 1.9    |   |   |   | 1.8 |   |
| Loss from continuing operations before income taxes |   |                           | (3.5   | ) |   |   | (2.1 | ) |
| Income taxes                                        |   |                           | -      |   |   |   | - |   |
| Income from discontinued operations                 |   |                           | -      |   |   |   | 0.0 |   |
| Net loss                                            |   |                           | (3.5   | )% |   |   | (2.1 | )% |

|                         |   | Thirteen Weeks Ended |   |
|------------------------------|--------|--------------------------------|--------|
| (in thousands)          |   | April 30,                 |   |   | May 1, |   |
|                         |   | 2011                           |   |   | 2010 |   |
| Retail comparable store base |   | $                              | 60,951 |   |   | $ | 61,793 |   |
| E-Commerce                   |   |                           | 1,026  |   |   |   | 1,008 |   |
| Comparable sales             |   |                           | 61,977 |   |   |   | 62,801 |   |
| New stores                   |   |                           | -      |   |   |   | - |   |
| Closed stores                |   |                           | -      |   |   |   | 302 |   |
|                         |   |                           |   |   |   |   |   |   |
| Total net sales              |   | $                              | 61,977 |   |   | $ | 63,103 |   |

----

|                    |   | Thirteen Weeks Ended |   |
|-------------------------|--------|----------------------|--------|
|                    |   | April 30,            |   |   | May 1, |   |
|                    |   | 2011                 |   |   | 2010 |   |
|                    |   |                 |   |   |   |   |
| Apparel Fabrics         |   |                 | 28     | % |   |   | 27 | % |
| Home Decorating         |   |                 | 19     | % |   |   | 20 | % |
| Quilting/Craft          |   |                 | 26     | % |   |   | 26 | % |
| Notions and Accessories |   |                 | 27     | % |   |   | 27 | % |
|                    |   |                 | 100    | % |   |   | 100 | % |

|   | · | the cost of merchandise |
|--------|--------|-------------------------|

|   | · | inventory rebates and allowances including term discounts |
|--------|--------|-----------------------------------------------------------|

|   | · | inventory shrinkage and valuation adjustments |
|--------|--------|-----------------------------------------------|

|   | · | freight charges |
|--------|--------|-----------------|

|   | · | costs associated with our sourcing operations, including payroll and related benefits |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | costs associated with receiving, processing, and warehousing merchandise |
|--------|--------|--------------------------------------------------------------------------|

|                     |   | Thirteen Weeks Ended |   |
|--------------------------|--------|--------------------------------|--------|
|                     |   | April 30,                 |   |   | % of |   |   | May 1, |   |   | % of |   |
| (dollars in thousands)   |   | 2011                           |   |   | Sales |   |   | 2010 |   |   | Sales |   |
|                     |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net sales                |   | $                              | 61,977 |   |   |   | 100.0 | % |   | $ | 63,103 |   |   |   | 100.0 | % |
|                     |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Merchandise cost         |   |                           | 29,018 |   |   |   | 46.8 | % |   |   | 30,258 |   |   |   | 48.0 | % |
| Freight                  |   |                           | 2,113  |   |   |   | 3.4 | % |   |   | 1,999 |   |   |   | 3.2 | % |
| Sourcing and warehousing |   |                           | 3,474  |   |   |   | 5.6 | % |   |   | 3,113 |   |   |   | 4.9 | % |
|                     |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit             |   | $                              | 27,372 |   |   |   | 44.2 | % |   | $ | 27,733 |   |   |   | 43.9 | % |

----

|   | · | payroll and related benefits (for our store operations, field management, and corporate functions) |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | advertising |
|--------|--------|-------------|

|   | · | general and administrative expenses |
|--------|--------|-------------------------------------|

|   | · | occupancy including rent, common area maintenance, taxes and insurance for our retail locations |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | operating costs of our headquarter facilities |
|--------|--------|-----------------------------------------------|

|   | · | other expense (income) |
|--------|--------|------------------------|

|                     |   | Thirteen Weeks Ended |   |
|--------------------------|--------|--------------------------------|--------|
|                     |   | April 30,                 |   |   | % of |   |   | May 1, |   |   | % of |   |
| (dollars in thousands)   |   | 2011                           |   |   | Sales |   |   | 2010 |   |   | Sales |   |
|                     |   |                           |   |   |   |   |   |   |   |   |   |   |
| Retail store labor costs |   | $                              | 10,038 |   |   |   | 16.2 | % |   | $ | 9,985 |   |   |   | 15.8 | % |
| Advertising              |   |                           | 1,885  |   |   |   | 3.0 | % |   |   | 2,418 |   |   |   | 3.8 | % |
| Store occupancy          |   |                           | 7,631  |   |   |   | 12.3 | % |   |   | 7,321 |   |   |   | 11.6 | % |
| Retail SG&A          |   |                           | 5,132  |   |   |   | 8.3 | % |   |   | 4,694 |   |   |   | 7.4 | % |
| Corp SG&A            |   |                           | 2,654  |   |   |   | 4.3 | % |   |   | 2,226 |   |   |   | 3.6 | % |
|                     |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total SG&A           |   | $                              | 27,340 |   |   |   | 44.1 | % |   | $ | 26,644 |   |   |   | 42.2 | % |

----

|                             |   | Thirteen Weeks Ended |   |
|----------------------------------|--------|--------------------------------|--------|
| (dollars in thousands) |   | April 30,                 |   |   | % of |   |   | May 2, |   |   | % of |   |
|                             |   | 2011                           |   |   | Sales |   |   | 2009 |   |   | Sales |   |
| Interest expense, net            |   | $                              | 1,147  |   |   |   | 1.9 | % |   | $ | 1,144 |   |   |   | 1.8 | % |

----

|                            |   | Thirteen Weeks Ended |   |
|---------------------------------|--------|--------------------------------|--------|
| (in thousands)             |   | April 30,                 |   |   | May 1, |   |
|                            |   | 2011                           |   |   | 2010 |   |
|                            |   |                           |   |   |   |   |
| Net cash flows provided (used): |   |                           |   |   |   |   |
| Operating activites             |   | $                              | 1,115  |   |   | $ | 1,837 |   |
| Investing activities            |   |                           | (576   | ) |   |   | (1,590 | ) |
| Financing activites             |   |                           | (548   | ) |   |   | (167 | ) |

----

----

----

| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) Under The Securities Exchange Act of 1934 |
|------|---------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Under The Securities Exchange Act of 1934 |
|------|---------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant To Section 906 of The Sarbanes-Oxley Act of 2002 |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | HANCOCK FABRICS, INC. |                          |
|--------|-----------------------|-------------------------------|
|   | (Registrant)          |                          |
|   |                  |                          |   |
|   | By:                   | /s/ Robert W. Driskell        |   |
|   |                  | Robert W. Driskell            |   |
|   |                  | Executive Vice President and  |   |
|   |                  | Chief Financial Officer       |   |
|   |                  | (Principal Financial Officer) |   |

----

| Exhibit No. |         | Description                                                                                                                                                                   |
|-------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |         |                                                                                                                                                                          |
| 31.1        |         | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) Under The Securities Exchange Act of 1934                                                                 |
|        |         |                                                                                                                                                                          |
| 31.2        |         | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Under The Securities Exchange Act of 1934                                                                 |
|        |         |                                                                                                                                                                          |
| 32.1        |    | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant To Section 906 of The Sarbanes-Oxley Act of 2002 |

----