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 August 3, 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 Exchange Act Rule 12b-2). 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 August 3, 2003, the registrant had  outstanding an aggregate of 18,695,682
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 August 3, 2003
     and February 2, 2003                                                3

    Consolidated Statement of Earnings for the Thirteen
     Weeks and Twenty-six Weeks Ended August 3, 2003 and
     August 4, 2002                                                      4

    Consolidated Statement of Shareholders' Equity for the
     Twenty-six Weeks Ended August 3, 2003                               5

    Consolidated Statement of Cash Flows for the Twenty-six
     Weeks Ended August 3, 2003 and August 4, 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                                      13

Part II.  Other Information:

  Item 4. Submission of Matters to a Vote of Security Holders           14

  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)           August 3,      February 2,
                                                                   2003            2003
------------------------------------------------------------------------------------------

Assets
Current assets:
    Cash and cash equivalents                                      $3,156          $4,589
    Receivables, less allowance for doubtful accounts                 978           1,100
    Inventories                                                   150,801         144,061
    Prepaid expenses                                                3,295           2,570
------------------------------------------------------------------------------------------
    Total current assets                                          158,230         152,320

Property and equipment, at depreciated cost                        45,163          41,853
Deferred tax asset                                                  4,465           4,465
Pension payment in excess of required contribution                 17,383          18,829
Goodwill                                                            4,480           4,480
Other assets                                                        3,522           3,563
------------------------------------------------------------------------------------------

    Total assets                                                 $233,243        $225,510
==========================================================================================

Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable                                              $35,164         $44,357
    Accrued liabilities                                            17,074          21,039
    Deferred tax liabilities                                        3,078           3,078
    Income taxes                                                    2,034           5,089
------------------------------------------------------------------------------------------
    Total current liabilities                                      57,350          73,563

Long-term debt obligations                                         28,000               0
Postretirement benefits other than pensions                        22,204          21,976
Reserve for store closings                                            628             878
Other liabilities                                                   4,949           4,862
------------------------------------------------------------------------------------------
    Total liabilities                                             113,131         101,279
------------------------------------------------------------------------------------------

Commitments and contingencies

Shareholders' equity:
  Common stock, $.01 par value; 80,000,000 shares
   authorized; 31,783,582 and 31,481,715 issued and outstanding,
   respectively                                                       318             315
  Additional paid-in capital                                       68,121          63,805
  Retained earnings                                               210,572         208,659
  Treasury stock, at cost, 13,087,900 and 12,431,937
   shares held, respectively                                     (151,809)       (142,545)
  Deferred compensation on restricted stock
   incentive plan                                                  (7,090)         (6,003)
------------------------------------------------------------------------------------------
    Total shareholders' equity                                    120,112         124,231
------------------------------------------------------------------------------------------
    Total liabilities and shareholders' equity                   $233,243        $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                 Twenty-six Weeks Ended
 per share amounts)                              -----------------------------------------------------------------------------
                                                       August 3,            August 4,         August 3,          August 4,
                                                         2003                 2002             2003                2002
------------------------------------------------------------------------------------------------------------------------------

Sales                                                     $96,103              $92,676         $203,739            $196,730
Cost of goods sold                                         46,334               45,125           99,231              96,644
------------------------------------------------------------------------------------------------------------------------------

  Gross profit                                             49,769               47,551          104,508             100,086
------------------------------------------------------------------------------------------------------------------------------

Expenses (income)
  Selling, general and administrative                      45,544               43,800           92,364              89,180
  Depreciation and amortization                             1,585                1,343            3,037               2,675
  Interest expense                                            180                   94              274                 154
  Interest income                                             (17)                 (19)             (34)                (50)
------------------------------------------------------------------------------------------------------------------------------
  Total operating and interest expenses                    47,292               45,218           95,641              91,959
------------------------------------------------------------------------------------------------------------------------------

Earnings before taxes                                       2,477                2,333            8,867               8,127
Income taxes                                                  900                  848            3,219               2,951
------------------------------------------------------------------------------------------------------------------------------

Net earnings and comprehensive income                      $1,577               $1,485           $5,648              $5,176
==============================================================================================================================

Earnings per share
      Basic                                                 $0.09                $0.08            $0.32               $0.29
      Diluted                                               $0.09                $0.08            $0.31               $0.27

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

Weighted average shares outstanding
      Basic                                                17,515               18,042           17,652              17,818
      Diluted                                              18,345               19,064           18,452              18,907

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

Dividends per share                                         $0.10                $0.08            $0.20               $0.16
==============================================================================================================================
</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                                  Additional                                                   Total
  number of shares)                       Common Stock      Paid-in   Retained     Treasury Stock      Deferred      Shareholders'
                                   ------------------------                    ----------------------  Compensation     Equity
                                      Shares      Amount    Capital   Earnings    Shares      Amount

----------------------------------------------------------------------------------------------------------------------------------
Twenty-six weeks ended August 3, 2003
----------------------------------------------------------------------------------------------------------------------------------

Balance February 2, 2003             31,481,715       $315   $63,805  $208,659 (12,431,937)($142,545)       ($6,003)     $124,231
Net earnings                                                             5,648                                              5,648
Cash dividend - $.10 per
 share on a quarterly basis                                             (3,735)                                            (3,735)
Issuance of restricted stock            149,000          1     2,359                                         (2,360)
Cancellation of restricted stock        (34,600)                (307)                                           307
Amortization and vesting of
 deferred compensation on restricted
 stock incentive plan                                             97                                            966         1,063
Purchase of treasury stock                                                        (655,963)   (9,264)                      (9,264)
Issurance of shares as compensation
  for professional services                 982                   15                                                           15
Issuance of shares under directors'
  stock plan                              5,910                   90                                                           90
Exercise of stock options               180,575          2     2,062                                                        2,064

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

Balance August 3, 2003               31,783,582       $318   $68,121  $210,572 (13,087,900)($151,809)       ($7,090)     $120,112
==================================================================================================================================
</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)
                                                           Twenty-six Weeks Ended
                                                        ------------------------------
                                                             August 3,      August 4,
                                                               2003            2002
--------------------------------------------------------------------------------------
Cash flows from operating activities:
  Net earnings                                                 $5,648          $5,176
  Adjustments to reconcile net earnings to cash
    flows from operating activities:
       Depreciation and amortization                            3,037           2,675
       LIFO                                                      (200)           (500)
       Amortization of deferred compensation on
         restricted stock incentive plan                          966           1,087
       Interest expense on closed store accrual                    67              84
       Issuance of shares as compensation for                      15              10
        professional services
  (Increase) decrease in assets:
      Receivables and prepaid expenses                           (603)         (1,265)
      Inventory at current cost                                (6,540)         (5,900)
      Pension payment in excess of required contribution        1,446             874
      Other noncurrent assets                                      41             401
  Increase (decrease) in liabilities:
      Accounts payable                                         (9,193)           (636)
      Accrued liabilities                                      (3,965)         (3,155)
      Current income tax obligations                           (2,958)         (3,408)
      Postretirement benefits other than pensions                 228              35
      Reserve for store closings                                 (317)           (555)
      Other liabilities                                            87            (217)

--------------------------------------------------------------------------------------
     Net cash used in operating activities                    (12,241)         (5,294)
--------------------------------------------------------------------------------------
Cash flows from investing activities:
  Additions to property and equipment                          (6,347)        (12,091)
--------------------------------------------------------------------------------------
     Net cash used in investing activities                     (6,347)        (12,091)
--------------------------------------------------------------------------------------
Cash flows from financing activities:
  Net borrowings on revolving
    credit agreement                                           28,000          11,000
  Purchase of treasury stock                                   (9,264)         (6,110)
  Issuance of shares under directors' stock plan                   90              89
  Exercise of stock options                                     2,064          12,196
  Cash dividends paid                                          (3,735)         (3,038)
--------------------------------------------------------------------------------------
     Net cash provided by financing activities                 17,155          14,137
--------------------------------------------------------------------------------------
Decrease in cash and cash equivalents                          (1,433)         (3,248)

Cash and cash equivalents:
  Beginning of period                                           4,589           6,914
--------------------------------------------------------------------------------------
  End of period                                                $3,156          $3,666
======================================================================================
Supplemental disclosures:
  Cash paid during the period for:
    Interest                                                     $156             $48
    Income taxes                                               $5,809          $3,309
======================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

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
February 2, 2003 incorporated into the Company's Annual Report on Form 10-K/A.

The results of operations for the thirteen and  twenty-six  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, is presented below:

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

                                                              Thirteen Weeks Ended              Twenty-six Weeks Ended
                                                        ---------------------------------  ---------------------------------
                                                           August 3,       August 4,          August 3,        August 4,
                                                             2003             2002               2003            2002
                                                        --------------  -----------------  ---------------   ---------------
Net earnings, as reported                                   $1,577          $1,485             $5,648           $5,176
Deduct: Total stock-based employee compensation
  expense determined under fair value based method
  for all awards, net of related tax effects                  (262)           (149)              (424)            (259)
                                                        --------------  -----------------  ---------------   ---------------
Pro forma net earnings                                      $1,315          $1,336             $5,224           $4,917
                                                        ==============  =================  ===============   ===============

Earnings per share:
     Basic - as reported                                      $0.09          $0.08               $0.32            $0.29
                                                        ==============  =================  ===============   ===============
     Basic - pro forma                                        $0.08          $0.07               $0.30            $0.28
                                                        ==============  =================  ===============   ===============

     Diluted - as reported                                    $0.09          $0.08               $0.31            $0.27
                                                        ==============  =================  ===============   ===============
     Diluted - pro forma                                      $0.07          $0.07               $0.28            $0.26
                                                        ==============  =================  ===============   ===============
</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        Twenty-six Weeks Ended
 per share amounts)                                                  -----------------------------------------------------------
                                                                     August 3,    August 4,       August 3,       August 4,
                                                                       2003         2002            2003             2002
-------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share:

  Net earnings                                                           $1,577       $1,485            $5,648          $5,176
                                                                    ============ ============  ================ ===============

  Weighted average number of common shares outstanding during        17,514,570   18,042,472        17,652,365      17,818,325
   period                                                           ============ ============  ================ ===============

Basic earnings per share                                                  $0.09        $0.08             $0.32           $0.29
                                                                    ============ ============  ================ ===============

Diluted earnings per share:

  Net earnings                                                           $1,577       $1,485            $5,648          $5,176
                                                                    ============ ============  ================ ===============

  Weighted average number of common shares outstanding during        17,514,570   18,042,472        17,652,365      17,818,325
   period

   Stock options                                                        468,503      634,845           455,644         701,345

   Restricted stock and deferred stock units                            361,765      386,646           344,381         387,684
                                                                    ------------ ------------  ---------------- ---------------

                                                                     18,344,838   19,063,963        18,452,390      18,907,354
                                                                    ============ ============  ================ ===============

Diluted earnings per share                                                $0.09        $0.08             $0.31           $0.27
                                                                    ============ ============  ================ ===============

Weighted average common stock equivalents not included in EPS
  (stock options) because the effect would be anti-dilutive             430,559      264,011           436,863         132,006
                                                                    ============ ============  ================ ===============
</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 August 3, 2003, the total reserve balance  included in current and noncurrent
liabilities was $1,499,000, 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                               August 3,
                          2003          Reserve         Interest    Payments       2003
                      -----------     ------------      --------    --------     ---------

Lease Obligations        $1,749           $0              $67        ($317)       $1,499
                      ===========     ============      ========    ========     =========


</TABLE>


                                       8
<PAGE>

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001,  the FASB  issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations.  SFAS 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
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 4 are
effective for fiscal years beginning after May 15, 2002. The provisions  related
to SFAS 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  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 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.  The
Company does not believe that this standard  will have a  significant  effect on
its financial position or results of operations.

                                       9
<PAGE>


During  January  2003,  the FASB  issued FIN No. 46,  Consolidation  of Variable
Interest  Entities.  FIN 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 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 46 becomes  effective  on July 1,  2003.  Because  Hancock  does not hold an
interest  in  an  entity  governed  by  the  pronouncement,   adoption  of  this
pronouncement had no 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.

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 8 stores and
closed 8 stores during the thirteen  weeks ended August 3, 2003,  resulting in a
total of 431 stores at quarter end.

During the twenty-six  weeks ended August 3, 2003, net earnings of $5.6 million,
borrowings of $28 million,  proceeds from stock option  exercises  totaling $2.1
million  and  existing  cash of $1.4  million  were used to fund a $6.5  million
seasonal increase in inventory,  $9.3 million of treasury stock purchases,  $3.7
million in cash  dividends,  a $13.2  million  decrease in accounts  payable and
accrued liabilities and $6.3 million in additions to property and equipment.  At
August 3, 2003,  Hancock had outstanding debt of $28 million,  or 18.9% of total
capitalization, compared to $11 million, or 9% of total capitalization at August
4, 2002.

RESULTS OF OPERATIONS

Thirteen  weeks ended August 3, 2003 compared to thirteen  weeks ended August 4,
2002

Net earnings were $1.6 million,  or $.09 per diluted  share,  compared with $1.5
million,  or $.08 per  diluted  share,  in the same  period of the  prior  year.
Earnings  were  influenced  by higher  sales and a higher gross margin than last
year.

Sales  increased to $96.1  million from $92.7  million in the second  quarter of
last year, as the result of an increase of 3.8% in comparable store sales driven
primarily  by a higher  average  ticket.  Sales  benefited  from  the  continued
repositioning of the store base, the  remerchandising  of Hancock's  product mix
and efforts to appeal to a more diverse  customer base. The store  repositioning
strategy has consisted of closing smaller,  low potential stores that were often
located too close  together,  while  opening or acquiring  larger  stores spaced

                                       10
<PAGE>

farther apart to better support the expanded  product  offering within Hancock's
core merchandise  competency.  Gross margins  increased to 51.8% from 51.3% last
year as a result of the shift in the merchandise mix towards more  higher-margin
home  decorating   products  and  Hancock's   efforts  to  control   promotional
activities.  This  increase  was  partially  offset by a decrease  in the second
quarter LIFO credit from $500,000 in 2002 to $200,000 this year  resulting  from
less product cost deflation in 2003.

Selling, general and administrative expenses as a percentage of sales were 47.4%
compared  to  47.3%  in the  second  quarter  of  2002.  Expense  leverage  from
comparable  store sales increases was offset partially by higher costs resulting
from certain  start-up  activities at the new  distribution  center.  As Hancock
continues to transfer its  warehousing  and  distribution  activities to the new
facility over the next three to four quarters, costs will tend to be higher than
the prior comparable  periods due to some duplication of expenses.  In addition,
insurance and pension costs were higher in this year's second quarter.

Interest expense was higher due to average debt outstanding totaling $25 million
during the second quarter of this year versus $5 million during the same quarter
of 2002.

Twenty-six  weeks ended August 3, 2003 compared to twenty-six weeks ended August
4, 2002

Net earnings were $5.6 million,  or $.31 per diluted  share,  compared with $5.2
million,  or $.27 per  diluted  share,  in the same  period of the  prior  year.
Earnings  were  influenced  by higher  sales and a higher gross margin than last
year.

Sales increased to $203.7 million from $196.7 million in the first half of 2002,
as the result of an increase of 4.0% in comparable  store sales driven primarily
by a higher average ticket. Sales benefited from the continued  repositioning of
the store base,  the  remerchandising  of  Hancock's  product mix and efforts to
appeal to a more diverse  customer base.  Gross margins  increased to 51.3% from
50.9% last year as a result of the shift in the  merchandise  mix  towards  more
higher-margin  home  decorating   products  and  Hancock's  efforts  to  control
promotional activities.  This increase was partially offset by a decrease in the
second quarter LIFO credit from $500,000 in 2002 to $200,000 this year resulting
from less product cost deflation in 2003.

Selling,  general and administrative  expenses as a percentage of sales remained
at 45.3% for the first half of the year.  Expense leverage from comparable store
sales  increases  was offset by higher costs  resulting  from  certain  start-up
activities at the new distribution  center. As Hancock continues to transfer its
warehousing and distribution  activities to the new facility over the next three
to four quarters, costs will tend to be higher than the prior comparable periods
due to some  duplication of expenses.  In addition,  insurance and pension costs
were higher in the first half of this year.

Interest expense  increased due to a higher level of outstanding debt throughout
the twenty-six weeks of 2003 versus 2002.

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.  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.

                                       11
<PAGE>

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
August 3, 2003,  Hancock had  commitments  of $1.8 million on issued  letters of
credit which support  purchase  orders for  merchandise to be imported.  Hancock
also has a $3.5  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.

Inflation is one of the key factors used in the  calculation  of the LIFO charge
or credit to Cost of Sales. During the first half of 2003 and 2002, decreases in
the PPI resulted in LIFO credits of $200,000 and $500,000, 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

From time to time, Hancock may publish  forward-looking  statements  relating to
such matters as anticipated financial performance,  financial items and results,
plans for  future  expansion,  store  closures  and other  business  development
activities, capital spending or financing sources, capital structure and similar
matters.  The Private  Securities  Litigation Reform Act of 1995 provides a safe

                                       12
<PAGE>

harbor for forward-looking  statements. In order to comply with the terms of the
safe  harbor,  Hancock  notes that a variety of factors  could  cause  Hancock's
actual results and experience to differ materially from the anticipated  results
or other expectations  expressed in Hancock's  forward-looking  statements.  The
risks and uncertainties that may affect the operations, performance, development
and results of Hancock's business include,  but are not limited to, 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 Hancock's  suppliers and/or
its distribution center and its stores,  disruption in Hancock's data processing
services, and competitive changes,  including,  but not limited to, liquidations
of  inventory in  Hancock's  markets in  connection  with a  competitor's  store
closings or need to dispose of old inventory.

Item 3:  Quantitative and Qualitative Disclosures about Market Risks

Hancock does not hold derivative financial or commodity instruments at August 3,
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.

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.

                                       13
<PAGE>

PART II.  OTHER INFORMATION:

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

Incorporated by reference to Item 4, Part II of Hancock Fabrics,  Inc. Quarterly
Report on Form 10-Q filed June 18, 2003.

Item 6:  Exhibits and Reports on Form 8-K

 (a)  Exhibits

    22    Submission  of  Matters  to  a  Vote  of  Security  Holders*
    31.1  Certification of Chief Executive  Officer
    31.2  Certification of Chief Financial  Officer
    32    Certification  of Chief Executive  Officer and  Certification of Chief
          Financial Officer Pursuant to 18 U.S.C. Section 1350

*Incorporated by reference to Item 4, Part II of Hancock Fabrics, Inc. Quarterly
Report on Form 10-Q filed June 18, 2003.

 (b)  Reports on Form 8-K

          Current  Report  on Form 8-K filed  June 12,  2003  regarding  workers
          compensation claims.
          Current  Report on Form 8-K filed May 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)


September 15, 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:  September 15, 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:  September 15, 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 August 3, 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:  September 15, 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



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