UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended April 30, 2005

                                       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.)

     One Fashion Way, Baldwyn, MS                               38824
(Address of principal executive offices)                      (Zip Code)


               Registrant's telephone number, including area code
                                 (662) 365-6000

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

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

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

As of April 30, 2005, the registrant had  outstanding an aggregate of 19,166,661
shares of common stock, $.01 par value.

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

INDEX

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

    Consolidated Balance Sheets as of April 30, 2005 and January 30, 2005                       3

    Consolidated Statements of Operations for the Thirteen Weeks Ended
      April 30, 2005 and May 2, 2004                                                            4

    Consolidated Statements of Cash Flows for the Thirteen Weeks Ended                          5
      April 30, 2005 and May 2, 2004

    Consolidated Statement of Shareholders' Equity for the Thirteen Weeks
       Ended April 30, 2005                                                                     6

    Notes to Consolidated Financial Statements                                                7 - 10

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

   Item 3.  Quantitative and Qualitative Disclosures about Market Risks                        13

   Item 4.  Controls and Procedures                                                            14

Part II.  Other Information:

   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                        14

   Item 6.  Exhibits                                                                           15

Signature                                                                                      16
</TABLE>



                                       2
<PAGE>

<TABLE>
  <S>                                                            <C>              <C>
  PART I. FINANCIAL INFORMATION
  ITEM 1. FINANCIAL STATEMENTS
  HANCOCK FABRICS, INC.
  CONSOLIDATED BALANCE SHEETS
  (unaudited)
  ---------------------------------------------------------------------------------------------------
                                                                   April 30,       January 30,
  (in thousands, except for share and per share amounts)             2005             2005
  ---------------------------------------------------------------------------------------------------
  Assets
  Current assets:
             Cash and cash equivalents                           $     3,730      $    3,794
             Receivables, less allowance for doubtful accounts           551             870
             Inventories                                             157,607         155,857
             Income taxes refundable                                   1,200               -
             Prepaid expenses                                          1,479           2,115
  ---------------------------------------------------------------------------------------------------
            Total current assets                                     164,567         162,636
  Property and equipment, at depreciated cost                         70,550          71,261
  Deferred tax assets                                                  4,338           4,157
  Pension payment in excess of required contribution                  13,464          13,961
  Goodwill                                                             4,480           4,480
  Other assets                                                         2,963           3,030
  ---------------------------------------------------------------------------------------------------
            Total assets                                         $   260,362      $  259,525
  ===================================================================================================

  Liabilities and Shareholders' Equity
  Current liabilities:
            Accounts payable                                     $    38,215      $   41,681
            Accrued liabilities                                       18,788          20,044
            Deferred tax liabilities                                   4,115           4,192
            Income taxes                                                   -             463
  ---------------------------------------------------------------------------------------------------
            Total current liabilities                                 61,118          66,380

  Long-term debt obligations                                          41,000          31,000
  Lease financing obligation                                             803               -
  Postretirement benefits other than pensions                         22,751          22,661
  Reserve for store closings                                             450             483
  Other liabilities                                                    9,519          10,435
  ---------------------------------------------------------------------------------------------------
            Total liabilities                                        135,641         130,959
  ---------------------------------------------------------------------------------------------------
  Commitments and contingencies
  ---------------------------------------------------------------------------------------------------
  Shareholders' equity:
            Common stock, $.01 par value; 80,000,000 shares
            authorized; 32,307,137 and 32,328,133 issued and
            outstanding, respectively                                    323             323
            Additional paid-in capital                                75,226          75,524
            Retained earnings                                        206,576         211,032
            Treasury stock, at cost, 13,140,476 and 13,127,250
               shares held, respectively                            (152,838)       (152,729)
            Deferred compensation on restricted stock incentive plan  (4,566)         (5,584)
  ---------------------------------------------------------------------------------------------------
            Total shareholders' equity                               124,721         128,566
  ---------------------------------------------------------------------------------------------------
            Total liabilities and shareholders' equity           $   260,362      $  259,525
  ===================================================================================================
  See accompanying notes to consolidated financial statements.
</TABLE>

                                       3
<PAGE>


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

HANCOCK FABRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

----------------------------------------------------------------------------------------------------------------
                                                                                       Thirteen Weeks Ended
                                                                                    April 30,           May 2,
(in thousands, except per share amounts)                                              2005               2004
----------------------------------------------------------------------------------------------------------------

Sales                                                                            $   97,840           $ 105,089
Cost of goods sold (1)                                                               51,134              52,606
----------------------------------------------------------------------------------------------------------------

      Gross profit                                                                   46,706              52,483

Selling, general and administrative expense                                          49,325              49,379
Depreciation and amortization                                                         2,234               1,710
----------------------------------------------------------------------------------------------------------------

      Operating income (loss)                                                        (4,853)              1,394

 Interest expense, net                                                                  332                 112
----------------------------------------------------------------------------------------------------------------

Earnings (loss) before income taxes (benefit)                                        (5,185)              1,282
Income taxes (benefit)                                                               (1,882)                466
----------------------------------------------------------------------------------------------------------------

Net earnings (loss) and comprehensive income                                     $   (3,303)          $     816
================================================================================================================

Earnings (loss) per share
           Basic                                                                 $     (.18)          $     .05
           Diluted                                                               $     (.18)          $     .04
================================================================================================================

Weighted average shares outstanding
           Basic                                                                     18,337              17,994
           Diluted                                                                   18,337              18,791
================================================================================================================

Dividends per share                                                              $      .06           $     .12
==================================================================================================================

(1)  Excluding depreciation and amortization
See accompanying notes to consolidated financial statements.
</TABLE>


                                       4
<PAGE>


<TABLE>
<S>                                                                     <C>              <C>
Hancock Fabrics, Inc.
Consolidated Statements of Cash Flows
(unaudited)
-----------------------------------------------------------------------------------------------------
(in thousands)
                                                                            Thirteen Weeks Ended
                                                                        April 30,        May 2,
                                                                          2005            2004
-----------------------------------------------------------------------------------------------------
Cash flows from operating activities:
         Net earnings and comprehensive income                         $ (3,303)         $  816
         Adjustments to reconcile net earnings to cash
           flows used in operating activities
                   Depreciation and amortization                          2,234           1,710
                   LIFO charge (credit)                                   1,000            (150)
                   Deferred income taxes                                   (258)          1,116
                   Amortization of deferred compensation on
                     restricted stock incentive plan                        596             710
                   Reserve for store closings credits                        (2)              -
                   Loss on disposition of property and equipment             22             138
                   Interest expense on closed stores accrual                  9              27
                   Issuance of shares as compensation for professional
                     services                                                 5               8
                   Issuance of shares under directors' stock plan            75              45
                   Tax benefit of stock options exercised                     1             483
         (Increase) decrease in assets
                   Receivables and prepaid expenses                         955             399
                   Inventory at current cost                             (2,750)          4,171
                   Income tax refundable                                 (1,200)              -
                   Pension payment in excess of required contribution       497             530
                   Other noncurrent assets                                   67              83
         Increase (decrease) in liabilities
                   Accounts payable                                      (3,466)         (3,862)
                   Accrued liabilities                                   (1,213)         (3,889)
                   Current income tax obligations                          (428)         (5,056)
                   Postretirement benefits other than pensions               90             165
                   Reserve for store closings                               (83)           (220)
                   Other liabilities                                       (916)           (112)
-----------------------------------------------------------------------------------------------------
                   Net cash used in operating activities                 (8,068)         (2,888)
-----------------------------------------------------------------------------------------------------

Cash flows from investing activities:
         Additions to property and equipment                             (1,573)         (8,070)
         Proceeds from the disposition of property and equipment             28               7
-----------------------------------------------------------------------------------------------------
                   Net cash used in investing activities                 (1,545)         (8,063)
-----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
         Borrowings on revolving credit agreement                        10,000          13,000
         Proceeds from lease financing                                      803               -
         Purchase of treasury stock                                        (109)         (1,732)
         Proceeds from exercise of stock options                              8           1,105
         Cash dividends paid                                             (1,153)         (2,256)
-----------------------------------------------------------------------------------------------------
                   Net cash provided by financing activities              9,549          10,117
-----------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents                                       (64)           (834)
Cash and cash equivalents:
         Beginning of period                                              3,794           4,080
-----------------------------------------------------------------------------------------------------
         End of period                                                  $ 3,730        $  3,246
=====================================================================================================

Supplemental disclosures:
Cash paid during the period for:
         Interest                                                       $   345        $     95
         Income taxes                                                   $    25        $  3,932
=====================================================================================================

  See accompanying notes to consolidated financial statements.
</TABLE>

                                       5
<PAGE>


<TABLE>
<S>                                        <C>         <C>    <C>       <C>       <C>           <C>
HANCOCK FABRICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(unaudited)
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except for number of shares)

-----------------------------------------------------------------------------------------------------------------------------------
                                                              Additional                                                  Total
                                               Common Stock    Paid-in  Retained      Treasury Stock        Deferred   Shareholders'
                                             Shares    Amount  Capital  Earnings    Shares      Amount    Compensation    Equity
-----------------------------------------------------------------------------------------------------------------------------------
Balance January 30, 2005                   32,328,133   $323   $75,524  $211,032  (13,127,250) ($152,729)   ($5,584)     $128,566

Net earnings and comprehensive income                                     (3,303)                                          (3,303)
Cash dividends ($.06 per share)                                           (1,153)                                          (1,153)
Issuance of restricted stock                   20,000              181                                         (181)
Cancellation of restricted stock              (52,200)            (603)                                         603
Amortization & vesting of deferred
  compensation on restricted stock incentive
  plan                                                              35                                          596           631
Issuance of shares under directors' stock
  plan                                          9,225               75                                                         75
Issuance of shares as compensation for
  professional services                           554                5                                                          5
Purchase of treasury stock                                                            (13,226)      (109)                    (109)
Stock options exercised                         1,425                8                                                          8
Tax benefit of stock options exercised                               1                                                          1
------------------------------------------------------------------------------------------------------------------------------------
Balance April 30, 2005                     32,307,137   $323   $75,226  $206,576  (13,140,476) ($152,838)   ($4,566)     $124,721
====================================================================================================================================

See accompanying notes to consolidated financial statements.
</TABLE>















                                       6
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1:  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Hancock Fabrics,
Inc.  ("Hancock" or the  "Company")  have been  prepared in accordance  with the
instructions  to Form 10-Q and  therefore  do not  include all  information  and
footnotes  necessary for a fair presentation of financial  position,  results of
operations  and cash flows in  conformity  with  generally  accepted  accounting
principles. The statements do reflect all adjustments (consisting of only normal
recurring entries) which are, in the opinion of management, necessary for a fair
presentation  of  financial  position  in  conformity  with  generally  accepted
accounting  principles.  The statements  should be read in conjunction  with the
Notes to the Consolidated Financial Statements for the fiscal year ended January
30, 2005 incorporated into the Company's Annual Report on Form 10-K.

For fiscal year 2004,  Hancock  maintained its financial records on a 52-53 week
fiscal year  ending on the Sunday  closest to January  31.  Beginning  in fiscal
2005, the Company began maintaining its financial records on a 52-53 week fiscal
year ending on the Saturday closest to January 31.

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

NOTE 2: STOCK OPTIONS

Stock  options  are  accounted  for  using  the  intrinsic  value  method  where
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. For all periods presented,  the exercise
price of all options granted equaled the fair market value at the date of grant;
accordingly, no compensation expense for stock options has been recorded.

Pro forma  information  regarding  net earnings  (loss) and earnings  (loss) per
share as if the fair value  method had been  applied in  measuring  compensation
expense is presented below (in thousands, except per share amounts):

<TABLE>
<S>                                                            <C>               <C>
                                                                    2005           2004
                                                               --------------- --------------

Net earnings (loss), as reported                               $       (3,303)   $      816
Deduct: Total stock-based employee compensation
  expense determined under fair value based method
  for all awards, net of related tax effects                             (355)         (448)
                                                               --------------- --------------
Pro forma net earnings (loss)                                  $       (3,658)   $      368
                                                               =============== ==============

Earnings (loss) per share:
   Basic - as reported                                         $         (.18)   $      .05
                                                               =============== ==============
   Basic - pro forma                                           $         (.20)   $      .02
                                                               =============== ==============

   Diluted - as reported                                       $         (.18)   $      .04
                                                               =============== ==============
   Diluted - pro forma                                         $         (.20)   $      .02
                                                               =============== ==============
</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 shares of
common  stock,  par value $.01  ("Common  Stock"),  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>
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(unaudited)
------------------------------------------------------------------------------------------------
(in thousands, except for share and                                    Thirteen Weeks Ended
                                                                    ----------------------------
  per share amounts)                                                 April 30,     May 2,
                                                                       2005         2004
------------------------------------------------------------------------------------------------
Basic earnings (loss) per share:

  Net earnings (loss)                                                  ($3,303)         $816
                                                                    ============ ============

  Weighted average number of common shares outstanding during
    period                                                          18,337,148    17,993,773
                                                                    ============ ============

Basic earnings (loss) per share                                     $     (.18)  $       .05
                                                                    ============ ============

Diluted earnings (loss) per share:

  Net earnings (loss)                                                  ($3,303)         $816
                                                                    ============ ============

  Weighted average number of common shares outstanding during
    period                                                          18,337,148    17,993,773

   Stock options                                                             -       346,088

   Restricted stock and deferred stock units                                 -       451,441
                                                                    ------------ ------------
  Weighted average number of common shares outstanding during
    period adjusted for dilutive securities                         18,337,148    18,791,302
                                                                    ============ ============

Diluted earnings (loss) per share                                   $     (.18)  $       .04
                                                                    ============ ============

Weighted average common stock equivalents not included in EPS
  (stock options) because the effect would be anti-dilutive          1,831,600       413,500
                                                                    ============ ============
</TABLE>


                                       8
<PAGE>

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 April 30, 2005, the total reserve balance  included in current and noncurrent
liabilities was $1,090,000  which represents the present value of the future net
lease obligations for the locations which have been closed. The 2005 activity in
the reserve is as follows (in thousands):

<TABLE>
   <S>                       <C>              <C>                  <C>             <C>              <C>
                                                 Addition to
                               January 30,      (Reduction in)                                        April 30,
                                  2005             Reserve            Interest        Payments           2005
                             ---------------- -------------------  --------------- ---------------- ---------------

   Lease obligations         $         1,166   $            (2)     $          9    $         (83)   $       1,090
                             ================ ===================  =============== ================ ===============
</TABLE>


NOTE 5: RETIREMENT BENEFITS

On  December  9,  2003,  the  Medicare   Prescription   Drug,   Improvement  and
Modernization  Act of 2003 (the "Act") was signed into law. The Act introduces a
prescription  drug  benefit  under  Medicare,  as well as a federal  subsidy  to
sponsors of retiree health benefit plans that provide prescription drug benefits
that  are at  least  actuarially  equivalent  to  Medicare's  prescription  drug
benefits.  During the third quarter of 2004, Hancock adopted FASB Staff Position
No.  106-2,  Accounting  and  Disclosure  Requirements  Related to the  Medicare
Prescription  Drug,  Improvement and  Modernization  Act of 2003, and determined
that  the  Company's  prescription  drug  coverage  for  retirees  is  at  least
actuarially  equivalent  to the Medicare  coverage  provided  under the Act. The
Company elected to adopt the provisions of FSP No. 106-2 prospectively.

The following  summarizes  the net periodic  benefit cost for Hancock's  defined
benefit pension retirement plan and its postretirement  health care benefit plan
for the thirteen weeks ended April 30, 2005 and May 2, 2004:


<TABLE>
<S>                                                  <C>            <C>                 <C>               <C>
                                                            Retirement Plan              Postretirement Benefit Plan
(Dollars in thousands)                                    2005           2004                2005           2004
-----------------------------------------------------------------------------------------------------------------------

Service costs                                        $       700    $       718         $         168     $       165
Interest cost                                              1,000            970                   238             248
Expected return on assets                                 (1,413)        (1,388)
Amortization of prior service costs                          (23)            18                   (63)            (62)
Recognized net actuarial (gain) loss                         233            212                   (68)            (58)
-----------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost                            $       497    $       530         $         275     $       293
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 6: RECENT ACCOUNTING PRONOUNCEMENTS

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of
ARB No. 43, Chapter 4. SFAS 151 clarifies that abnormal  inventory costs such as
idle  facilities,  excess  freight  and  handling  costs,  and  waste  materials
(spoilage)  are  required  to be  recognized  as  current  period  charges.  The
provisions of SFAS 151 are effective for inventory  costs incurred during fiscal
years  beginning  after June 15, 2005.  Hancock does not expect adoption of SFAS
151 to have a material impact on its financial statements.

During  December  2004,  the FASB issued SFAS No. 153,  Exchanges of Nonmonetary
Assets - an amendment of APB Opinion No. 29. SFAS 153 amends APB Opinion No. 29,
Accounting  for  Nonmonetary  Transactions,   to  eliminate  the  exception  for
nonmonetary  exchanges  of  similar  productive  assets and  replaces  it with a
general  exception  for  exchanges  of  nonmonetary  assets  that  do  not  have
commercial  substance.  SFAS 153 is effective for  nonmonetary  asset  exchanges
occurring in fiscal  periods  beginning  after June 15,  2005.  Hancock does not
expect  the  adoption  of SFAS 153 to have a  material  impact on its  financial
statements.


                                       9
<PAGE>

In  December  2004,  the FASB issued  SFAS No.  123(revised  2004),
Share-Based  Payment,  which replaces SFAS No. 123,  Accounting for  Stock-Based
Compensation,  and supercedes APB Opinion No. 25, Accounting for Stock Issued to
Employees.  SFAS 123R  requires  that all grants of employee  stock  options and
other similar share-based awards be recognized in the financial statements based
on their  grant-date  fair  values.  SFAS 123R is  effective  for  fiscal  years
beginning  after June 15,  2005.  Hancock is in the  process of  evaluating  the
impact  SFAS  123R  will  have  on its  financial  statements  and  has  not yet
determined  whether the adoption  will result in amounts that are similar to the
current pro forma disclosures under SFAS 123R.

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 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 allow.

For the first three months of the year,  inventory increased $1.8 million due to
the normal seasonal build-up from year-end, when inventory is typically at a low
level.  In 2004,  such an increase  did not occur in the first  quarter  because
extra  inventory had been  purchased in the fourth quarter of 2003 in an attempt
to protect against supply disruptions  associated with the transfer of inventory
to  the  Company's  new  distribution  center.   Accounts  payable  and  accrued
liabilities  decreased  $4.7  million  primarily  due to the  timing  of  higher
year-end payments  associated with the seasonal nature of the Company's business
and the payment in the first  quarter of a $1.8  million  liability  incurred in
connection  with the  acquisition in 2004's fourth quarter of stores operated by
certain of Hancock's  independent  wholesale customers.  Income taxes payable of
$463 thousand  swung to a refund  receivable of $1.2 million during the thirteen
week period due to the Company's first quarter loss.

During the thirteen  weeks ended April 30, 2005,  borrowings  of $10 million and
proceeds of $800 thousand from a lease financing  transaction  were used to fund
capital  expenditures of $1.6 million,  cash dividends totaling $1.2 million and
working capital requirements. At April 30, 2005, Hancock had outstanding debt of
$41 million, or 24.7% of total capitalization, compared to $31 million, or 19.4%
of total capitalization at January 30, 2005.

During April and May 2005,  Hancock entered into separate lease  agreements with
two parties to lease a portion of the Company's former distribution center which
is currently being held for sale. The lease  agreements are expected to generate
approximately  $550 thousand in rental income over the next 12 months  beginning
in the second quarter of 2005. The lease which  comprises most of the income has
a term of three years, while the other lease has a term of less than one year.

Hancock opened four stores and closed five during the thirteen weeks ended April
30, 2005,  resulting  in a total of 446 stores at quarter end. In addition,  two
stores  were  relocated.  We expect to open and  close  approximately  25 stores
during the year, resulting in zero net additions.

RESULTS OF OPERATIONS

Thirteen  weeks ended April 30, 2005 compared  with thirteen  weeks ended May 2,
2004

Net losses were $3.3  million,  or $.18 per  diluted  share,  compared  with net
earnings of $816 thousand, or $.04 per diluted share, in 2004's first quarter.

                                       10
<PAGE>

Sales decreased to $97.8 million from $105.1 million in the same quarter of 2004
due to a 6.9% decline in  comparable  store sales.  The  comparable  store sales
decrease  was   attributable   to   incomplete   assortments   and   ineffective
merchandising of the Company's home decorating, quilting and apparel fabric core
categories.  Hancock is currently in the process of addressing  these matters in
connection with the Company's  implementation of a strategic  makeover plan that
will involve new/expanded merchandise lines, changes to the advertising strategy
and  enhancements  to  store  presentation,  all  of  which  are  scheduled  for
completion  prior to the fall  selling  season.  Store  selling  square  footage
increased  from  5,062,000  selling  square feet at the end of last year's first
quarter to 5,262,000 square feet this year due to the net addition of 16 stores.

Gross margins  declined from 49.9% to 47.7%,  partially as a result of markdowns
needed to clear seasonal goods in response to decreased  sales. In addition,  an
increase in the Producer Price Index ("PPI") used to measure inflation  resulted
in a LIFO charge of $1 million during the first quarter of 2005, compared with a
LIFO credit of $150,000 in the same period of 2004.

Selling,  general and administrative expenses as a percentage of sales increased
to 50.4% in the first  quarter of 2005 from 47.0% in the first  quarter of 2004.
This  increase was the result of the  deleveraging  impact on the expense  ratio
that results from  negative  comparable  store  sales,  as selling,  general and
administrative  expense dollars actually decreased  slightly,  even with the net
opening of 16 new stores since the first quarter of 2004.

Depreciation  and amortization  expense  increased to 2.3% of sales from 1.6% in
the first  quarter of 2004 due to completion  of  construction  of the Company's
corporate office facility in Baldwyn,  Mississippi and the  implementation  of a
point-of-sale ("POS") system in Hancock's stores.

Interest  expense  increased  $220  thousand  over the prior  year due to higher
average  outstanding debt levels and a higher interest rate environment.  Income
taxes decreased due to the reduction of pre-tax  earnings.  Hancock's  effective
tax rate was 36.3% in both years.

Thirteen weeks ended May 2, 2004 compared with thirteen weeks ended May 4, 2003

Net earnings were $816 thousand,  or $.04 per diluted share,  compared with $4.1
million, or $.22 per diluted share, in 2003's first quarter.

Sales decreased to $105.1 million from $107.6 million in the same quarter of the
previous  year  primarily  as the result of a 3.2% decline in  comparable  store
sales.  Comparable  store sales were adversely  affected by a weaker offering of
spring  merchandise,  together with a delay in getting the spring assortments to
our  stores on a timely  basis as the  result  of  relocating  our  distribution
operations from our only  distribution  center to a new facility.  Store selling
square footage increased from 4,968,000 selling square feet at the end of 2003's
first quarter to 5,062,000 square feet in 2004 due to new stores being larger in
size than the stores that were closed.

Gross  margins  declined  from  50.9% to 49.9% due  largely to the need for more
seasonal clearance markdowns resulting from slower sales.

Selling, general and administrative expenses as a percentage of sales were 47.0%
compared to 43.5% in the first quarter of 2003. The  deleveraging  impact on the
expense ratio that results from negative  comparable store sales was the primary
factor  affecting this comparison.  In addition,  there was  approximately  $350
thousand of expense  associated with completing the distribution  center move, a
$350 thousand  spike in employee  medical  claims,  $150 thousand of store lease
termination  costs and a $150 thousand  increase in legal costs  associated with
various real estate activity, including a condemnation case for one store.

Depreciation and amortization increased to 1.6% of sales from 1.3% primarily due
to capital expenditures related to the new distribution center and the continued
roll-out of POS systems to our stores. At quarter end, POS had been installed in
224 stores.

                                       11
<PAGE>

Interest  expense  increased  slightly due to higher  average  outstanding  debt
levels incurred in connection with funding  construction of the new distribution
center. The effect of higher borrowings was partially offset,  however, by lower
interest rates.

Income tax expense  decreased almost $1.9 million due to the reduction in pretax
earnings from the same period in 2003. Hancock's effective tax rate was 36.3% in
both years.

LIQUIDITY AND CAPITAL RESOURCES

Bank credit facilities

For the quarter  ended April 30, 2005,  Hancock was in violation of the ratio of
consolidated  debt to consolidated  EBITA and fixed charges  coverage  covenants
contained in its revolving  credit  agreement.  However,  the Company obtained a
waiver for these covenants from the lending banks for the quarter.

Subsequent to quarter end, Hancock entered into an agreement with Wachovia Bank,
National Association, and Wachovia Capital Markets, LLC (together,  "Wachovia"),
whereby  Wachovia  has  committed  to use its best  efforts to  arrange  for and
syndicate a secured revolving loan and letter of credit facility for the Company
of up to  $110  million.  The  new  facility  will  replace  Hancock's  existing
unsecured $50 million credit agreement and contain less  restrictive  covenants.
In addition,  the interest rate will be only slightly higher than Hancock's rate
under the existing  facility.  The agreement is expected to be finalized  during
the second quarter of 2005.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

OFF-BALANCE SHEET ARRANGEMENTS

Hancock has no off-balance sheet financing arrangements.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

Hancock has an arrangement  that provides up to $5 million in letters of credit.
At April 30,  2005,  Hancock  had  commitments  under this  arrangement  of $300
thousand on letters of credit which support  purchase  orders for merchandise to
be  imported.  Hancock  also has a $5.5  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 2025.

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

                                       12
<PAGE>

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 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 could be necessary if investment returns
are weak.  Costs of leases for new store  locations  remain stable,  but renewal
costs of older  leases  continue to increase.  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 three months of 2005,  an increase
in the PPI  resulted in a LIFO  charge of $1 million.  During the same period of
2004, the Company recorded a LIFO credit of $150,000.

SEASONALITY

Hancock's  business is 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.

FORWARD-LOOKING STATEMENTS

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

  -  Changes in customer demand or purchase patterns
  -  Competitive  changes,   including  but  not  limited  to,  an  increase  in
     advertising,  an increase in promotional  pricing activity and liquidations
     of inventory in Hancock's  markets in connection with a competitor's  store
     closing or need to dispose of old inventory
  -  Adverse general economic trends
  -  Delays  or  interruptions  in the  flow of  merchandise  between  Hancock's
     suppliers and/or its distribution center and its stores
  -  Disruption in the Company's data processing services
  -  The stability of interest rates during periods of borrowing

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

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Hancock does not hold derivative financial or commodity instruments at April 30,
2005.  Hancock  is exposed  to  financial  market  risks,  including  changes in
interest rates. All borrowings  under Hancock's  Revolving Credit Agreement bear
interest at a negotiated  rate, a floating rate (the higher of the federal funds
rate plus 1/2% or the prime rate), a rate derived from the money market rate, or
a rate derived from the London  Interbank  Offered Rate. An increase in interest
rates of 100 basis points would not significantly  affect Hancock's results. All
of Hancock's business is transacted in U. S. dollars and,  accordingly,  foreign
exchange rate fluctuations have never had a significant  impact on Hancock,  and
they are not expected to in the foreseeable future.


                                       13
<PAGE>

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Change in Internal Control Over Financial Reporting

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

PART II.  OTHER INFORMATION:

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     This table provides information with respect to purchases by the Company of
     shares of its common stock during the first quarter of 2005:

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

                                                                        Total Number of               Maximum
                                                                      Shares Purchased as      Number of Shares That
                               Total Number of      Average Price       Part of Publicly       May Yet Be Purchased
Period                      Shares Purchased (1)    Paid Per Share    Announced Plans (2)         Under the Plans
------------------------------------------------------------------------------------------------------------------------

January 31, 2005 through
February 26, 2005                            1,929             $8.77                      76                    244,304
------------------------------------------------------------------------------------------------------------------------

February 27, 2005 through
April 2, 2005                               11,213             $8.13                      92                    244,212
------------------------------------------------------------------------------------------------------------------------

April 3, 2005 through
April 30, 2005                                  84             $7.03                      84                    244,128
------------------------------------------------------------------------------------------------------------------------

Total                                       13,226             $8.22                     252
------------------------------------------------------------------------------------------------------------------------
</TABLE>

     (1)The number of shares  purchased during the first quarter includes 12,974
     shares  deemed  surrendered  to the  Company  to  satisfy  tax  withholding
     obligations arising from the lapse of restrictions on shares.

     (2)In June of 2000 the Board of Directors  authorized  the repurchase of up
     to 2,000,000  shares of the  Company's  Common Stock from time to time when
     warranted by market conditions.  There have been 1,755,872 shares purchased
     under this  authorization  through April 30, 2005. The shares  discussed in
     footnote (1) are excluded from this column.

                                       14
<PAGE>

ITEM 6: EXHIBITS

   10.1   Letter  Agreement Re:  Separation and Release and Waiver with James A.
          Austin dated April 25, 2005
   10.2   Fourth Amendment to Credit Agreement dated May 16, 2005
   31.1   Certification of Chief Executive Officer
   31.2   Certification of Chief Financial Officer
   32     Certification of Chief Executive  Officer and Chief Financial  Officer
          Pursuant to Rule 13a-14(b)  under the Securities  Exchange Act of 1934
          and 18 U.S.C. Section 1350








                                       15
<PAGE>


                                   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

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

June 8, 2005



                                       16
<PAGE>

                                                                  Exhibit 31.1


                    Certification of Chief Executive Officer

I, Jane F. Aggers, 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))  and  internal
       control  over  financial  reporting  (as  defined in  Exchange  Act Rules
       13a-15(f) and 15d-15(f)) 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)     designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial statements for external reporting purposes in accordance
              with generally accepted accounting principles;

       c)     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

       d)     disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's first 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:  June 8, 2005
/s/ Jane F. Aggers
-------------------
Jane F. Aggers
President and Chief Executive Officer

                                       17
<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))  and  internal
       control  over  financial  reporting  (as  defined in  Exchange  Act Rules
       13a-15(f) and 15d-15(f)) 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)     designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial statements for external reporting purposes in accordance
              with generally accepted accounting principles;

       c)     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

       d)     disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's first 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:  June 8, 2005

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

                                       18
<PAGE>

                                                                    Exhibit 32


      Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350

Each of the undersigned,  Jane F. Aggers and Bruce D. Smith,  certifies pursuant
to Rule  13a-14(b)  under  the  Securities  Exchange  Act of 1934 and 18  U.S.C.
Section 1350 that:  (1) this quarterly  report on Form 10-Q of Hancock  Fabrics,
Inc.  ("Hancock")  for the quarter ended April 30, 2005 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:  June 8, 2005

/s/ Jane F. Aggers
---------------------

Jane F. Aggers
President and Chief Executive Officer

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

Bruce D. Smith
Executive Vice President and Chief Financial Officer




                                       19