UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 1O-Q

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended April 29, 2000
                                                ---------------

                                       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: 1-10089

                            FACTORY 2-U STORES, INC.
             (Exact name of registrant as specified in its charter)

  Delaware                                          51-0299573
  --------                                          ----------
  (State or other jurisdiction of                  (I.R.S. Employer
  incorporation or organization)                    Identification No.)


  4000 Ruffin Road, San Diego, CA                   92123-1866
  -------------------------------                   ----------
  (Address of principal executive office)           (Zip Code)

                          (858) 627-1800
              (Registrant's telephone number, including area code)


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

The number of shares  outstanding  of the  registrant's  of common stock,  as of
April 29, 2000, was 12,430,342 shares.




<PAGE>


                            FACTORY 2-U STORES, INC.

             FORM 10-Q FOR THE QUARTERLY PERIOD ENDED APRIL 29, 2000

                                      INDEX


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

  Factory 2-U Stores, Inc. Balance Sheets as of April 29, 2000
  (Unaudited) and January 29, 2000 ..........................................F-1

  Factory 2-U Stores, Inc. Statements of Operations (Unaudited) for the
  13 weeks ended April 29, 2000 and May 1, 1999..............................F-3

  Factory 2-U Stores, Inc. Statements of Cash Flows (Unaudited) for the
  13 weeks ended April 29, 2000 and May 1, 1999 .............................F-4

  Factory 2-U Stores, Inc. Notes to Financial Statements
  (Unaudited)       .........................................................F-6

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations ...............................................3

PART II. OTHER INFORMATION

Item 1.           Legal Proceedings........................................... 6
Item 2.           Changes in Securities and Use of Proceeds....................6
Item 3.           Defaults Upon Senior Securities..............................6
Item 4.           Submission of Matters to a Vote of Security Holders..........6
Item 5.           Other Information........................................... 7
Item 6.           Exhibits and Reports on Form 8-K ............................7
                  Signatures...................................................8
                  Exhibit Index................................................9







                                        2


<PAGE>



                                     PART I

Item 1.   Financial Statements

                            FACTORY 2-U STORES, INC.
                                 Balance Sheets
                        (in thousands, except share data)

                                                      April 29,      January 29,
                                                        2000            2000
                                                  -------------     ------------
                                                    (Unaudited)
ASSETS
Current assets:
     Cash                                        $      3,571         $    9,473
     Merchandise inventory                             52,447             35,048
     Prepaid expenses and other assets                  3,980              2,291
     Deferred income taxes                              2,184              2,184
                                                       ------              -----
          Total current assets                         62,182             48,996

Leasehold improvements and equipment,
     net of accumulated depreciation
     and amortization                                  31,221             27,425
Deferred income taxes                                   1,032              1,032
Other assets                                            1,558              1,507
Excess of cost over net assets acquired,
     less  accumulated  amortization of
     $10,540 and $10,139 at April 29, 2000
     and January 29, 2000, respectively                29,105             29,506
                                                      -------             ------

          Total assets                            $   125,098         $  108,466
                                                   ============       ==========


















                                   (continued)


                                       F-1



<PAGE>


                            FACTORY 2-U STORES, INC.
                                 Balance Sheets
                        (in thousands, except share data)
                                   (continued)


                                                   April 29,         January 29,
                                                     2000               2000
                                                --------------     -------------
                                                  (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Current maturities of long-term debt
       and capital lease obligations               $    1,228         $    1,251
     Accounts payable                                  30,459             19,994
     Income taxes payable                               1,374              4,235
     Accrued expenses                                  19,401             22,275
                                                      -------             ------
               Total current liabilities               52,462             47,755

Revolving credit facility                               9,300                  -
Long-term debt, less current maturities                10,346             10,067
Capital leases and other long-term obligations          1,606              1,658
Deferred rent                                           2,639              2,556
                                                       ------              -----
               Total liabilities                       76,353             62,036
                                                       ------             ------


Stockholders' equity:
     Series A convertible  preferred  stock,
       $0.01 par value;  4,500,000 shares
       authorized,  0 shares issued and
       outstanding  (aggregate  liquidation
       preference of $0) at April 29, 2000 and
       January 29, 2000                                     -                  -

    Series B junior convertible, exchangeable
       preferred stock, $0.01 par value;
       40,000 shares authorized, 0 shares issued
       and outstanding  (aggregate liquidation
       preference of $0 at April 29, 2000
       and January 29, 2000                                 -                  -

    Common stock, $0.01 par value; 35,000,000
       shares authorized and 12,430,342
       shares and 12,390,817 shares issued and
       outstanding at April 29, 2000 and
       January 29, 2000, respectively                     124                124
     Stock subscription notes receivable              (2,542)            (2,710)

     Additional paid-in capital                       108,634            108,091
     Accumulated deficit                             (57,471)           (59,075)
                                                     --------           --------

          Total stockholders' equity                   48,745             46,430
                                                      -------             ------

          Total liabilities and
           stockholders' equity                    $  125,098        $   108,466
                                                     ========            =======




   The accompanying notes are an integral part of these financial statements.


                                       F-2


<PAGE>


                            FACTORY 2-U STORES, INC.
                            Statements of Operations
                      (in thousands, except per share data)
                                   (Unaudited)

                                                       13 Weeks Ended
                                              ----------------------------------
                                                 April 29,          May 1,
                                                    2000             1999
                                              ----------------  ----------------

Net sales                                          $   108,375        $   85,099
Cost of sales                                           70,150            56,108
                                                       -------            ------

  Gross profit                                          38,225            28,991

Selling and administrative expenses                     32,846            26,304
Pre-opening expenses                                     1,698               993
Amortization of intangibles                                589               589
                                                       -------            ------
  Operating income                                       3,092             1,105

Interest expense                                           350               539
                                                       -------            ------

Income before income taxes                               2,742               566


Income taxes                                             1,140               232
                                                       ---------          ------

  Net income                                         $   1,602         $     334
                                                     ===========       =========



Earnings per share:

  Basic                                              $    0.13          $   0.03

  Diluted                                            $    0.12          $   0.03



Weighted average common shares outstanding:

  Basic                                                 12,412            12,107
  Diluted                                               12,828            12,577











   The accompanying notes are an integral part of these financial statements.


                                       F-3

<PAGE>



                            FACTORY 2-U STORES, INC.
                            Statements of Cash Flows
                                 (in thousands)
                                   (Unaudited)

                                                          13 Weeks Ended
                                                 -------------------------------
                                                    April 29,           May 1,
                                                      2000               1999
                                                 ---------------   -------------
Cash flows from operating activities:
  Income from operating activities              $        1,602        $     334

  Adjustments  to  reconcile  net  income  to
  net  cash  used  in  operating activities:
     Depreciation                                        2,245            1,429
     Amortization of intangibles                           589              589
     Amortization of debt discount                         279              276
     Loss on disposal of equipment                         280               71
     Deferred rent expense                                 111               21
     Changes in operating assets and liabilities:
          Merchandise inventory                        (17,399)          (4,837)
          Prepaid expenses and other assets             (1,654)          (3,200)
          Accounts payable                              10,465            6,848
          Accrued expenses and other liabilities        (6,161)          (4,998)
                                                         ------          -------


Net cash used in operating activities                   (9,643)          (3,467)


Cash flows used in investing activities:
  Purchase of leasehold improvements and equipment      (5,553)          (3,266)
                                                        -------          -------

Net cash used in investing activities                   (5,553)          (3,266)
                                                        -------          -------












                                   (continued)


                                      F-4

<PAGE>


                            FACTORY 2-U STORES, INC.
                            Statements of Cash Flows
                                 (in thousands)
                                  (Continued)


                                                          13 Weeks Ended
                                                --------------------------------
                                                    April 29,           May 1,
                                                      2000               1999
                                                --------------      ------------
Cash flows from financing activities:
  Borrowings on revolving credit facility             51,694             98,890
  Payments on revolving credit facility              (42,394)           (89,347)
  Payments of long-term debt and
    capital lease obligations                            (70)            (1,125)
  Repurchase of warrants                                   -               (288)
  Payment of deferred debt issuance costs               (250)                 -
  Payments of stock subscription notes receivable        169                 30
  Proceeds from exercise of stock options                145                 11
                                                      -------           --------

Net cash provided by financing activities              9,294              8,171
                                                     --------           --------

Net increase (decrease) in cash                       (5,902)             1,438

Cash at the beginning of the period                    9,473              3,124
                                                     --------           --------

Cash at the end of the period                    $     3,571        $     4,562
                                                  ===========        ===========

Supplemental disclosure of
 cash flow  information:
  Cash paid during the period for:
          Interest                               $        47        $       170
          Income taxes                           $     4,001        $     2,647




















   The accompanying notes are an integral part of these financial statements.


                                       F-5

<PAGE>


                            FACTORY 2-U STORES, INC.
                          Notes to Financial Statements
                                   (Unaudited)

(1)      Unaudited Interim Financial Statements

         The accompanying  unaudited financial  statements do not include all of
         the information and footnotes required by generally accepted accounting
         principles  for  annual  financial  statements  and  should  be read in
         conjunction  with the  financial  statements  for the fiscal year ended
         January  29,  2000  included  in the  Factory  2-U  Stores,  Inc.  (the
         "Company")  Form  10-K  as  filed  with  the  Securities  and  Exchange
         Commission.

         In the opinion of management,  the unaudited financial statements as of
         and for the 13 weeks ended  April 29, 2000 and May 1, 1999  reflect all
         adjustments (which include normal recurring  adjustments)  necessary to
         present fairly the financial  position,  results of operations and cash
         flows for the  periods  presented.  Due to the  seasonal  nature of the
         Company's  business,  the results of operations  for the interim period
         may not  necessarily  be indicative of the results of operations  for a
         full year.

(2)      New Accounting Pronouncements

         In December 1999, the  Securities and Exchange  Commission  (the "SEC")
         issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
         Financial  Statements."  This SAB summarizes the SEC's view in applying
         generally  accepted  accounting  principles to revenue  recognition  in
         financial  statements.  This SAB was  amended  by SAB No.  101A,  which
         defers the effective  date for all  registrants  with fiscal years that
         begin  between  December 16, 1999 and March 15, 2000,  to allow for the
         adoption  of  implementing  during the second  quarter of fiscal  2000.
         Management  has  reviewed  the impact of SAB No.  101 on the  Company's
         financial statements,  and does not believe that its adoption will have
         a material impact on the Company's financial statements.

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
         133,  "Accounting for Derivative  Instruments and Hedging  Activities",
         which  establishes  accounting  and reporting  standards for derivative
         instruments  and  hedging  activities.  SFAS No. 133  requires  that an
         entity recognize all derivatives as either assets or liabilities in the
         statement of financial  position and measure those  instruments at fair
         value.  This  Statement  was  amended by SFAS No. 137 which  defers the
         effective date to all fiscal  quarters of fiscal years  beginning after
         June 15,  2000.  SFAS No.  133 is  effective  for the  Company's  first
         quarter  in the  fiscal  year  beginning  February  4,  2001 and is not
         expected to have a material effect on the Company's  financial position
         or results of operations.






                                       F-6

<PAGE>



(3)      Revolving Credit Facility

         In March  2000,  the Company  entered  into a $50.0  million  revolving
         credit  facility with a financial  institution and terminated the prior
         revolving credit facility.  Under the new revolving credit facility the
         Company may borrow up to 70% of its eligible  inventory  and 85% of its
         eligible accounts receivables, as defined, not to exceed $50.0 million.
         The new credit facility also provides a $5.0 million  sub-facility  for
         letters of credit.  Interest  on the  credit  facility  is at the prime
         rate, or at the Company's election, LIBOR plus 2.0%. Under the terms of
         the new credit  facility,  the  interest  rate may increase or decrease
         subject to  earnings,  as defined,  on a rolling  four  fiscal  quarter
         basis.  Accordingly,  prime rate  borrowings  could range from prime to
         prime  plus 0.50% and LIBOR  borrowings  from LIBOR plus 1.50% to LIBOR
         plus 2.50%. The new credit facility  expires on March 3, 2003,  subject
         to automatic  one-year renewal periods,  unless  terminated  earlier by
         either party.  The Company is obligated to pay fees equal to 0.125% per
         annum on the unused amount of the new credit  facility.  The new credit
         facility  is  secured  by a  first  lien  on  accounts  receivable  and
         inventory  and  requires  the Company to maintain  specified  levels of
         tangible net worth in the event that its borrowing availability is less
         than a specified amount.

         At April 29, 2000, the prime interest rate in effect was 9.0%. At April
         29, 2000, based on its eligible inventory and accounts receivable,  the
         Company  had $42.0  million  available  to borrow  under the  revolving
         credit facility.  Of the $42.0 million available to borrow, the Company
         had $9.3 million outstanding.

(4)      Long-term Debt

         As  of  April  29,  2000,   the  Company  had   outstanding   long-term
         indebtedness,  less current maturities, of $10.3 million. The long-term
         indebtedness  consists of the New Junior  Subordinated  Notes which are
         non-interest  bearing and are reflected on the Company's balance sheets
         at the  present  value  using a discount  rate of 10%.  As of April 29,
         2000,  the New  Junior  Subordinated  Notes  had a face  value of $16.3
         million and a related unamortized  discount of $5.0 million,  resulting
         in a net carrying value of $11.3 million.  The discount is amortized to
         interest expense as a non-cash charge until the notes are paid in full.
         The  Company  made a principal  payment on the New Junior  Subordinated
         Notes of $1.0 million in December 1999.  Additional  principal payments
         are  scheduled on December 31, 2000 ($1.0  million),  December 31, 2001
         and  December 31, 2002 ($2.0  million),  December 31, 2003 and December
         31, 2004 ($3.0 million) and on May 28, 2005 ($5.3 million).

(5)      Earnings per Share

         The Company  computes  earnings per share in  accordance  with SFAS No.
         128,  "Earnings Per Share." Under the provisions of SFAS No. 128, basic
         earnings per share are computed  based on the weighted  average  shares
         outstanding.  Diluted  earnings  per  share are  computed  based on the
         weighted  average shares  outstanding and  potentially  dilutive common
         equivalent shares.
                                      F-7

<PAGE>

         At April 29,  2000,  there were  411,785  anti-dilutive  stock  options
outstanding.

(6)      Provision for Income Taxes

         The Company recorded a $1.1 million  provision for income taxes for the
         13 weeks ended April 29, 2000.  The provision for income taxes is based
         upon the estimated  effective tax rate for the entire fiscal year.  The
         estimated   effective  tax  rate  is  subject  to  ongoing  review  and
         evaluation.

(7)      Stock Options and Warrants

         As of April 29,  2000,  options  to  purchase  1,436,354  shares of the
         Company's  common  stock  were  outstanding.  Of those  stock  options,
         250,348  options will become  exercisable  once specified  market price
         hurdles  for  the  Company's   common  stock  have  been  achieved  and
         maintained  for  60  consecutive   trading  days  (92,961  will  become
         exercisable  at a market  price  hurdle of $24.89;  78,693  will become
         exercisable at $33.19;  and 78,694 will become  exercisable at $49.78).
         When the market price of the  Company's  common stock  reaches  $24.89,
         $33.19 and $49.78 for the specified  periods of time,  the Company will
         be required to record aggregate  non-cash  compensation  expense in the
         minimum  amounts  of $1.6  million,  $2.0  million  and  $3.3  million,
         respectively.

         At April 29, 2000,  warrants to purchase 82,690 shares of the Company's
common stock at $19.91 per share were outstanding.

























                                       F-8
<PAGE>

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

General

Management's  discussion of the results of operations  provides  analysis of the
Company's operations for the 13 weeks ended April 29, 2000 and May 1, 1999.

Results of Operations

The following  discussion and analysis  should be read in  conjunction  with the
Company's Financial Statements and notes thereto included elsewhere in this Form
10-Q. As of April 29, 2000, the Company  operated 203 stores  compared to 169 as
of May 1, 1999.  The Company opened 25 new stores and closed 9 stores during the
current period.


13 Weeks Ended April 29, 2000 Compared to the 13 Weeks Ended May 1, 1999

Net sales were $108.4  million for the 13 weeks ended April 29, 2000 compared to
$85.1 million for the 13 weeks ended May 1, 1999, an increase of $23.3  million,
or 27.4%. Comparable store sales increased 4.0%.

Gross profit was $38.2 million for the 13 weeks ended April 29, 2000 compared to
$29.0  million for the 13 weeks ended May 1, 1999,  an increase of $9.2 million,
or 31.9%. As a percentage of net sales,  gross profit was 35.3% for the 13 weeks
ended April 29, 2000  compared to 34.1% for the 13 weeks ended May 1, 1999.  The
increase in gross profit as a percentage of net sales was primarily attributable
to a higher  initial  markup  on  purchases,  lower  markdown  volume  and lower
inventory shrinkage.

Selling and  administrative  expenses  were $32.8  million for the 13 weeks
ended  April 29, 2000  compared  to $26.3  million for the 13 weeks ended May 1,
1999,  an increase of $6.5  million,  or 24.9%.  As a  percentage  of net sales,
selling and administrative  expenses were 30.3% for the 13 weeks ended April 29,
2000 and 30.9% for the 13 weeks ended May 1, 1999. Approximately $6.3 million of
the  increase  was  related to sales  volume and new store  growth.  Selling and
administrative  expenses  as  apercentage  of net sales  decreased  due to sales
volume leverage.

Interest  expense was $350,000 for the 13 weeks ended April 29, 2000 compared to
$539,000  for the 13 weeks  ended May 1,  1999,  a  decrease  of  $189,000.  The
decrease was due to lower average outstanding borrowings on the revolving credit
facility.

Income  taxes  were $1.1  million  for the 13 weeks  ended  April  29,  2000 and
$232,000 for the 13 weeks ended May 1, 1999.  Income taxes increased as a result
of higher taxable income versus the same period a year ago.

                                        3

<PAGE>

Net income was $1.6  million for the 13 weeks  ended April 29, 2000  compared to
$334,000  for the 13 weeks ended May 1, 1999.  The  increase in net income was a
result of the operating and other factors cited above.

Liquidity and Capital Resources

General

As of April 29, 2000, the Company had outstanding indebtedness of $22.5 million.

The Company finances its operations through credit provided by vendors and other
suppliers,  amounts  borrowed under its $50.0 million  revolving credit facility
and internally  generated cash flow.  Credit terms provided by vendors and other
suppliers  are usually  net 30 days.  Amounts  which may be  borrowed  under the
revolving  credit  facility are based on a percentage of eligible  inventory and
accounts  receivable,  as defined,  outstanding from time to time, as more fully
described in Note 3 of Notes to Financial Statements.

Management believes that the Company's sources of cash,  including the revolving
credit   facility,   will  be  adequate  to  finance  its  operations,   capital
requirements  and debt  obligations  as they  become  due for at least  the next
twelve months. See Notes 3 and 4 of Notes to Financial Statements.

Capital Expenditures

The Company  anticipates  capital  expenditures of  approximately  $13.6 million
during the  remainder of the current  fiscal year ending  February 3, 2001 which
include  costs to open  approximately  35 new  stores,  to  renovate 13 existing
stores, to construct a new distribution  center, to upgrade  information systems
and to renovate and expand our administrative offices.  Management believes that
future  capital  expenditures  will be  financed  from  internal  cash  flow and
borrowings under the revolving credit facility.

Inflation

In general,  the Company  believes  that  inflation  has had no recent  material
impact on operations and none is anticipated in the next fiscal year.

Minimum Wage Increases

The Company  employs,  both in its stores and in its corporate  headquarters,  a
substantial  number of  employees  who earn hourly  wages near or at the minimum
wage.  Actions by both the federal and certain state  governments have increased
and may  continue to increase the hourly wages that the Company must pay to such
employees.  Historically,  the  Company has  mitigated  such  increases  through
policies to manage its ratio of wages to sales. However, the Company can make no
assurances that these measures and other steps taken will be adequate to control
the impact of any hourly  wage  increases  in the future and may have a negative
impact on profitability in the future.

                                       4

<PAGE>


Seasonality and Quarterly Fluctuations

The Company  historically  has  realized  its highest  level of sales and income
during the third and fourth  quarters of its fiscal year (the quarters ending in
October and January) as a result of the "Back to School"  (August and September)
and Holiday (November and December)  seasons.  The seasonally lower sales in the
Company's  first  two  quarters  (February  through  July),  can  result  in the
Company's  incurring losses during those quarters even in years in which it will
have full year profits.


Year 2000 Issue

The Year 2000 issue was the result of  computer  systems and  software  products
coded to accept  only 2 digit  entries in the date code  field.  This could have
resulted in system  failure or the  generation of erroneous data in systems that
do not properly recognize such information.

The Company diligently addressed the potential Year 2000 issue by utilizing both
internal and external resources as applicable, to identify, correct or reprogram
its  internal  systems for Year 2000  compliance.  In fiscal  1999,  the Company
implemented a new  integrated  software  package to support future growth and to
address issues  associated  with the Year 2000 at a cost of  approximately  $2.8
million.

To date, the Company has not experienced any significant business disruptions or
system  failures  as a  result  of the Year  2000  issue  and none of its  major
vendors,  service  providers and customers  has reported  substantial  Year 2000
related problems.

Although the Year 2000 event has  occurred,  and while there can be no assurance
that there will be no problems  related to the Year 2000 issue after  January 1,
2000,  the Company  believes it will not be adversely  impacted by the Year 2000
issue.


Cautionary Statement for Purposes of "Safe Harbor Provisions" of the Private
 Securities Litigation Reform Act of 1995

In December 1995, Congress enacted the Private Securities  Litigation Reform Act
of 1995.  The Act  contains  amendments  to the  Securities  Act of 1933 and the
Securities  Exchange  Act of 1934 which  provide  protection  from  liability in
private lawsuits for "forward-looking"  statements made by specified persons. We
desire to take advantage of the "safe harbor" provisions of the Act.








                                        5

<PAGE>

Certain statements in this Form 10-Q, or in documents  incorporated by reference
into this Form  10-Q,  are  forward-looking  statements.  Those  forward-looking
statements  are subject to  uncertainties  that may cause the actual  results to
differ from the results anticipated by the forward-looking  statements.  Factors
which  may  cause   actual   results  to  differ  from  those   anticipated   by
forward-looking  statements include, among others, general economic and business
conditions (both nationally and in the regions in which we operate);  government
regulations   (including   regulations   regarding   temporary   immigration  of
agricultural works and minimum wages of agricultural and other workers);  claims
asserted  against  us;   competition;   changes  in  our  business  strategy  or
development plans;  difficulties  attracting and retaining qualified  personnel;
the inability to obtain adequate  quantities of merchandise at favorable prices;
and the  other  factors  described  in the  Company's  other  filings  with  the
Securities and Exchange  Commission.  Consequently,  all of the  forward-looking
statements  are  qualified by these  cautionary  statements  and there can be no
assurance  that the results or  developments  anticipated by the Company will be
realized  or that they will save the  expected  effects  on the  Company  or its
business or operations.

Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to interest rate risk on its fixed rate debt obligations.
At April 29, 2000, fixed rate debt obligations totaled $16.3 million.  The fixed
rate debt obligations are  non-interest  bearing and are discounted at a rate of
10%,  resulting in a net carrying  value of $11.3  million.  Maturities are $1.0
million, $2.0 million, $2.0 million, $3.0 million, $3.0 million and $5.3 million
in fiscal  year 2000,  2001,  2002,  2003,  2004 and 2005,  respectively.  While
generally an increase in market  interest  rates will decrease the value of this
debt,  and  decreases  in rates will have the  opposite  effect,  the Company is
unable to estimate the impact that  interest rate changes will have on the value
of this debt as there is no active public market for the debt and the Company is
unable to determine the market interest rate at which alternate  financing would
have been available at April 29, 2000.


                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

                  None.

Item 2.   Changes in Securities and Use of Proceeds
                  None.

Item 3.   Defaults Upon Senior Securities
                  None.

Item 4.   Submission of Matters to a Vote of Security Holders
                  None.

                                        6


<PAGE>


Item 5.   Other Information
                  None.

Item 6.   Exhibits and Reports on Form 8-K

(a)      Exhibits

11.1     Computation of per share loss

27       Financial Data Schedule

(b)      Reports on Form 8-K
                  None.


































                                        7

<PAGE>

                                   SIGNATURES

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.


FACTORY 2-U STORES, INC.

Date: May 23, 2000




By:    /s/  Douglas C. Felderman
       ------------------------------------------------------
       Name:  Douglas C. Felderman
         Title:    Executive Vice President and Chief Financial Officer
                   (duly authorized officer and principal financial officer)






























                                        8
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number Description Page

11.1   Computation of earnings per share                                      10
27     Financial Data Schedule (for EDGAR filing only)                        11







































                                        9


<PAGE>


EXHIBIT 11.1


                        COMPUTATION OF EARNINGS PER SHARE
                      (in thousands, except per share data)


                                                        13 weeks ended
                                               ---------------------------------
                                               April 29, 2000        May 1, 1999
                                               --------------       ------------

    Net income                                    $    1,602        $        334

    Weighted average number of
     common shares outstanding                        12,412              12,107

    Effect of dilutive securities:
     Warrants that are common stock equivalents           21                   -
     Options that are common stock equivalents           395                 470

    Adjusted common shares outstanding used
     for diluted computation                          12,828              12,577


    Earnings per share:
          Basic                                   $     0.13          $     0.03
          Diluted                                 $     0.12          $     0.03




                                     10
<PAGE>