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 October 30, 1999 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 No.   000-19372

                         CATHERINES STORES CORPORATION
             (exact name of registrant as specified in its charter)

Tennessee                                                             62-1350411
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                  3742 Lamar Avenue, Memphis, Tennessee, 38118
                    (Address of principal executive offices)

Registrant's telephone number, including area code (901) 363-3900

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date:

     As of December 3, 1999 there were  6,821,196  shares of  Catherines  Stores
Corporation common stock outstanding.












<PAGE>




                          CATHERINES STORES CORPORATION

                                    FORM 10-Q

                                October 30, 1999

                                Table of Contents


PART 1 -          FINANCIAL INFORMATION

         Consolidated Statements of Income

         Consolidated Balance Sheets

         Consolidated Statements of Cash Flows

         Notes to Consolidated Financial Statements

         Management's Discussion and Analysis of Financial
         Condition and Results of Operations

PART 2 -          OTHER INFORMATION
































<PAGE>




PART 1 - FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                 CATHERINES STORES CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME



                                         Thirteen weeks ended         Thirty-nine weeks ended
                                     October 30,      October 31,    October 30,      October 31,
                                         1999             1998          1999             1998
                                         ----             ----          ----             ----
<S>                                  <C>            <C>            <C>            <C>
Net sales                            $ 75,572,432   $ 73,019,529   $234,205,696   $224,298,534

Cost of sales,
  including buying and
  occupancy costs                      50,978,959     50,134,942    153,814,907    150,452,408
                                     ------------   ------------   ------------   ------------

Gross margin                           24,593,473     22,884,587     80,390,789     73,846,126

Selling, general and
  administrative expenses              19,949,464     19,816,219     60,898,883     59,561,720

Amortization of
  intangible assets                       261,799        261,031        764,513        790,411
                                     ------------   ------------   ------------   ------------

Operating income before write-down
  of store assets and store
  closing costs                         4,382,210      2,807,337     18,727,393     13,493,995

Write-down of store assets
  and store closing costs                 118,843         67,608        356,123        267,363
                                     ------------   ------------   ------------   ------------

Operating income                        4,263,367      2,739,729     18,371,270     13,226,632

Interest and other, net                    64,387        158,335        259,310        592,122
                                     ------------   ------------   ------------   ------------

Income before
  income taxes                          4,198,980      2,581,394     18,111,960     12,634,510

Provision for
  income taxes                          1,588,000        949,000      7,153,000      5,072,000
                                     ------------   ------------   ------------   ------------

Net income                           $  2,610,980   $  1,632,394   $ 10,958,960   $  7,562,510
                                     ============   ============   ============   ============


Net income per
  common share                              $0.38          $0.23           $1.58         $1.04
                                            =====          =====           =====         =====

Net income per common share,
  assuming dilution                         $0.37          $0.22           $1.54         $1.02
                                            =====          =====           =====         =====
</TABLE>

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


<PAGE>

<TABLE>
<CAPTION>

                 CATHERINES STORES CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                                                                October 30, 1999   January 30, 1999
                                                                                ----------------   ----------------
<S>                                                                                   <C>           <C>
ASSETS
Current Assets:
Cash and cash equivalents                                                          $   9,936,086    $  11,561,223
Receivables                                                                            4,453,902        2,457,333
Merchandise inventory                                                                 60,326,219       50,355,267
Prepaid expenses and other                                                             3,966,682        3,398,562
Deferred income taxes                                                                  4,203,000        4,203,000
                                                                                   -------------    -------------
Total current assets                                                                  82,885,889       71,975,385
                                                                                   -------------    -------------

Property and Equipment, at cost:
  Land                                                                                   500,000          500,000
  Buildings and leasehold improvements                                                28,668,463       25,751,524
  Fixtures and equipment                                                              36,285,901       31,910,633
  Equipment under capital leases                                                      15,336,874       13,588,016
  Improvements in process                                                                518,391        2,644,496
                                                                                   -------------    -------------
                                                                                      81,309,629       74,394,669
Less accumulated depreciation
  and amortization                                                                   (45,213,629)     (39,410,261)
                                                                                   -------------    -------------
                                                                                      36,096,000       34,984,408
                                                                                   -------------    -------------
Other Assets and Deferred Charges,
  less accumulated amortization
  of $2,238,091 and $1,997,082                                                         1,929,311        2,290,022
Goodwill, less accumulated amortization
  of $6,000,980 and $5,534,646                                                        21,116,359       21,871,164
                                                                                   -------------    -------------
                                                                                   $ 142,027,559    $ 131,120,979
                                                                                   =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable                                                                   $  26,740,828    $  22,310,110
Accrued expenses                                                                      20,389,976       19,347,208
Current maturities of long-term bank
and other debt                                                                         1,810,838        1,816,119
                                                                                   -------------    -------------
Total current liabilities                                                             48,941,642       43,473,437
                                                                                   -------------    -------------

Long-Term Bank and Other Debt,
  less current maturities                                                              9,175,077        9,517,067
Deferred Income Taxes                                                                    378,000          378,000
Stockholders' Equity:
Preferred stock, $.01 par value,
  1,000,000 shares authorized,
  none issued and outstanding                                                               --               --
Common stock, $.01 par value,
  50,000,000 shares authorized,
  6,794,133 and 7,279,949 shares
  issued and outstanding                                                                  67,942           72,800
Additional paid-in capital                                                            41,351,450       46,525,187
Retained earnings                                                                     42,113,448       31,154,488
                                                                                      ----------       ----------
Total stockholders' equity                                                            83,532,840       77,752,475
                                                                                      ----------       ----------
                                                                                    $142,027,559     $131,120,979
                                                                                    ============     ============
</TABLE>

The  accompanying  notes  are an  integral  part of these  consolidated  balance
sheets.

<PAGE>

                 CATHERINES STORES CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                    Thirty-nine weeks ended
                                                 October 30,      October 31,
                                                     1999             1998
                                                     ----             ----
Cash Flows from Operating Activities:
 Net income                                      $ 10,958,960    $  7,562,510
                                                 ------------    ------------
Adjustments to reconcile net income to
 net cash provided by operating activities--
  Depreciation and amortization                     6,787,078       6,827,371
  Write-down of closed store assets                   359,905          47,067
  Change in reserve for store closing costs          (368,243)         27,249
  Net change in current assets and liabilities     (7,708,376)     (5,947,526)
  Change in other noncash reserves                  1,014,464       1,598,684
  Change in other assets                              198,423         (75,514)
                                                 ------------    ------------
Total adjustments                                     283,251       2,477,331
                                                 ------------    ------------

Net cash provided by operating activities          11,242,211      10,039,841
                                                 ------------    ------------

Cash Flows from Investing Activities:
 Capital expenditures                              (6,170,192)     (3,660,323)
                                                 ------------    ------------

Net cash used in investing activities              (6,170,192)     (3,660,323)
                                                 ------------    ------------

Cash Flows from Financing Activities:
 Sales of common stock                                581,786         129,885
 Repurchases of common stock                       (5,760,381)           --
 Proceeds from long-term bank
  and other debt                                         --         6,919,000
 Principal payments of long-term bank
  and other debt                                   (1,518,561)     (9,780,476)
                                                 ------------    ------------

Net cash used in financing activities              (6,697,156)     (2,731,591)
                                                 ------------    ------------

Net Increase in Cash and Cash Equivalents          (1,625,137)      3,647,927
Cash and Cash Equivalents, beginning of period     11,561,223       3,089,290
                                                 ------------    ------------

Cash and Cash Equivalents, end of period         $  9,936,086    $  6,737,217
                                                 ============    ============

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







<PAGE>



                 CATHERINES STORES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  General

     In the  opinion of  management,  the  accompanying  unaudited  consolidated
financial  statements  contain all adjustments  (consisting of normal  recurring
adjustments)  which  management   considers  necessary  to  present  fairly  the
consolidated  financial position of Catherines Stores Corporation ("Stores") and
its wholly owned  subsidiaries  as of October 30, 1999 and January 30, 1999, the
consolidated  results of their operations for the thirteen and thirty-nine weeks
ended  October  30,  1999 and  October  31,  1998 and their  cash  flows for the
thirty-nine  weeks ended  October 30, 1999 and October 31, 1998.  Stores and its
subsidiaries  are  collectively  referred  to as the  "Company".  The results of
operations for the thirteen and  thirty-nine  week periods may not be indicative
of the results for the entire year.

     These statements  should be read in conjunction with the Company's  audited
financial statements and related notes which have been incorporated by reference
in the  Company's  Form 10-K for the year ended  January 30, 1999.  Accordingly,
significant  accounting  policies and other  disclosures  necessary for complete
financial statements in conformity with generally accepted accounting principles
have been  omitted  since  such items are  reflected  in the  Company's  audited
financial statements and related notes thereto.

     Certain  prior  year  balances  have been  reclassified  to  conform to the
current year presentation.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted accounting principles requires management to make certain estimates and
assumptions  that affect the  reported  amounts of assets and  liabilities,  and
disclosure of contingent  assets and  liabilities,  at the date of the financial
statements,  and the  reported  amounts  of  revenues  and  expenses  during the
reporting period. Actual results could differ from those estimates.

(2)  Accounts Receivable

     The Company sells accounts receivable generated from its proprietary credit
card to a third-party  provider,  without  recourse.  Under the  agreement,  the
Company sells its  receivables  from in-house  credit sales on a daily basis. In
April 1999,  the agreement  was extended to January  2005. In addition,  certain
terms of the agreement were favorably  amended.  Also, as an incentive to extend
the agreement,  the  third-party  provider agreed to pay the Company an up-front
cash payment.  This amount will be amortized into income evenly over the life of
the new agreement.




<PAGE>



(3)  Statements of Cash Flows

     The changes in current assets and  liabilities  reflected in the statements
of cash flows were as follows:




                                      Thirty-nine weeks ended
                                    October 30,      October 31,
                                       1999              1998
                                       ----              ----
Increase (decrease) in cash and
 cash equivalents-
  Receivables                     $ (1,993,762)   $ (1,053,378)
  Merchandise inventory            (10,842,223)    (16,338,018)
  Prepaid expenses and other          (568,120)        528,476
  Accounts payable                   4,430,718       5,916,457
  Accrued expenses                   1,265,011       4,998,937
                                  ------------    ------------
Total                             $ (7,708,376)   $ (5,947,526)
                                  ============    ============

     Interest  paid  during the  thirty-nine  weeks  ended  October 30, 1999 and
October 31, 1998 was approximately $660,000 and $746,000, respectively. Interest
expense is net of interest income of approximately $437,000 and $149,000 for the
first  nine  months of fiscal  1999 and 1998,  respectively.  Income  taxes paid
during the  thirty-nine  weeks ended  October 30, 1999 and October 31, 1998 were
approximately $7,429,000 and $3,902,000, respectively.

(4)  Accrued Expenses

         Accrued expenses consisted of the following:

                                    October 30,   January 30,
                                       1999          1999
                                       ----          ----
Payroll and related benefits      $ 4,554,689   $ 5,012,439
Taxes other than income taxes       1,670,353     1,761,964
Rent and other related costs        2,558,494     2,427,805
Deferred revenues                   3,811,277     1,836,298
Reserve for customer awards           725,000     1,513,900
Reserve for store closing costs       742,102     1,110,345
Income taxes                          781,120     1,000,333
Other                               5,546,941     4,684,124
                                  -----------   -----------
 Total                            $20,389,976   $19,347,208
                                  ===========   ===========

<PAGE>

(5)  Long-Term Bank and Other Debt

         Long-term bank and other debt consisted of the following:

                                         October 30,      January 30,
                                            1999             1999
                                            ----             ----
Due to banks:
 Mortgage note                         $  6,664,634    $  6,784,599
 Working capital notes                         --              --

Other:
 Capital lease and other obligations      4,321,281       4,548,587
                                       ------------    ------------
                                         10,985,915      11,333,186
Less current maturities                  (1,810,838)     (1,816,119)
                                       ------------    ------------
 Total                                 $  9,175,077    $  9,517,067
                                       ============    ============

     The mortgage financing  agreement  provides a $6,919,000  mortgage facility
with a seven-year term and a 20-year  amortization  period. The interest rate on
the mortgage  note is fixed at 7.5%.  The working  capital  facility has a total
availability  of $28 million,  including the swing line of credit.  The interest
rate fluctuates  based on the Company's debt coverage  ratio.  The interest rate
can range from LIBOR plus 1 1/4 to LIBOR plus 2 1/4, or the agent  bank's  prime
rate,  at the  Company's  option.  Based on the  formula in the  agreement,  the
Company's current borrowing cost would be LIBOR plus 1 1/4%, or the agent bank's
prime rate, at the Company's  option.  Amounts available under this facility are
based on the Company's eligible receivables and inventories.

     At October 30, 1999, the Company had  approximately  $22,900,000  available
under its combined working capital and swing line facility.  Outstanding letters
of credit  were  approximately  $5,100,000  at  October  30,  1999.  During  the
thirty-nine weeks ended October 30, 1999, the Company entered into capital lease
agreements  for  the  purpose  of  obtaining  computer  equipment,  at a cost of
approximately $1,200,000.

(6)  Leases

     During the thirty-nine  weeks ended October 30, 1999, the Company  entered,
amended or extended leases for 64 stores,  which increased future minimum rental
payments by  approximately  $6,070,000  since  January 30,  1999.  Total  future
minimum rental payments under all noncancelable operating leases with initial or
remaining lease terms of one year or more are approximately $77,433,000.

     Total rent expense for all operating leases was as follows:

                       Thirty-nine weeks ended
                      October 30,    October 31,
                         1999          1998
                         ----          ----
Minimum rentals      $15,777,242   $15,615,066
Contingent rentals       286,537       216,850
                     -----------   -----------
Total                $16,063,779   $15,831,916
                     ===========   ===========

<PAGE>

(7)  Net Income Per Common Share

     The reconciliation of net income per common share and net income per common
share, assuming dilution, is as follows:
<TABLE>
<CAPTION>

                                                                                                 Net Income
                                                              Net                                Per
                                                              Income                             Common
                                                              Per                                Share,
                                                              Common            Stock            Assuming
                                                              Share             Options          Dilution
                                                              -----             -------          --------
<S>                                                           <C>               <C>              <C>
Thirty-nine weeks ended October 30, 1999:
Net income                                                    $10,958,960           ---          $10,958,960
Weighted average shares                                         6,936,907       164,207            7,101,114
                                                                ---------                          ---------
Per share amount                                                    $1.58                              $1.54
                                                                    =====                              =====

Thirty-nine weeks ended October 31, 1998:
Net income                                                     $7,562,510           ---           $7,562,510
Weighted average shares                                         7,241,376       138,528            7,379,904
                                                                ---------                          ---------
Per share amount                                                    $1.04                              $1.02
                                                                    =====                              =====

Thirteen weeks ended October 30, 1999:
Net income                                                     $2,610,980           ---           $2,610,980
Weighted average shares                                         6,789,846       226,864            7,016,710
                                                                ---------                          ---------
Per share amount                                                    $0.38                              $0.37
                                                                    =====                              =====

Thirteen weeks ended October 31, 1998:
Net income                                                     $1,632,394           ---           $1,632,394
Weighted average shares                                         7,248,457       127,666            7,376,123
                                                                ---------                          ---------
Per share amount                                                    $0.23                              $0.22
                                                                    =====                              =====
</TABLE>

(8)  Store Closing Costs

     In late fiscal 1997, the Company adopted a plan to close  approximately  30
underperforming  stores upon lease termination or settlement with the landlords.
During fiscal 1998, 14 unprofitable  stores were closed,  including eight during
the first nine months. In addition,  based on financial performance evaluations,
management  added 10 stores to the store closing plan and removed 11 stores from
the store closing plan,  bringing the number of stores in the store closing plan
to 15 at January 30, 1999. The Company closed seven  unprofitable  stores during
the first nine months of fiscal 1999.

     The Company has  scheduled  three  additional  stores,  not included in the
plan,  for  closing  during  the  remainder  of fiscal  1999.  Negotiations  are
continuing with landlords to terminate the leases of the eight stores  remaining
in  the  plan.   Write-down  of  store  assets  and  store  closing  costs  were
approximately  $356,000  and  $267,000  during the first nine months of 1999 and
1998, respectively.

<PAGE>

(9)  Stockholders' Equity

     The change in stockholders' equity was as follows:
<TABLE>
<CAPTION>

                          Additional
                              Common         Paid-In        Retained
                               Stock         Capital        Earnings          Total
                               -----         -------        --------          -----
<S>                          <C>        <C>             <C>            <C>
Balance at
 January 30, 1999       $     72,800    $ 46,525,187    $ 31,154,488   $ 77,752,475
Net proceeds from the
 sale of 79,600
 common shares                   796         580,990            --          581,786
Repurchase of 565,416
 common shares                (5,654)     (5,754,727)           --       (5,760,381)
Net income                      --              --        10,958,960     10,958,960
                        ------------    ------------    ------------   ------------
Balance at
 October 30, 1999       $     67,942    $ 41,351,450    $ 42,113,448   $ 83,532,840
                        ============    ============    ============   ============
</TABLE>


     The Company  began a stock  repurchase  initiative  in late  January  1999.
During the nine months  ended  October 30,  1999,  the Company  repurchased  and
retired 565,416 shares of its outstanding common stock for approximately  $10.19
per share. The Company has repurchased a total of 650,416 shares since inception
of  this  initiative.  Additionally,  67,503  common  stock  options  have  been
exercised  during the first nine  months of 1999 and 12,097  common  shares have
been purchased through the employee stock purchase plan.

(10) Subsequent Event

     Subsequent  to  quarter-end,  the Company's  Board of Directors  approved a
definitive  merger agreement with Charming  Shoppes,  Incorporated  ("Charming")
whereby  Charming  will  acquire all of the common  stock of  Catherines  Stores
Corporation  ("Catherines")  pursuant to a tender offer and merger. Charming has
submitted a tender offer to Catherines' shareholders to purchase their stock for
$21 per  common  share in  cash.  J.C.  Bradford  & Co.,  Catherines'  financial
advisor,  has delivered its opinion to  Catherines'  Board of Directors that the
offer is fair to Catherines'  shareholders  from a financial  point of view. The
initial  offering period expires January 6, 2000, and, if ninety percent or more
of the Company's outstanding shares are tendered, the transaction is anticipated
to close shortly thereafter.
































<PAGE>

Item 2.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

     This outlook contains forward-looking  statements within the meaning of the
Private  Securities   Litigation  Reform  Act  of  1995.  Such   forward-looking
statements  are based on  current  expectations  that are  subject  to known and
unknown risks,  uncertainties  and other factors that could cause actual results
to differ materially from those contemplated by the forward-looking  statements.
Such  factors  include,  but  are not  limited  to,  the  following:  Year  2000
information systems issues; general economic conditions; competitive factors and
pricing  pressures;  the Company's  ability to predict fashion trends;  consumer
apparel buying patterns;  adverse weather  conditions and inventory risks due to
shifts in market  demand.  The Company does not undertake to publicly  update or
revise the forward-looking  statements even if experience or future changes make
it clear  that  projected  results  expressed  or  implied  therein  will not be
realized.

Overview

     The  Company's  net income for the thirteen  week period ended  October 30,
1999 was  $2,611,000  compared to  $1,632,000  in the thirteen week period ended
October 31, 1998.  Operating  income  margins were 5.6% for the third quarter of
1999 compared to 3.8% in 1998.

     Net income for the  thirty-nine  week  period  ended  October  30, 1999 was
$10,959,000  compared to $7,563,000 in the thirty-nine week period ended October
31, 1998.  Operating  income for the first nine months of 1999  increased  38.9%
over the first nine months of 1998.  Operating  income margins were 7.8% for the
first nine months of 1999 compared to 5.9% for the first nine months of 1998.

     The  improvement  in  operating  income  margin  over  the  prior  year  is
attributable to improved sales and  merchandise  margins,  leveraged  buying and
occupancy  costs and savings  generated  from the amendment and extension of the
contract with the Company's third party credit processor.

     Subsequent  to  quarter-end,  the Company's  Board of Directors  approved a
definitive merger agreement with Charming Shoppes, Incorporated ("Charming")


<PAGE>



whereby  Charming  will  acquire all of the common  stock of  Catherines  Stores
Corporation  ("Catherines")  pursuant to a tender offer and merger. Charming has
submitted a tender offer to Catherines' shareholders to purchase their stock for
$21 per  common  share in  cash.  J.C.  Bradford  & Co.,  Catherines'  financial
advisor,  has delivered its opinion to  Catherines'  Board of Directors that the
offer is fair to Catherines'  shareholders  from a financial  point of view. The
initial  offering period expires January 6, 2000, and, if ninety percent or more
of the Company's outstanding shares are tendered, the transaction is anticipated
to close shortly thereafter.

Liquidity and Capital Resources

     The  Company's  cash  provided by  operations  was  $11,242,000  during the
thirty-nine  weeks  ended  October  30,  1999,  compared  to  cash  provided  by
operations of $10,040,000  during the thirty-nine  weeks ended October 31, 1998.
The increase in cash flow provided by operations is primarily attributable to an
increase in net income,  offset by an increase in working capital. The Company's
working  capital was  $33,900,000 at October 30, 1999 compared to $30,000,000 at
October 31, 1998.  The  Company's  internally  generated  cash flow financed its
operating requirements, capital expenditures, debt service and stock repurchases
during the thirty-nine week period ended October 30, 1999.

     The Company  maintains  a merchant  services  agreement  with a third party
credit  processor.  This  agreement  provides  for the Company to sell,  without
recourse,  accounts  receivable from private label credit card sales.  The third
party  provides all  authorization,  billing and  collection  services for these
accounts.  The  agreement  was amended and extended  during the first quarter of
1999, allowing the Company to obtain more favorable terms. Also, as an incentive
to extend the agreement,  the third-party  provider agreed to pay the Company an
up-front cash payment. This amount will be amortized evenly into income over the
life of the new agreement. The agreement expires in January 2005.

Capital Expenditures

     The  Company  incurred  approximately  $4,000,000  to open new  stores  and
relocate,  remodel or expand  existing  stores  during the first nine  months of
1999. An additional  $1,000,000  was incurred on other store  expenditures.  The
Company  estimates that fiscal 1999 capital  expenditures  will be approximately
$9,000,000 of which an estimated  $7,000,000  will be used for the opening of 12
new locations and the remodeling,  relocation and expansion of  approximately 45
other locations.  The remainder of capital  expenditures are to upgrade existing
computer systems,  add additional  software  technology and to maintain existing
facilities.

Banking Arrangements

     The mortgage financing  agreement  provides a $6,919,000  mortgage facility
with a seven-year term and a 20-year  amortization  period. The interest rate on
the mortgage  note is fixed at 7.5%.  The existing  bank credit  facility has an
availability  of $28,000,000,  including the swing line of credit.  The interest
rate fluctuates  based on the Company's debt coverage  ratio.  The interest rate
can range from LIBOR plus 1 1/4 to LIBOR plus 2 1/4, or the agent  bank's  prime
rate,  at the  Company's  option.  Based on the  formula in the  agreement,  the
Company's current borrowing cost would be LIBOR plus 1 1/4%, or


<PAGE>



the agent bank's prime rate, at the Company's option.  The  agreement expires
June 30, 2001.

     At October 30, 1999, the Company had  approximately  $22,900,000  available
under its combined  working  capital and swing line  facility and  approximately
$5,100,000 in outstanding letters of credit.

     The Company believes that its internally generated cash flow, together with
borrowings  under the bank  credit  agreement,  will be  adequate to finance the
Company's operating  requirements,  debt repayments and capital needs during the
foreseeable future.



Results of Operations

Thirteen Weeks Ended October 30, 1999 Compared to Thirteen Weeks Ended October
31, 1998

     Net sales in the third quarter of 1999 increased  3.5% to $75,572,000  from
$73,020,000  in the third quarter of 1998.  Comparable  stores' sales  increased
3.8%,  primarily due to an increase in the number of  saleschecks  generated and
the average  number of units per  salescheck.  The average unit price  declined.
During the third  quarter,  one store was closed and five  stores  were  opened,
bringing  the number of stores  operated  by the  Company on October 30, 1999 to
437. At October 31, 1998, the Company operated 438 stores.

     Gross margin,  after buying and occupancy costs,  increased as a percentage
of sales to 32.5%  from  31.3% in the third  quarter of 1998.  The  increase  is
attributable  to  an  increase  in  merchandise  margin,  which  increased  as a
percentage of sales by 80 basis points.  The increase in merchandise  margin was
driven primarily by an increase in merchandise markup. Additionally, the Company
leveraged its buying and occupancy costs as a result of increased sales.  Buying
and occupancy costs as a percentage of sales decreased by 40 basis points.

     Selling,  general and  administrative  expenses increased to $19,949,000 in
the third quarter of 1999 compared to  $19,816,000 in the third quarter of 1998.
As a percentage  of sales,  the  selling,  general and  administrative  expenses
decreased to 26.4% from 27.1% in 1998. The decrease is primarily attributable to
the income generated from the amended third-party credit agreement.

     In late fiscal 1997, the Company adopted a plan to close  approximately  30
underperforming  stores upon lease termination or settlement with the landlords.
During fiscal 1998, 14 unprofitable  stores were closed,  including seven during
the  first  half.  In  addition,  based on  financial  performance  evaluations,
management  added 10 stores to the store closing plan and removed 11 stores from
the store closing plan,  bringing the number of stores in the store closing plan
to 15 at January 30, 1999.



<PAGE>



     The Company closed one unprofitable store during the third quarter of 1999,
bringing  the total  number of stores  closed in 1999 to seven.  The Company has
scheduled three additional  stores, not included in the plan, for closing during
the remainder of fiscal 1999.  Negotiations  are  continuing  with  landlords to
terminate  the leases of the eight stores  remaining in the plan.  Write-down of
store assets and store  closing  costs were  approximately  $119,000 and $68,000
during the third quarters of 1999 and 1998, respectively.

     Net interest expense was approximately $64,000 in the third quarter of 1999
compared to $158,000 in the third  quarter of 1998.  The  decrease is  primarily
attributable to an increase in interest income.

     Income taxes were  provided at  effective  rates of 37.8% and 36.8% for the
thirteen weeks ended October 30, 1999 and October 31, 1998, respectively.  Third
quarter tax rates reflect  adjustments to bring the  year-to-date  effective tax
rate equal to the  expected  annual tax rate.  The  statutory  rate is  affected
primarily by non-deductible goodwill amortization and state income taxes.

     Net  income  for the  third  quarter  of 1999 was  $2,611,000  compared  to
$1,632,000 for the third quarter of 1998. Net income per common share,  assuming
dilution,  ("Net  income  per  common  share")  was $0.37 per share in the third
quarter of 1999 and $0.22 per share in the third quarter of 1998.

Thirty-Nine Weeks Ended October 30, 1999 Compared to Thirty-Nine Weeks Ended
October 31, 1998

     Net sales in the first nine months of 1999 increased  4.4% to  $234,206,000
from  $224,299,000  in the first nine months of 1998.  Comparable  stores' sales
increased  5.0%,  primarily  due to an  increase  in the  number of  saleschecks
generated and the average number of units per salescheck. The average unit price
declined.  During the first nine months of 1999, seven stores were closed and 12
stores  were  opened.

     Gross margin,  after buying and occupancy costs,  increased as a percentage
of sales to 34.3% from 32.9% in the first nine months of 1998.  The  increase is
attributable  to  an  increase  in  merchandise  margin,  which  increased  as a
percentage of sales by 100 basis points.  The increase in merchandise margin was
driven primarily by an increase in merchandise markup. Additionally, the Company
leveraged its buying and occupancy costs as a result of increased sales.  Buying
and occupancy costs as a percentage of sales decreased by 40 basis points.

     Selling,  general and  administrative  expenses increased to $60,899,000 in
the first nine months of 1999 compared to  $59,562,000  in the first nine months
of 1998.  As a  percentage  of sales,  the selling,  general and  administrative
expenses  decreased  to 26.0% from 26.6% in the first nine  months of 1998.  The
decrease is primarily  attributable to the income generated from the third-party
credit agreement, offset slightly by increased freight to stores.



<PAGE>



     In late fiscal 1997, the Company adopted a plan to close  approximately  30
underperforming  stores upon lease termination or settlement with the landlords.
During fiscal 1998, 14 unprofitable  stores were closed.  In addition,  based on
financial  performance  evaluations,  management  added 10  stores  to the store
closing  plan and removed 11 stores from the store  closing  plan,  bringing the
number of stores in the store closing plan to 15 at January 30, 1999.

     The Company closed seven  unprofitable  stores during the first nine months
of 1999. The Company has scheduled three additional  stores, not included in the
plan,  for  closing  during  the  remainder  of fiscal  1999.  Negotiations  are
continuing with landlords to terminate the leases of the eight stores  remaining
in  the  plan.   Write-down  of  store  assets  and  store  closing  costs  were
approximately  $356,000  and  $267,000  during the first nine months of 1999 and
1998, respectively.

     Net interest expense was approximately $259,000 in the first nine months of
1999  compared to $592,000  in the first nine  months of 1998.  The  decrease is
primarily attributable to an increase in interest income.

     Income taxes were provided at an effective  rate of 39.5% in the first nine
months of 1999 and 40.1% in 1998.  The statutory  rate is affected  primarily by
non-deductible goodwill amortization and state income taxes.

     Net income for the first nine  months of 1999 was  $10,959,000  compared to
$7,563,000  for the first nine months of 1998.  Net income per common  share was
$1.54 compared to $1.02 per share reported in the first nine months of 1998.

Year 2000 Compliance

     The year 2000 computer  noncompliance  occurs when a computer system cannot
recognize dates stored with only a two digit year rather than a four digit year.
The Company's  risks are mitigated by the fact that the Company is a retailer of
women's  apparel  and  therefore  does  not  rely  on a  single  customer  for a
significant amount of sales. Similarly,  the Company has over 300 active vendors
from which they purchase  merchandise,  with no one vendor  accounting  for more
than 3% of total annual purchases.  However, the Company has developed a plan to
ensure its systems are compliant with the  requirements to process  transactions
in the year 2000.

     The majority of the Company's information systems are provided and serviced
by outside vendors who have successfully completed testing the majority of those
systems.  Testing  included  changing the dates at the  Company's  point of sale
registers as well as testing the home office  mainframe and servers.  Management
currently  believes that any other minor  technological  equipment,  if not year
2000  compliant,  will not have a  material  impact  on the  Company's  business
operations.

     The   Company  has   requested,   from  its  key   third-party   providers,
certifications of year 2000 compliance.  The Company has completed substantially
all of the  testing on the  systems  where the  third-party  responded  as being
compliant by December 31, 1999.  Contingency  plans to address  unexpected  year
2000   scenarios   have  been  developed  to  address  the  material  risks  and
uncertainties  for  those  third-parties  who  either  did  not  respond  or who
responded that they will not be compliant.  The Company  expects the majority of
its  information  systems  to be  year  2000  compliant  by  2000;  however,  no
assurances  can be given that the efforts by the  Company and its  third-parties
will be successful. To date, the costs to remedy year 2000 technologies have not
been significant and the Company does not currently  estimate that the remaining
costs to remedy year 2000 noncompliant technologies will be significant.


<PAGE>



PART 2 - OTHER INFORMATION

Item 1.   Legal Proceedings
            None

Item 2.   Changes in the Rights of the Company's Security Holders
            Not applicable

Item 3.   Defaults by the Company on its Senior Securities
            Not applicable

Item 4.   Submission of Matters to a vote of Security Holder

     See Quarterly  Report on Form 10-Q for the period ended May 1, 1999 for the
results of the Company's Annual Meeting of Stockholders held on June 2, 1999.

Item 5.   Other Information
            Not applicable

Item 6.   Exhibits and Reports on Form 8-K
            (A) 27.1 Financial Data Schedule (for EDGAR filing only)
            (B) None

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   SIGNATURES


December 1, 1999                    /s/ David C. Forell
                                    --------------------
    (Date)                          David C. Forell,
                                    Executive Vice President,
                                    Chief Financial Officer