<PAGE>   1
                                                                   EXHIBIT 10.87


                               SEVERANCE AGREEMENT

                                     BETWEEN

                          GOODY'S FAMILY CLOTHING, INC.

                                       AND

                                CHRIS A. BULLARD


<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                                                                <C>
1.       Definitions........................................................................................1

2.       Termination of Employment..........................................................................2

3.       Obligations of the Company Upon Termination........................................................3

4.       Non-exclusivity of Rights..........................................................................5

5.       No Duty to Mitigate................................................................................5

6.       Arbitration of Disputes............................................................................5

7.       Confidential Information and Nonsolicitation.......................................................6

8.       Successors.........................................................................................6

9.       Miscellaneous......................................................................................7
</TABLE>


<PAGE>   3

                               SEVERANCE AGREEMENT

         THIS SEVERANCE AGREEMENT, by and between GOODY'S FAMILY CLOTHING, INC.,
a Tennessee corporation (the "Company"), and CHRIS A. BULLARD (the "Executive"),
shall be effective as of the 4th day of February, 2001.

                                    RECITALS:

         A.       The Executive has been appointed to the position of Vice
President, Sales for the Southern Region.

         B.       The Company desires to recognize the Executive's commitment to
the Company and to confirm the right of the Executive to certain severance
benefits. To attain that end, the Company and the Executive wish to enter into
this Severance Agreement (the "Agreement").

         NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the Company and the
Executive do hereby agree as follows:

         1.       Definitions.

                  (a)      "Accrued Obligations" shall mean (i) the Executive's
Base Salary through the Date of Termination, (ii) any amounts deferred by the
Executive and not yet paid by the Company pursuant to a valid election to defer
the receipt of all or a portion of such payments made in accordance with any
plan of deferred compensation sponsored by the Company and any earned but unpaid
vacation pay for the current year, (iii) any amounts or benefits owing to the
Executive or to the Executive's beneficiaries under the then applicable employee
benefit plans or policies of the Company and (iv) any amounts owing to the
Executive for reimbursement of expenses properly incurred by the Executive
through the Date of Termination and which are reimbursable in accordance with
the reimbursement policy of the Company.

                  (b)      "Board" shall mean the Board of Directors of the
Company.

                  (c)      "Cause" shall mean that the Executive has, in the
judgment of a majority of the Senior Executive Officer Group (i) committed a
felony, or committed an act of fraud, embezzlement or theft in connection with
his duties with the Company or in the course of his employment with the Company;
(ii) willfully caused damage to property of the Company; (iii) been convicted of
a criminal offense (either a misdemeanor involving acts of dishonesty, theft or
moral turpitude, or a felony); or (iv) engaged in a willful and material breach
of his obligations to the Company (including without limitation, his obligation
to devote his full business time to the business and affairs of the Company and
to use his best efforts to perform faithfully and efficiently the
responsibilities assigned to him) which breach (under this clause iv) has been
communicated to the Executive with specificity by written notice, and which has
not been cured to the reasonable satisfaction of the Senior Executive Officer
Group within a reasonable period of time, which shall not be less than ten (10)
days, nor more than thirty (30) days, following receipt of such written notice
by the Executive. The Senior Executive Officer Group shall provide the Executive
with an opportunity to meet with the Senior Executive Officer Group in order to
provide the Executive an opportunity to refute or explain acts or omissions
referred to in such written notice. For the purpose of this paragraph, no act or
omission shall be considered willful unless done or omitted to be done in bad
faith and without reasonable belief that such act or omission was done in the
best interest of the Company.

                  (d)      "Date of Termination" shall have the meaning set
forth in Section 2(e).

                  (e)      "Disability" shall mean disability whereby the
Executive is unable to render the services provided for by this Agreement by
reason of illness, injury or incapacity (whether physical, mental, emotional or
psychological) for a period of either (i) ninety (90) consecutive days or (ii)
one hundred eighty (180) days in any consecutive three hundred sixty-five (365)
day period.


<PAGE>   4

                  (f)      "Incentive Bonus" shall mean the annual incentive
target bonus payable under the Incentive Plan.

                  (g)      "Incentive Plan" shall mean the Company's "Short Term
Incentive Plan" under which certain employees are eligible to receive an annual
incentive target bonus based on performance and other specific objectives
adopted by the Compensation Committee of the Board.

                  (h)      "Notice of Termination" shall have the meaning as set
forth in Section 2(d).

                  (i)      "Qualified Plan" shall mean any retirement plan
maintained by the Company which is intended to meet the requirements of the
Internal Revenue Code of 1986, as amended.

                  (j)      "Senior Executive Officer Group" shall mean the
Company's senior vice presidents, executive vice presidents, president and/or
chief operating officer, and chief executive officer, and any other senior
executives of the Company holding similar positions with the Company as may be
appointed by the Board from time to time.

                  (k)      "Subsidiary" shall mean any majority-owned subsidiary
of the Company.

                  (l)      "Supplemental Payment Date" shall have the meaning as
set forth in Section 3(c).

         2.       Termination of Employment.

                  (a)      Disability; Death. The Company may terminate the
Executive's employment after having established the Executive's Disability, by
giving to the Executive written notice of its intention to terminate his
employment, and his employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice if the Executive shall fail to
return to full-time performance of his duties within thirty (30) days after such
receipt. If the Executive dies during the term of this Agreement, his employment
hereunder shall be deemed to cease as of the date of his death.

                  (b)      Voluntary Termination by the Executive.
Notwithstanding anything in this Agreement to the contrary, the Executive may,
upon not less than thirty (30) days' written notice to the Company, voluntarily
terminate employment for any reason (including retirement under the terms of the
Company's retirement plan as in effect from time to time).

                  (c)      Termination by the Company. The Company at any time
may terminate the Executive's employment for Cause or without Cause.

                  (d)      Notice of Termination. Any termination by the Company
for Cause shall be communicated by a written Notice of Termination to the other
party hereto given in accordance with Section 9(c). For purposes of this
Agreement, a "Notice of Termination" means a written notice given in the case of
a termination for Cause which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment, and (iii) if the termination date is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than thirty (30) days after the receipt of such notice).

                  (e)      Date of Termination. For the purpose of this
Agreement, the term "Date of Termination" means (i) in the case of a termination
for Cause, the date of receipt of a Notice of Termination or, if later, the date
specified therein, and (ii) in all other cases, the actual date on which the
Executive's employment terminates.


                                       2
<PAGE>   5

         3.       Obligations of the Company Upon Termination. Upon termination
of the Executive's employment with the Company, the Company shall have the
following obligations:

                  (a)      Death, Disability and Retirement. If the Executive's
employment is terminated by reason of the Executive's death, Disability, or
retirement on or after the attainment of age sixty-five (65), the Company shall
have no further obligations to the Executive's legal representatives under this
Agreement other than payment of the Accrued Obligations. If the Executive's
employment is terminated by reason of the Executive's death or Disability, the
Company shall have the additional obligation, subject to the terms of the
Incentive Plan and further provided that the Executive has been employed by the
Company for the first six (6) months of the then applicable fiscal year, to pay
a cash amount equal to a portion of the Incentive Bonus, the product of a
fraction, the numerator of which is the number of days elapsed since the date
the Incentive Plan began for the applicable fiscal year through the date of the
Disability or the date of death of the Executive, and the denominator of which
is the total number of days of the applicable fiscal year for such Incentive
Plan. Unless otherwise directed by the Executive (or, in the case of the
Incentive Plan or a Qualified Plan, as may be required by such Incentive Plan or
Qualified Plan) all Accrued Obligations shall be paid to the Executive, his
beneficiaries or his estate, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination.

                  (b)      Termination by the Company for Cause and Voluntary
Termination by the Executive. If the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive, the Company shall pay the
Executive the Accrued Obligations. The Executive shall be paid all such Accrued
Obligations in a lump sum in cash within thirty (30) days of the Date of
Termination and the Company shall have no further obligations to the Executive
under this Agreement, unless otherwise required by a Qualified Plan or specified
pursuant to a valid election to defer the receipt of all or a portion of such
payments made in accordance with any plan of deferred compensation sponsored by
the Company.

                  (c)      Other Termination of Employment. If the Company
terminates the Executive's employment other than for Cause, death or Disability,
the Company shall pay and provide to the Executive the following:

                           (i)      Severance Payment. The Company shall pay to
the Executive in a lump sum in cash or certified check within fifteen (15) days
after the Date of Termination a severance payment equal to the sum of the
following amounts (other than amounts payable from the Incentive Plan or
Qualified Plans, non-qualified retirement plans and deferred compensation plans,
which amounts shall be paid in accordance with the terms of such plans):

                                    (A)     all Accrued Obligations;

                                    (B)     a cash amount equal to three (3)
months of the Executive's Base Salary at the rate in effect as of the date when
the Notice of Termination was given;

                                    (C)     subject to the terms of the
Incentive Plan and further provided that the Executive has been employed by the
Company for the first six (6) months of the then applicable fiscal year, a cash
amount equal to a portion of the Incentive Bonus, the product of a fraction, the
numerator of which is the number of days elapsed since the date the Incentive
Plan began for the applicable fiscal year through the date of such termination
without Cause, and the denominator of which is the total number of days of the
applicable fiscal year for such Incentive Plan.

                           In addition, if the Executive has not accepted
employment from a subsequent employer prior to the date which is four (4) months
from the Date of Termination (the "Supplemental Payment Date"), commencing on
the Supplemental Payment Date the Company shall pay the Executive an amount
equal to fifty percent (50%) of his monthly Base Salary at the rate in effect as
of the date when the Notice of Termination was given in equal monthly
installments until the earlier of (i) the payment of the third


                                       3
<PAGE>   6

(3rd) monthly installment or (ii) the date of the Executive's acceptance of
employment from a subsequent employer. The Executive shall notify the Company
immediately upon his acceptance of any such new employment if secured prior to
the payment by the Company of such three (3) additional monthly installments.

                  (d)      Release. As a condition precedent to the receipt of
any termination benefits payable to the Executive under this Section 3, the
Executive agrees to execute a general release among other things releasing the
Company from any obligation or liability (other than those contained in Sections
3, 6, 8 and 9 hereof, to the extent an obligation under such section arose at or
prior to the Date of Termination and remains unfulfilled). Such release shall
exclude the Executive's rights under any Qualified Plan.

                  (e)      Discharge of Company's Obligations. Subject to the
performance of its obligations under Sections 3, 6, 8 and 9 (and then, only to
the extent an obligation under such section arose at or prior to the Date of
Termination and remains unfulfilled), the Company shall have no further
obligations to the Executive under this Agreement in respect of any termination
of employment.

         4.       Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company and
for which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under any other
agreements with the Company, including, but not limited to stock option
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.

         5.       No Duty to Mitigate. The Executive shall not be obligated to
seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement.

         6.       Arbitration of Disputes. In the event that a claim for payment
or benefits under this Agreement is disputed, the Company and the Executive
agree to submit such dispute to final and binding arbitration with United States
Arbitration and Mediation, Inc. ("USAM") in Knoxville, Tennessee or such other
arbitration firm as the Company and the Executive shall mutually agree. Either
party wishing to arbitrate any claim hereunder shall notify the other party and
USAM in writing whereupon USAM shall select a neutral arbitrator and shall
schedule an arbitration hearing within thirty (30) days of receipt of such
notice of arbitration. The arbitration shall be conducted in accordance with the
rules and procedures of USAM. The parties agree that any arbitrator's award may
be presented to a court of competent jurisdiction and judgment entered thereon.


                                       4
<PAGE>   7

         7.       Confidential Information and Nonsolicitation.

                  (a)      The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or
data, including without limitation all trade secrets, relating to the Company,
and its business, (i) obtained by the Executive during his employment by the
Company, and (ii) which is not otherwise publicly known (other than by reason of
an unauthorized act by the Executive) and is subject to efforts that are
reasonable under the circumstances to maintain its secrecy. After termination of
the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company, unless compelled pursuant to an order
of a court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.

                  (b)      Upon termination of the Executive's employment for
any reason, the Executive, for the twelve (12) month period following the Notice
of Termination, shall not, on his own behalf or on behalf of any person or
entity, directly or indirectly solicit or aid in the solicitation of any
employees of the Company to leave their employment. In the event the Executive
violates the terms of Section 7(a) or this Section 7(b), the Employee shall
forfeit the right to all salary and benefits that the Executive and/or his
family members were otherwise entitled pursuant to the terms of Section 3. Also,
in the event that this Section 7 is determined to be unenforceable in part, it
shall be construed to be enforceable to the maximum extent permitted by law.

                  (c)      The Executive agrees that the covenants of
confidentiality and non-solicitation contained in this Section 7 are reasonable
covenants under the circumstances and necessary to protect the business
interests and properties of the Company. The Executive agrees that irreparable
loss and damage will be suffered by the Company should the Executive breach any
of the covenants contained in this Section 7. Accordingly, the Executive agrees
that the Company, in addition to all remedies provided at law or in equity,
shall be entitled to a temporary restraining order and temporary and permanent
injunctions to prevent a breach or contemplated breach of any of the covenants
contained in this Section 7.

         8.       Successors.

                  (a)      This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

                  (b)      This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.

         9.       Miscellaneous.

                  (a)      Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Tennessee, applied
without reference to principles of conflict of laws.

                  (b)      Amendments. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.

                  (c)      Notices. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party, by overnight delivery or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:


                                       5
<PAGE>   8

         If to the Executive:       at the address listed on the last page
                                    hereof

         If to the Company:         Goody's Family Clothing, Inc.
                                    400 Goody's Lane
                                    P.O. Box 22000
                                    Knoxville, Tennessee 37933-2000
                                    Attention: General Counsel

(with a copy to the attention of the Secretary or to such other address as
either party shall have furnished to the other in writing in accordance
herewith). Communications delivered by hand or by overnight delivery shall be
deemed received on the date of delivery and communications sent by registered or
certified mail shall be deemed received three (3) business days after the
sending thereof.

                  (d)      Tax Withholding. The Company may withhold from any
amounts payable under this Agreement such federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

                  (e)      Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.

                  (f)      Captions. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.

                  (g)      Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties regarding the terms and conditions
governing the Executive's employment with the Company, and all prior agreements
governing the Executive's employment with the Company shall have no further
effect; provided, however, that except as specifically provided herein, the
terms of this Agreement do not supersede the terms of any grant or award to the
Executive under any stock option or profit sharing program of the Company.


                                       6
<PAGE>   9

         IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf, and
its corporate seal to be hereunto affixed and attested by its Secretary, all
effective as of the day and year first above written.

                                    GOODY'S FAMILY CLOTHING, INC.


                                    By: /s/ Robert M. Goodfriend
                                        ----------------------------------------
                                            Robert M. Goodfriend
                                    Title:  Chairman and Chief Executive Officer
ATTEST:

/s/ Regis J. Hebbeler
------------------------------
Title: Assistant Secretary
      ------------------------
(CORPORATE SEAL)

                                    EXECUTIVE:  Chris A. Bullard

                                    /s/ Chris A. Bullard
                                    --------------------------------------------
                                    Name:  Chris A. Bullard

                                    Address: