<TABLE>

FIVE-YEAR  SUMMARY OF  SELECTED  FINANCIAL  DATA  (Dollar  and share  amounts in
thousands, except per share data)
<CAPTION>

                                                                                  Fiscal Year Ended
                                          ------------------------------------------------------------------------------------------
                                              February 3,        January 29,      January 30,       January 31,       January 25,
                                                 2001               2000              1999             1998              1997
                                          -------------------  ----------------  ---------------  ----------------  ----------------

INCOME STATEMENT DATA:

<S>                                               <C>                <C>              <C>               <C>              <C>
Net sales ................................        $  167,913         $ 162,792        $ 154,446         $ 144,983        $  130,222

Gross profit..............................            83,083            78,431           73,640            68,898            60,268

Selling, general and
     administrative expenses..............            71,753            66,977           61,561            57,964            51,779

Interest..................................               869             1,068              772               536               546

Depreciation and amortization ............             3,239             3,071            2,757             2,404             2,242

Net income................................             4,531             4,899            5,486             4,981             4,610

EARNINGS PER SHARE DATA:

Basic earnings per share..................         $    1.04          $   1.04         $   1.09          $   0.99         $    0.91

Diluted earnings per share................              1.04              1.04             1.07              0.97              0.91

Weighted average shares outstanding -
     basic ...............................             4,373             4,719            5,040             5,026             5,066

Weighted average shares outstanding -
     including dilutive potential common
     shares...............................             4,375             4,729            5,119             5,118             5,092


BALANCE SHEET DATA:

Working capital...........................        $   43,769          $ 43,670         $ 45,021         $  35,000        $   33,804

Inventories...............................            52,031            51,538           50,779            43,896            41,511

Net property and equipment................            18,522            19,607           19,713            17,833            14,755

Total assets..............................            79,948            79,828           79,296            69,446            62,429

Long-term debt (including
     current maturities)..................             9,230            10,019           12,377             4,260             4,340

Shareholders' equity......................            55,866            55,303           53,717            49,521            45,109

Book value per share......................             13.60             11.88            11.02              9.88              8.90

Current ratio.............................             4.7:1             4.8:1            5.3:1             3.6:1             4.1:1

Number of stores at year end..............               238               240              233               211               194
</TABLE>

<TABLE>
MANAGEMENT'S DISCUSSION AND FINANCIAL REVIEW

RESULTS OF OPERATIONS

  The following  table sets forth certain items in the Statements of Income as a
percentage of net sales for fiscal years 2001, 2000, and 1999.
<CAPTION>
                                                                       Percentage of Net Sales
                                                                          Fiscal Year Ended


                                                              2/3/01          1/29/00           1/30/99
                                                            ------------    -------------     ------------

<S>                                                               <C>             <C>               <C>
Net  sales..........................................              100.0           100.0             100.0

Cost of sales.......................................               50.5            51.8              52.3
                                                            ------------    -------------     ------------

Gross profit  ......................................               49.5            48.2              47.7

Other costs and expenses:

     Selling, general and administrative............               42.7            41.1              39.9

     Interest.......................................                0.5             0.7               0.5

     Depreciation and amortization .................                1.9             1.9               1.8

     Other income, net..............................              ---              (0.3)             (0.2)
                                                            ------------    -------------     ------------

Income before income taxes..........................                4.4             4.8               5.7

Provision for income taxes..........................                1.7             1.8               2.2
                                                            ------------    -------------     ------------

Net income..........................................                2.7             3.0               3.5
                                                            ============    =============     ============
</TABLE>

                                     Page 3
<PAGE>

Year Ended February 3, 2001 Compared to Year Ended January 29, 2000

Net sales increased by 3%, or $5.1 million, from fiscal 2000 (a 52-week year) to
fiscal  2001 (a 53-week  year).  This  increase in net sales is the result of an
additional week of sales in fiscal 2001 as well as the addition of 15 new stores
and the closing of 17 stores (seven of which were relocations). Comparable store
sales were even for the 53-week  year;  however,  on a basis  comparable to last
year's 52-week period, same store sales decreased 1%.

Cost of sales in fiscal  2001 was 50.5% of net  sales  compared  to 51.8% of net
sales in fiscal 2000.  The 1.3% of net sales  reduction  was  primarily due to a
change in the mix of  merchandise  sold to inventory  with higher initial markup
and, to a lesser extent, lower markdowns as a percentage of merchandise sold.

Selling,  general and  administrative  expenses in fiscal 2001 were 42.7% of net
sales  compared  to 41.1% of net  sales in fiscal  2000.  This 1.6% of net sales
increase was primarily  attributable to higher cost and frequency of advertising
in the first half of fiscal 2001 related to the  Company's  heavier  emphasis on
marketing  which  included  the  launch  of a  branding  message  campaign.  The
Company's  second  half  marketing  costs were  generally  in-line  with  levels
experienced  in fiscal  2000.  To a lesser  degree,  the  increase is related to
higher store  occupancy  and  supervision  costs,  as well as year end incentive
bonuses.

Interest  expense  in fiscal  2001 was .5% of net sales  compared  to .7% of net
sales in fiscal 2000 and is primarily  attributable  to lower average  borrowing
levels in fiscal  2001  offset in part by average  annual  interest  rates which
increased from 5.6% to 6.8%.

Other income,  net in fiscal 2000 included $665,000 ($412,000 after tax, or $.09
per diluted share) representing a non-recurring gain on the sale of real estate.

Year Ended January 29, 2000 Compared to Year Ended January 30, 1999

Net sales  increased  by 5%, or $8.3  million,  from fiscal 1999 to fiscal 2000.
This  increase  in net sales  reflects  the  addition  of 22 new  stores  and 15
closures (one of which was a relocation).  Comparable  store sales  decreased 1%
primarily due to reduced  customer  traffic in a group of outlet  stores,  lower
than  planned  sales in  sportcoats  and the  opening of new stores in  existing
markets.

Cost of sales in fiscal  2000 was 51.8% of net  sales  compared  to 52.3% of net
sales in fiscal 1999. The .5% of net sales  reduction was primarily due to lower
markdowns on  merchandise  sold,  offset to a lesser degree by higher  inventory
shrinkage.

Selling,  general and  administrative  expenses in fiscal 2000 were 41.1% of net
sales  compared  to 39.9% of net  sales in fiscal  1999.  This 1.2% of net sales
increase was the net result of higher store occupancy and payroll costs,  and to
a lesser  degree,  higher group health claims offset by lower year end incentive
bonuses.

Interest  expense  in fiscal  2000 was .7% of net sales  compared  to .5% of net
sales in fiscal 1999 and is primarily  attributable to higher average borrowings
in fiscal 2000.

Other income,  net in fiscal 2000 included $665,000 ($412,000 after tax, or $.09
per diluted share) representing a gain on the sale of real estate.

LIQUIDITY AND CAPITAL RESOURCES

In fiscal 2001, the Company funded its operating  activities,  including capital
expenditures for the opening of new stores, and its repurchases of common stock,
from internally  generated funds and from bank  borrowings.  During fiscal 2001,
the  Company  opened  15 new  stores,  closed 17  stores  (seven  of which  were
relocated),  and  remodeled  several  others.  During  fiscal 2002,  the Company
believes it will open approximately 10 new stores while also  closing/relocating
approximately  10  under-performing  locations  and  does  not  expect  this  to
significantly  impact liquidity or capital resources.  The Company believes that
its sources of liquidity and capital resources will continue to be sufficient to
fund its operations, capital expenditures and stock repurchase initiatives.

Operating  activities  provided  net cash of $7.5  million  and $9.0  million in
fiscal 2001 and fiscal 2000, respectively,  and used net cash of $1.1 million in
fiscal  1999.  The change  between  fiscal 2001 and 2000 relates to increases in
working capital. The change between fiscal 2000 and 1999 was attributable to the
$6.1  million  reduction  in  inventory  growth  year over year and, to a lesser
extent,  the year over year  growth in  payables  in fiscal  2000  compared to a
reduction in fiscal 1999.

Net cash used for investing  activities in fiscal 2001 approximated $2.8 million
and was primarily for the purpose of store  expansion and  remodeling  and, to a
lesser degree,  the development of the Company's  internet store.  Net cash used
for investing  activities in fiscal 2000  approximated $3.0 million and included
$4.3 million in capital  expenditures  related to store expansion,  remodels and
completion of its point of sale equipment  rollout in approximately  150 stores,
offset in part by proceeds from  property  disposals.  In fiscal 1999,  net cash
used in investing  activities  approximated  $5.2  million and included  capital
expenditures on eight more new stores than in fiscal 2000.

Financing  activities  used net cash of $4.9  million and $5.9 million in fiscal
2001 and fiscal  2000,  respectively,  and  provided net cash of $6.3 million in
fiscal  1999.  Financing  activities  primarily  relate to  fluctuations  in the
borrowing levels under the Company's  revolving credit  agreements which have an
aggregate borrowing capacity of $40.0 million. Financing activities for the last
three  fiscal  years  included  $4.1  million,  $3.6  million and $2.2  million,
respectively,  used for the  repurchase of  approximately  564,600,  403,800 and
220,600 shares of the Company's  common stock.  The Company has the right at the
end of May 2003 to convert the revolving  credit  agreements into four year term
loans.  At the end of fiscal 2001,  the Company had $32.4 million  available for
use under its bank revolving lines of credit.

OTHER MATTERS


Historically,  inflation  has not  significantly  affected the  Company's  gross
margins.  When  necessary,  the Company has generally  been able to pass through
price increases as the cost of merchandise has increased.

Interest Rate Risk

The Company's bank revolving credit lines and Industrial  Development Bonds bear
interest at variable  rates which expose the Company to risk from  interest rate
fluctuations.  If interest rates were to increase or decrease by 10%, the effect
on net income and cash flows would not be material.































                                     Page 4


<PAGE>
<TABLE>
  STATEMENTS OF INCOME  (in thousands, except per share data)
<CAPTION>

                                                                                    Fiscal Year Ended
                                                               ------------------------------------------------------------

                                                                 February 3,           January 29,           January 30,
                                                                    2001                   2000                  1999
                                                               ----------------       ---------------       ---------------

<S>                                                                 <C>                   <C>                   <C>
Net sales...............................................            $ 167,913             $ 162,792             $ 154,446

Cost of sales...........................................               84,830                84,361                80,806
                                                               ----------------       ---------------       ---------------
<S>                                                                    <C>                   <C>                   <C>
Gross profit............................................               83,083                78,431                73,640

Other costs and expenses:

     Selling, general and administrative................               71,753                66,977                61,561

     Interest...........................................                  869                 1,068                   772

     Depreciation and amortization......................                3,239                 3,071                 2,757

     Other income, net..................................                  (86)                 (585)                 (298)
                                                               ----------------       ---------------       ---------------

Income before income taxes..............................                7,308                 7,900                 8,848

Provision for income taxes..............................                2,777                 3,001                 3,362
                                                               ----------------       ---------------       ---------------

Net income..............................................             $  4,531              $  4,899              $  5,486
                                                               ================       ===============       ===============

Earnings per common share:

     Basic..............................................             $   1.04              $   1.04              $   1.09
                                                               ================       ===============       ===============

     Diluted............................................             $   1.04              $   1.04              $   1.07
                                                               ================       ===============       ===============


Weighted average common shares outstanding -
basic...................................................                4,373                 4,719                 5,040

Dilutive effect of stock options........................                    2                    10                    79
                                                               ----------------       ---------------       ---------------

Weighted average common shares outstanding -
including dilutive potential common shares..............                4,375                 4,729                 5,119
                                                               ================       ===============       ===============
</TABLE>


<TABLE>

  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands)
<CAPTION>
                                                    Common Stock       Capital in     Notes Receivable
                                               ---------------------    Excess of   Stock Purchase Loan    Retained
                                               Shares         Amount    Par Value           Plan           Earnings      Total
                                               ------         ------    ---------    ------------------    --------      -----
    <S>                                          <C>       <C>         <C>                <C>              <C>          <C>
    Balance - January 31, 1998 .............     5,014     $   2,507   $    7,232         $   (1,315)      $ 41,097     $49,521
      Net income ...........................                                                                  5,486       5,486
      Repurchase of common stock............      (221)         (110)      (2,076)                                       (2,186)
      Issuances of common stock.............         5             2           78                                            80
      Exercise stock options................        76            38          585                                           623
      Reduction of notes receivable.........                                                     193                        193
                                              --------      --------    ---------         ----------       --------     -------

    Balance - January 30, 1999 .............     4,874         2,437        5,819             (1,122)        46,583      53,717
      Net income............................                                                                  4,899       4,899
      Repurchase of common stock............      (404)         (202)      (3,356)                                       (3,558)
      Issuances of common stock.............        10             5           75                                            80
      Issuances of common stock under
         the Stock Purchase Loan Plan.......       176            88        1,412                                         1,500
      Notes receivable - stock purchase.....                                                  (1,500)                    (1,500)
      Reduction of notes receivable.........                                                     165                        165
                                              --------      --------    ---------         ----------       --------     -------

    Balance - January 29, 2000 .............     4,656         2,328        3,950             (2,457)        51,482      55,303
      Net income............................                                                                  4,531       4,531
      Repurchase of common stock............      (565)         (282)      (3,802)                                       (4,084)
      Issuances of common stock.............         8             4           56                                            60
      Issuances of common stock under
         the Stock Purchase Loan Plan.......        10             4           62                                            66
      Notes receivable - stock purchase.....                                                     (67)                       (67)
      Reduction of notes receivable.........                                                      57                         57
                                              --------      --------    ---------         ----------       --------     -------
    Balance - February 3, 2001 .............     4,109      $  2,054    $     266         $   (2,467)      $ 56,013     $55,866
                                              ========      ========    =========         ==========       ========     =======
</TABLE>


    See Notes to Financial Statements.

                                     Page 5


<PAGE>
<TABLE>
          BALANCE SHEETS (in thousands, except per share amounts)
<CAPTION>

                                                                                         February 3,           January 29,
                                                                                            2001                   2000
                                                                                          ---------              --------
         ASSETS
         <S>                                                                              <C>                    <C>
         Current assets:
             Cash.............................................................            $     439              $    619
             Accounts receivable..............................................                  255                   420
             Merchandise inventories..........................................               52,031                51,538
             Other current assets.............................................                2,896                 2,740
                                                                                          ---------              --------
                Total current assets..........................................               55,621                55,317

         Property and equipment, net..........................................               18,522                19,607

         Other assets ........................................................                5,805                 4,904
                                                                                          ---------              --------
                                                                                          $  79,948              $ 79,828
                                                                                          =========              ========

         LIABILITIES AND SHAREHOLDERS' EQUITY
         Current liabilities:
             Current maturities of long-term debt ...........................               $   180               $   180
             Accounts payable ................................................                6,691                 7,534
             Accrued compensation and related items...........................                2,131                 1,054
             Current and deferred income taxes ...............................                  694                   962
             Other current liabilities........................................                2,156                 1,917
                                                                                          ---------              --------
                Total current liabilities.....................................               11,852                11,647


         Long-term debt.......................................................                9,050                 9,839
         Other long-term liabilities..........................................                1,485                 1,393
         Deferred income taxes................................................                1,695                 1,646

         Commitments

         Shareholders' equity:
             Preferred stock, $1 par value; authorized shares, 500;
                  issued and outstanding shares, none.........................
             Common stock, $.50 par value; authorized shares, 10,000;
                  issued and outstanding shares, 4,109 (2001) and 4,656
                 (2000).......................................................                2,054                 2,328
             Capital in excess of par value...................................                  266                 3,950
             Notes receivable -- Stock Purchase Loan Plan ....................               (2,467)               (2,457)
             Retained earnings................................................               56,013                51,482
                                                                                          ---------              --------
                                                                                             55,866                55,303
                                                                                          ---------              --------
                                                                                          $  79,948              $ 79,828
                                                                                          =========              ========
</TABLE>

          See Notes to Financial Statements.


                                     Page 6

<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash (in thousands)
<CAPTION>

                                                                                            Fiscal Year Ended
                                                                          --------------------------------------------------------
                                                                              February 3,         January 29,         January 30,
                                                                                  2001                2000               1999
                                                                           ---------------     ---------------    ----------------
<S>                                                                             <C>                 <C>                 <C>
Cash flows from operating activities:
   Net income...................................................                $  4,531            $  4,899            $  5,486
   Adjustments to reconcile net income to net cash
      provided  by (used  for) operating activities:
        Depreciation and amortization...........................                   3,653               3,494               3,196
        Loss (gain) on property dispositions, net...............                     220                (349)                160
        Other...................................................                      92                  83                  87
        Changes in assets and liabilities:
           Accounts receivable..................................                     165                 442                (308)
           Merchandise inventories .............................                    (493)               (759)             (6,883)
           Other current assets.................................                    (156)                546                (116)
           Other assets.........................................                    (901)               (795)               (709)
           Accounts payable and accrued expenses................                     589               1,035              (2,273)
           Current and deferred income taxes....................                    (219)                365                 232
                                                                                --------            --------             -------
   Net cash provided by (used for) operating activities                            7,481               8,961              (1,128)
                                                                                --------            --------             -------

Cash flows from investing activities:
   Capital expenditures.........................................                  (2,795)             (4,324)             (5,250)
   Proceeds from property dispositions..........................                       7               1,285                  14
                                                                                --------            --------             -------
   Net cash used for investing activities.......................                  (2,788)             (3,039)             (5,236)
                                                                                --------            --------             -------

Cash flows from financing activities:
   Net (paydowns) borrowings under revolving bank
       lines of credit..........................................                    (609)             (2,178)              8,297
   Repurchase of common stock...................................                  (4,084)             (3,558)             (2,186)
   Reduction of long-term debt..................................                    (180)               (180)               (180)
   Proceeds from exercise of stock options......................                                                             242
   Principal paid on notes receivable--Stock Purchase
        Loan Plan...............................................                                          66                 145
                                                                                --------            --------             -------
   Net cash (used for) provided by financing activities                           (4,873)             (5,850)              6,318
                                                                                --------            --------             -------
Net (decrease) increase in cash.................................                    (180)                 72                 (46)
Cash at beginning of period.....................................                     619                 547                 593
                                                                                --------            --------             -------
Cash at end of period...........................................                $    439             $   619             $   547
                                                                                ========             =======             =======

Supplemental disclosure of cash flow information:
   Cash paid during the year for interest.......................                $    880            $  1,064             $   759
   Cash paid during the year for income taxes...................                   2,996               2,639               3,158
   Non-cash financing activity--notes receivable.................                     67               1,500

   See Notes to Financial Statements.
</TABLE>


                                     Page 7



<PAGE>

NOTES TO FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies:

PRINCIPAL BUSINESS
S&K Famous Brands, Inc.(the Company) operates in one segment, the retail sale of
menswear, including tailored clothing, furnishings,  sportswear and accessories.
The  Company's  fiscal  year  is the 52- or  53-week  period  which  ends on the
Saturday closest to January 31. Fiscal year ended February 3, 2001 (fiscal 2001)
was a 53-week  period;  January  29,  2000  (fiscal  2000) and  January 30, 1999
(fiscal 1999) were 52-week periods.

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

MERCHANDISE INVENTORIES
Inventories are valued at the lower of average cost or market.

PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.  Depreciation for financial reporting
purposes is computed using both straight line and  accelerated  methods over the
estimated  service  lives  which are between 25 and 40 years for  buildings  and
between three and seven years for fixtures and equipment. Leasehold improvements
are generally amortized over an eight year period.

The  Company  annually  evaluates  long-lived  assets for any  impairment.  This
evaluation  has  not  resulted  in  adjustments  to  the  Company's  results  of
operations  or  financial  position.  Repair and  maintenance  expenditures  are
charged to expense as incurred.  Upon  retirement or sale of an asset,  its cost
and  related  accumulated  depreciation  are written off and any gain or loss is
recognized.

OTHER ASSETS
Other assets consists  primarily of cash surrender value related to various life
insurance policies  aggregating $5.5 million and $4.8 million in fiscal 2001 and
2000, respectively.

REVENUE RECOGNITION
The Company recognizes revenue at the "point of sale".

ADVERTISING COSTS
Advertising  costs  are  expensed  in the  period  in  which  the  advertisement
initially runs.  Advertising  expense of $14.8 million,  $13.1 million and $12.6
million,  respectively,  was  included  in selling,  general and  administrative
expenses in each of the last three  fiscal  years.  Deferred  advertising  costs
related  to  future  programs  included  in the  balance  sheets  were less than
$100,000 in each year.

EARNINGS PER SHARE
The  computation  of basic  earnings per share is based on the weighted  average
number of common shares  outstanding  during each period.  Diluted  earnings per
share  includes  the  dilutive  effect  of stock  options.  Options  which  were
anti-dilutive  of  592,400,  525,000,  and 51,500  shares  were not  included in
computing   diluted   earnings  per  share  for  fiscal  2001,  2000  and  1999,
respectively.


Note 2 - Merchandise Inventories:

Inventories  are costed using an average  cost  method,  under which the Company
tracks inventory costs for approximately 100 inventory categories which are used
to classify its inventory.

The  Company  capitalizes  certain  buying,  holding and  distribution  costs to
inventory  which at the end of the last three  fiscal  years were  approximately
$2.8 million, $2.6 million and $2.5 million,  respectively.  Buying, holding and
distribution  costs  charged to cost of sales in each of the  fiscal  years were
approximately $3.9 million, $3.8 million and $3.7 million, respectively.




                                     Page 8


<PAGE>
<TABLE>
Note 3 - Property and Equipment:

Property and equipment consists of the following (in thousands):
<CAPTION>

                                                                              February 3,              January 29,
                                                                                 2001                     2000
                                                                          -------------------       -----------------

     <S>                                                                    <C>                       <C>
     Land.............................................................      $          1,232          $       1,232

     Buildings........................................................                 5,368                  5,366

     Furniture, fixtures and equipment................................                15,359                 14,754

     Leasehold improvements...........................................                16,789                 16,718
                                                                            -----------------       ----------------

                                                                                      38,748                 38,070

     Less - accumulated depreciation and amortization.................                20,226                 18,463
                                                                            -----------------       ----------------

                                                                             $        18,522           $     19,607
                                                                            =================       ================



Depreciation and amortization expense of approximately  $400,000 was included in
cost of sales for each of the last three fiscal years.

Note 4 - Long-Term Debt:

Long-term debt consists of (in thousands):
<CAPTION>
                                                                              February 3,             January 29,
                                                                                 2001                    2000
                                                                          -------------------       ----------------
     Industrial  Development Revenue Bond; $45 of principal plus
        interest at 65% of prime, due quarterly to January 1, 2010,
        secured by land and corporate headquarters....................      $          1,620           $      1,800
     Bank revolving lines of credit...................................                 7,610                  8,219
                                                                            -----------------       ----------------
                                                                                       9,230                 10,019
     Less - current maturities........................................                   180                    180
                                                                            -----------------       ----------------
                                                                            $          9,050           $      9,839
                                                                            =================       ================
</TABLE>

The Company has available an aggregate of $40.0 million from two banks under its
unsecured, long-term bank revolving lines of credit. Interest is payable monthly
at a rate  equal to the  lower of the  30-day  Federal  Funds  Rate  plus  three
quarters of one percent or the banks' prime  interest rates (6.1% at February 3,
2001). The Company's financing agreements contain certain restrictive covenants,
none of which is presently  significant to the Company. At the Company's option,
any  outstanding  balance at May 31, 2003 is convertible to four-year term loans
at the banks'  prime  interest  rates and is  payable  in  monthly or  quarterly
installments.

At  February  3, 2001,  maturities  of  long-term  debt,  exclusive  of the bank
revolving lines of credit, were $180,000 for each of the next five fiscal years.


Note  5 - Profit Sharing and Other Benefit Programs:

The Company  maintains a  noncontributory  profit sharing plan for all employees
who meet age and service requirements.  Contributions to the plan are determined
annually by the Board of Directors  and were  $120,000 in each of the last three
fiscal years.

Additionally, the profit sharing plan includes a qualified salary reduction plan
under Section 401(k) of the Internal Revenue Code. Eligible  participants in the
Company's  401(k) Plan can elect to invest 1% to 15% of their pre-tax  earnings.
The Company's  contribution to the 401(k) Plan is at the discretion of the Board
of Directors,  who authorized contributions of the Company's common stock in the
amount of $80,000 in each of the last three fiscal years.

Included in Other assets,  the Company has receivables  from certain officers in
each of the last three  fiscal  years in the amount of  $291,000,  $416,000  and
$489,000,  respectively,  relating  to  premiums  paid under  split  dollar life
insurance policies.

                                     Page 9


<PAGE>



The Company has unfunded deferred compensation  agreements with certain officers
which provide a fixed level of  retirement  benefits to be paid based on age and
years of  service.  Deferred  compensation  expense  is being  accrued  over the
vesting period using a discount rate of 8% and approximated  $120,000,  $111,000
and $89,000, respectively, in each of the last three fiscal years.


Note 6 - Stock Incentive and Stock Purchase Loan Plans:

The Company's  stock  incentive  plan provides for the granting of up to 400,000
common  shares to key  management  employees.  Options to purchase the Company's
stock are  granted  at no less than the market  value at the date of grant,  are
exercisable  after one to five years and expire  after  eight to ten years.  The
Company  applies the intrinsic  value based method of  accounting  prescribed by
Accounting Principles Board Opinion No. 25, in accounting for its stock options.
Accordingly,  the Company has not recognized any related compensation expense in
its Statements of Income.

Changes in options  under the plan for the three  years  ended  February 3, 2001
were as follows:
<TABLE>
<CAPTION>
                                                                   Weighted
                                                                    Average                                   Weighted Average
                                             Options            Exercise Price           Exercisable           Exercise Price
                                          ---------------     --------------------    ------------------    --------------------
<S>                                            <C>            <C>                          <C>              <C>
Outstanding - January 31, 1998                   508,134      $        9.71                405,723          $        9.81

Granted.............................              70,000              11.94
Exercised...........................            (108,631)              7.03
Surrendered.........................              (9,667)             19.66
                                          ---------------

Outstanding - January 30, 1999                   459,836              10.48                341,613                  10.30
Granted.............................              94,200               8.41
                                          ---------------

Outstanding - January 29, 2000                   554,036              10.13                379,725                  10.32

Granted.............................              79,300               7.38

Exercised...........................              (4,000)              6.19

Surrendered.........................             (11,900)             10.56
                                          ---------------

Outstanding - February 3, 2001                   617,436               9.79                421,496                  10.28
                                          ===============


Additional  information  regarding stock options outstanding at February 3, 2001
follows:
<CAPTION>

                                                   Weighted
         Range of                                   Average               Weighted                                     Weighted
         Exercise             Outstanding          Exercise           Average Remaining          Exercisable            Average
          Prices                Options              Price            Contractual Life             Options          Exercise Price
------------------------    -----------------    --------------     ----------------------    ------------------    ---------------
$6.00 - $7.69........                175,300        $  7.31              4.2 years                       96,000         $  7.25
$8.31 - $9.63........                323,336           8.83              3.8 years                      247,976            8.96
$11.94..............                  68,800          11.94              5.6 years                       27,520           11.94
$21.75...............                 50,000          21.75              0.6 years                       50,000           21.75
                            -----------------                                                 ------------------
$6.00 - $21.75.......                617,436                                                            421,496
                            =================                                                 ==================
</TABLE>

FAS No. 123 requires the Company to make certain proforma  disclosures as if the
fair value  based  method of  accounting  had been  applied to its stock  option
grants. The fair value of these options was estimated at the date of grant using
the Black - Scholes  option  pricing model with the  following  weighted-average
assumptions  for fiscal 2001,  2000 and 1999,  respectively:  risk free interest
rates of 5.7%,  5.8% and 5.0%;  expected  volatility of 36.9%,  35.9% and 42.0%;
expected life of 5 in each year. This pricing model resulted in a fair value per
option of $3.08, $3.48 and $5.25, for fiscal 2001, 2000 and 1999, respectively.
                                     Page 10

Had compensation cost been determined  including the weighted average fair-value
of options  granted in fiscal years 2001, 2000 and 1999 (which all ratably vests
over five years),  the  Company's  proforma  net income (and basic  earnings per
share) would be $4.4 million  ($1.01) in fiscal  2001,  $4.8 million  ($1.01) in
fiscal 2000 and $5.4 million  ($1.07) in fiscal 1999.  Proforma  disclosures are
not likely to be representative of the effect on net income in future periods.

Under the  Company's  Stock  Purchase  Loan Plan,  the Company has full recourse
loans  with  eighteen  officers  approximating  $2.8  million,  gross of amounts
accrued for  principal  forgiveness.  Approximately  $67,000 and $1.5 million in
loans  originated  during  fiscal 2001 and fiscal  2000,  when 9,368 and 175,812
additional shares,  respectively,  were purchased by Company officers.  The Plan
annually  provides for  reduction of a portion of interest  payable on the loans
based on meeting certain operating  targets,  as well as the opportunity for the
officer to receive a reduction of a portion of the principal balance of the loan
if the officer  remains an employee of the Company for seven years and maintains
ownership  of the  stock.  Compensation  expense  related  to this  program  was
$55,000, $100,000 and $79,000 for the last three fiscal years, respectively.  At
the end of fiscal 2001, the Company has accrued  interest  receivable from these
officers in the amount of $281,000.


Note 7 - Provision for Income Taxes:

Significant components of the Company's deferred income tax liabilities (assets)
are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                         Fiscal Year Ended
                                                        --------------------------------------------------
                                                            2001              2000              1999
                                                        --------------    -------------    ---------------
Deferred tax liabilities:
<S>                                                         <C>               <C>          <C>
    Depreciation ............................               $  2,459          $ 2,347      $     2,163
    Other items  ............................                    234              290              396
                                                        --------------    -------------    ---------------
          Total deferred tax liabilities ....                  2,693            2,637            2,559
Deferred tax assets, primarily compensation
related .....................................                   (871)            (814)            (728)
                                                        --------------    -------------    ---------------

Net deferred tax liabilities ................                $ 1,822          $ 1,823      $     1,831
                                                        ==============    =============    ===============


The provision for income taxes consists of (in thousands):
<CAPTION>

                                                                         Fiscal Year Ended
                                                        --------------------------------------------------
                                                            2001              2000              1999
                                                        --------------    -------------    ---------------
Current:
    Federal  ................................                $ 2,225      $      2,464     $        2,551
    State  ..................................                    553               545                620
                                                        --------------    -------------    ---------------
                                                               2,778             3,009              3,171
Deferred  ...................................                     (1)               (8)               191
                                                        --------------    -------------    ---------------
                                                             $ 2,777      $      3,001     $        3,362
                                                        ==============    =============    ===============

</TABLE>

<PAGE>
<TABLE>
The effective income tax rates consist of (in thousands):
<CAPTION>
                                                                        Fiscal Year Ended
                                                       -----------------------------------------------------
                                                            2001               2000               1999
                                                       ----------------    --------------     --------------
     <S>                                                     <C>           <C>                     <C>
     Income taxes at federal                                 $ 2,485       $    2,686              $ 3,008
       statutory rate (34%) ......................

     State income taxes,
       net of federal benefit ....................               365              360                 374

     Other - net .................................               (73)             (45)                (20)
                                                       ----------------    --------------     --------------
                                                             $ 2,777       $    3,001              $ 3,362
                                                       ================    ==============     ==============
     Effective income tax rate ...................              38.0%            38.0%                38.0%
                                                       ================    ==============     ==============

</TABLE>

Note 8 - Commitments:

The Company leases all of its stores under varying terms and arrangements  which
generally  provide renewal options and contingent  rentals based on a percentage
of gross sales. Total rent expense under the leases  approximated $13.4 million,
$12.6 million and $11.1 million in each of the last three years, respectively.

The future minimum  payments under operating leases as of the end of fiscal 2001
aggregate $42.9 million and are payable as follows: fiscal 2002 - $13.2 million,
fiscal  2003 - $9.8  million,  fiscal  2004 - $7.2  million,  fiscal 2005 - $4.4
million and fiscal 2006 - $3.0 million and $5.3 million thereafter.

The Company  leases a property from an immediate  family member of an officer of
the Company,  who is also a  shareholder.  Rent expense  included  approximately
$144,000,  $141,000 and $138,000 in fiscal  2001,  2000 and 1999,  respectively,
paid to this party.  The Company is also obligated under this lease agreement to
pay minimum rentals  approximating  $147,000 through fiscal 2002.  Additionally,
prior to January 2001,  the Company had leased a property from an officer of the
Company,  who is also a shareholder  and incurred rent expense of  approximately
$49,000, $47,000 and $47,000, respectively, in each of the last three years.

Note 9 - Nonrecurring Items:

During fiscal 2000, other income,  net, included $665,000 ($412,000 after tax or
$.09 per diluted  share)  related to a gain on the sale of real  estate.  During
fiscal 1999, other income,  net, included  $266,000  ($165,000 after tax or $.03
per diluted share), related to income from an insurance claim.

















                                     Page 11


<PAGE>
<TABLE>

SELECTED QUARTERLY DATA  (unaudited)

Summarized quarterly data for fiscal 2001 and 2000 are as follows (in thousands,
except per share data):

<CAPTION>


  Fiscal 2001                                         April 29          July 29            October 28           February 3
  -----------                                        ------------    -------------     -----------------    -----------------

  <S>                                                   <C>            <C>                     <C>                   <C>
  Net sales ...................................         $ 41,350         $ 36,834              $ 37,235             $ 52,494

  Gross profit  ...............................           20,729           17,826                18,731               25,797

  Net income  .................................            1,429              133                   324                2,645

  Earnings per share--basic*....................             .31              .03                   .08                  .64

  Earnings per share--diluted*..................             .31              .03                   .08                  .64

  Common share prices:
      High.....................................             7.73             7.94                 8.25                  7.50
      Low......................................             6.00             6.44                 6.50                  6.50




  Fiscal 2000                                            May 1         July 31            October 30           January 29
  -----------                                        ------------    -------------    -----------------    ------------------
  Net sales ...................................         $ 39,799         $ 35,667              $ 37,195             $ 50,131

  Gross profit  ...............................           19,287           16,834                18,309               24,001

  Net income  .................................            1,425              373                   323                2,778

  Earnings per share--basic*....................             .30              .08                   .07                  .60

  Earnings per share--diluted*..................             .30              .08                   .07                  .60

  Common share prices:
      High.....................................            10.22            10.00                  9.00                 8.25
      Low......................................             8.25             8.63                  6.50                 5.63
</TABLE>

  * Note: Earnings per share does not add to total for year due to rounding.




S&K Famous  Brands,  Inc.  common  shares are traded on The Nasdaq  Stock Market
under the symbol SKFB. As of February 3, 2001,  there were  approximately  1,650
holders of S&K common stock, including  approximately 230 holders of record. The
number of record holders does not reflect the number of beneficial owners of the
Company's common stock for whom shares are held by Cede & Co., certain brokerage
firms and others.  The Company has not declared cash  dividends and  anticipates
that for the foreseeable future it will continue to follow its present policy of
retaining  earnings in order to finance the  expansion  and  development  of its
business.








                                     Page 12


<PAGE>



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
S&K Famous Brands, Inc.

In our opinion,  the accompanying  balance sheets and the related  statements of
income, of changes in shareholders'  equity and of cash flows present fairly, in
all material respects,  the financial  position of S&K Famous Brands,  Inc. (the
"Company")  at February 3, 2001 and  January  29,  2000,  and the results of its
operations  and its cash flows for each of the three  fiscal years in the period
ended  February 3, 2001,  in conformity  with  accounting  principles  generally
accepted in the United States of America.  These  financial  statements  are the
responsibility of the Company's management;  our responsibility is to express an
opinion on these  financial  statements  based on our audits.  We conducted  our
audits of these  statements in  accordance  with  auditing  standards  generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
Richmond, Virginia
March 16, 2001




























                                     Page 12