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

                           FORM 10-Q

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

                           CPI CORP.
                           ---------

                For the Quarter Ended November 9, 2002
                                      -----------------

                   Commission File Number 1-10204
                                          -------

              DELAWARE                        43-1256674
              --------                        ----------
(State or Other Jurisdiction of          (I.R.S. Employer
 Incorporation or Organization)           Identification No.)


      1706 Washington Avenue, St. Louis, Missouri   63103-1790
      --------------------------------------------------------
      (Address of Principal Executive Offices)      (Zip Code)


                            (314) 231-1575
                            --------------
                    (Registrant's Telephone Number)

     Indicate by check mark whether the registrant has (1) 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
issuer's classes of common stock as of the latest practicable
date:

     As of December 10, 2002 there were 8,044,203 shares of the
Registrant's common stock outstanding.








TABLE OF CONTENTS
-----------------

              (PAGE NUMBERS REFER TO PAPER DOCUMENT ONLY)

PART 1.   FINANCIAL INFORMATION                          PAGE(S)
-------------------------------                          -------

Item 1.   Financial Statements
          - Interim Condensed Consolidated Balance
             Sheets as of November 9, 2002 and
             February 2, 2002                               3-4
          - Interim Condensed Consolidated Statements of
             Earnings - For the 16 and 40 Weeks Ended
             November 9, 2002 and November 10, 2001         5-6
          - Interim Condensed Consolidated Statement
             of Changes in Stockholders' Equity - For
             the 40 Weeks Ended November 9, 2002              7
          - Interim Condensed Consolidated Statements
             of Cash Flows - For the 40 Weeks Ended
             November 9, 2002 and November 10, 2001         8-9
          - Notes to the Interim Condensed Consolidated
             Financial Statements                         10-16

Item 2.   - Management's Discussions and Analysis of
             Financial Condition and Results of
             Operations                                   17-29

Item 3.   Quantitative and Qualitative Disclosures About
           Market Risk                                       30

Item 4.   Controls and Procedures                            30

PART II.  OTHER INFORMATION
---------------------------

Item 6.   Exhibits and Reports on Form 8-K                   31

Signature                                                    32

Certifications                                            33-36

Index to Exhibits                                            37









                                 2
PART 1
FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CPI CORP. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS - ASSETS
(in thousands of dollars)

                                     November 9,   February 2,
                                         2002         2002
                                     (UNAUDITED)
                                     -----------   -----------
Current assets:
 Cash and cash equivalents            $  25,343    $   46,555
 Receivables, less allowance of
  $663 and $429, respectively            20,968         8,417
 Inventories                             10,656         9,510
 Prepaid expenses and other current
  assets                                  7,668         4,257
 Refundable income taxes                 11,305         9,123
                                      ----------   -----------
     Total current assets                75,940        77,862
                                      ----------   -----------
Net property and equipment               51,493        63,708
Assets of business transferred under
 contractual arrangements:
   Preferred security                    10,221        10,069
   Loan receivable                        4,710         1,518
Assets of supplemental retirement
 plan:
   Cash surrender value of life
    insurance policies (net of
    borrowings of $1,595, as of
    November 9, 2002)                     9,196         9,455

   Long-term investments held in Rabbi
    Trust                                 4,846         4,951
Other assets, net of amortization of
  $1,359                                  5,655         5,239
                                      ----------   -----------
     Total assets                     $ 162,061    $  172,802
                                      ==========   ===========

See accompanying notes to consolidated financial statements.









                            3
CPI CORP. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS -
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands of dollars except share and per share amounts)

                                       November 9,  February 2,
                                          2002         2002
                                       (UNAUDITED)
                                       -----------  ------------
Current liabilities:
 Current maturities of long-term debt   $   8,580    $   8,580
 Accounts payable                          14,380        9,741
 Accrued employment costs                  11,101       13,538
 Deferred revenue                           9,860        9,529
 Sales taxes payable                        2,744        2,816
 Accrued advertising expense                3,927        1,384
 Accrued expenses and other liabilities     5,949        4,134
                                       -----------  -----------
   Total current liabilities               56,541       49,722
                                       -----------  -----------
Long-term debt                             34,103       42,639
Other liabilities                           9,047       10,686
Deferred revenue                            3,002        3,677
Stockholders' equity:
 Preferred stock, no par value,
  1,000,000 shares authorized; no
  shares outstanding                            -            -
 Preferred stock, Series A, no par
  value, 200,000 shares authorized;
  no shares outstanding                         -            -
 Common stock, $0.40 par value,
  50,000,000 shares authorized;
  18,282,506 and 18,201,743 shares
  issued at November 9, 2002 and
  February 2, 2002, respectively            7,313        7,281
  Additional paid-in capital               51,137       49,845
  Retained earnings                       233,824      242,015
  Accumulated other comprehensive
   income                                  (5,241)      (5,387)
                                       -----------  -----------
                                          287,033      293,754
Treasury stock at cost, 10,238,303
 shares at both November 9, 2002 and
 February 2, 2002                        (227,642)    (227,642)
Unamortized deferred compensation-
 restricted stock                             (23)         (34)
                                       -----------  -----------
Total stockholders' equity                 59,368       66,078
                                       -----------  -----------
Total liabilities and stockholders'
 equity                                 $ 162,061    $ 172,802
                                       ===========  ===========

See accompanying notes to consolidated financial statements.
                               4
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED) Sixteen weeks ended November 9, 2002 and
November 10, 2001
(in thousands of dollars except share and per share amounts)

                                         Sixteen Weeks Ended
                                      --------------------------
                                       Nov. 9,         Nov. 10,
                                         2002            2001
                                      ----------      ----------
Net sales                             $  90,190       $  96,872
Costs and expenses:
  Cost of sales (exclusive of
   depreciation and amortization
   expense shown below)                  12,132          12,774
  Selling, general and
   administrative expenses               74,406          75,749
  Depreciation and amortization           5,865           7,247
  Impairment loss                         4,436               -
                                      ----------      ----------
                                         96,839          95,770
                                      ----------      ----------
Income (loss) from operations            (6,649)          1,102
Interest expense                          1,023           1,228
Interest income                             501             619
Other income (expense), net                  37            (372)
                                      ----------      ----------
Income (loss) before income tax
 benefit                                 (7,134)            121
Income tax benefit                       (2,782)            (32)
                                      ----------      ----------
Net earnings (loss)                   $  (4,352)      $     153
                                      ==========      ==========
Net earnings (loss) per share-diluted $   (0.54)      $    0.02
                                      ==========      ==========
Net earnings (loss) per share-basic   $   (0.54)      $    0.02
                                      ==========      ==========

Dividends per share                   $    0.14       $    0.14
                                      ==========      ==========
Weighted average number of common
 and common equivalent shares
 outstanding - diluted                8,044,203       7,982,501
                                      ==========      ==========
Weighted average number of common
 and common equivalent shares
 outstanding - basic                  8,044,203       7,912,532
                                      ==========      ==========

See accompanying notes to consolidated financial statements.



                                 5

CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Forty weeks ended November 9, 2002 and November 10, 2001
(in thousands of dollars except share and per share amounts)

                                         Forty Weeks Ended
                                     --------------------------
                                      Nov. 9,         Nov. 10,
                                        2002            2001
                                     ----------      ----------
Net sales                            $ 208,746       $ 220,970
Costs and expenses:
  Cost of sales (exclusive of
   depreciation and amortization
   expense shown below)                 29,136          29,411
  Selling, general and
   administrative expenses             165,972         170,754
  Depreciation and amortization         15,996          18,300
  Impairment loss                        4,436               -
                                     ----------      ----------
                                       215,540         218,465
                                     ----------      ----------
Income (loss) from operations           (6,794)          2,505
Interest expense                         2,793           3,304
Interest income                          1,608           1,313
Other income (expense), net                 79          (2,052)
                                     ----------      ----------
Loss before income tax benefit          (7,900)         (1,538)
Income tax benefit                      (3,081)           (613)
                                     ----------      ----------
Net loss                             $  (4,819)      $    (925)
                                     ==========      ==========
Net loss per share - diluted         $   (0.60)      $   (0.12)
                                     ==========      ==========
Net loss per share - basic           $   (0.60)      $   (0.12)
                                     ==========      ==========
Dividends per share                  $    0.42       $    0.42
                                     ==========      ==========
Weighted average number of common
 and common equivalent shares
 outstanding - diluted               8,038,874       7,809,179
                                     ==========      ==========
Weighted average number of common
 and common equivalent shares
 outstanding - basic                 8,038,874       7,809,179
                                     ==========      ==========

See accompanying notes to consolidated financial statements.




                                  6


<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED) (in thousands of dollars except share and per share amounts)
Forty weeks ended November 9, 2002
<CAPTION>
                                                  Accum               Deferred
                                Add'l             other    Treasury   comp'n
                         Common paid-in Retained  comp'h   stock      restr'td
                         stock  capital earnings  income   at cost    stock      Total
                         ------ ------- --------- -------- ---------- -------- ----------
<S>                      <C>    <C>     <C>       <C>      <C>        <C>      <C>
Balance at Feb. 2, 2002  $7,281 $49,845 $242,015  $(5,387) $(227,642) $   (34) $  66,078
                         ------ ------- --------- -------- ---------- -------- ----------
Issuance of common stock
  in conjunction with
  employee benefit plans
  and option exercises
  (80,763 shares)            32   1,292        -        -          -        -      1,324
Comprehensive income:
  Net loss                    -       -   (4,819)       -          -        -
  Foreign currency
      translation             -       -        -      146          -        -
    Comprehensive income      -       -        -        -          -        -     (4,673)
Dividends ($0.42 per
  common share)               -       -   (3,372)       -          -        -     (3,372)
Amortization of deferred
  compensation -
  restricted stock            -       -        -        -          -       11         11
                         ------ ------- --------- -------- ---------- -------- ----------
Balance at
  Nov. 9, 2002           $7,313 $51,137 $233,824  $(5,241) $(227,642) $   (23)  $  59,368
                         ====== ======= ========= ======== ========== ========  ==========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
                                                 7


CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (in thousands of dollars)
Forty weeks ended November 9, 2002 and November 10, 2001

RECONCILIATION OF NET LOSS TO CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES
                                              40 Weeks Ended
                                           --------------------
                                            Nov. 9,   Nov. 10,
                                              2002      2001
                                           ---------  ---------
Net loss                                   $ (4,819)  $   (925)

Adjustments for items not requiring cash:
  Depreciation and amortization              15,996     18,300
  Deferred income taxes                      (1,630)     5,703
  Deferred revenue                             (317)    (1,096)
  Post-closing adjustment on preferred
   security                                     147          -
  Accrued interest on preferred security       (652)      (305)
  Impairment loss                             4,436          -
  Other                                      (2,502)     1,307

Increase (decrease) in current assets:
  Receivables and inventories               (13,697)    (7,800)
  Refundable income taxes                    (2,182)   (11,832)
  Prepaid expenses and other current assets  (2,374)    (2,427)

Increase (decrease) in current liabilities:
  Accounts payable, accrued expenses and
    other liabilities                         6,488      9,562
  Income taxes                                    -     (1,067)
                                            --------   --------
Cash flows provided by (used in)operating
  activities                                $(1,106)   $  9,420
                                            ========   ========

See accompanying notes to consolidated financial statements.













                                8
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (in thousands of dollars)
Forty weeks ended November 9, 2002 and November 10, 2001

                                             40 Weeks Ended
                                          --------------------
                                           Nov. 9,    Nov. 10,
                                             2002       2001
Cash flows provided by (used in)          ---------  ---------
 operating activities                     $ (1,106)   $  9,420
                                          ---------  ---------
Cash flows (used in) provided by
 financing activities:
  Repayment of long-term debt               (8,580)    (8,580)
  Proceeds from borrowing against cash
   surrender value of life insurance         1,595          -
  Issuance of common stock in
   conjunction with employee benefit
   plans and option exercises                1,324      5,066
  Cash dividends                            (3,372)    (3,255)
  Issuance of treasury stock                     -         62
  Purchase of treasury stock                     -         (4)
                                          ---------  ---------
Cash flows used in financing activities     (9,033)    (6,711)
                                          ---------  ---------
Cash flows (used in) provided by
 investing activities:
  Additions to property and equipment, net  (8,054)   (14,701)
  Change in loan receivable                 (3,192)    (5,171)
  Purchase of investment securities in
   Rabbi Trust                              (2,544)    (1,909)
  Proceeds from sale of investment
   securities in Rabbi Trust                 2,649      3,654
                                          ---------  ---------
Cash flows used in investing activities    (11,141)   (18,127)
                                          ---------  ---------
Effect of exchange rate changes on
 cash and cash equivalents                      68       (303)
                                          ---------  ---------
Net decrease in cash and cash
 equivalents                               (21,212)   (15,721)
Cash and cash equivalents at
 beginning of period                        46,555     38,820
                                          ---------  ---------
Cash and cash equivalents at end of
 period                                   $ 25,343   $ 23,099
                                          =========  =========
Supplemental cash flow information:
  Interest paid                           $  1,920   $  2,302
                                          =========  =========
  Income taxes paid                       $    778   $  6,794
                                          =========  =========
See accompanying notes to consolidated financial statements.
                               9
CPI CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)

Note 1
------
     In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments necessary for a fair presentation of CPI Corp.'s
(the "Company's") financial position as of November 9, 2002
and February 2, 2002 and the results of its operations for
the 16 weeks and 40 weeks ended November 9, 2002 and
November 10, 2001 and changes in its cash flows for the
40 weeks ended November 9, 2002 and November 10, 2001.
Certain prior year amounts have been reclassified to
conform to the third quarter 2002 presentation. These
financial statements should be read in conjunction with
the consolidated financial statements and the notes included
in the Company's annual report on Form 10-K for its fiscal
year ended February 2, 2002.

Note 2
------
     The Company has operations in two business segments:
Portrait Studios and Technology Development (see Note 6).
The Portrait Studios segment functions as the exclusive
operator of Sears Portrait Studios with 1,031 locations in the
United States, Canada and Puerto Rico as of November 9, 2002.
The Technology Development segment operates an internet-based,
mail order photofinishing business under the name searsphoto.com
and offers software programs primarily for the retail service
industry  use, software consulting and custom software
development  under the  name Centrics Technology, Inc.

SELECTED INDUSTRY SEGMENT INFORMATION (in thousands of dollars)
                                         Sixteen Weeks Ended
                                    -----------------------------
                                    Nov. 9, 2002   Nov. 10, 2001
                                    -------------   -------------
NET SALES:
  Portrait Studios                    $   89,992     $   96,711
  Technology Development                   1,205            933
  Intersegment sales                      (1,007)          (772)
                                      -----------    -----------
                                      $   90,190     $   96,872
                                      ===========    ===========
INCOME (LOSS) FROM OPERATIONS:
 Portrait Studios                     $     (657)    $    5,337
 Technology Development                     (927)          (487)
 Corporate expense                        (5,065)        (3,748)
                                      -----------    -----------
                                      $   (6,649)    $    1,102
                                      ===========    ===========

                                10
SELECTED INDUSTRY SEGMENT INFORMATION (in thousands of dollars)

                                       Forty Weeks Ended
                                  -----------------------------
                                  Nov. 9, 2002    Nov. 10, 2001
                                  --------------- -------------
NET SALES:
  Portrait Studios                  $  207,797     $  220,734
  Technology Development                 3,377          2,377
  Intersegment sales                    (2,428)        (2,141)
                                    -----------    -----------
                                    $  208,746     $  220,970
                                    ===========    ===========
INCOME (LOSS) FROM OPERATIONS:
 Portrait Studios                   $    6,425     $   13,188
 Technology Development                 (1,371)        (1,178)
 Corporate expense                     (11,848)        (9,505)
                                    -----------    -----------
                                    $   (6,794)    $    2,505
                                    ===========    ===========
SEGMENT ASSETS:
 Portrait Studios                   $   78,501     $   88,662
 Technology Development                  1,302          1,316
 Corporate cash and cash
  equivalents                           25,343         23,099
 Corporate other                        56,915         58,800
                                    -----------    -----------
                                    $  162,061     $  171,877
                                    ===========    ===========























                                11

GEOGRAPHIC FINANCIAL INFORMATION
--------------------------------
                                Sixteen Weeks Ended
                           --------------------------------
                            Nov. 9, 2002     Nov. 10, 2001
                           --------------    --------------
NET SALES:
 United States             $   83,831        $   89,759
 Canada                         6,359             7,113
                           --------------    --------------
                           $   90,190        $   96,872
                           ==============    ==============

                                  Forty Weeks Ended
                           --------------------------------
                            Nov. 9, 2002     Nov. 10, 2001
                           --------------    --------------
NET SALES:
 United States             $  194,718        $  205,867
 Canada                        14,028            15,103
                           --------------    --------------
                           $  208,746        $  220,970
                           ==============    ==============
LONG-LIVED ASSETS:
 United States             $   80,982        $   95,422
 Canada                         5,139             5,180
                           --------------    --------------
                           $   86,121        $  100,602
                           ==============    ==============

Note 3
------
     On February 3, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" (SFAS 142).  Under SFAS 142, goodwill
amortization ceases upon adoption of the new standard.  The
new rules also require an initial goodwill impairment
assessment in the year of adoption and an annual impairment
test thereafter.  In addition, interim testing of goodwill
is now required if an event or circumstance indicates that
an impairment loss has been incurred. During the first
quarter ended April 27, 2002, the Company performed the first
of the required impairment tests of goodwill.  No impairment
loss resulted from the initial goodwill impairment test.
As of February 2, 2002 and November 9, 2002,  the carrying
value of goodwill was $513,000 and related to  acquisitions by
the Portrait Studio division prior to June 30, 2001.   For the
periods prior to fiscal year 2002, the adoption of SFAS 142
has no proforma effect on the loss per share reported for the
sixteen  weeks ended November 10, 2001 and a $.01 increase
in earnings per share  reported for the 40 weeks ended
November 10, 2001.

                                   12


Note 4
------

     In July 2001, the Company announced it had provided TRU
Retail, Inc., the predecessor legal entity of Prints Plus, Inc.
("Prints Plus") with a $6.4 million revolving line of credit.
The Company further announced the completion of the sale of
its Wall Decor segment for $16.0 million.  The sales price
reflected  the receipt of $11.0 million in a Preferred Security
of Prints Plus, approximately $4.0 million in cash, other
consideration  netting to $1.0 million and the assumption of
certain liabilities  including the ongoing guarantee of certain
operating real estate leases.   The sales price was subject to
final post-closing adjustments.

     Subsequently, in January 2002 and May 2002, the balance of
the  Preferred Security decreased due to the optional redemption
of  $1.0 million and $353,000, respectively, of the security by
Prints Plus,  and, in the first quarter of 2002, by a final
post-closing adjustment of  $147,000 to the security reflecting
a decrease in the final sales price.   These events, when offset
by the accrued interest income of $721,000 that  is also
reflected in the value of the Preferred Security, resulted in a
balance on November 9, 2002 of $10.2 million.

     Borrowings under the revolving line of credit extended to
Prints Plus were $4.7 million and $5.2 million as of
November 9, 2002 and  November 10, 2001, respectively.
Interest income earned on this revolving  line of credit for
the third quarter 2002 and 2001 was $64,000 and $84,000,
respectively.

     Due to the Company's continuing financial interest in
Prints Plus,  the Company is required to follow a modified equity
method of accounting,  which requires cumulative losses, if any,
incurred by Prints Plus during its fiscal year be reflected in the
Company's financials as a valuation  allowance and corresponding
charge to income.  As a result of Prints Plus'  operating
performance and compliance with the covenants of the Preferred
Security and revolving line of credit, no valuation allowance
was recorded  as of November 9, 2002.

     Further, if Prints Plus defaults on certain operating real
estate leases, the Company has guaranteed monthly lease payments
over the remaining life of these leases.  As of November 9, 2002,
the maximum future obligation to the Company would be $16.0
million before any negotiation with landlords or subleasing.
Based on scheduled lease payments, the maximum future obligations
will decrease an additional $908,000 by the end of fiscal 2002,
then  annually by approximately $5.2 million to $4.8 million
during the next  two years. To recognize the risk associated with
these leases and based  on the Company's past experience with
renegotiating lease obligations,  a $1.0 million reserve was
                             13
established in 2001.  At November 9, 2002, the Company had made
no further allowances for defaults under these operating leases
as, in the opinion of management, Prints Plus is meeting the
performance standards established under the operating leases.

Note 5
------

     As discussed in the Company's Annual Report on Form 10-K,
the Company has a $60.0 million Senior Note Agreement and $30.0
million Revolving Facility.  In April 2002 and November 2002,
the Company amended its Revolving Facility to adjust the minimum
consolidated earnings before income taxes, depreciation and
amortization ("EBITDA")  covenant.  In the November 2002 amendment,
the Company also reduced the  line to $15 million since the Company
has minimal borrowing needs other than to support $7.2 million in
outstanding letters of credit as of November 9, 2002.  As of
November 9, 2002, the Company was in compliance with all covenants
under both the amended Revolving Facility and the Senior Note
Agreement, and expects to be in compliance with the covenants
under the Senior Note Agreement for the remainder of this year.

     However, given the sales shortfall incurred in the first three
quarters compared to the prior year periods, the Company may not
achieve  the EBITDA covenant related solely to its Revolving
Facility for the  fourth quarter of this fiscal year.  Other than
supporting outstanding  letters of credit in the principal amount
of $7.2 million as of  November 9, 2002, the Company has no
outstanding borrowings under the Revolving Facility, nor does it
currently expect to need to draw on the facility prior to its
expiration in June 2003.  The Company anticipates that it will
reach an agreement before the end of the fourth quarter
with the lending institutions offering the Revolving Facility
whereby either the above mentioned covenant will be amended or
the facility will be eliminated and replaced.

Note 6
------

     During the third quarter of fiscal 2002, management completed
its previously announced review of the infrastructure and platform
from which  it delivers technology development and support services.
The objectives  of the review were to 1) improve focus on and support
for the Company's core portraiture business, 2) improve organizational
functionality and  systems flexibility, and 3) eliminate duplicative
cost structures.

     To achieve the aforementioned objectives, the Company is
in the process of transferring the technology development activities,
previously performed by its subsidiary Centrics Technology, Inc.
("Centrics"), back into a newly reorganized and right-sized corporate
technology function.  In addition, the Company will no longer pursue
the sale of consulting and
                              14
software development to third parties.  As a result of these decisions,
the Company is currently negotiating with management of Centrics for the
acquisition of the stock of Centrics by its management group.  If an
agreement is reached, the Company anticipates the transaction will close
prior to the end of its current fiscal year.  If an agreement is not
reached,  all of the aforementioned transfer and reorganization
activities will still  be completed by the end of the Company's current
fiscal year.

     Under either the sale or transfer of activities scenarios, the
Company  expects to incur certain fourth quarter charges to earnings
when the ultimate  outcome is known.  Under either the sale or transfer
of activities scenarios,  the Company anticipates incurring a charge
for employee severance ranging  from approximately $450,000 to $550,000.
Under the sale scenario, the Company would record a loss on sale ranging
from approximately $150,000  o $200,000, representing the excess of the
net book value of assets  transferred over liabilities assumed, without
giving effect to the contingent consideration to be received in the form
of royalties on future sales of consulting services and/or software by the
buyer.  Under the transfer scenario, the Company would also incur a charge
for anticipated settlement  of the existing Centrics office lease of
approximately $284,000, representing  the remaining lease payments under
the lease and assuming no sub-lease  rentals or negotiated settlements.

     Through the elimination of the currently existing duplicative cost
structures and the reorganization and right-sizing of the newly formed
corporate technology group, the Company anticipates annualized payroll
costs savings beginning in fiscal 2003 of approximately $4.0 million.

     As part of the ongoing transfer and reorganization activities,
certain strategic technology decisions were made in the third quarter
of fiscal 2002 that either reduce or eliminate the future utility of
certain historic capitalized technology development costs necessitating
a write-down or write-off of these costs, thus resulting in a pre-tax,
non-cash, charge of $4.2 million.  The impacted development activities
include a proprietary digital camera development project ($2.9 million,
including $2.5 million in equipment costs), a digital manufacturing
system ($445,000) and, a portion of the store automation system platform
($863,000).  In the case of both the digital camera project and the
digital  manufacturing system, the Company has made the decision to
prospectively  utilize commercially-available cameras and digital
manufacturing software.   The Company's change in technology direction
and its decision to no longer pursue the sale of technology services to
third parties resulted  in the need to write-off a portion of its store
automation system  capitalized software code.



                               15
Note 7
------

     The projected accumulated benefit obligation of the Company's
defined benefit pension plan as of December 31, 2002 (the measurement
date) exceeds the fair value of the plan's assets as of
September 30, 2002  by approximately $10.4 million.  Should a
shortfall exist at year-end, the  Company would be required to
record a charge to accumulated other comprehensive income in
stockholders' equity, consisting of the amount of any shortfall plus
the amount of the prepaid pension asset (approximately $5.2 million,
net of tax, at September 30, 2002).









































                              16
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

     THE STATEMENTS CONTAINED IN THIS REPORT, AND IN PARTICULAR
IN THE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" SECTION THAT ARE NOT
HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION ACT OF 1995, AND
INVOLVE RISKS AND UNCERTAINTIES.  MANAGEMENT WISHES TO CAUTION
THE READER THAT THESE FORWARD-LOOKING STATEMENTS, SUCH AS THE
COMPANY'S OUTLOOK FOR PORTRAIT STUDIOS AND OTHER STRATEGIC
INITIATIVES, FUTURE CASH REQUIREMENTS, COMPLIANCE WITH DEBT
COVENANTS, VALUATION ALLOWANCES, AND CAPITAL EXPENDITURES, ARE
ONLY PREDICTIONS OR EXPECTATIONS; ACTUAL EVENTS OR RESULTS MAY
DIFFER MATERIALLY AS A RESULT OF RISKS FACING THE COMPANY.  SUCH
RISKS INCLUDE, BUT ARE NOT LIMITED TO: CUSTOMER DEMAND FOR THE
COMPANY'S PRODUCTS AND SERVICES, THE OVERALL LEVEL OF ECONOMIC
ACTIVITY IN THE COMPANY'S MAJOR MARKETS, COMPETITORS' ACTIONS,
MANUFACTURING INTERRUPTIONS, DEPENDENCE ON CERTAIN SUPPLIERS,
CHANGES IN THE COMPANY'S RELATIONSHIP WITH SEARS AND THE
CONDITION AND STRATEGIC PLANNING OF SEARS, FLUCTUATIONS IN
OPERATING RESULTS, THE CONDITION OF PRINTS PLUS, INC., THE
ATTRACTION AND RETENTION OF QUALIFIED PERSONNEL AND OTHER RISKS
AS MAY BE DESCRIBED IN THE COMPANY'S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION, INCLUDING ITS FORM 10-K FOR THE YEAR
ENDED FEBRUARY 2, 2002.

     The Company's fiscal year ends the first Saturday of
February. Accordingly, fiscal year 2001 ended February 2, 2002
and consisted of 52 weeks.  The third fiscal quarters of
2002 and 2001, which consisted of sixteen weeks, and the first
three quarters of 2002 and 2001, which consisted of forty
weeks, ended November 9, 2002 and November 10, 2001, respectively.
Throughout "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION," reference to 2001 will
mean the fiscal year ended February 2, 2002 and reference to
third quarter 2002 and third quarter 2001 or first three quarters
2002 and first three quarters 2001 will mean the third fiscal
quarter  or the first three quarters fiscal of 2002 and 2001,
respectively.

     The Company has operations in two business segments:
Portrait Studios and Technology Development (see Item 1.  Financial
Statements, Note 6).  The Portrait Studios segment functions as the
exclusive operator of Sears Portrait Studios with 1,031 locations
in the United States, Canada and Puerto Rico as of November 9, 2002.
The Technology Development segment operates an internet-based, mail
order photofinishing business under the name searsphoto.com and
offers  software programs primarily for the retail service industry
use, software  consulting and custom software development under the
name Centrics Technology, Inc.

                               17
RESULTS OF OPERATIONS
---------------------

SIXTEEN WEEKS ENDED NOVEMBER 9, 2002 COMPARED TO SIXTEEN WEEKS ENDED
NOVEMBER 10, 2001

Net Sales and Income (Loss) From Operations
-------------------------------------------

     The following table sets forth certain operating
information for each period and should be viewed in conjunction
with the consolidated financial statements and notes included in
Item 1 of this Form 10-Q.


                              Sixteen Weeks Ended
                              --------------------     Change
                              Nov. 9,    Nov. 10,     Increase
                                2002       2001      (Decrease)
                             ---------  ---------    ----------
                          (in thousands of dollars
                         except sittings and average
                         sales per customer sitting)
Net sales:
  Portrait Studios            $ 89,992   $ 96,711       (6.9)%
  Technology Development         1,205        933       29.2 %
  Intersegment sales            (1,007)      (772)      30.4 %
                              ---------  ---------
                              $ 90,190   $ 96,872       (6.9)%
                              =========  =========
Operating earnings (losses):
  Portrait Studios            $   (657)  $  5,337     (112.3)%
  Technology Development          (927)      (487)      90.3 %
                              ---------  ---------
    Total operating earnings
     (loss)                     (1,584)     4,850     (132.7)%
                              ---------  ---------
General corporate expenses       5,065      3,748       35.1 %
                              ---------  ---------
Income (loss) from operations $ (6,649)  $  1,102     (703.4)%
                              =========  =========
Sittings:
   Custom                      891,919    946,244       (5.7)%
   Package                     592,560    772,677      (23.3)%
                             ---------  ---------
                             1,484,479  1,718,921      (13.6)%
                             =========  =========
Average sales per customer
 sitting:
   Custom                      $ 71.16    $ 67.48        5.5 %
   Package                     $ 44.65    $ 42.44        5.2 %
   Overall                     $ 60.57    $ 56.24        7.7 %

                               18
     Net sales for the Portrait Studios segment decreased in
third quarter of 2002 from third quarter of 2001, as a
decrease in sittings was only partially offset by an increase
in average sales per customer sitting.  The decrease in sittings
continues to be a function of significantly reduced sittings
related to the Company's package offers.  The decline in package
sittings is attributable to both the impacts of a larger percentage
of the Company's customers choosing the higher value custom offer
versus the package offer and the effects of competitors with lower
price package offers.  The increase in average sales per customer
sitting is primarily the result of the Company's success in
converting more if its customers to the higher value custom offer
and the Company's decision made during the second quarter to begin
selling custom proof sheets which had previously been provided free
of charge as part of the custom offer.

     The operating loss for the Portrait Studios segment in the
third quarter of 2002 compared to the operating earnings recorded
in the same time frame in 2001 was significantly impacted by the
$4.2 million pre-tax, non-cash charge related to the write-off or
write-down of certain previously capitalized technology development
costs (see further details below).

     Exclusive of these write-offs and write-downs, lower operating
expenses partially offset the lower sales results.  The lower
operating expenses are due to reduced cost of sales and commissions
attributable  to lower sales, reduced depreciation expense due to
certain assets becoming fully depreciated, reduced credit card fees
due to credit card transactions being processed directly by Sears
and other various reductions resulting from the Company's continuing
focus on expense reductions.

     Net sales for the Technology Development segment reflected
an increase in the third quarter of 2002 from the third quarter
of 2001.  However, after elimination of intersegment sales, the
negative swing in operating results quarter to quarter is
attributable  to higher employment costs and the write-off of
certain assets having diminished or no future utility.

     During the third quarter of fiscal 2002, management completed
its previously announced review of the infrastructure and platform
from which it delivers technology development and support services.
The objectives of the review were to 1) improve focus on and support
for the Company's core portraiture business, 2) improve organizational
functionality and systems flexibility, and 3) eliminate duplicative
cost structures.

     To achieve the aforementioned objectives, the Company is
in the process of transferring the technology development activities,
previously performed by its subsidiary Centrics Technology, Inc.
("Centrics"), back into a newly reorganized and right-sized corporate
technology function.  In addition, the
                              19
Company will no longer pursue the sale of consulting and software
development to third parties.  As a result of these decisions, the
Company is currently negotiating with management of Centrics for the
acquisition of the stock of Centrics by its management group.  If an
agreement is reached, the Company anticipates the transaction will
close prior to the end of its current fiscal year.  If an agreement
is not reached, all of the aforementioned transfer and reorganization
activities will still be completed by the end of the Company's current
fiscal year.

     Under either the sale or transfer of activities scenarios, the
Company expects to incur certain fourth quarter charges to earnings
when the ultimate outcome is known.  Under either the sale or transfer
of activities scenarios, the Company anticipates incurring a charge for
employee severance ranging from approximately $450,000 to $550,000.
Under the sale scenario, the Company would record a loss on sale ranging
from approximately $150,000 to $200,000, representing the excess of
the net book value of assets transferred over liabilities assumed,
without giving effect to the contingent consideration to be received
in the form of royalties on future sales of consulting services and/or
software by the buyer.  Under the transfer scenario, the Company would
also incur a charge for anticipated settlement of the existing Centrics
office lease of approximately $284,000, representing the remaining lease
payments under the lease and assuming no sub-lease rentals or negotiated
settlements.

     Through the elimination of the currently existing duplicative cost
structures and the reorganization and right-sizing of the newly formed
corporate technology group, the Company anticipates annualized payroll
costs savings beginning in fiscal 2003 of approximately $4.0 million.

	As part of the ongoing transfer and reorganization activities,
certain strategic technology decisions were made in the third quarter
of fiscal 2002 that either reduce or eliminate the future utility of
certain historic capitalized technology development costs necessitating
a write-down or write-off of these costs, thus resulting in a pre-tax,
non-cash, charge of $4.2 million.  The impacted development activities
include a proprietary digital camera development project ($2.9 million,
including $2.5 million in equipment costs), a digital manufacturing
system ($445,000) and, a portion of the store automation system platform
($863,000).   In the case of both the digital camera project and the
digital manufacturing  system, the Company has made the decision to
prospectively utilize commercially-available cameras and digital
manufacturing software.  The Company's change in technology direction
and its decision to no longer pursue the sale of technology services to
third parties resulted in the need to write-off a portion of its store
automation system capitalized software code.

                                 20
     General corporate expenses increased between quarters
due to increases in supplemental retirement benefit plan costs, workers'
compensation costs, professional service fees and
severance costs in the third quarter of 2002 compared to 2001.

















































                                    21
Other Items Effecting Results of Operations
-------------------------------------------

     The following table sets forth certain operating
information for each period and should be viewed in conjunction
with the consolidated financial statements and notes included in
Item 1 of this Form 10-Q.
                             Sixteen Weeks Ended
                             --------------------      Change
                               Nov.9,    Nov. 10,     Increase
                                2002       2001      (Decrease)
                             ---------  ---------    ----------
                          (in thousands of dollars)
Interest expense:
  Debt                        $   980   $  1,177      (16.7)%
  Other                            43         51      (15.7)%
                              --------  ---------
    Total interest expense    $ 1,023   $  1,228      (16.6)%
                              ========  =========
Interest income:
  Investments                 $   175   $    230      (24.2)%
  Income from Preferred
    Security                      262        305      (13.8)%
  Revolver                         64         84      (23.5)%
                              --------  ---------
    Total interest income     $   501   $    619      (19.0)%
                              ========  =========

Other income (expense), net:
  Other income                $    37   $     30       23.3 %
  Investment revaluation            -       (402)         -
                              --------  ---------
     Total other income
      (expense), net          $    37   $   (372)    (109.9)%
                              ========  =========
Effective income tax rate        39.0%      26.8%
                              ========  =========

     Interest expense decreased in third quarter of 2002
from the third quarter of 2001 as a result of the scheduled
repayment of long-term debt.

     Interest income was lower in the third quarter of 2002
compared to third quarter of 2001 due principally to the lower
income earned on invested cash as a result of higher invested balances
offset by significantly lower interest rates.

     The Company's effective income tax rate increased from 26.8%
in fiscal 2001 to 39% in fiscal 2002.  The fiscal 2001 rate was
positively impacted by adjustments to the income tax reserve
related to various income tax matters.


                              22
RESULTS OF OPERATIONS
---------------------

FORTY WEEKS ENDED NOVEMBER 9, 2002 COMPARED TO FORTY WEEKS
 ENDED NOVEMBER 10, 2001

Net Sales and Income From Operations
------------------------------------

     The following table sets forth certain operating
information for each period and should be viewed in conjunction
with the consolidated financial statements and notes included in
Item 1 of this Form 10-Q.

                             Forty Weeks Ended
                           -----------------------     Change
                              Nov. 9,    Nov. 10,     Increase
                                2002       2001      (Decrease)
                             ---------  ---------    ----------
                          (in thousands of dollars
                         except sittings and average
                         sales per customer sitting)

Net sales:
  Portrait Studios            $207,797   $220,734       (5.9)%
  Technology Development         3,377      2,377       42.1 %
  Intersegment sales            (2,428)    (2,141)      13.4 %
                              ---------  ---------
                              $208,746   $220,970       (5.5)%
                              =========  =========
Operating earnings (losses):
  Portrait Studios            $  6,425   $ 13,188      (51.3)%
  Technology Development        (1,371)    (1,178)      16.4 %
                              ---------  ---------
    Total operating earnings     5,054     12,010      (57.9)%
                              ---------  ---------
General corporate expenses      11,848      9,505       24.7 %
                              ---------  ---------
Income (loss) from operations $ (6,794)  $  2,505     (371.2)%
                              =========  =========
Sittings:
   Custom                     2,050,502  1,987,224       3.2 %
   Package                    1,374,109  1,834,234     (25.1)%
                              ---------  ---------
                              3,424,611  3,821,458     (10.4)%
                              =========  =========
Average sales per customer
 sitting:
   Custom                      $ 70.83    $ 69.58        1.8 %
   Package                     $ 45.46    $ 44.88        1.3 %
   Overall                     $ 60.65    $ 57.73        5.1 %


                               23
     Net sales for the Portrait Studios segment decreased in
the first three quarters of 2002 from the first three quarters
of 2001, as a decrease in sittings was only partially offset
by an increase in average sales per customer sitting.
The decrease in sittings is attributable to the effects of an early
Easter that historically results in reduced sittings in the first
quarter and significantly reduced sittings related to the Company's
package offers. The decline in package sittings is attributable  to
both the impacts of a larger percentage of the Company's customers
choosing the higher value custom offer versus package offer and the
effects of competitors with lower price package offers.  The increase
in average sales per customer sitting is primarily the result of the
Company's success in converting more of its customers to the higher
value custom offer and the Company's decision made during the second
quarter to begin selling custom proof sheets which had previously
been provided free of charge as part of the custom offer.

     Operating earnings for the Portrait Studios segment
decreased in the first three quarters of 2002 from the same timeframe
in 2001 primarily due to the $4.2 million non-cash charge related
to the write-off or write-down of certain previously capitalized
technology development costs.

     Exclusive of write-off and write-down amounts, lower operating
expenses partially offset the lower sales results.  The lower operating
expenses resulted from reduced cost of sales and commissions attributable
to lower sales, reduced advertising expense resulting principally from
planned reductions in spring television and direct mail advertising,
reduced depreciation expense due to certain assets becoming fully
depreciated, reduced credit card fees due to credit card transactions
being processed directly by Sears and other various reductions resulting
from the Company's continuing focus on expense reductions.

     Net sales for the Technology Development segment reflected an
increase in the first three quarters of 2002 from the first three
quarters of 2001 due to an increase in intersegment sales and net
sales to nonaffiliated companies.   After elimination of intersegment
sales, operating losses for the same timeframe increased reflecting
the increase in nonaffiliated sales offset by higher employment costs,
costs relating to supplies and maintenance and the write-down of certain
assets having diminished or no future utility.

     General corporate expenses increased between the first three quarters
of 2002 compared to the first three quarters of 2001 primarily due to the
incurrence in 2002 of additional professional service fees, which included
$688,000 associated withthe final phase of the Company's strategic planning
initiativeand increases in supplemental retirement benefit plan costs,
workers' compensation and severance costs.

                                      24
Other Items Effecting Results of Operations
-------------------------------------------
     The following table sets forth certain operating
information for each period and should be viewed in conjunction
with the consolidated financial statements and notes included in
Item 1 of this Form 10-Q.

                              Forty Weeks Ended
                           -----------------------     Change
                              Nov. 9,    Nov. 10,     Increase
                                2002       2001      (Decrease)
                             ---------  ---------    ----------
                          (in thousands of dollars)
Interest expense:
  Debt                        $ 2,686   $  3,176      (15.4)%
  Other                           107        128      (17.1)%
                              --------  ---------
    Total interest expense    $ 2,793   $  3,304      (15.5)%
                              ========  =========
Interest income:
  Investments                 $   523   $    924      (43.4)%
  Interest on income tax
   refund                         297          -          -
  Income from Preferred
    Security                      658        305       116.1%
  Revolver                        130         84        55.5%
                              --------  ---------
    Total interest income     $ 1,608   $  1,313        22.6%
                              ========  =========
Other income (expense), net:
  Other income                $    79   $     64        23.4%
  Investment revaluation            -       (402)          -
  Separation expense (1)            -     (1,714)          -
                              --------  ---------
    Total other income
      (expense), net          $    79   $ (2,052)      103.8%
                              ========  =========
Effective income tax rate        39.0%      39.9%
                              ========  =========

(1)  See Separation discussion on page 27.

     Interest expense decreased in the first three quarters
of 2002 from the first three quarters of 2001 as a result of
the scheduled repayment of long-term debt.

     Interest income was higher in the first three quarters
of 2002 compared to first half of 2001 due to the receipt of interest
on a federal income tax refund and accrued income relating to the
Preferred Security and Revolver offsetting the lower income  earned
on invested cash.  The lower income earned on invested  cash was a
result of higher invested balances offset by significantly lower
interest rates.
                              25
Discontinued Operations
-----------------------
     In July 2001, the Company announced it had provided TRU
Retail, Inc., the predecessor legal entity of Prints Plus, Inc.
("Prints Plus") with a $6.4 million revolving line of credit.
The Company further announced the completion of the sale of
its Wall Decor segment for $16.0 million.  The sales price reflected
the receipt of $11.0 million in a Preferred Security of Prints Plus,
approximately $4.0 million in cash, other consideration netting to
$1.0 million and the assumption of certain liabilities including the
ongoing guarantee of certain operating real estate leases.  The sales
price was subject to final post-closing adjustments.

     Subsequently, in January 2002 and May 2002, the balance of the
Preferred Security decreased due to the optional redemption of
$1.0 million and $353,000, respectively, of the security by Prints Plus,
and, in the first quarter of 2002, by a final post-closing adjustment of
$147,000 to the security reflecting a decrease in the final sales price.
These events, when offset by the accrued interest income of $721,000 that
is also reflected in the value of the Preferred Security, resulted in a
balance on November 9, 2002 of $10.2 million.

     Borrowings under the revolving line of credit extended to
Prints Plus were $4.7 million and $5.2 million as of November 9, 2002
and November 10, 2001, respectively.  Interest income earned on this
revolving line of credit for the third quarter 2002 and 2001 was
$64,000 and $84,000, respectively.

     Due to the Company's continuing financial interest in Prints Plus,
the Company is required to follow a modified equity method of accounting,
which requires cumulative losses, if any, incurred by Prints Plus during
its fiscal year be reflected in the Company's financials as a valuation
allowance and corresponding charge to income.  As a result of Prints Plus'
operating performance and compliance with the covenants of the Preferred
Security and revolving line of credit, no valuation allowance was
recorded as of November 9, 2002.

     Further, if Prints Plus defaults on certain operating real
estate leases, the Company has guaranteed monthly lease payments
over the remaining life of these leases.  As of November 9, 2002,
the maximum future obligation to the Company would be $16.0
million before any negotiation with landlords or subleasing.
Based on scheduled lease payments, the maximum future obligations
will decrease an additional $908,000 by the end of fiscal 2002, then
annually by approximately $5.2 million to $4.8 million during
the next two years. To recognize the risk associated with these
leases and based on the Company's past experience with renegotiating
lease obligations, a $1.0 million reserve wasestablished in 2001.
At November 9, 2002, the Company had made

                               26
no further allowances for defaults under these operating leases as,
in the opinion of management, Prints Plus is meeting the performance
standards established under the operating leases.

     For further detailed information regarding risk, see
Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operation-Liquidity, Capital Resources
and Financial Condition-Risk and Critical Accounting Policies,"
in the Company's Annual Report on Form 10-K for fiscal year ended
February 2, 2002.

Separation
----------
     In February 2001, the Company announced it had hired
J. David Pierson as Chairman and Chief Executive Officer to
replace the retiring Alyn V. Essman.  The Company incurred $1.7
million in expenses in the first quarter of 2001, which is
included in Other Expenses, related to the severance pay,
recognition of unamortized supplemental employee retirement plan
benefits and other costs associated with the retirement of
Mr. Essman and the recruitment of Mr. Pierson.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
----------------------------------------------------
Operating Activities
--------------------
     Net cash used in  operating activities in the first three
quarters of 2002 of $1.1 million decreased $10.5 million from the
$9.4 million provided by in the first three quarters of 2001 due to
changes in various deferred and refundable income taxes relating to
the net operating loss carrybacks that resulted from the sale of
Prints Plus in second quarter of 2001, a decline in accrued advertising
based on cost reduction initiatives and an increase in outstanding
receivable balances that resulted primarily from normal seasonal growth
and from a change in settlement methods with Sears Roebuck and Company
("Sears") in the second quarter of 2002. The settlement method change
resulted from a recent amendment to the Company's Sears agreement that
now allows the Company's credit card transactions to be processed
directly through Sears, thereby reducing credit card processing fees
paid to third-party vendors but resulting in an slight increase in the
collection period of the receivable from Sears.

Financing Activities
--------------------
     Net cash used in financing activities in the three quarters of
2002 of $9.0 million increased $2.3 million from the $6.7 million
recorded in the first three quarters of 2001 due to a decrease in funds
provided by the issuance of common stock in conjunction with employee
benefit plans and option exercises in 2001 not being repeated in 2002
offset by proceeds from the borrowing against the cash surrender value
of life insurance.

                                 27
     As discussed in the Company's Annual Report on Form 10-K,
the Company has a $60.0 million Senior Note Agreement and $30.0
million Revolving Facility.  In April 2002 and November 2002, the
Company amended its Revolving Facility to adjust the minimum
consolidated earnings before income taxes, depreciation and
amortization ("EBITDA") covenant.  In the November 2002 amendment,
the Company also reduced the line to $15 million since the Company
has minimal borrowing needs other than to support $7.2 million in
outstanding letters of credit as of November 9, 2002.  As of
November 9, 2002, the Company was in compliance
with all covenants under both the amended Revolving Facility and
the Senior Note Agreement, and expects to be in compliance with
the covenants under the Senior Note Agreement for the remainder
of this year.

     However, given the sales shortfall incurred in the first
three quarters compared to the prior year periods, the Company may
not achieve the EBITDA covenant related solely to its Revolving
Facility for the fourth quarter of this fiscal year.  Other than
supporting outstanding letters of credit in the principal amount
of $7.2 million as of November 9, 2002, the Company has no outstanding
borrowings under the Revolving Facility, nor does it currently expect
to need to draw on the facility prior to its expiration in June 2003.
The Company anticipates that it will reach an agreement before the end
of the fourth quarter with the lending institutions offering
the Revolving Facility whereby either the above mentioned covenant
will be amended or the facility will be eliminated and replaced.

Investing Activities
--------------------
     Net cash used in investing activities in the first three quarters
of 2002 of $11.1 million reflects a $7.0 million decrease from the first
three quarters of 2001 due principally to lower levels of capital
expenditures.

Cash Flows
----------
     Cash flows from operations and cash and cash equivalents
on hand represent the Company's expected source of funds in
fiscal year 2002 for planned capital expenditures, scheduled principal
payments in June of each year on long-term debt of $8.6 million, normal
business operations and dividends to shareholders. With the exception of
letters of credit used to support the Company's self-insurance program
and operating leases, the Company does not use off-balance sheet
arrangements to finance business activities.

Financial Condition
-------------------
     Assets of the Company decreased 6.2% in the first three
quarters of 2002 from year-end 2001 due primarily to a decrease


                                    28
in net property and equipment resulting from depreciation charges
exceeding property and equipment additions, the write-down or write-off
of certain previously capitalized technology development costs,
decreases in cash and  cash equivalents resulting from the second
scheduled principal payment in June 2002 of $8.6 million of the Company's
long-term debt and decreases in cash balances driven by normal seasonal
cash needs.

     Liabilities of the Company decreased 3.8% primarily as a
result of the $8.6 million debt repayment in June 2002 offset by
seasonal increases in accounts payable and accrued expenses related to
advertising.

     Stockholders' equity decreased 10.2% at the end of the
first three quarters of 2002 from year-end 2001 reflecting the
year-to-date 2002 net losses and payments of dividends to stockholders,
offset by increases in additional paid-in capital that resulted from
issuing shares of stock in conjunction with employee benefit plans and
option exercises.

Strategic Planning Initiatives
------------------------------
     On June 4, 2002, the Company announced that its Board of
Directors had approved management's recommendation for the
recently completed strategic planning process.  For additional
information on the Company's strategic initiatives, refer to
the Company's Form 8-K filed on June 4, 2002.


























                                29
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
          RISK

     Market risks relating to the Company's operations result
primarily from changes in interest rates and changes in foreign
exchange rates. The Company's outstanding debt obligations
carry primarily fixed interest rates; therefore, the
Company's exposure to changes in interest rates is minimal.
The Company's exposure to changes in foreign exchange
rates relates to the Canadian operations, which is minimal,
as these operations constitute 6.8% of the Company's total
assets and 6.7% of the Company's total sales.


ITEM 4.   CONTROLS AND PROCEDURES

     An evaluation of the Company's disclosure controls and
procedures (as defined in Section 13(a)-14(c) of the Securities
Exchange Act of 1934 (the "Act") was carried out under the supervision
and with the participation of the Company's Chief Executive Officer,
Chief Financial Officer and several other members of the Company's
senior management within the 90-day period preceding the filing date
of this quarterly report. The Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls
and procedures as currently in effect are effective in ensuring that the
information required to be disclosed by the Company in the reports it
files or submits under the Act is (i)accumulated and communicated to the
Company's management (including the Chief Executive Officer and Chief
Financial Officer) in a timely manner, and (ii) recorded, processed,
summarized and reported within the time periods specified in the SEC's
rules and forms.

     In the quarter ended November 9, 2002, the Company did not make
any significant changes in, nor take any corrective actions regarding,
its internal controls or other factors that could significantly affect
these controls.  In addition, since the dateof this evaluation to the
filing date of this Quarterly Report,there have been no significant
changes in the Company's internalcontrols or in other factors that
could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses.











                                    30
PART II    OTHER INFORMATION
----------------------------

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a) EXHIBITS

            The following exhibits are being filed as part of
            this Report:

            Exhibit 10.53 - Fifth Amendment to Sears License
                             Agreement
            Exhibit 10.54 - Sixth Amendment to Sears License
                             Agreement
            Exhibit 10.55 - Third Amendment to Sears License
                             Agreement (Off Mall)
            Exhibit 10.56 - Fourth Amendment to Sears License
                             Agreement (Off Mall)
            Exhibit 10.57 - Fifth Amendment to Sears License
                             Agreement (Off Mall)
            Exhibit 10.58 - Employment Agreement by and between
                             Peggy J. Deal and CPI Corp.
            Exhibit 10.59 - Employment Agreement by and between
                             Thomas Gallahue and CPI Corp.
            Exhibit 11.0  - Computation of Earnings Per Common
                             Share
            Exhibit 99.1  - Certification Pursuant to 18 U.S.C.
                             Section 1350, as Adopted Pursuant to
                             to Section 906 of the Sarbanes-Oxley
                             Act of 2002 by Chief Executive
                             Officer
            Exhibit 99.2  - Certification Pursuant to 18 U.S.C.
                             Section 1350, as Adopted Pursuant to
                             Section 906 of the Sarbanes-Oxley
                             Act of 2002 by Chief Financial
                             Officer

         b) REPORTS ON FORM 8-K

            On August 2, 2002, CPI Corp. filed an 8-K Current
            Report announcing the issuance of a press release
            dated July 31, 2002 on the election of Jim Clifford
            to CPI Corp.'s Board of Directors.

            On August 8, 2002, CPI Corp. filed an 8-K Current
            Report announcing the issuance of a press release
            dated August 6, 2002 declaring a third quarter
            cash dividend of 14 cents per share.

            On August 15, 2002, CPI Corp. filed an 8-K Current
            Report announcing the issuance of a press release
            dated August 15, 2002 reporting the second quarter
            FY 2002 results.
                               31

                          SIGNATURE






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





                                         CPI Corp.
                                       (Registrant)




                             By:  /s/ Gary W. Douglass
                                  ---------------------------
                                   Gary W. Douglass
                                   Authorized Officer and
                                   Principal Financial Officer

Dated:  December 11, 2002
























                                         32

CERTIFICATION
-------------
I, J. David Pierson, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of
CPI Corp.;

     2.  Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;

     3.  Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report;

     4.  The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:

         a) designed such disclosure controls and procedures to  ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
         b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
         c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):

         a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls;
and



                                33

         b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls;
     6.  The registrant's other certifying officers and I have indicated
in this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.



Date: December 11, 2002


                                By: /s/ J. David Pierson
                                    ---------------------------
                                        J. David Pierson
                                        Chief Executive Officer
































                                       34

CERTIFICATION
-------------

I, Gary W. Douglass, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of CPI Corp.;

     2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

        a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
	b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
	c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):

        a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for
the registrant's auditors any material weaknesses in internal controls;


                                     35

        b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls;

     6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.


Date: December 11, 2002


                                 By: /s/ Gary W. Douglass
                                     ----------------------------
                                         Gary W. Douglass
                                         Chief Financial Officer

































                                    36

                               CPI CORP.

                             EXHIBIT INDEX

Exhibit 10.53 - Fifth Amendment to Sears License Agreement    38

Exhibit 10.54 - Sixth Amendment to Sears License Agreement    39

Exhibit 10.55 - Third Amendment to Sears License
                 Agreement (Off Mall)                         40

Exhibit 10.56 - Fourth Amendment to Sears License
                 Agreement (Off Mall)                         41

Exhibit 10.57 - Fifth Amendment to Sears License
                 Agreement (Off Mall)                         42

Exhibit 10.58 - Employment Agreement by and between
                 Peggy J. Deal and CPI Corp.                  43

Exhibit 10.59 - Employment Agreement by and between
                 Thomas Gallahue and CPI Corp.                44

Exhibit 11.0  - Computation of Earnings Per Common Share   45-47

Exhibit 99.1  - Certification Pursuant to 18 U.S.C.
                 Section 1350, as Adopted Pursuant to
                 Section 906 of the Sarbanes-Oxley Act
                 of 2002 by Chief Executive Officer           48

Exhibit 99.2  - Certification Pursuant to 18 U.S.C.
                 Section 1350, as Adopted Pursuant to
                 Section 906 of the Sarbanes-Oxley Act
                 of 2002 by Chief Financial Officer       `   49


















                                 37

EXHIBIT 10.53

(This exhibit has been filed with the Securities and Exchange
Commission and is retained at the office of the Company.)











                        Material Contract:
              Fifth Amendment to Sears License Agreement



































                               38


EXHIBIT 10.54

(This exhibit has been filed with the Securities and Exchange
Commission and is retained at the office of the Company.)











                            Material Contract:
                 Sixth Amendment to Sears License Agreement


































                                    39

EXHIBIT 10.55

(This exhibit has been filed with the Securities and Exchange
Commission and is retained at the office of the Company.)











                          Material Contract:
          Third Amendment to Sears License Agreement (Off Mall)



































                                  40

EXHIBIT 10.56

(This exhibit has been filed with the Securities and Exchange
Commission and is retained at the office of the Company.)











                           Material Contract:
           Fourth Amendment to Sears License Agreement (Off Mall)



































                                   41

EXHIBIT 10.57

(This exhibit has been filed with the Securities and Exchange
Commission and is retained at the office of the Company.)











                        Material Contract:
         Fifth Amendment to Sears License Agreement (Off Mall)



































                             42



EXHIBIT 10.58

(This exhibit has been filed with the Securities and Exchange
Commission and is retained at the office of the Company.)











                       Material Contract:
                Employment Agreement by and between
                   Peggy J. Deal and CPI Corp.

































                                 43
EXHIBIT 10.59

(This exhibit has been filed with the Securities and Exchange
Commission and is retained at the office of the Company.)











                       Material Contract:
              Employment Agreement by and between
                   Thomas Gallahue and CPI Corp.


































                              44