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

                                    FORM 10-Q

                                   (Mark One)
         [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended November 2, 1996
                         -------------------------------

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
      For the transition period from ________________ to ________________

                         Commission file number 0-19526

                          Goody's Family Clothing, Inc.
             (Exact name of registrant as specified in its charter)

          Tennessee                                            62-0793974
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                        Identification Number)

400 Goody's Lane, Knoxville, Tennessee                 37922
(Address of principal executive offices)               (Zip Code)

                    (423) 966-2000
(Registrant's telephone number, including area code)

      (Former name, former address and former fiscal year, if changed since
                                 last report.)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

  Indicate the number of shares outstanding of each of the issuer's classes of
                common stock, as of the latest practicable date.
         
     Common Stock, no par value, 16,140,212 shares outstanding as of
                               December 11, 1996.

                      Index to the exhibits is on page 12.


<PAGE>

                          Goody's Family Clothing, Inc.
                               Index to Form 10-Q
                                November 2, 1996



Part I - Financial Information:
<TABLE>
<CAPTION>

     Item 1 - Financial Statements
<S>                                                                       <C>

         Statements of Operations......................................   3

         Balance Sheets................................................   4

         Statements of Cash Flows......................................   5

         Notes to Financial Statements.................................   6

         Independent Accountants' Report...............................   7

     Item 2 - Management's Discussion and Analysis of Financial Condition and
                Results of Operations..................................   8-11


Part II - Other Information............................................   12
          -----------------

     Item 1.  Legal Proceedings
     Item 2.  Changes in Securities
     Item 3.  Defaults upon Senior Securities
     Item 4.  Submission of Matters to a Vote of Security Holders
     Item 5.  Other Information
     Item 6.  (a)  Exhibits
     Item 6.  (b)  Reports on Form 8-K


Signatures..............................................................  13

</TABLE>

<PAGE>

                         PART 1 - FINANCIAL INFORMATION

----------------------------------------------------------------------------

Item 1  -  Financial Statements

Goody's Family Clothing, Inc.
Statements of Operations - Unaudited
(In thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                ---------------------------------------   ---------------------------------------
                                                        Thirteen Weeks Ended                     Thirty-nine Weeks Ended
                                                ---------------------------------------   ---------------------------------------

                                                  November 2, 1996    October 28, 1995     November 2, 1996   October 28, 1995
                                                 ------------------  -------------------  ------------------  ------------------
<S>                                               <C>                 <C>                 <C>                 <C>
Sales                                                     $211,380             $168,104            $545,558            $468,166
Cost of sales and occupancy expenses                       159,197              126,200             405,493             351,080
                                                 ------------------  -------------------  ------------------  ------------------
    Gross Profit                                            52,183               41,904             140,065              117,086

Selling, general and administrative expenses                46,954               38,693             129,471              109,187
                                                 ------------------  -------------------  ------------------  -------------------
    Earnings from Operations                                 5,229                3,211              10,594                7,899

Interest expense                                             (233)                (255)               (513)                (441)
Investment and other income                                    430                  339               1,097                  930
                                                 ------------------  -------------------  ------------------  -------------------
    Earnings before income taxes                             5,426                3,295              11,178                8,388

Provision for income taxes                                   2,062                1,236               4,248                3,146
                                                 ------------------  -------------------  ------------------  -------------------
Net earnings                                                $3,364               $2,059              $6,930               $5,242
                                                 ==================  ===================  ==================  ===================

Weighted average common shares outstanding                  16,134               16,124              16,129               16,122
                                                 ==================  ===================  ==================  ===================

Earnings per common share                                    $0.21                $0.13               $0.43                $0.33
                                                 ==================  ===================  ==================  ===================
</TABLE>




















     See accompanying Notes to Financial Statements and Independent Accountants'
Report.
<PAGE>

Goody's Family Clothing, Inc.
Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>

                                                                  -------------------   ------------------  ---------------
                                                                                                            ------------------
                                                                  November 2, 1996      February 3, 1996    October 28, 1995
                                                                  -------------------  ------------------   ------------------
                                                                     (unaudited)                             (unaudited)
<S>                                                               <C>                  <C>                   <C>

ASSETS
Current Assets
    Cash and cash equivalents                                                $25,321              $32,987             $12,928
    Investments                                                                1,421                1,386               1,370
    Inventories                                                              177,967               78,267             115,327
    Accounts receivable and other current assets                              12,174                6,617               9,890
                                                                                        ------------------
                                                                  -------------------  -------------------  ------------------
         Total current assets                                                216,883              119,257             139,515
Property and equipment, net                                                   92,508               85,715              85,108
Other assets                                                                   3,442                3,471               3,469
                                                                  -------------------  -------------------  ------------------

Total assets                                                                $312,833             $208,443            $228,092
                                                                  ===================  ===================  ==================


LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
    Accounts payable                                                        $124,983               $68,238             $81,471
    Accrued expenses                                                          37,474                21,345              20,849
    Income taxes payable                                                         921                 1,671                   -
    Current portion of long- term debt                                           217                   217                 198
                                                                  -------------------  --------------------  ------------------
         Total current liabilities                                           163,595                91,471             102,518
Long-term debt                                                                25,110                 1,110              16,327
Other long-term liabilities                                                    2,354                 2,239               1,624
Deferred income taxes                                                          8,867                 7,748               6,970
                                                                  -------------------  --------------------  ------------------
         Total liabilities                                                   199,926               102,568             127,439
                                                                  -------------------  --------------------  ------------------

Commitments and Contingencies

Shareholders' Equity
    Preferred stock $1.00 par value;
      Authorized  -  2,000,000  shares;  issued and  outstanding  - none Class B
    Common stock no par value;
      Authorized - 50,000,000 shares; issued and outstanding - none
    Common stock no par value;
      Authorized - 50,000,000 shares;
      Issued - 16,336,012, 16,325,212 and 16,325,212 shares
      Outstanding - 16,136,012, 16,125,212 and 16,125,212 shares              26,142                26,040              26,040
    Paid-in capital                                                            3,135                 3,135               3,135
    Retained earnings                                                         86,732                79,802              74,580
    Treasury stock, at cost - 200,000 shares                                 (3,102)               (3,102)             (3,102)
                                                                  -------------------  --------------------  ------------------
         Total shareholders' equity                                          112,907               105,875             100,653
                                                                  -------------------  --------------------  ------------------

Total liabilities and shareholders' equity                                  $312,833              $208,443            $228,092
                                                                  ===================  ====================  ==================

</TABLE>



     See accompanying Notes to Financial Statements and Independent Accountants'
Report.
<PAGE>


Goody's Family Clothing, Inc.
Statements of Cash Flows - Unaudited
(In thousands)
<TABLE>
<CAPTION>

                                                                        ------------------------------------------
                                                                                 Thirty-nine Weeks Ended
                                                                        ------------------------------------------
                                                                         November 2, 1996      October 28, 1995
                                                                        -------------------   -------------------
<S>                                                                       <C>                   <C>                

Cash Flows from Operating Activities:
      Net earnings                                                                   $6,930                $5,242
      Adjustments to reconcile net earnings to net cash provided
       by operating activities:
          Depreciation and amortization                                               7,280                 6,291
          Net loss (gain) on asset disposals and write-down                             734                  (57)
          Changes in assets and liabilities:
              Inventories                                                          (99,701)              (50,919)
              Accounts payable                                                       59,415                35,746
              Income taxes                                                              506               (3,432)
              Other assets & liabilities                                              9,613               (3,202)
                                                                        --------------------  --------------------
                  Cash used in operating activities                                (15,223)              (10,331)
                                                                        --------------------  --------------------

Cash Flows from Investing Activities:
      Acquisitions of property and equipment                                       (15,067)               (7,093)
      Proceeds from sale of property and equipment                                      260                   350
                                                                        --------------------  --------------------
                  Cash used in investing activities                                (14,807)               (6,743)
                                                                        --------------------  --------------------

Cash Flows from Financing Activities:
      Net payments on notes payable                                                       -              (10,000)
      Net advances on long-term debt                                                 24,000                15,000
      Issuance of common stock                                                           92                   201
      Redemption of preferred stock purchase rights                                       -                 (161)
      Changes in cash management accounts                                           (1,728)                 1,831
                                                                        --------------------  --------------------
                  Cash provided by financing activities                              22,364                 6,871
                                                                        --------------------  --------------------

Cash and cash equivalents :
Net decrease for the period                                                         (7,666)              (10,203)
Balance, beginning of period                                                         32,987                23,131
                                                                        --------------------  --------------------
Balance, end of period                                                              $25,321               $12,928
                                                                        ====================  ====================

Supplemental Disclosures:
      Interest payments                                                                $362                  $365
      Income tax payments                                                            $3,988                $6,829

</TABLE>






     See accompanying Notes to Financial Statements and Independent Accountants'
Report.
<PAGE>


Goody's Family Clothing, Inc.
Notes to Financial Statements
(Unaudited)

(1)  Unaudited Financial Information

In the opinion of the Company's management, the accompanying unaudited financial
statements  include all  adjustments,  consisting  only of normal and  recurring
adjustments,  necessary for a fair presentation of the results of operations for
the interim  periods  presented.  Due to the  seasonal  nature of the  Company's
business,  the results of operations for the interim periods are not necessarily
indicative  of the  results  that may be  achieved  for the entire  year.  These
financial  statements  should be read in conjuction  with the audited  financial
statements of the Company  included in its Form 10-K for the year ended February
3, 1996.

(2)  Accounting for Stock-Based Compensation

In October 1995, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  (SFAS) No. 123,  "Accounting  for  Stock-Based
Compensation,"  which is effective for the Company  beginning  February 4, 1996.
SFAS  No.  123  requires   expanded   disclosure  of  stock-based   compensation
arrangements  with employees and encourages (but does not require)  compensation
costs to be measured based on the fair value of the equity  instrument  awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25, which
recognizes  compensation  costs  based  on the  intrinsic  value  of the  equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to its
stock-based  compensation awards to employees and will disclose the required pro
forma  effect on net  earnings  and  earnings  per  common  share in its  annual
financial statements for the fiscal year ending February 1, 1997.

(3)  Credit Arrangements

The Company has a credit  agreement  with a consortium of banks for an unsecured
revolving line of credit that provides for cash borrowings for general corporate
purposes  as  well  as  for  the  issuances  of  letters  of  credit  of  up  to
$100,000,000.  On May 20, 1996, the expiration date of this credit agreement was
extended to May 31, 1998. This credit agreement was further amended and restated
on October 31,  1996.  The Company is  committed to pay (i) interest on the cash
borrowings at a fluctuating  base rate or LIBOR plus an  applicable  margin,  as
defined,  (ii)  letter of credit  fees  based on the  number of days a letter of
credit is  outstanding  times the  applicable  rate,  and (iii) a commitment fee
payable quarterly in advance.  The terms of this credit facility require,  among
other  things,  maintenance  of  minimum  levels  of  shareholders'  equity  and
compliance with certain  financial  ratios and place  restrictions on additional
indebtedness,   asset  disposals,   investments  and  capital  expenditures.  In
addition, the Company is prohibited from paying dividends.

(4)  Reclassifications

Certain  reclassifications  have been made to the financial  statements of prior
periods to conform to the current period presentation.

<PAGE>




INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Shareholders
Goody's Family Clothing, Inc.
Knoxville, Tennessee:

We have reviewed the  accompanying  balance sheets of Goody's  Family  Clothing,
Inc. as of November 2, 1996 and October 28, 1995, and the related  statements of
operations  and cash flows for the thirteen  week and  thirty-nine  week periods
then ended.  These financial  statements are the responsibility of the Company's
management.

We  conducted  our  reviews in  accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial data and of making inquiries of persons  responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole.
Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to such financial statements for them to be in conformity with generally
accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the balance sheet of Goody's Family Clothing, Inc. as of February 3,
1996, and the related statements of operations,  shareholders'  equity, and cash
flows for the year then ended (not  presented  herein);  and in our report dated
March  15,  1996,  we  expressed  an  unqualified  opinion  on  those  financial
statements.  In our  opinion,  the  information  set  forth in the  accompanying
balance sheet as of February 3, 1996 is fairly stated, in all material respects,
in relation to the balance sheet from which it has been derived.


/s/ Deloitte & Touche LLP
Atlanta, Georgia
November 19, 1996


<PAGE>


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

Results of Operations

The following table sets forth  unaudited  results of operations as a percent of
sales for the periods indicated:
<TABLE>
<CAPTION>

                                                             Thirteen                    Thirty-nine
                                                           Weeks Ended                 Weeks Ended
                                                   November 2,    October 28,    November 2,   October 28,
                                                       1996           1995          1996          1995
                                                   ------------   -----------    -----------   -------
<S>                                              <C>                <C>          <C>             <C>

    Sales                                            100.0%          100.0%        100.0%        100.0%
    Cost of  sales and occupancy expenses             75.3            75.1          74.3          75.0
                                                      ----            ----          ----          ----
    Gross profit                                      24.7            24.9          25.7          25.0
    Selling, general and administrative expenses      22.2            23.0          23.7          23.3
                                                      ----            ----          ----          ----
    Earnings from operations                           2.5             1.9           2.0           1.7
    Interest expense                                  (0.1)           (0.2)         (0.1)         (0.1)
    Investment and other income                        0.2             0.2           0.2           0.2
                                                       ---             ---           ---           ---
    Earnings before income taxes                       2.6             1.9           2.1           1.8
    Provision for income taxes                         1.0             0.7           0.8           0.7
                                                       ---             ---           ---           ---
    Net earnings                                       1.6%            1.2%          1.3%          1.1%
                                                       ===             ===           ===           ===
</TABLE>


Third Quarter Fiscal 1996 Compared with Third Quarter Fiscal 1995

Overview - During the third quarter of fiscal 1996,  the Company opened four new
stores,  relocated one store and closed one store,  bringing the total number of
stores in operation  at quarter end to 197  compared  with 178 at the end of the
third quarter of fiscal 1995. In the corresponding period of the previous fiscal
year, the Company opened four new stores and relocated four stores. Net earnings
for the third quarter of fiscal 1996 were  $3,364,000  compared with  $2,059,000
for the third quarter of fiscal 1995.

Sales - Sales for the third  quarter of fiscal 1996 were  $211,380,000,  a 25.7%
increase  over the  $168,104,000  for the third  quarter of the previous  fiscal
year. Comparable store sales for the quarter increased 13.4% from the comparable
prior year period.  Sales for the quarter were driven by customer  acceptance of
the  Company's  merchandising  strategies  and  significant  promotions  of fall
transitional fashions and denim products.

Gross  Profit  -  Gross  profit  for  the  third  quarter  of  fiscal  1996  was
$52,183,000,  or 24.7% of sales, a $10,279,000 increase over the $41,904,000, or
24.9% of sales,  in gross profit for the third  quarter of the  previous  fiscal
year. The 0.2% decrease in gross profit, as a percent of sales,  consists of (i)
a decrease in margins by 0.3% due to certain  aggressive  promotional events and
(ii) a decrease in occupancy  costs,  as a percent of sales,  by 0.1% because of
the quarter's strong sales performance.

Selling,   General   and   Administrative   Expenses  -  Selling,   general  and
administrative  expenses for the third quarter of fiscal 1996 were  $46,954,000,
or 22.2% of sales,  an  increase of  $8,261,000  from  $38,693,000,  or 23.0% of
sales, for the third quarter of the previous fiscal year.  Selling,  general and
administrative  expenses decreased by 0.8%, as a percent of sales, for the third
quarter of fiscal 1996 compared  with the third  quarter of the previous  fiscal
year. This net decrease is comprised of (i) a 0.4% decrease in advertisement and
promotion expenses, (ii) a 0.1% decrease in depreciation expenses,  (iii) a 0.7%
decrease in other selling,  general and administrative  expenses and (iv) a 0.4%
increase in payroll expenses.

Interest  Expense -  Interest  expense  for the  third  quarter  of fiscal  1996
decreased by $22,000  compared  with the third  quarter of the  previous  fiscal
year. This net decrease consists of (i) a decrease in interest expense resulting
from lower borrowings  during the third quarter of fiscal 1996 compared with the
corresponding  period of the  previous  fiscal  year and (ii) an increase in the
fees paid in connection  with the credit  agreement  entered into by the Company
with a consortium of banks.

Investment  and Other Income - Investment and other income for the third quarter
of fiscal 1996 was $430,000  compared with $339,000 for the third quarter of the
previous  fiscal year. The increase in investment  income is primarily due to an
increase in invested funds during the period.

<PAGE>

Income Taxes - The  provision  for income taxes for the third  quarter of fiscal
1996 was  $2,062,000,  for an  effective  tax rate of 38.0% of  earnings  before
income taxes,  compared with  $1,236,000,  for an effective tax rate of 37.5% of
earnings before income taxes, for the third quarter of the previous fiscal year.

Thirty-nine Weeks Ended November 2, 1996, Compared with Thirty-nine Weeks Ended
October 28, 1995

Overview - During the  thirty-nine  weeks ended  November  2, 1996,  the Company
opened 14 new stores,  relocated five stores, remodeled one store and closed one
store,  bringing  the total number of stores in operation at November 2, 1996 to
197 compared  with 178 at October 28, 1995. In the  corresponding  period of the
previous fiscal year, the Company opened seven new stores,  relocated six stores
and opened a clearance store with an existing lease from a previously  relocated
store.  Net  earnings  for the  thirty-nine  weeks  ended  November 2, 1996 were
$6,930,000  compared with $5,242,000 for the thirty-nine weeks ended October 28,
1995.

Sales  -  Sales  for  the   thirty-nine   weeks  ended  November  2,  1996  were
$545,558,000,  a 16.5%  increase  over the  $468,166,000  for the  corresponding
period of the  previous  fiscal year.  The sales  contribution  from  comparable
stores  represents a 3.7% increase from same store sales in the previous  fiscal
year.  Sales  increases  for the period were  driven by the  addition of new and
transitional  stores  and  the  overall  customer  acceptance  of the  Company's
merchandising strategies.

Gross Profit - Gross profit for the thirty-nine weeks ended November 2, 1996 was
$140,065,000,  or 25.7% of sales, a $22,979,000  increase over the $117,086,000,
or 25.0% of sales, in gross profit generated for the corresponding period of the
previous fiscal year. The 0.7% increase in gross profit,  as a percent of sales,
consists  of  (i)  a  0.6%  increase  in  margins  as  a  result  of  successful
merchandising strategies and a concerted effort by management to improve pricing
strategies and  well-positioned  inventories at the beginning of fiscal 1996 and
(ii) a decrease in occupancy  costs by 0.1% as a result of the  period's  strong
sales performance in relation to the same period of the prior year.

Selling,   General   and   Administrative   Expenses  -  Selling,   general  and
administrative  expenses for the  thirty-nine  weeks ended November 2, 1996 were
$129,471,000,  or 23.7% of sales, an increase of $20,284,000 from  $109,187,000,
or 23.3% of sales,  for the  corresponding  period of the previous  fiscal year.
Selling,  general and administrative  expenses increased by 0.4% as a percent of
sales compared with the  corresponding  period of the previous fiscal year. This
increase is primarily  comprised of (i) a 0.3% increase in payroll  expenses and
(ii) a 0.1% increase in advertisement and promotion expenses.  Selling,  general
and  administrative  expenses  include a  provision  of  $691,000,  or 0.1% as a
percent of sales, in connection with the early  termination of a lease of one of
the Company's stores which closed in August 1996.

Interest Expense - Interest expense for the thirty-nine  weeks ended November 2,
1996 increased by $72,000 compared with the corresponding period of the previous
fiscal  year.  This  increase  is  primarily  attributable  to the fees  paid in
connection  with  the  credit  agreement  entered  into  by the  Company  with a
consortium of banks.

Investment  and Other Income - Investment  and other income for the  thirty-nine
weeks ended  November 2, 1996 was  $1,097,000  compared  with  $930,000  for the
corresponding  period of the previous  fiscal year.  The increase in  investment
income is primarily due to an increase in invested funds during the period.

Income Taxes - The  provision for income taxes for the  thirty-nine  weeks ended
November 2, 1996 was $4,248,000,  for an effective tax rate of 38.0% of earnings
before income  taxes,  compared  with  $3,146,000,  for an effective tax rate of
37.5% of earnings  before  income  taxes,  for the  corresponding  period of the
previous fiscal year.

Liquidity and Capital Resources

     Financial  Position - The Company's  primary  sources of liquidity are cash
flows from operations, including credit terms from vendors, and borrowings under
its credit  agreement  with a  consortium  of banks.  At November  2, 1996,  the
Company's  working capital was $53,288,000  compared with $36,997,000 at October
28, 1995.  At the end of the third  quarter of fiscal 1996 compared with the end
of the third  quarter of the  previous  year,  (i) cash,  cash  equivalents  and
investment securities increased by $12,444,000,  (ii) net property and equipment
increased by $7,400,000,  (iii)  inventories  increased by $62,640,000  and (iv)
accounts payable increased by $43,512,000. The increase in inventories primarily
consists  of (i)  additional  inventories  needed  for the new and  transitional
stores,  (ii)  merchandise  received  in the last week of the third  quarter  of
fiscal 1996 (which  ended on November 2, 1996) that  comparably  would have been
received during the first week of the fourth quarter in the previous fiscal year
(which  commenced  on  October  29,  1995) as a result of a change in the retail
calendar and (iii) the Company's  strategic  build-up of  inventories in various
departments  and certain  other new  businesses,  such as,  Men's  sport  coats,
blazers  and dress  pants and  Misses  classic  collections  in  dresses.  Trade
payables,  as a percent of inventories,  were 70.6% at October 28, 1995 compared
with 70.2% at November 2, 1996.
<PAGE>

At November 2, 1996, the Company had an unsecured $100,000,000 revolving line of
credit from a  consortium  of banks,  of which  $24,000,000  was in use for cash
borrowings  and  $35,774,000  was in use  for  outstanding  letters  of  credit.
Borrowings  under  the  Company's  bank  line  of  credit,  consisting  of  cash
borrowings and letters of credit,  averaged $43,762,000 during the third quarter
of fiscal  1996,  with the highest  balance for the  quarter of  $62,214,000  in
October  1996.  On May 20,  1996,  the Company  amended its credit  agreement to
extend the expiration date of the agreement to May 31, 1998. See Note 3 to Notes
to Financial Statements.

Cash Flows - Operating  activities  used cash of $15,223,000 in the  thirty-nine
weeks  ended  November  2,  1996,  compared  with  cash used of  $10,331,000  by
operating  activities in the  corresponding  period of the previous fiscal year.
Cash used in operating activities during the thirty-nine weeks ended November 2,
1996, for inventory increases was $99,701,000  compared with $50,919,000 for the
corresponding period of the previous fiscal year. Accounts payable provided cash
of $59,415,000  during the  thirty-nine  weeks ended November 2, 1996,  compared
with  $35,746,000  for the  corresponding  period of the  previous  fiscal year.
Depreciation and amortization  amounted to $7,280,000 for the thirty-nine  weeks
ended November 2, 1996, compared with $6,291,000 for the corresponding period of
the previous fiscal year.

Cash flows from investing activities for the thirty-nine weeks ended November 2,
1996  reflected  a net  use of  cash  amounting  to  $14,807,000  compared  with
$6,743,000 for the  corresponding  period of the previous  fiscal year. The cash
was primarily used to fund capital expenditures  incurred relating to new stores
opened during the first three quarters of fiscal 1996 and 1995.

Cash provided by financing  activities for the thirty-nine  weeks ended November
2, 1996 was $22,364,000 compared with $6,871,000 for the corresponding period of
the previous fiscal year. The cash management  program maintained by the Company
used cash of $1,728,000 in the thirty-nine weeks ended November 2, 1996 compared
with cash provided of $1,831,000  for the  corresponding  period of the previous
fiscal year.  Net payments on notes payable under  previous  revolving  lines of
credit amounted to $10,000,000 in the  thirty-nine  weeks ended October 28, 1995
with no amounts  outstanding  at the period end. The Company's  net  borrowings,
under its new two-year credit agreement as described above, were $24,000,000 for
the thirty-nine  weeks ended November 2, 1996 compared with  $15,000,000 for the
corresponding  period  of the  previous  fiscal  year,  with  the  same  amounts
outstanding at the respective  quarter ends. The Company  received  $92,000 from
the  issuance  of common  stock on the  exercise  of stock  options  during  the
thirty-nine  weeks ended November 2, 1996 compared with $201,000 received during
the corresponding period of the previous year.

Outlook - During  November 1996, the Company opened six new stores and relocated
two stores,  bringing the total number of new stores opened in fiscal 1996 to 20
and the total number of stores  currently  operating to 203.  There are no plans
for any new store openings or  relocations  during the remainder of fiscal 1996.
Management estimates that capital expenditures of approximately $3,5000,000 will
be  incurred  relating  to new  stores  opened  as well as stores  relocated  in
November  1996 and for the purchase of computer  systems and  equipment  and for
other capital expenditure requirements for the remainder of fiscal 1996.

The Company's  primary needs for capital resources are for the purchase of store
inventories,  capital expenditures and for normal operating expenses. Management
believes that cash flows from  operations,  including  credit terms from vendors
and the borrowings  available under the credit  facility,  will be sufficient to
meet the Company's operating and capital expenditure requirements.

This Quarterly Report may include forward-looking statements that may or may not
materialize. All forward-looking statements made by the Company involve material
risks and  uncertainties  and are subject to change based on factors  beyond the
Company's control, including,  without limitation,  retail market conditions and
consumer acceptance of the Company's products. Accordingly, the Company's future
performance and financial  results may differ materially from those expressed or
implied in any such  forward-looking  statements.  Such factors include, but are
not limited to, those described in the Company's filings with the Securities and
Exchange Commission.

<PAGE>

Seasonality and Inflation

The Company's business is seasonal by nature. The Christmas season (beginning on
the  Sunday  before  Thanksgiving  and  ending  on  the  second  Saturday  after
Christmas),  the back-to-school period (beginning  approximately the second week
of August and  continuing  through the second week of September)  and the Easter
season (beginning approximately two weeks before Easter Sunday and ending on the
Saturday preceding Easter)  collectively  accounted for approximately 37% of the
Company's  annual  sales,  based on the Company's  last three fiscal  years.  In
general,  sales volume varies directly with customer traffic,  which is heaviest
during the third and fourth quarters of a fiscal year.

The Company does not believe  inflation has had a material effect on its results
of  operations  during the past three  fiscal  years.  However,  there can be no
assurance  that the Company's  business will not be affected by inflation in the
future.



<PAGE>




PART II - OTHER INFORMATION


Item 1 - Legal Proceedings  -  None
----------------------------       

Item 2. -  Changes in Securities  -  None

Item 3.  -  Defaults Upon Senior Securities  -  None

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

Item 5.  -  Other Information  - None



Item 6.  -  Exhibits and Reports on Form 8-K.......
        a)   Exhibits -

           10.43 Amended and Restated Credit Agreement dated October 31, 1996
                 between the Registrant, Goody's MS, L.P. and Goody's IN, L.P.
                 as borrowers, SYDOOG, Inc., TREBOR of TN Inc., and
                 GOFAMCLO, Inc. as guarantors, Lenders as identified therein
                 and First Tennessee Bank National Association as Administrative
                 Agent

           15      -              Accountants' Awareness Letter

           27      -              Financial Data Schedule

        b)   Reports on Form 8-K  -  None





<PAGE>







                          GOODY'S FAMILY CLOTHING, INC.



                                   SIGNATURES



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





                                                   GOODY'S FAMILY CLOTHING, INC.
                                                                 (Registrant)




     Date:    December 11, 1996                 /s/ Harry M. Call
              ------------------------          -----------------
                                                 Harry M. Call
                                                 Director, President and
                                                 Chief Operating Officer



     Date:    December 11, 1996                 /s/ Edward R. Carlin
              ------------------------          --------------------
                                                 Edward R. Carlin
                                                 Executive Vice President,
                                                 Chief Financial Officer and
                                                 Secretary
                                                 (Principal Financial Officer)



     Date:    December 11, 1996                 /s/ David G. Peek
              ------------------------          -----------------
                                                 David G. Peek
                                                 Corporate Controller and Chief 
                                                 Accounting Officer
                                                 (Principal Accounting Officer)







<PAGE>