<PAGE>
                                 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 3, 2001
                               ------------------------

                                       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)

                                 (865) 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, 32,451,130 shares outstanding as of November 16,
2001.


                                       1
<PAGE>



                         GOODY'S FAMILY CLOTHING, INC.
                               INDEX TO FORM 10-Q
                                NOVEMBER 3, 2001


<TABLE>
<S>                                                                                                   <C>
Part I - Financial Information:

      Item 1 - Financial Statements

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

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

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

            Notes to Consolidated Financial Statements.............................................   6-7

            Independent Accountants' Review Report.................................................   8

      Item 2 -  Management's Discussion and Analysis of Financial Condition and
            Results of Operations..................................................................   9-12

      Item 3 - Quantitative and Qualitative Disclosures about Market Risk..........................   12


Part II - Other Information........................................................................   13

      Item 1.  Legal Proceedings
      Item 2.  Changes in Securities and Use of Proceeds
      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.........................................................................................   14
</TABLE>


                                       2
<PAGE>


PART 1 - FINANCIAL INFORMATION
-------------------------------------------------------------------------------

ITEM 1  - CONSOLIDATED FINANCIAL STATEMENTS

GOODY'S FAMILY CLOTHING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                             THIRTEEN                                THIRTY-NINE
                                                            WEEKS ENDED                              WEEKS ENDED
                                                  -------------------------------         ---------------------------------
                                                  NOVEMBER 3,         October 28,         NOVEMBER 3,           October 28,
                                                     2001                2000                2001                   2000
                                                  -----------         -----------         -----------           -----------

<S>                                               <C>                 <C>                 <C>                   <C>
Sales                                              $279,324            $276,550            $ 829,443             $ 850,329
Cost of sales and occupancy expenses                195,996             193,975              610,807               623,207
                                                   --------            --------            ---------             ---------
Gross profit                                         83,328              82,575              218,636               227,122
Selling, general and administrative
   expenses                                          82,779              80,404              238,948               224,857
                                                   --------            --------            ---------             ---------
Earnings (loss) from operations                         549               2,171              (20,312)                2,265
Interest expense                                        134                  59                  238                   166
Investment income                                        27                 504                  523                 1,763
                                                   --------            --------            ---------             ---------
Earnings (loss) before income taxes                     442               2,616              (20,027)                3,862
Provision (benefit) for income taxes                    166                 981               (7,510)                1,448
                                                   --------            --------            ---------             ---------
Earnings (loss) before cumulative
   effect of accounting change                          276               1,635              (12,517)                2,414
Cumulative effect of accounting change                   --                  --                   --                  (207)
                                                   --------            --------            ---------             ---------
Net earnings (loss)                                $    276            $  1,635            $ (12,517)            $   2,207
                                                   ========            ========            =========             =========

Earnings (loss) per common share
   Basic
      Earnings (loss) before cumulative
         effect of accounting change               $   0.01            $   0.05            $   (0.39)            $    0.07
      Cumulative effect of accounting
         change                                          --                  --                   --                    --
                                                   --------            --------            ---------             ---------
      Basic net earnings (loss) per share          $   0.01            $   0.05            $   (0.39)            $    0.07
                                                   ========            ========            =========             =========

   Diluted
      Earnings (loss) before cumulative
         effect of accounting change               $   0.01            $   0.05            $   (0.39)            $    0.07
      Cumulative effect of accounting
         change                                          --                  --                   --                    --
                                                   --------            --------            ---------             ---------
      Diluted net earnings (loss) per share        $   0.01            $   0.05            $   (0.39)            $    0.07
                                                   ========            ========            =========             =========

Weighted average common
   shares outstanding
      Basic                                          32,450              32,520               32,438                32,544
                                                   ========            ========            =========             =========
      Diluted                                        32,501              32,541               32,438                32,674
                                                   ========            ========            =========             =========
</TABLE>


        SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND
                    INDEPENDENT ACCOUNTANTS' REVIEW REPORT.


                                       3
<PAGE>


GOODY'S FAMILY CLOTHING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                     NOVEMBER 3,      February 3,       October 28,
                                                                                       2001             2001               2000
                                                                                    ------------      -----------      ------------
                                                                                    (UNAUDITED)                        (unaudited)

<S>                                                                                 <C>               <C>              <C>
ASSETS
Current Assets
    Cash and cash equivalents                                                         $ 26,625         $ 62,750         $ 24,292
    Inventories                                                                        282,445          207,720          286,124
    Accounts receivable and other current assets                                        23,673           17,602           16,901
                                                                                      --------         --------         --------
         Total current assets                                                          332,743          288,072          327,317
Property and equipment, net                                                            134,706          138,504          130,784
Other assets                                                                            10,722           10,051           10,499
                                                                                      --------         --------         --------
         Total assets                                                                 $478,171         $436,627         $468,600
                                                                                      ========         ========         ========


LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
    Accounts payable                                                                  $157,495         $129,857         $180,011
    Accrued expenses                                                                    63,026           61,115           60,331
    Borrowings under credit facility                                                    30,000               --               --
    Income taxes payable                                                                    --            4,986               --
    Current portion of long-term debt                                                       --               --              318
                                                                                      --------         --------         --------
         Total current liabilities                                                     250,521          195,958          240,660
Other long-term liabilities                                                              4,634            5,361            4,648
Deferred income taxes                                                                   13,245           13,161           11,873
                                                                                      --------         --------         --------
         Total liabilities                                                             268,400          214,480          257,181
                                                                                      --------         --------         --------

Commitments and Contingencies

Shareholders' Equity
   Preferred stock, par value $1.00 per share; 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 and outstanding - 32,451,130, 32,419,930
        and 32,528,330 shares, respectively                                             21,719           21,580           21,987
   Paid-in capital                                                                       9,576            9,574            9,574
   Retained earnings                                                                   178,476          190,993          179,858
                                                                                      --------         --------         --------
        Total shareholders' equity                                                     209,771          222,147          211,419
                                                                                      --------         --------         --------
        Total liabilities and shareholders' equity                                    $478,171         $436,627         $468,600
                                                                                      ========         ========         ========
</TABLE>


        SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND
                    INDEPENDENT ACCOUNTANTS' REVIEW REPORT.


                                       4
<PAGE>


GOODY'S FAMILY CLOTHING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- UNAUDITED
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                               THIRTY-NINE WEEKS ENDED
                                                                           --------------------------------
                                                                           NOVEMBER 3,          October 28,
                                                                             2001                  2000
                                                                           -----------          -----------

<S>                                                                        <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) earnings                                                         $(12,517)            $   2,207
Adjustments to reconcile net (loss) earnings to net cash
  used by operating activities:
      Depreciation and amortization                                           17,742                14,324
      Net loss on asset disposals and write down                                  85                   475
      Cumulative effect of accounting change                                      --                   207
      Changes in assets and liabilities:
            Inventories                                                      (74,725)             (103,230)
            Accounts payable                                                  27,638                36,326
            Income taxes                                                      (3,887)                 (264)
            Other assets and liabilities                                      (6,575)                7,433
                                                                            --------             ---------
                 Cash used in operating activities                           (52,239)              (42,522)
                                                                            --------             ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of property and equipment                                       (14,049)              (28,722)
Proceeds from sale of property and equipment                                      20                    31
                                                                            --------             ---------
                 Cash used in investing activities                           (14,029)              (28,691)
                                                                            --------             ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under credit facility                                          30,000                    --
Proceeds from exercise of stock options                                          143                   723
Common shares repurchased and retired                                             --                (2,517)
                                                                            --------             ---------
                 Cash provided by (used in) financing activities              30,143                (1,794)
                                                                            --------             ---------

CASH AND CASH EQUIVALENTS:
Net decrease for the period                                                  (36,125)              (73,007)
Cash and cash equivalents, beginning of period                                62,750                97,299
                                                                            --------             ---------
Cash and cash equivalents, end of period                                    $ 26,625             $  24,292
                                                                            ========             =========

Supplemental Disclosures:
     Income tax payments                                                    $  5,145             $   3,787
     Interest payments                                                           102                   136
</TABLE>


        SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND
                    INDEPENDENT ACCOUNTANTS' REVIEW REPORT.


                                       5
<PAGE>


GOODY'S FAMILY CLOTHING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Unaudited


(1)      BASIS OF PRESENTATION

The accompanying consolidated financial statements of Goody's Family Clothing,
Inc. and subsidiaries (the "Company") are unaudited and have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
for interim financial statements. In the opinion of the Company's management,
the accompanying unaudited consolidated financial statements include all
adjustments, consisting primarily of normal and recurring adjustments,
necessary for a fair presentation of the Company's financial position, results
of operations and cash flows 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. The consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and the
notes thereto contained in the Company's Annual Report on Form 10-K for its
fiscal year ended February 3, 2001.

(2)      CHANGE IN ACCOUNTING METHODOLOGY

The Company changed its accounting methodology effective January 30, 2000 (the
first day of the first quarter of fiscal 2000) to recognize the sale and
related gross profit from layaways upon delivery of the merchandise to the
customer.

(3)      CREDIT FACILITY

On May 31, 2001, the Company entered into a new five-year $130,000,000
syndicated revolving loan and security agreement which provides for cash
borrowings for general corporate purposes, including a $95,000,000 sub-facility
for the issuance of letters of credit. Borrowings under this credit facility are
limited by collateral formulas based principally upon the Company's eligible
inventories and, under certain circumstances, require compliance with a
financial covenant relating to tangible net worth. The new facility is secured
by the Company's cash, accounts receivable and inventory and bears interest at
either LIBOR plus an applicable margin or the prime rate.

(4)      RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued the following new
pronouncements:

Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133") requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The statement,
as amended, was effective for the Company's 2001 fiscal year. The Company
adopted SFAS No. 133 and related amendments on February 4, 2001. The Company
does not hold any derivative financial instruments and, accordingly, the
adoption of SFAS No. 133 did not have any effect on its consolidated financial
statements.

Statement of Financial Accounting Standards No. 141, "Business Combinations"
("SFAS No. 141") and Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142") modifies the
recognition of and accounting for goodwill and other intangible assets in a
business combination. The Company has not consummated a business combination
nor does it currently contemplate a business combination. As such, the adoption
of SFAS No. 141 and SFAS No. 142 will have no impact on its consolidated
financial statements.

Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment of Long-Lived Assets" ("SFAS No. 144") addresses accounting for and
reporting of the impairment or disposal of long-lived assets. The Company must
adopt SFAS No. 144 at the beginning of its next fiscal year ending February 1,
2003. Early adoption of this standard is permitted; however, the Company has not
yet decided if it will adopt this standard prior to fiscal 2002. The Company
expects that the adoption of SFAS No. 144 will not have a significant impact on
its financial position or results of operations. However, SFAS No. 144 may
modify the presentation of the operating results of certain closed stores in the
Company's statement of operations in the future.


                                       6
<PAGE>


GOODY'S FAMILY CLOTHING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED - CONTINUED


(5)      CONTINGENCIES

The Company and Robert M. Goodfriend, its Chairman and Chief Executive Officer,
are defendants in a 1999 civil rights lawsuit claiming it discriminated against
a class of African-American employees at its retail stores through the use of
discriminatory selection and compensation procedures and by maintaining unequal
terms and conditions of employment. The plaintiffs further allege that the
Company maintained a racially hostile working environment. The plaintiffs are
seeking to have this action certified as a class action and are seeking, among
other things, injunctive relief (including restructuring of the Company's
selection and compensation procedures) as well as back pay, an award of
attorneys' fees and costs, and other monetary relief. The Company disputes
these claims and intends to continue to defend this matter vigorously. The
Company is unable to estimate the effect, if any, the above lawsuit may have on
the Company's financial position or results of operations.

In addition, the Company is a party to various other legal proceedings arising
in the ordinary course of its business. Management does not currently believe
that the ultimate outcome of all such other pending legal proceedings (other
than the matter noted in the paragraph above), individually and in the
aggregate, would have a material adverse effect on the Company's financial
position and results of operations.

(6)      RECLASSIFICATIONS

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


                                       7
<PAGE>


INDEPENDENT ACCOUNTANTS' REVIEW REPORT

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

We have reviewed the accompanying consolidated balance sheets of Goody's Family
Clothing, Inc. and subsidiaries as of November 3, 2001 and October 28, 2000 and
the related consolidated statements of operations and cash flows for the
thirteen 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 auditing standards generally accepted in the United States
of America, 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 consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Goody's Family Clothing, Inc. and subsidiaries as of February 3, 2001 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the year then ended (not presented herein); and in our report dated
March 19, 2001, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of February 3, 2001 is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.


/s/Deloitte & Touche LLP
Atlanta, Georgia
November 19, 2001


                                       8
<PAGE>


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

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains certain forward-looking statements which are
based upon current expectations, plans and estimates and involve material risks
and uncertainties including, but not limited to: (i) weather conditions; (ii)
the general economic conditions within the Company's markets and an improvement
in the overall retail environment; (iii) customer demand and trends in the
apparel and retail industry and to the acceptance of merchandise acquired for
sale by the Company; (iv) the effectiveness of the Company's advertising and
marketing initiatives; (v) the impact of competitors' pricing and store
expansion; (vi) the ability to enter into acceptable leases for new store
locations; (vii) the timing, magnitude and costs of opening new stores; (viii)
individual store performance, including new stores; (ix) employee relations;
(x) the timely availability of merchandise in sufficient quantities to satisfy
customer demand; (xi) the Company's financing plans; (xii) trends affecting the
Company's financial condition or results of operations; (xiii) the
effectiveness of the Company's distribution process; (xiv) the Company's
ability to successfully execute its business plans and strategies; and (xv) the
Company's compliance with loan covenants and the availability of sufficient
eligible collateral for borrowing. Any "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "estimate," "anticipate," "believe," "target," "plan," "project" or
"continue" or the negatives thereof or other variations thereon or similar
terminology, are made on the basis of management's plans and current analysis
of the Company, its business and the industry as a whole. Readers are cautioned
that any such forward-looking statement is not a guarantee of future
performance and involves risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statement as a
result of various factors. The Company does not undertake to publicly update or
revise its forward-looking statements even if experience or future changes make
it clear that any projected results expressed or implied therein will not be
realized. Additional information on risk factors that could potentially affect
the Company's financial results may be found in the Company's public filings
with the Securities and Exchange Commission. Certain of such filings may be
accessed through the Securities and Exchange Commission's web site,
http://www.sec.gov.

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 3,          October 28,         November 3,        October 28,
                                                             2001                 2000                2001               2000
                                                          -----------          -----------         -----------        -----------

<S>                                                       <C>                  <C>                 <C>                <C>
Sales                                                       100.0%                100.0%             100.0%             100.0%
Cost of sales and occupancy expenses                         70.2                  70.1               73.6               73.3
                                                            -----                 -----              -----              -----
Gross profit                                                 29.8                  29.9               26.4               26.7
Selling, general and administrative expenses                 29.6                  29.1               28.8               26.4
                                                            -----                 -----              -----              -----
Earnings (loss) from operations                               0.2                   0.8               (2.4)               0.3
Interest expense                                               --                    --                 --                 --
Investment income                                              --                   0.2                 --                0.2
                                                            -----                 -----              -----              -----
Earnings (loss) before income taxes                           0.2                   1.0               (2.4)               0.5
Provision (benefit) for income taxes                          0.1                   0.4               (0.9)               0.2
                                                            -----                 -----              -----              -----
Net earnings (loss)                                           0.1%                  0.6%              (1.5)%              0.3%
                                                            =====                 =====              =====              =====
</TABLE>

THIRTEEN WEEKS ENDED NOVEMBER 3, 2001 COMPARED WITH THIRTEEN WEEKS ENDED
OCTOBER 28, 2000

OVERVIEW During the third quarter of fiscal 2001, the Company opened eight new
stores, relocated four stores and closed two stores, bringing the total number
of stores in operation at November 3, 2001 to 332, compared with 310 at October
28, 2000. During the corresponding period of the previous fiscal year, the
Company opened 13 new stores and relocated 5 stores. Net earnings for the third
quarter of fiscal 2001 were $276,000, or 0.1% of sales, compared with net
earnings of $1,635,000, or 0.6% of sales, for the third quarter of fiscal 2000.


                                       9
<PAGE>


SALES Sales for the third quarter of fiscal 2001 were $279,324,000, a 1.0%
increase over the $276,550,000 in sales for the third quarter of fiscal 2000.
This increase of $2,774,000 consisted primarily of additional sales from new
and transition stores that was offset by a 1.3% decrease in comparable store
sales. The Company believes that its sales were negatively effected by the
difficult economic environment, the September 11 terrorist attacks, the
subsequent war and continuing related events, and the overwhelmingly warm
weather throughout most of its markets.

GROSS PROFIT Gross profit for the third quarter of fiscal 2001 was $83,328,000,
or 29.8% of sales, a $753,000 increase from the $82,575,000 in gross profit, or
29.9% of sales, generated for the third quarter of the previous fiscal year. The
Company was slightly less promotional during the third quarter of fiscal 2001 as
compared to the third quarter of fiscal 2000 primarily due to lower levels of
inventories. The decrease in gross profit of 0.1% was related to higher
occupancy costs for new and relocated stores and the lack of leverage due
to the shortfall in comparable store sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative
expenses for the third quarter of fiscal 2001 were $82,779,000, or 29.6% of
sales, an increase of $2,375,000 from $80,404,000, or 29.1% of sales, for the
third quarter of fiscal 2000. The 0.5% increase in selling, general and
administrative expenses, as a percent of sales, for the third quarter of fiscal
2001 compared with the third quarter of fiscal 2000 was partially due to the
loss of leverage from the decline in comparable store sales as noted above and
is comprised of (i) a 0.3% increase in payroll expenses, and (ii) a net 0.8%
increase in all other selling, general and administrative expenses which was
partially offset by (iii) a 0.6% decrease in advertising and promotional
expenses.

INTEREST EXPENSE Interest expense for the third quarter of fiscal 2001
increased by $75,000 compared with the third quarter of fiscal 2000 due to
increased borrowings.

INVESTMENT INCOME Investment income for the third quarter of fiscal 2001
decreased by $477,000 compared with the third quarter of fiscal 2000 primarily
as a result of a decrease in invested funds and interest rates during the
period.

INCOME TAXES The provision for income taxes for the third quarter of fiscal
2001 was $166,000, for an effective tax rate of 37.6% of earnings before income
taxes, compared with a provision for income taxes of $981,000, for an effective
tax rate of 37.5% of earnings before income taxes, for the third quarter of
fiscal 2000.

THIRTY-NINE WEEKS ENDED NOVEMBER 3, 2001 COMPARED WITH THIRTY-NINE WEEKS ENDED
OCTOBER 28, 2000

OVERVIEW During the thirty-nine weeks ended November 3, 2001, the Company
opened 18 new stores, relocated or remodeled 12 stores and closed 3 stores,
bringing the total number of stores in operation at November 3, 2001 to 332,
compared with 310 at October 28, 2000. During the corresponding period of the
previous fiscal year, the Company opened 25 new stores, relocated 6 stores and
closed 2 stores. Net loss for the thirty-nine weeks ended November 3, 2001 was
$12,517,000, or (1.5%) as a percent of sales, compared with net earnings of
$2,207,000, or 0.3% as a percent of sales, for the thirty-nine weeks ended
October 28, 2000.

SALES Sales for the thirty-nine weeks ended November 3, 2001 were $829,443,000,
a 2.5% decrease from the $850,329,000 in sales for the corresponding period of
the previous fiscal year. This decrease of $20,886,000 consisted of additional
sales from new and transition stores that was offset by an 8.4% decrease in
comparable store sales. The Company believes that its sales were negatively
effected by the difficult economic and retail environment.

GROSS PROFIT Gross profit for the thirty-nine weeks ended November 3, 2001 was
$218,636,000, or 26.4% of sales, an $8,486,000 decrease from the $227,122,000 in
gross profit, or 26.7% of sales, generated for the corresponding period of the
previous fiscal year. The 0.3% decrease in gross profit, as a percent of sales,
for the thirty-nine weeks ended November 3, 2001 compared with the thirty-nine
weeks ended October 28, 2000 resulted from (i) a 0.6% decrease in cost of
sales, offset by (ii) a 0.9% increase in occupancy costs which were not
leveraged due to a shortfall in comparable store sales and higher occupancy
costs for new and relocated stores.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and
administrative expenses for the thirty-nine weeks ended November 3, 2001 were
$238,948,000, or 28.8% of sales, an increase of $14,091,000 from $224,857,000,
or 26.4% of sales, for the corresponding period of the previous fiscal year.
The 2.4% increase in selling, general and administrative expenses, as a percent
of sales, for the thirty-nine weeks ended November 3, 2001 compared with the
thirty-nine weeks ended October 28, 2000 was primarily due to the loss of
leverage from the decline in comparable store sales as noted above and is
comprised of (i) a 0.5% increase in payroll expenses, (ii) a 0.5% increase in
advertising and promotional expenses and (iii) a net 1.4% increase in all other
selling, general and administrative expenses.


                                      10
<PAGE>


INTEREST EXPENSE Interest expense for the thirty-nine weeks ended November 3,
2001 increased by $72,000 compared with the corresponding period of the
previous fiscal year, as a result of increased borrowings under the credit
facility compared to the corresponding period of the previous fiscal year.

INVESTMENT INCOME Investment income for the thirty-nine weeks ended November 3,
2001 decreased by $1,240,000 compared with the corresponding period of the
previous fiscal year primarily as a result of a decrease in invested funds and
interest rates during the period.

INCOME TAXES The benefit for income taxes for the thirty-nine weeks ended
November 3, 2001 was ($7,510,000), for an effective tax rate of 37.5% of loss
before income taxes, compared with a provision of $1,448,000, for an effective
tax rate of 37.5% of earnings before income taxes, for the corresponding period
of the previous fiscal year.

CUMULATIVE EFFECT OF ACCOUNTING CHANGE The Company changed its accounting
methodology effective January 30, 2000 (the first day of the first quarter of
fiscal 2000) to recognize the sale and related gross profit from layaways upon
delivery of the merchandise to the customer. The cumulative effect of this new
accounting methodology for layaways was recorded in the first quarter of fiscal
2000 and reduced earnings by $207,000, net of a tax benefit of $124,000.

LIQUIDITY AND CAPITAL RESOURCES

FINANCIAL POSITION The Company's primary sources of liquidity are cash flows
from operations, including credit terms from vendors and factors, and
borrowings under its credit facility discussed below. At November 3, 2001, the
Company's working capital was $82,222,000 compared with $86,657,000 at October
28, 2000. Additionally, inventories at November 3, 2001 were 1.3% lower than
inventories at October 28, 2000, and on a per square foot basis, were 8.9%
lower when compared to the third fiscal quarter ended last year. Trade
payables, as a percent of inventories, were 55.8% at November 3, 2001 compared
with 62.9% at October 28, 2000.

On May 31, 2001, the Company entered into a new five-year $130,000,000
syndicated revolving loan and security agreement (the "credit facility") which
provides for cash borrowings for general corporate purposes, including a
$95,000,000 sub-facility for the issuance of letters of credit. Borrowings under
this credit facility are limited by collateral formulas based principally upon
the Company's eligible inventories and, under certain circumstances, require
compliance with a financial covenant relating to tangible net worth. The
Company's cash, accounts receivable and inventory serves as collateral on the
credit facility. The credit facility bears interest at either LIBOR plus an
applicable margin or the prime rate.

At November 3, 2001, the Company had $30,000,000 in cash borrowings and
$33,242,000 outstanding for letters of credit under the new credit facility
compared with no cash borrowings and $32,125,000 outstanding for letters of
credit at October 28, 2000 under the former credit facility. During the
thirty-nine weeks ended November 3, 2001, the Company averaged $3,745,000 in
borrowings (with the highest balance of $32,500,000 in October 2001) compared
with no cash borrowings during the thirty-nine weeks ended October 28, 2000.
Letters of credit outstanding averaged $37,907,000 during the thirty-nine weeks
ended November 3, 2001 compared with $64,262,000 during the thirty-nine weeks
ended October 28, 2000. The highest balance of letters of credit outstanding
during the thirty-nine weeks ended November 3, 2001 was $50,849,000 (in June
2001) compared with $79,789,000 (in June 2000) during the thirty-nine weeks
ended October 28, 2000. For the periods ended November 3, 2001 and October 28,
2000, the highest balance of direct borrowings and letters of credit, on a
combined basis, was $65,601,000 (in October 2001) compared with $79,789,000 (in
June 2000), respectively.

CASH FLOWS Cash used in operating activities for the thirty-nine weeks ended
November 3, 2001 was $52,239,000 compared with $42,522,000 for the
corresponding period of the previous fiscal year. Cash used for increases in
inventory during the thirty-nine weeks ended November 3, 2001 and October 28,
2000 was $74,725,000 and $103,230,000, respectively. Accounts payable provided
cash of $27,638,000 and $36,326,000 in the thirty-nine weeks ended November 3,
2001 and October 28, 2000, respectively. Other assets and liabilities used cash
of $6,575,000 in the thirty-nine weeks ended November 3, 2001 while in the
corresponding period of the previous fiscal year $7,433,000 in cash was
provided by other assets and liabilities. Depreciation and amortization
expenses were $17,742,000 and $14,324,000 for the thirty-nine weeks ended
November 3, 2001 and October 28, 2000, respectively.


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<PAGE>


Cash flows from investing activities reflected a $14,029,000 and $28,691,000
net use of cash for the thirty-nine weeks ended November 3, 2001 and October
28, 2000, respectively. Cash was used primarily to fund capital expenditures
for (i) new, relocated and remodeled stores, (ii) the construction of a new
distribution center, and (iii) for general corporate purposes.

Cash provided by financing activities for the thirty-nine weeks ended November
3, 2001 was $30,143,000 compared with cash used in financing activities of
$1,794,000 for the corresponding period of the previous fiscal year. Net
borrowings under the Company's credit facility were $30,000,000 during the
thirty-nine weeks ended November 3, 2001 compared to no borrowings in the
comparable prior year period. During the thirty-nine weeks ended November 3,
2001, the Company realized $143,000 from the issuance of common stock resulting
from the exercise of stock options, compared with $723,000 during the
corresponding period of the previous year. During the thirty-nine weeks ended
November 3, 2001, the Company did not make any purchases of its common stock
under the stock repurchase plan authorized by the Company's Board of Directors
in June 1999. That plan authorized the Company to purchase up to $20,000,000 of
its common stock. The Company has purchased 1,118,300 shares of its common
stock for an aggregate of $7,400,000 since the plan's inception.

OUTLOOK Management estimates that capital expenditures of approximately
$6,500,000 will be required during the remainder of fiscal 2001, primarily
related to store improvements, management information systems, and general
corporate purposes. The Company may also continue purchasing shares of its
common stock, from time to time, in the open market or in privately negotiated
transactions, depending on price, prevailing market conditions and other
factors in accordance with its stock purchase plan.

The Company's primary needs for capital resources are for the opening of new
stores, relocating and remodeling of existing stores, purchase of store
inventories, capital expenditures and for normal operating purposes. Management
believes that its existing working capital, together with cash flows from
operations, including credit terms from vendors and factors, and the borrowings
available under the credit facility, will be sufficient to meet the Company's
operating and capital expenditure requirements. However, an adverse outcome of
pending litigation (as described in Note 6 - Contingencies in the Notes to
Consolidated Financial Statements) or the unavailability of borrowings under the
credit facility could negatively affect working capital.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has no material investments or risks in market risk sensitive
instruments.


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<PAGE>


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

ITEM 1 - LEGAL PROCEEDINGS  - None

ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS  -  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 -

                  15    Accountants' Awareness Letter

          (b)   Reports on Form 8-K  -  None


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<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:    November 21, 2001                   /s/ Robert M. Goodfriend
     ---------------------------             ----------------------------------
                                             Robert M. Goodfriend
                                             Chairman of the Board and
                                             Chief Executive Officer


Date:    November 21, 2001                   /s/ Lana Cain Krauter
     ---------------------------             ----------------------------------
                                             Lana Cain Krauter
                                             President and
                                             Chief Merchandising Officer


Date:    November 21, 2001                   /s/ Edward R. Carlin
     ---------------------------             ----------------------------------
                                             Edward R. Carlin
                                             Executive Vice President,
                                             Chief Financial Officer and
                                             Secretary (Principal Financial
                                             Officer)


Date:    November 21, 2001                   /s/ David G. Peek
     ---------------------------             ----------------------------------
                                             David G. Peek
                                             Senior Vice President and
                                             Chief Accounting Officer
                                             (Principal Accounting Officer)


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