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                May 1, 1999
                           -------------------------------------------------

                                       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, 33,334,680 shares outstanding
as of May 14, 1999.


<PAGE>




                          Goody's Family Clothing, Inc.
                               Index to Form 10-Q
                                   May 1, 1999



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


<PAGE>




PART 1 - FINANCIAL INFORMATION

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

Item 1  -  Financial Statements

Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                                                   ---------------------------------------
                                                                                            Thirteen Weeks Ended
                                                                                   ---------------------------------------
                                                                                      May 1, 1999          May 2, 1998
                                                                                   -------------------   -----------------
                                                                                      (unaudited)          (unaudited)
<S>                                                                                  <C>                    <C>

Sales                                                                                      $259,931              $226,714
Cost of sales and occupancy expenses                                                        185,730               158,794
                                                                                  -----------------     -----------------
     Gross profit                                                                            74,201                67,920

Selling, general and administrative expenses                                                 62,154                55,904
                                                                                  -----------------     -----------------
     Earnings from operations                                                                12,047                12,016

Interest expense                                                                                 53                    94
Investment income                                                                               578                   536
                                                                                  -----------------     -----------------
     Earnings before income taxes                                                            12,572                12,458

Provision for income taxes                                                                    4,689                 4,690
                                                                                  -----------------     -----------------

Net earnings                                                                                 $7,883                $7,768
                                                                                  =================     =================

Earnings per common share
     Basic                                                                                    $0.24                 $0.23
                                                                                  =================     =================
     Diluted                                                                                  $0.23                 $0.22
                                                                                  =================     =================

Weighted average common shares outstanding
     Basic                                                                                   33,333                33,164
                                                                                  =================     =================
     Diluted                                                                                 33,918                34,618
                                                                                  =================     =================
</TABLE>


















See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.


<PAGE>



Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                     May 1, 1999     January 30, 1999     May 2, 1998
                                                                  --------------     ----------------   -------------
                                                                  (unaudited)                            (unaudited)
<S>                                                              <C>                  <C>                  <C>

ASSETS
Current Assets
   Cash and cash equivalents                                                $63,281           $89,292            $47,941
   Inventories                                                              196,601           165,687            184,609
   Accounts receivable and other current assets                              20,612            14,195             19,670
                                                                     --------------     -------------     --------------
        Total current assets                                                280,494           269,174            252,220
Property and equipment, net                                                 111,466           104,789             98,350
Other assets                                                                  3,339             3,210              3,032
                                                                     --------------     -------------     --------------
         Total assets                                                      $395,299          $377,173           $353,602
                                                                     ==============     =============     ==============


LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
   Accounts payable                                                        $118,014          $122,776           $121,401
   Accrued expenses                                                          53,939            43,190             42,402
   Income taxes payable                                                       4,494               321              4,366
   Current portion of long-term debt                                            289               289                263
                                                                     --------------     -------------     --------------
        Total current liabilities                                           176,736           166,576            168,432
Long-term debt                                                                  318               318                608
Other long-term liabilities                                                   3,809             3,782              3,151
Deferred income taxes                                                        11,055            11,020             10,362
                                                                     --------------     -------------     --------------
        Total liabilities                                                   191,918           181,696            182,553
                                                                     --------------     -------------     --------------

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 - 33,333,480, 33,330,780
      and 32,972,980 shares, respectively                                    28,120            28,102             26,430
  Paid-in capital                                                             9,452             9,449              6,612
  Retained earnings                                                         165,809           157,926            138,007
                                                                     --------------     -------------     --------------
       Total shareholders' equity                                           203,381           195,477            171,049
                                                                     --------------     -------------     --------------
       Total liabilities and shareholders' equity                          $395,299          $377,173           $353,602
                                                                     ==============     =============     ==============
</TABLE>




See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.


<PAGE>



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

                                                                                    ----------------------------------------
                                                                                             Thirteen Weeks Ended
                                                                                    ----------------------------------------
                                                                                       May 1, 1999           May 2, 1998
                                                                                    ------------------    ------------------
                                                                                       (unaudited)           (unaudited)
<S>                                                                                  <C>                  <C>

Cash Flows from Operating Activities
Net earnings                                                                                 $7,883                $7,768
Adjustments to reconcile net earnings to net cash
  used in operating activities:
     Depreciation and amortization                                                            3,782                 3,191
     Net loss on asset disposals and write-down                                                  75                   320
     Changes in assets and liabilities:
         Inventories                                                                        (30,914)              (32,942)
         Accounts payable                                                                    12,353                 8,902
         Income taxes                                                                         4,410                (6,281)
         Other assets & liabilities                                                           1,431                (4,143)
                                                                                  -----------------     ------------------
             Cash used in operating activities                                                 (980)              (23,185)
                                                                                  -----------------     -----------------

Cash Flows from Investing Activities
Acquisitions of property and equipment                                                      (10,534)               (4,419)
Proceeds from sale of property and equipment                                                      -                    26
                                                                                  -----------------     -----------------
           Cash used in investing activities                                                (10,534)               (4,393)
                                                                                  -----------------     -----------------

Cash Flows from Financing Activities
Exercise of stock options                                                                        21                 3,141
Changes in cash management accounts                                                         (14,518)                8,204
                                                                                  ------------------    -----------------
           Cash (used in) provided by financing activities                                  (14,497)               11,345
                                                                                  ------------------    -----------------

Net decrease in cash and cash equivalents                                                   (26,011)              (16,233)
Cash and cash equivalents, beginning of period                                               89,292                64,174
                                                                                  -----------------     -----------------
Cash and cash equivalents, end of period                                                    $63,281               $47,941
                                                                                  =================     =================


Supplemental Disclosures:
    Income tax payments                                                                        $130                $8,608
    Interest payments                                                                            38                    72


</TABLE>











See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.



<PAGE>


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

(1)  Basis of presentation

The accompanying  condensed  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.   Although  certain  information   normally  included  in  financial
statements prepared in accordance with generally accepted accounting  principles
has been condensed or omitted,  the Company  believes that the  disclosures  are
adequate to make the information presented not misleading. In the opinion of the
Company's  management,   the  accompanying   unaudited  condensed   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 condensed  consolidated  financial
statements should be read in conjunction with the audited consolidated financial
statements  and the notes thereto  contained in the Company's 1998 Annual Report
on Form 10-K for its fiscal year ended January 30, 1999.

(2) Credit arrangements

The Company has a credit  agreement  for an unsecured  revolving  line of credit
which provides for cash borrowings for general corporate purposes as well as for
the  issuance of letters of credit of up to an  aggregate  of  $130,000,000  and
which  expires in May 2001.  The Company is committed to pay (i) interest on the
cash borrowings at a fluctuating  base rate or LIBOR plus an applicable  margin,
(ii)  letter of credit  fees  based on the  number of days a letter of credit is
outstanding  times an applicable fee and (iii) an annual  commitment fee payable
quarterly in advance.  The terms of this credit agreement  require,  among other
things,  maintenance of minimum levels of shareholders' equity,  compliance with
certain  financial ratios and Mr. Robert M. Goodfriend  remaining as Chairman of
the Board or Chief Executive Officer of the Company,  and place  restrictions on
additional indebtedness, asset disposals, investments and capital expenditures.

(3) Earnings per common share

Basic  earnings  per common  share is computed by dividing  net  earnings by the
weighted  average  number of common  shares  outstanding.  Diluted  earnings per
common share is computed by dividing net earnings by the weighted average number
of common shares  outstanding and potentially  dilutive common shares.  Weighted
average diluted shares  outstanding  differs from weighted  average basic shares
outstanding solely from the effect of stock options.

In July 1998,  the Company  effected a two-for-one  stock split.  All previously
reported  earnings per share and related data have been restated to reflect such
stock split.

(4)      Recent accounting pronouncements

Accounting for costs of computer software
     At the beginning of the first quarter of fiscal 1999,  the Company  adopted
Statement of Position No. 98-1,  "Accounting for the Costs of Computer  Software
Developed or Obtained for Internal  Use" ("SOP No.  98-1") which  requires  that
certain  costs  incurred  to  develop or obtain  software  for  internal  use be
capitalized. The  effect  of the  adoption  of SOP  No.  98-1 on  the  Company's
financial position or results of operations was not material.

Accounting for derivative instruments and hedging activities
     In June 1998, the American Institute of Certified Public Accountants issued
Statement of Financial  Accounting  Standards No. 133 "Accounting for Derivative
Instruments  and Hedging  Activities"  ("SFAS No. 133").  SFAS No. 133, which is
currently effective beginning with the Company's fiscal year 2000 (however,  the
Financial  Accounting  Standards  Board is  considering a one year delay of this
effective  date),  requires that an entity  recognize all  derivatives as either
assets or liabilities  in its statement of financial  position and measure those
instruments at fair value. The Company has not yet completed its analysis of the
effect of SFAS No. 133 on its financial statements.

<PAGE>


Goody's Family Clothing, Inc. and Subsidiaries
Notes to Consolidated Financial Statements  -  continued
(Unaudited)

(5)  Contingencies

In February 1999, two lawsuits were served on the Company. The first lawsuit was
filed by nine individual  plaintiffs at one of the Company's retail stores,  who
generally  allege  discrimination  with  respect  to  employment  opportunities,
including,  among  other  things,   discrimination  through  their  constructive
discharge,  failure to be  promoted  and failure to be paid wages equal to white
employees.  The second lawsuit was filed by 20 named  plaintiffs,  who generally
allege  that the  Company  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  and  that  the  Company   maintained  a  racially   hostile  working
environment.  The  plaintiffs  in  the  second  lawsuit  also  named  Robert  M.
Goodfriend,  the Company's Chairman and Chief Executive Officer, as a defendant,
and are  seeking to have this  action  certified  as a class  action.  By way of
damages,  the  plaintiffs  in these  actions are  seeking,  among other  things,
injunctive  relief,  back pay and other monetary  relief.  The Company  disputes
these claims and intends to defend these matters vigorously.  It is too early to
estimate  the  effect,  if any,  these two  lawsuits  may have on the  Company's
financial position or results of operations.

The  Company  is a party to  certain  other  legal  proceedings  arising  in the
ordinary course of its business. Management currently believes that the ultimate
outcome of these other proceedings,  individually and in the aggregate, will not
have a material adverse effect on the Company's financial position or results of
operations.

(6)  Reclassifications

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



<PAGE>



INDEPENDENT ACCOUNTANTS' REVIEW REPORT

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

We have  reviewed the  accompanying  condensed  consolidated  balance  sheets of
Goody's Family Clothing, Inc. and subsidiaries as of May 1, 1999 and May 2, 1998
and the related  consolidated  statements of  operations  and cash flows for the
thirteen-weeks 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 condensed  consolidated  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 consolidated balance sheet of Goody's Family Clothing,  Inc. and
subsidiaries as of January 30, 1999 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 17,  1999,  we  expressed an
unqualified opinion on those consolidated financial statements.  In our opinion,
the information set forth in the  accompanying  condensed  consolidated  balance
sheet as of January 30, 1999 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
May 18, 1999





<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 timely  availability of branded and private label  merchandise in sufficient
quantities to satisfy customer  demand;  (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  advertising  and  promotional
events;  (v) the impact of competitors'  pricing and store  expansion;  (vi) the
ability  to enter  into  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  general  economic
conditions  within the Company's  markets;  (xi) the Company's  financing plans;
(xii)  trends  affecting  the  Company's   financial  condition  or  results  of
operations,  (xiii) the Company's  business and growth  strategies and (xiv) the
effect of the Year 2000 issue on the Company and third parties who provide goods
and services to the Company. 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 Weeks Ended
                                                                        May 1, 1999         May 2, 1998
<S>                                                                   <C>                   <C>

    Sales                                                                   100.0%             100.0%
    Cost of sales and occupancy expenses                                     71.5               70.0
                                                                             ----               ----
    Gross profit                                                             28.5               30.0
    Selling, general and administrative expenses                             23.9               24.7
                                                                             ----               ----
    Earnings from operations                                                  4.6                5.3
    Interest expense                                                           -                  -
    Investment income                                                         0.2                0.2
                                                                             ----                ---
    Earnings before income taxes                                              4.8                5.5
    Provision for income taxes                                                1.8                2.1
                                                                              ---                ---
    Net earnings                                                              3.0%               3.4%
                                                                              ===                ===
</TABLE>


Overview  During the first  quarter of fiscal 1999,  the Company  opened ten new
stores,  relocated  seven stores and  remodeled  two stores,  bringing the total
number of stores in  operation at quarter end to 267,  compared  with 229 at the
end of the first  quarter of fiscal  1998.  In the  corresponding  period of the
previous fiscal year, seven new stores were opened, one store was relocated, one
store was remodeled and one store was closed. Net earnings for the first quarter
of fiscal 1999 were $7,883,000,  or 3.0% of sales, compared with $7,768,000,  or
3.4% of sales, for the first quarter of fiscal 1998.

Sales  Sales for the first  quarter of fiscal  1999 were  $259,931,000,  a 14.7%
increase  over the  $226,714,000  for the first  quarter  of fiscal  1998.  This
increase of  $33,217,000  consisted of (i) a 1.1% increase in  comparable  store
sales of $2,320,000  from the  corresponding  period of the previous fiscal year
and (ii) additional sales from new and transition stores of $30,897,000.

Gross profit Gross profit for the first quarter of fiscal 1999 was  $74,201,000,
or 28.5% of sales,  a  $6,281,000  increase  over the  $67,920,000,  or 30.0% of
sales,  in gross profit for the first quarter of the previous  fiscal year.  The
1.5% decrease in gross profit,  as a percent of sales,  resulted  primarily from
(i) a 1.2%  increase  in  cost  of  sales  related  to  the  sale  of  clearance
merchandise at lower margins, some additional promotional activity in March 1999
and from a less profitable sales mix of spring and summer merchandise and (ii) a
0.3% increase in occupancy  costs primarily  related to higher rents  associated
with new and relocated stores.

Selling, general and administrative expenses Selling, general and administrative
expenses  for the first  quarter of fiscal  1999 were  $62,154,000,  or 23.9% of
sales, an increase of $6,250,000 from  $55,904,000,  or 24.7% of sales,  for the
first quarter of the previous fiscal year.  Selling,  general and administrative
expenses  decreased  by 0.8%,  as a percent of sales,  for the first  quarter of
fiscal 1999 compared  with the first quarter of the previous  fiscal year and is
comprised  of (i) a 0.5%  decrease in bonus  expenses  related to the  Company's
Short-Term  Incentive  Plan and other bonus plans  and (ii) a 0.3%  decrease in
other selling, general and administrative expenses.

Interest expense Interest expense for the first quarter of fiscal 1999 decreased
by $41,000  compared  with the first  quarter of the  previous  fiscal year as a
result of decreases in various interest expenses incurred during the period.

Investment income  Investment  income  for the first  quarter  of  fiscal  1999
increased by $42,000 compared with the first quarter of the previous fiscal year
primarily as a result of an increase in invested funds during the period.

Income taxes The provision for income taxes for the first quarter of fiscal 1999
was  $4,689,000,  for an effective  tax rate of 37.3% of earnings  before income
taxes, compared with $4,690,000,  for an effective tax rate of 37.7% of earnings
before income  taxes,  for the first  quarter of the previous  fiscal year.  The
decrease in the  effective  tax rate is primarily due to a decrease in effective
state income tax rates.

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.  At May 1,  1999,  the  Company's  working  capital  was
$103,758,000  compared with  $83,788,000 at May 2, 1998. At the end of the first
quarter of fiscal 1999 compared  with the first  quarter of the previous  fiscal
year,  (i)  cash,  cash  equivalents  and  investment  securities  increased  by
$15,340,000,  (ii) net property and equipment  increased by  $13,116,000,  (iii)
inventories  increased by $11,992,000 due to an increase in the number of stores
and (iv) accounts payable decreased by $3,387,000.  Trade payables, as a percent
of inventories, were 60.0% at May 1, 1999 compared with 65.8% at May 2, 1998.

The Company has a credit  agreement  for an unsecured  revolving  line of credit
which provides for cash borrowings for general corporate purposes as well as for
the  issuance of letters of credit of up to an  aggregate  of  $130,000,000  and
which  expires in May 2001.  The Company is committed to pay (i) interest on the
cash borrowings at a fluctuating  base rate or LIBOR plus an applicable  margin,
(ii)  letter of credit  fees  based on the  number of days a letter of credit is
outstanding  times an applicable fee and (iii) an annual  commitment fee payable
quarterly in advance.  The terms of this credit agreement  require,  among other
things,  maintenance of minimum levels of shareholders' equity,  compliance with
certain  financial ratios and Mr. Robert M. Goodfriend  remaining as Chairman of
the Board or Chief Executive Officer of the Company,  and place  restrictions on
additional indebtedness, asset disposals, investments and capital expenditures.

At May 1,  1999,  the  Company  had  no  cash  borrowings  and  $43,055,000  was
outstanding  for  letters  of  credit  compared  with  no  cash  borrowings  and
$68,941,000  outstanding  for letters of credit at May 2, 1998.  Cash borrowings
averaged  $38,000 (with the highest  balance of $2,000,000 in March 1999) in the
first  quarter of fiscal 1999  compared  with no cash  borrowings  for the first
quarter of fiscal  1998.  Letters  of credit  outstanding  averaged  $44,695,000
during the first  quarter of fiscal 1999 compared  with  $58,744,000  during the
first  quarter  of  fiscal  1998.  The  highest  balance  of  letters  of credit
outstanding during the first quarter of fiscal 1999 and 1998 was $49,454,000 (in
February 1999) and $72,857,000 (in April 1998), respectively.

Cash flows  Operating  activities  used cash of $980,000 in the first quarter of
fiscal 1999  compared  with  $23,185,000  in the first  quarter of the  previous
fiscal  year.  Cash used in  operating  activities  during the first  quarter of
fiscal 1999 for seasonal  inventory  increases  was  $30,914,000  compared  with
$32,942,000 for the first quarter of the previous fiscal year.  Accounts payable
provided cash of  $12,353,000  in the first quarter of fiscal 1999 compared with
$8,902,000 for the first quarter of the previous  fiscal year.  Other assets and
liabilities  provided cash of  $1,431,000  compared with cash used of $4,143,000
for the first quarter of the previous fiscal year. Depreciation and amortization
amounted  to  $3,782,000  in the first  quarter  of fiscal  1999  compared  with
$3,191,000 for the first quarter of the previous fiscal year.

Cash flows  from  investing  activities  for the first  quarter  of fiscal  1999
reflected a net use of cash  amounting to $10,534,000  compared with  $4,393,000
for the first quarter of the previous  fiscal year.  Cash was used  primarily to
fund  capital  expenditures  for new,  relocated  and  remodeled  stores and for
general corporate purposes.

Cash used by  financing  activities  for the first  quarter  of fiscal  1999 was
$14,497,000  compared with cash provided of $11,345,000 for the first quarter of
the previous  fiscal year.  The Company's cash  management  program used cash of
$14,518,000  in the first  quarter of fiscal 1999 compared with cash provided of
$8,204,000  for the first  quarter of the  previous  fiscal  year.  The  Company
received  $18,000  in cash and  realized  a tax  benefit  of $3,000 in the first
quarter of fiscal 1999  compared  with  $1,250,000  in cash and a tax benefit of
$1,891,000  for the first quarter of the previous  fiscal year from the issuance
of common stock on exercise of stock options.

Outlook The Company plans to open approximately 30 to 35 new stores and relocate
or remodel  approximately  24 stores  and close one store  during  fiscal  1999.
During the second quarter to date, the Company opened two new stores. Management
estimates  that  capital  expenditures  of  approximately  $29,500,000  will  be
required  for (i) opening new stores,  (ii)  upgrading  existing  stores,  (iii)
distribution  center  enhancements,  (iv) computer systems and equipment and (v)
for general corporate purposes during the remainder of fiscal 1999.

The Company's  primary needs for capital resources are for the 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 the borrowings  available
under the credit  agreement  will be sufficient to meet the Company's  operating
and capital expenditure requirements.

In February 1999, two lawsuits were served on the Company. The first lawsuit was
filed by nine individual  plaintiffs at one of the Company's retail stores,  who
generally  allege  discrimination  with  respect  to  employment  opportunities,
including,  among  other  things,   discrimination  through  their  constructive
discharge,  failure to be  promoted  and failure to be paid wages equal to white
employees.  The second lawsuit was filed by 20 named  plaintiffs,  who generally
allege  that the  Company  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  and  that  the  Company   maintained  a  racially   hostile  working
environment.  The  plaintiffs  in  the  second  lawsuit  also  named  Robert  M.
Goodfriend,  the Company's Chairman and Chief Executive Officer, as a defendant,
and are  seeking to have this  action  certified  as a class  action.  By way of
damages,  the  plaintiffs  in these  actions are  seeking,  among other  things,
injunctive  relief,  back pay and other monetary  relief.  The Company  disputes
these claims and intends to defend these matters vigorously.  It is too early to
estimate  the  effect,  if any,  these two  lawsuits  may have on the  Company's
financial position or results of operations.

The  Company  is a party to  certain  other  legal  proceedings  arising  in the
ordinary course of its business. Management currently believes that the ultimate
outcome of these other proceedings,  individually and in the aggregate, will not
have a material adverse effect on the Company's financial position or results of
operations.

Impact of the Year 2000 Issue

The Year 2000 issue is the result of computer  programs  being written using two
digits  rather than four to define the  applicable  year.  Any of the  Company's
computer programs that have  date-sensitive  software may recognize a date using
"00" as the year 1900  rather  than the year 2000.  This could  result in system
failure or miscalculations causing disruptions of operations,  including,  among
other things, a temporary inability to process transactions or engage in similar
normal business activities.

The state of readiness

During fiscal 1998, the Company established an oversight  committee,  consisting
of individuals from each of its functional areas, to review all of the Company's
computer  systems and  programs,  as well as the  computer  systems of the third
parties  upon whose data or  functionality  the Company  relies in any  material
respect,  and to assess their ability to process  transactions in the year 2000.
This committee meets regularly to review the progress of the Company's Year 2000
compliance issues. At May 1, 1999, all internal systems have been modified to be
Year 2000  compliant.  Throughout the remainder of fiscal 1999 the Company plans
to  continue   testing  and  monitoring  its  internal  systems  for  Year  2000
compliance.   In  addition,  the  oversight  committee  will  continue  to  meet
throughout  the  remainder  of fiscal  1999 and into the year 2000 to review the
progress  of the  Company's  Year  2000  efforts  and to  address  any  problems
encountered with third parties.

In addition,  the Company has  contacted  its  significant  suppliers  and other
service  providers to determine the extent to which the Company is vulnerable to
those third parties'  failure to remediate their own Year 2000 issues.  Although
most suppliers have responded that they expect to be in substantial  compliance,
there can be no guarantee  that the computer  systems of these third  parties on
which the Company's systems rely will be timely converted,  or that a failure to
convert  by another  company,  or a  conversion  that is  incompatible  with the
Company's systems,  would not have a material adverse effect on the Company. The
Company is not yet in a position to assess any third party's  compliance efforts
with the Year 2000 issue or the impact on the Company, if any, of the failure of
one or more third party's Year 2000 compliance efforts.

Costs to address Year 2000 issues

Through  May 1, 1999,  the costs  incurred  by the  Company for Year 2000 issues
amounted to approximately  $881,000 for external and existing internal resources
that were  expensed as incurred.  The  Company's  remaining  costs for Year 2000
issues are estimated at $699,000,  which  primarily  consist of (i) $283,000 for
the purchase of software and hardware and (ii)  $416,000  representing  external
and existing internal resources that will be expensed as incurred.

Risks of Year 2000 issues

The risks  associated  with failing to remediate  the Year 2000 issues  include,
among  other  things,  temporary  disruptions  in  (i)  store  operations,  (ii)
ordering,  receiving and distributing  merchandise,  (iii) services  provided by
banks such as credit  card  processing  and  authorization,  (iv)  communication
services,  (v) city and government services and (vi) utility services as well as
other vital and necessary operations.

Contingency plans

The oversight  committee is currently in the process of developing a contingency
plan for each area  within the  organization  that could be affected by the Year
2000  issue.   Although  management   currently   anticipates  minimal  business
disruption,  the  failure  of either the  Company  or one of its major  business
partners to remediate the Year 2000 issue could have a materially adverse impact
on the Company's business, operations and financial condition.

Seasonality  and  inflation The  Company's  business is seasonal by nature.  The
Christmas  season  (beginning the Sunday before  Thanksgiving  and ending on the
first  Saturday  after   Christmas),   the   back-to-school   season  (beginning
approximately the first week of August and continuing  through the first 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  33.7% of the  Company's  annual sales based on the
Company's  last three fiscal years ended  January 30,  1999.  In general,  sales
volume varies directly with customer traffic, which is heaviest during the third
and  fourth  quarters  of a  fiscal  year.  Because  of the  seasonality  of the
Company's  business,  results for any quarter are not necessarily  indicative of
the results that may be achieved for the full year.

Inflation  can affect the costs  incurred by the Company in the  purchase of its
merchandise,  the leasing of its stores and certain  components  of its selling,
general and  administrative  expenses.  During the last three fiscal years ended
January 30, 1999,  inflation has not materially affected the Company's business,
although  there can be no  assurance  that  inflation  will not have a  material
adverse effect on the Company in the future.

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

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




<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 -
              11      -         Statement re: Computation of Per Share Earnings
              15      -         Accountants' Awareness Letter
              27      -         Financial Data Schedule

        b)       Reports on Form 8-K  -
        On  February  19,  1999,  the  Company  filed a report  on Form 8-K with
        respect to its  issuance on February 16, 1999 of a press  release  which
        stated,  in part,  that a complaint  on behalf of a purported  class has
        been  filed  in  federal  court  in  Albany,   Georgia  alleging  racial
        discrimination. Such issuance was reported under Item 5 - Other Event.


<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:    May 25, 1999                   /s/ Robert M. Goodfriend
                    ------------------------        ---------------------------
                                                     Robert M. Goodfriend
                                                     Chairman of the Board and
                                                     Chief Executive Officer


             Date:    May 25, 1999                   /s/ Harry M. Call
                    ------------------------        ---------------------------
                                                     Harry M. Call
                                                     Director, President and
                                                     Chief Operating Officer



             Date:    May 25, 1999                   /s/ Edward R. Carlin
                    ------------------------        ---------------------------
                                                     Edward R. Carlin
                                                     Executive Vice President,
                                                     Chief Financial Officer
                                                     and Secretary
                                                     (Principal Financial
                                                     Officer)


             Date:    May 25, 1999                   /s/ David G. Peek
                    ------------------------        ---------------------------
                                                     David G. Peek
                                                     Vice President, Corporate
                                                     Controller and Chief
                                                     Accounting Officer
                                                     (Principal Accounting
                                                     Officer)



<PAGE>