##### Table of Contents



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



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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 4, 2002
|                               |            
|                              
|OR                            
|                              
|o                              |             | 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
incorporation or organization) |  | (I.R.S. Employer
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   o

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, 32,503,480 shares outstanding as of May 28, 2002.





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TABLE OF CONTENTS



|                               |                                                                                                 |                                                   |  |  |  |  |  | 
|------------------------------ | ----------------------------------------------------------------------------------------------- | ------------------------------------------------- |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION
|                               | Item 1    Financial Statements                                                                
|                               |                                                                                                 | Consolidated Statements of Operations (Unaudited)
|                               |                                                                                                 | Consolidated Balance Sheets                      
|                               |                                                                                                 | Consolidated Statements of Cash Flows (Unaudited)
|                               |                                                                                                 | Notes to Consolidated Financial Statements       
|                               |                                                                                                 | INDEPENDENT ACCOUNTANTS REVIEW REPORT           
|                               | Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3  Quantitative and Qualitative Disclosures about Market Risk                            
|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                                                   
|SIGNATURES                    
|Accountants Awareness Letter  



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##### Table of Contents



Goodys Family Clothing, Inc.
Index to Form 10-Q
May 4, 2002

|                                |                                                                                                |                               |                                            |      |  |       | 
|------------------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------- | ------------------------------------------ | ---- |  | ----- | 
|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 |                               |                                            | 9-11 | 
|                                | Item 3  Quantitative and Qualitative Disclosures about Market Risk                            |                               |                                            | 12   | 
|Part II  Other Information     |                                                                                                |                               | 12                                         |     
|                                | 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                      |                                                                                                |                               | 13                                         |     

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PART 1  FINANCIAL INFORMATION




Item 1    Financial Statements

Goodys Family Clothing, Inc. and Subsidiaries




Consolidated Statements of Operations (Unaudited)


(In thousands, except per share amounts)


|                                             |                                     |   |                      |        |             |   |         |        |  
|-------------------------------------------- | ----------------------------------- | - | -------------------- | ------ | ----------- | - | ------- | ------ | -
|                                             |                                     |   | Thirteen Weeks Ended
|                                             |                                     |   |                     
|                                             |                                     |   | May 4, 2002          |        | May 5, 2001
|                                             |                                     |   |                      |        |            
|Sales                                        |                                     | $ | 283,504              |        |             | $ | 263,262 |       
|Cost of sales and occupancy expenses         |                                     |   | 199,046              |        |             |   | 191,805 |       
|                                             |                                     |   |                      |        |             |   |         |       
|                                             | Gross profit                        |   |                      | 84,458 |             |   |         | 71,457 |  
|Selling, general and administrative expenses |                                     |   | 75,646               |        |             |   | 74,551  |       
|                                             |                                     |   |                      |        |             |   |         |       
|                                             | Earnings (loss) from operations     |   |                      | 8,812  |             |   |         | (3,094 | )
|Interest expense                             |                                     |   | 1                    |        |             |   | 67      |       
|Investment income                            |                                     |   | 104                  |        |             |   | 379     |       
|                                             |                                     |   |                      |        |             |   |         |       
|                                             | Earnings (loss) before income taxes |   |                      | 8,915  |             |   |         | (2,782 | )
|Provision (benefit) for income taxes         |                                     |   | 3,343                |        |             |   | (1,043  | )     
|                                             |                                     |   |                      |        |             |   |         |       
|Net earnings (loss)                          |                                     | $ | 5,572                |        |             | $ | (1,739  | )     
|                                             |                                     |   |                      |        |             |   |         |       
|Earnings (loss) per common share:            |                                     |   |                      |        |             |   |         |       
|                                             | Basic                               |   | $                    | 0.17   |             |   | $       | (0.05  | )
|                                             |                                     |   |                      |        |             |   |         |       
|                                             | Diluted                             |   | $                    | 0.17   |             |   | $       | (0.05  | )
|                                             |                                     |   |                      |        |             |   |         |       
|Weighted average common shares outstanding:  |                                     |   |                      |        |             |   |         |       
|                                             | Basic                               |   |                      | 32,462 |             |   |         | 32,420 |  
|                                             |                                     |   |                      |        |             |   |         |       
|                                             | Diluted                             |   |                      | 33,113 |             |   |         | 32,420 |  
|                                             |                                     |   |                      |        |             |   |         |       

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

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Goodys Family Clothing, Inc. and Subsidiaries




Consolidated Balance Sheets


(Dollars in thousands)


|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |         |         | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------- | ------- | ---------------- | ------- | ----------- | ------- | ----------- | ------- | ------- | ------- | 
|                                     |                                                                                                                                                 |                                            |         | May 4, 2002 |         | February 2, 2002 |         | May 5, 2001
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |            
|                                     |                                                                                                                                                 |                                            |         | (unaudited) |         |                  |         |             |         | (unaudited)
|                                    
|ASSETS                               |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|Current Assets                       |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     | Cash and cash equivalents                                                                                                                       |                                            | $       | 45,917      |         |                  | $       | 53,806      |         |             | $       | 33,054  |        
|                                     | Inventories                                                                                                                                     |                                            |         | 201,572     |         |                  |         | 179,971     |         |             |         | 240,307 |        
|                                     | Accounts receivable and other current assets                                                                                                    |                                            |         | 25,136      |         |                  |         | 24,831      |         |             |         | 20,015  |        
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     |                                                                                                                                                 | Total current assets                       |         |             | 272,625 |                  |         |             | 258,608 |             |         |         | 293,376 | 
|Property and equipment, net          |                                                                                                                                                 |                                            | 122,555 |             |         |                  | 128,041 |             |         |             | 137,609 |        
|Other assets                         |                                                                                                                                                 |                                            | 9,585   |             |         |                  | 9,585   |             |         |             | 9,995   |        
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     |                                                                                                                                                 | Total assets                               |         | $           | 404,765 |                  |         | $           | 396,234 |             |         | $       | 440,980 | 
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|Current Liabilities                  |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     | Accounts payable                                                                                                                                |                                            | $       | 119,345     |         |                  | $       | 115,063     |         |             | $       | 139,096 |        
|                                     | Accrued expenses                                                                                                                                |                                            |         | 53,916      |         |                  |         | 58,122      |         |             |         | 57,139  |        
|                                     | Income taxes payable                                                                                                                            |                                            |         | 2,649       |         |                  |         |            |         |             |         |        |        
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     |                                                                                                                                                 | Total current liabilities                  |         |             | 175,910 |                  |         |             | 173,185 |             |         |         | 196,235 | 
|Other long-term liabilities          |                                                                                                                                                 |                                            | 6,308   |             |         |                  | 6,256   |             |         |             | 7,288   |        
|Deferred income taxes                |                                                                                                                                                 |                                            | 14,076  |             |         |                  | 14,077  |             |         |             | 17,049  |        
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     |                                                                                                                                                 | Total liabilities                          |         |             | 196,294 |                  |         |             | 193,518 |             |         |         | 220,572 | 
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|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  32,482,530, 32,451,130
and 32,419,930 shares, respectively |                                            |         | 21,867      |         |                  |         | 21,720      |         |             |         | 21,580  |        
|                                     | Paid-in capital                                                                                                                                 |                                            |         | 10,231      |         |                  |         | 10,194      |         |             |         | 9,574   |        
|                                     | Retained earnings                                                                                                                               |                                            |         | 176,373     |         |                  |         | 170,802     |         |             |         | 189,254 |        
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     |                                                                                                                                                 | Total shareholders equity                 |         |             | 208,471 |                  |         |             | 202,716 |             |         |         | 220,408 | 
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        
|                                     |                                                                                                                                                 | Total liabilities and shareholders equity |         | $           | 404,765 |                  |         | $           | 396,234 |             |         | $       | 440,980 | 
|                                     |                                                                                                                                                 |                                            |         |             |         |                  |         |             |         |             |         |        

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

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Goodys Family Clothing, Inc. and Subsidiaries




Consolidated Statements of Cash Flows (Unaudited)


(In thousands)


|                                                                                       |                         |                                    |                              |                                   |       |                      |         |        |       |         |         |  
|-------------------------------------------------------------------------------------- | ----------------------- | ---------------------------------- | ---------------------------- | --------------------------------- | ----- | -------------------- | ------- | ------ | ----- | ------- | ------- | -
|                                                                                       |                         |                                    |                              |                                   |       | Thirteen Weeks Ended
|                                                                                       |                         |                                    |                              |                                   |       |                     
|                                                                                       |                         |                                    |                              |                                   |       | May 4,               |         | May 5,
|                                                                                       |                         |                                    |                              |                                   |       | 2002                 |         | 2001  
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|Cash Flows from Operating Activities                                                   |                         |                                    |                              |                                   |       |                      |         |       
|Net earnings (loss)                                                                    |                         | $                                  | 5,572                        |                                   |       | $                    | (1,739  | )     
|Adjustments to reconcile net earnings (loss) to net cash
used in operating activities: |                         |                                    |                              |                                   |       |                      |         |       
|                                                                                       |                         | Depreciation and amortization      |                              |                                   | 5,825 |                      |         |        | 5,984 |        
|                                                                                       |                         | Net loss on asset disposals        |                              |                                   | 779   |                      |         |        |      |        
|                                                                                       |                         | Changes in assets and liabilities: |                              |                                   |       |                      |         |        |       |        
|                                                                                       |                         |                                    | Inventories                  |                                   |       | (21,601              | )       |        |       | (32,587 | )      
|                                                                                       |                         |                                    | Accounts payable             |                                   |       | 4,282                |         |        |       | 9,239   |        
|                                                                                       |                         |                                    | Income taxes                 |                                   |       | 3,538                |         |        |       | (4,514  | )      
|                                                                                       |                         |                                    | Other assets and liabilities |                                   |       | (5,381               | )       |        |       | (990    | )      
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|                                                                                       |                         |                                    |                              | Cash used in operating activities |       |                      | (6,986  | )      |       |         | (24,607 | )
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|Cash Flows from Investing Activities                                                   |                         |                                    |                              |                                   |       |                      |         |       
|Acquisitions of property and equipment                                                 |                         |                                    | (1,055                       | )                                 |       |                      | (5,089  | )     
|Proceeds from sale of property and equipment                                           |                         |                                    | 4                            |                                   |       |                      |        |       
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|                                                                                       |                         |                                    |                              | Cash used in investing activities |       |                      | (1,051  | )      |       |         | (5,089  | )
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|Cash Flows from Financing Activities                                                   |                         |                                    |                              |                                   |       |                      |         |       
|Exercise of stock options                                                              |                         |                                    | 148                          |                                   |       |                      |        |       
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|                                                                                       |                         |                                    |                              | Cash used in financing activities |       |                      | 148     |        |       |         |        |  
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|Net decrease in cash and cash equivalents                                              |                         |                                    | (7,889                       | )                                 |       |                      | (29,696 | )     
|Cash and cash equivalents, beginning of period                                         |                         |                                    | 53,806                       |                                   |       |                      | 62,750  |       
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|Cash and cash equivalents, end of period                                               |                         | $                                  | 45,917                       |                                   |       | $                    | 33,054  |       
|                                                                                       |                         |                                    |                              |                                   |       |                      |         |       
|Supplemental Disclosures:                                                              |                         |                                    |                              |                                   |       |                      |         |       
|                                                                                       | Net income tax payments |                                    | $                            | 131                               |       |                      | $       | 4,746  |      
|                                                                                       | Interest payments       |                                    |                              | 1                                 |       |                      |         | 67     |      

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

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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 for interim financial statements. 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 Annual Report on Form 10-K for its fiscal year ended February 2,
2002.

(2) Credit arrangements

In May 2001, the Company entered into a five-year $130,000,000 syndicated
revolving loan and security agreement that 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. The credit facility is secured primarily by the Companys
inventories, receivables and cash and cash equivalents. If availability (as
calculated pursuant to the credit facility) falls below $25,000,000, the
Company would be required, for a period of time, to comply with a financial
covenant requiring it to maintain minimum levels of tangible net worth based on
formulas. The credit facility also contains certain discretionary provisions
that enable the lender to reduce availability. The credit facility bears
interest at LIBOR plus an applicable margin or the prime rate. At May 4, 2002,
the Company had no borrowings and $30,420,000 in letters of credit (not yet
reflected in accounts payable) outstanding under the facility.

(3) Recent accounting pronouncements

In July 2001, the Financial Accounting Standards Board (the FASB) issued
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). This statement revises the standards for
accounting for goodwill and other intangible assets by not allowing
amortization of goodwill and establishing accounting for impairment of goodwill
and other intangible assets. The Company adopted SFAS 142 on February 3, 2002.
To date, the Company has not entered into any business combinations and has no
goodwill or intangible assets that are subject to this statement. Accordingly,
the adoption of SFAS 142 had no impact on the Companys financial statements
and related disclosures.

In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 (SFAS 144), Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supersedes FASB Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, and the accounting and reporting
provisions relating to the disposal of a segment of a business of
Accounting Principles Board Opinion No. 30. The Company adopted SFAS 144
on February 3, 2002; the adoption of this statement did not have a
significant impact on the Companys financial statements.

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(4) Unusual Item

The Company recorded a restructuring charge during the fourth quarter of fiscal
2001 of approximately $1,335,000 for a reduction in the Companys work force at
its corporate office and distribution centers, expected to be completed during
2002. The following is an analysis of the activity in the restructuring
accrual during the first quarter of fiscal 2002:

|                                    |  |                               |          |                   |  |       |         |  |  |   |         |  
|----------------------------------- |  | ----------------------------- | -------- | ----------------- |  | ----- | ------- |  |  | - | ------- | -
|                                    |  | Severance andrelated payments |          | Professional fees |  | Total
|                                    |  |                               |          |                   |  |      
|Accrued balance at February 2, 2002 |  | $                             | 480,000  |                   |  | $     | 332,000 |  |  | $ | 812,000 |  
|Payments                            |  |                               | 258,000  |                   |  |       | 432,000 |  |  |   | 690,000 |  
|Adjustments                         |  |                               | (151,000 | )                 |  |       | 131,000 |  |  |   | (20,000 | )
|                                    |  |                               |          |                   |  |       |         |  |  |   |         |  
|Accrued balance at May 4, 2002      |  | $                             | 71,000   |                   |  | $     | 31,000  |  |  | $ | 102,000 |  
|                                    |  |                               |          |                   |  |       |         |  |  |   |         |  

(5) Contingencies

In February 1999, a lawsuit was filed in the United States District Court for
the Middle District of Georgia and was served on the Company and Robert M.
Goodfriend, its Chairman and Chief Executive Officer, by 20 named plaintiffs,
generally alleging 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. The plaintiffs further allege that the
Company maintained a racially hostile working environment. The plaintiffs
claims are being brought under Title VII of the Civil Rights Act of 1964, as
amended, and under the Civil Rights Act of 1866. The plaintiffs are seeking to
have this action certified as a class action, but only as to the issue of
promotions. By way of damages, the plaintiffs 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 is disputing these claims and is
continuing to defend these matters 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. The Company has various insurance
policies in place in the event of unfavorable outcomes from such proceedings.
The insurance companies level of, and willingness to, support their coverage
could vary depending upon the circumstances of each particular case. As such,
there can be no assurance as to the level of support available from insurance
policies. Management does not currently believe that the ultimate outcome of
all such 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 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.

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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 4, 2002 and May 5,
2001 and the related condensed 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 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 condensed 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 2, 2002 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 18, 2002, 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 February 2, 2002 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 21, 2002

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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) the ability to reverse
negative comparable store sales trends; (ii) competition, including the impact
of competitors pricing and store expansion; (iii) compliance with loan
covenants and the availability of sufficient eligible collateral for borrowing;
(iv) growth of its store base and the ability of the Company to resume its
historical levels of new store growth; (v) trends affecting the Companys
financial condition or results of operations; (vi) the continued availability
of adequate credit support from vendors and factors; (vii) customer demand and
trends in the apparel and retail industry and the acceptance of merchandise
acquired for sale by the Company; (viii) the timely availability of branded and
private label merchandise in sufficient quantities to satisfy customer demand;
(ix) the effectiveness of the recently adopted changes in merchandising,
advertising, pricing and operational strategies; (x) the outcome of pending
trademark and other litigation; (xi) the ability to control shrinkage; (xii)
the success of the Companys information technologies systems; (xiii) the
ability to achieve business plan targets; (xiv) the ability to avoid excessive
markdowns; (xv) the effectiveness of advertising and promotional events; (xvi)
the ability to enter into leases for new store locations; (xvii) the timing,
magnitude and costs of opening new stores; (xviii) individual store
performance, including new stores; (xix) relations with vendors, factors and
employees; (xx) unanticipated needs for additional capital expenditures; (xxi)
the general economic conditions within the Companys markets and an improvement
in the overall retail environment; and (xxii) global political unrest. 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:

|                                             |  |                      |       |             |  |  |       |  
|-------------------------------------------- |  | -------------------- | ----- | ----------- |  |  | ----- | -
|                                             |  | Thirteen Weeks Ended
|                                             |  |                     
|                                             |  | May 4, 2002          |       | May 5, 2001
|                                             |  |                      |       |             | 
|Sales                                        |  |                      | 100.0 | %           |  |  | 100.0 | %
|Cost of sales and occupancy expenses         |  |                      | 70.2  |             |  |  | 72.9  |  
|                                             |  |                      |       |             |  |  |       |  
|Gross profit                                 |  |                      | 29.8  |             |  |  | 27.1  |  
|Selling, general and administrative expenses |  |                      | 26.7  |             |  |  | 28.3  |  
|Unusual items                                |  |                      |      |             |  |  |      |  
|                                             |  |                      |       |             |  |  |       |  
|Earnings (loss) from operations              |  |                      | 3.1   |             |  |  | (1.2  | )
|Interest expense                             |  |                      |      |             |  |  |      |  
|Investment income                            |  |                      | 0.1   |             |  |  | 0.1   |  
|                                             |  |                      |       |             |  |  |       |  
|Earnings (loss) before income taxes          |  |                      | 3.2   |             |  |  | (1.1  | )
|Provision (benefit) for income taxes         |  |                      | 1.2   |             |  |  | (0.4  | )
|                                             |  |                      |       |             |  |  |       |  
|Net earnings (loss)                          |  |                      | 2.0   | %           |  |  | 0.7   | %
|                                             |  |                      |       |             |  |  |       |  

Overview   During the first quarter of fiscal 2002, the Company opened one new
store, remodeled one store and closed one store; the total number of stores in
operation at May 4, 2002 was 332 compared with 318 at the end of the first
quarter of fiscal 2001. In the corresponding period of the previous fiscal
year, one new store was opened and three stores were relocated or remodeled.
Net earnings for the first quarter of fiscal 2002 were $5,572,000, or 2.0% of
sales, compared with net loss of $1,739,000, or (0.7)% of sales, for the first
quarter of fiscal 2001.

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Sales   Sales for the first quarter of fiscal 2002 were $283,504,000, a 7.7%
increase from the $263,262,000 for the first quarter of fiscal 2001. This
increase of $20,242,000 consisted of (i) $15,944,000 in sales from new and
transition stores, and (ii) a $4,298,000 increase in comparable store sales.
Comparable store sales for the first quarter of fiscal 2002 increased 2.6%
compared with the corresponding period of the previous fiscal year. Customer
acceptance of the Companys merchandise offerings, which were supported by new
marketing and advertising initiatives, combined with favorable weather during
the Easter selling season and the second week of April resulted in comparable
store sales increases compared to the same period of the prior year.

Gross profit   Gross profit for the first quarter of fiscal 2002 was
$84,458,000, or 29.8% of sales, a $13,001,000 increase over the $71,457,000,
or 27.1% of sales, in gross profit for the first quarter of the previous
fiscal year. The 2.7% increase in gross profit, as a percent of sales,
resulted from (i) a 2.8% increase in merchandise margins resulting from
acceptance of the Companys merchandise offerings, successful response to the
new marketing and advertising initiatives, and lower per square foot
inventories which allowed the Company to be less promotional, offset by (ii) a
0.1% increase in occupancy costs primarily related to new and relocated
stores.

Selling, general and administrative expenses   Selling, general and
administrative expenses for the first quarter of fiscal 2002 were $75,646,000,
or 26.7% of sales, an increase of $1,095,000 over $74,551,000, or 28.3% of
sales, for the first quarter of the previous fiscal year. Selling, general and
administrative expenses decreased by 1.6%, as a percent of sales, for the
first quarter of fiscal 2002 compared with the first quarter of the previous
fiscal year primarily due to increased leverage related to the comparable
stores sales increase noted above and benefits derived from the reduction of
costs attributable to a corporate restructuring announced at the end of fiscal
2001. The percentage decrease, as a percent of sales, consisted primarily of
decreases in the following: (i) 0.6% in payroll expenses, (ii) 0.4% in
advertising expenses, (iii) 0.2% in depreciation, and (iv) a net 0.4% in all
other selling, general and administrative expenses.

Interest expense   Interest expense for the first quarter of fiscal 2002
decreased by $66,000 compared with the first quarter of the previous fiscal
year.

Investment income   Investment income for the first quarter of fiscal 2002
decreased by $275,000 compared with the first quarter of the previous fiscal
year principally as a result of a decrease in interest rates.

Income taxes   The provision for income taxes for the first quarter of fiscal
2002 was $3,343,000, for an effective tax rate of 37.5% of earnings before
income taxes, compared with a benefit for income taxes of $1,043,000, for an
effective tax rate of 37.5% of loss before income taxes, for the first quarter
of the previous fiscal year.

Liquidity and Capital Resources

Financial position   The Companys primary sources of liquidity are cash flows
from operations, including credit terms from vendors and factors, and
borrowings under its credit facility discussed below. At May 4, 2002, the
Companys working capital was $96,715,000 compared with $97,141,000 at May 5,
2001. At the end of the first quarter of fiscal 2002 compared with the first
quarter of the previous fiscal year, (i) cash and cash equivalents increased
by $12,863,000, (ii) inventories decreased by $38,735,000 as a result of a
strategic initiative to lower overall inventory levels, (iii) net property and
equipment decreased by $15,054,000 primarily from depreciation, and (iv)
accounts payable decreased by $19,751,000. Trade payables, as a percent of
inventories, were 59.2% at May 4, 2002 compared with 57.9% at May 5, 2001.

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In May 2001, the Company entered into a five-year $130,000,000 syndicated
revolving loan and security agreement that 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. The credit facility is secured primarily by the Companys
inventories, receivables and cash and cash equivalents. If availability (as
calculated pursuant to the credit facility) falls below $25,000,000, the
Company would be required, for a period of time, to comply with a financial
covenant requiring it to maintain minimum levels of tangible net worth based on
formulas. The credit facility also contains certain discretionary provisions
that enable the lender to reduce availability. The credit facility bears
interest at LIBOR plus an applicable margin or the prime rate.

At May 4, 2002 and May 5, 2001, the Company had (i) no cash borrowings under
its credit agreements and (ii) letters of credit outstanding not yet reflected
in accounts payables of $30,420,000 and $19,369,000, respectively. There were
no cash borrowings at any time during the first quarter of fiscal 2002 or
fiscal 2001. Letters of credit outstanding averaged $29,753,000 during the
first quarter of fiscal 2002 compared with $33,286,000 during the first quarter
of fiscal 2001, with the highest balance of $59,698,000 in April 2002 compared
with $42,188,000 in April 2001.

Cash flows   Operating activities used cash of $6,986,000 in the first quarter
of fiscal 2002 compared with $24,607,000 in the first quarter of the previous
fiscal year. Cash used in operating activities during the first quarter of
fiscal 2002 for seasonal inventory build-ups and new stores was $21,601,000
compared with $32,587,000 for the first quarter of the previous fiscal year.
Accounts payable provided cash of $4,282,000 in the first quarter of fiscal
2002 compared with $9,239,000 for the first quarter of the previous fiscal
year. Other assets and liabilities used cash of $5,381,000 in the first
quarter of fiscal 2002 compared with $990,000 for the first quarter of the
previous fiscal year. Depreciation and amortization amounted to $5,825,000 in
the first quarter of fiscal 2002 compared with $5,984,000 for the first
quarter of the previous fiscal year.

Cash flows from investing activities for the first quarter of fiscal 2002
reflected a net use of cash amounting to $1,051,000 compared with $5,089,000
for the first quarter of the previous fiscal year. Cash was used primarily to
fund capital expenditures for new, remodeled stores and for other corporate
purposes.

In fiscal 1999, the Company entered into a split-dollar life insurance
agreement, whereby the Company agreed to pay the premiums for certain
second-to-die policies insuring the lives of Mr. and Mrs. Robert M.
Goodfriend, which policies are owned by a trust for the benefit of the
Goodfriends children. The Company currently expects to pay premiums on such
policies of $2.4 million in fiscal 2002, and in fiscal 2003
repay a $1.3 million loan taken against such policies in fiscal 2001. The Company has
certain rights under this agreement, including the right to terminate these
policies at any time prior to the occurrence of certain restricting events.

Outlook   The Company plans to open one new store, relocate or remodel three
stores and close approximately six to eight stores during the remaining three
quarters of fiscal 2002. Capital expenditures for the remainder of fiscal 2002
are estimated to be approximately $10,000,000, primarily related to store
improvements, management information systems and general corporate purposes.

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 anticipated 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 the risks and uncertainties described in the Companys 2001 Annual
Report on Form 10-K under the caption Certain Factors That May Affect Future
Results (such as the Companys failure to continue to recognize increases in
comparable store sales and to successfully execute its business plans and
strategies, and the lack of availability under the credit facility) could have
a material adverse effect on working capital or results of operations.

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Item 3  Quantitative and Qualitative Disclosures about Market Risk

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




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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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 31, 2002 |  | /s/ Robert M. Goodfriend                                                                                      
|      |  |              |  |                                                                                                               
|      |  |              |  | Robert M. Goodfriend
Chairman of the Board and Chief Executive Officer                                        
|     
|Date: |  | May 31, 2002 |  | /s/ Lana Cain Krauter                                                                                         
|      |  |              |  |                                                                                                               
|      |  |              |  | Lana Cain Krauter
President and Chief Merchandising Officer                                                   
|     
|Date: |  | May 31, 2002 |  | /s/ Edward R. Carlin                                                                                          
|      |  |              |  |                                                                                                               
|      |  |              |  | Edward R. Carlin
Executive Vice President, Chief Financial Officer and Secretary
(Principal Financial Officer)
|     
|Date: |  | May 31, 2002 |  | /s/ David G. Peek                                                                                             
|      |  |              |  |                                                                                                               
|      |  |              |  | David G. Peek
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)               

13