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           July 29, 2000
                               -----------------------

                                            OR

 [    ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
              SECURITIES EXCHANGE ACT OF 1934
For the transition period from  ________________ to ________________  Commission
file number 0-19526 Goody's Family Clothing, Inc.
              (Exact name of registrant as specified in its charter)

         Tennessee                                     62-0793974
-----------------------------------------------------------------
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification Number)
400 Goody's Lane,               Knoxville, Tennessee              37922
-----------------------------------------------------------------------
(Address of principal executive offices)                        (Zip Code)

                            (865) 966-2000
              (Registrant's telephone number, including area code)

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

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

                                       APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.
                 Common Stock, no par value, 32,528,330 shares outstanding as of
August 31, 2000.


<PAGE>



                          Goody's Family Clothing, Inc.
                               Index to Form 10-Q
                                  July 29, 2000



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.  13


Part II - Other Information..............................................  14
          -----------------

     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...............................................................  15















<PAGE>



PART 1 - FINANCIAL INFORMATION

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

Item 1  - Consolidated Financial Statements

Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Operations - Unaudited
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                     Thirteen                            Twenty-six
                                                  Weeks Ended                           Weeks Ended
                                          -------------------------------       -------------------
                                            July 29,           July 31,            July 29,         July 31,
                                             2000               1999                2000             1999
                                          -------------      ------------       -------------     -------
<S>                                     <C>                 <C>                 <C>               <C>

Sales                                     $    295,496       $    271,462       $   573,779       $    522,211
Cost of sales and occupancy expenses           230,153            189,725            429,232           367,003
                                          ------------       ------------            -------      ------------
Gross profit                                    65,343             81,737            144,547           155,208
Selling, general and administrative
   expenses                                     71,512             66,545            144,453           128,699
                                          ------------       ------------       ------------      ------------
(Loss) earnings from operations                 (6,169)            15,192                 94            26,509
Interest expense                                    51                 53                107               106
Investment income                                  617                699              1,259             1,277
                                          ------------       ------------       ------------      ------------
(Loss) earnings before income taxes             (5,603)            15,838              1,246            27,680
(Benefit) provision for income taxes            (2,101)             5,965                467            10,382
                                          -------------      ------------       ------------      ------------
(Loss) earnings before cumulative
   effect of accounting change                  (3,502)             9,873                779            17,298
Cumulative effect of accounting change,
    net of tax benefit of $124                       -                  -                207                 -
                                          ------------       ------------       ------------      ------------
Net (loss) earnings                       $     (3,502)      $      9,873       $        572      $     17,298
                                          =============      ============       ============      ============

(Loss) earnings per common share
   Basic
     (Loss) earnings before cumulative
       effect of accounting change        $     (0.11)       $       0.30       $       0.02      $       0.52
     Cumulative effect of accounting
       change                                        -                  -                  -                 -
                                          ------------       ------------       ------------      ------------
     Basic net (loss) earnings per share  $     (0.11)       $       0.30       $       0.02      $       0.52
                                          ============       ============       ============      ============

   Diluted
     (Loss) earnings before cumulative
       effect of accounting change        $     (0.11)       $       0.29       $       0.02      $       0.51
     Cumulative effect of accounting
       change                                        -                  -                  -                 -
                                          ------------       ------------       ------------      ------------
     Diluted net (loss) earnings per share$     (0.11)       $       0.29       $       0.02      $       0.51
                                          ============       ============       ============      ============

Weighted average common
   shares outstanding
     Basic                                      32,525             33,318             32,557            33,325
                                          ============       ============       ============      ============
     Diluted                                    32,525             33,900             32,740            33,909
                                          ============       ============       ============      ============

</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>

                                                                     July 29, 2000    January 29, 2000     July 31, 1999
                                                                   ----------------  -------------------  --------------
                                                                     (unaudited)                           (unaudited)
<S>                                                                  <C>             <C>                 <C>

ASSETS
Current Assets
   Cash and cash equivalents                                         $       57,633     $      97,299     $       70,858
   Inventories                                                              224,973           182,894            209,666
   Accounts receivable and other current assets                              16,262            20,352             15,068
                                                                     --------------     -------------     --------------
        Total current assets                                                298,868           300,545            295,592
Property and equipment, net                                                 124,384           116,892            113,343
Other assets                                                                  9,763             5,856              3,647
                                                                     --------------     -------------     --------------
         Total assets                                                $      433,015     $     423,293     $      412,582
                                                                     ==============     =============     ==============


LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
   Accounts payable                                                  $      155,271     $     143,685     $      133,885
   Accrued expenses                                                          51,578            52,329             49,506
   Income taxes payable                                                           -                 -              1,764
   Current portion of long-term debt                                            318               318                289
                                                                     --------------     -------------     --------------
        Total current liabilities                                           207,167           196,332            185,444
Long-term debt                                                                    -                 -                318
Other long-term liabilities                                                   4,704             4,345              3,790
Deferred income taxes                                                        11,536            11,610             11,223
                                                                     --------------     -------------     --------------
        Total liabilities                                                   223,407           212,287            200,775
                                                                     --------------     -------------     --------------

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 - 32,488,330, 32,799,380
      and 33,245,480 shares, respectively                                    21,817            23,832             27,104
  Paid-in capital                                                             9,568             9,523              9,479
  Retained earnings                                                         178,223           177,651            175,224
                                                                     --------------     -------------     --------------
       Total shareholders' equity                                           209,608           211,006            211,807
                                                                     --------------     -------------     --------------
       Total liabilities and shareholders' equity                    $      433,015     $     423,293     $      412,582
                                                                     ==============     =============     ==============
</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 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
                                                                                    -----------------------------------------
                                                                                             Twenty-six Weeks Ended
                                                                                    -----------------------------------------
                                                                                      July 29, 2000         July 31, 1999
                                                                                   -------------------   -------------------
<S>                                                                                 <C>                     <C>

Cash Flows from Operating Activities
Net earnings                                                                        $           572         $      17,298
Adjustments to reconcile net earnings to net cash
  provided by operating activities:
     Depreciation and amortization                                                            9,486                 7,819
     Net loss on asset disposals                                                                326                   289
     Cumulative effect of accounting change                                                     207                     -
     Changes in assets and liabilities:
         Inventories                                                                       (42,079)               (43,979)
         Accounts payable                                                                    30,071                26,794
         Income taxes                                                                       (1,738)                 2,398
         Other assets & liabilities                                                           3,452                 5,428
                                                                                    ---------------         -------------
             Cash provided by operating activities                                              297                16,047
                                                                                    ---------------         -------------

Cash Flows from Investing Activities
Acquisitions of property and equipment                                                      (17,336)             (16,690)
Proceeds from sale of property and equipment                                                     32                    28
                                                                                    ---------------         -------------
           Cash used in investing activities                                                (17,304)             (16,662)
                                                                                    ---------------         ------------

Cash Flows from Financing Activities
Exercise of stock options                                                                       547                   103
Shares repurchased and retired                                                               (2,517)               (1,071)
Changes in cash management accounts                                                         (20,689)              (16,851)
                                                                                    ----------------        --------------
           Cash used in financing activities                                                (22,659)              (17,819)
                                                                                    ----------------        --------------

Net decrease in cash and cash equivalents                                                   (39,666)              (18,434)
Cash and cash equivalents, beginning of period                                               97,299                89,292
                                                                                    ---------------         -------------
Cash and cash equivalents, end of period                                            $        57,633         $      70,858
                                                                                    ===============         =============

Supplemental Disclosures:
    Income tax payments                                                             $         3,613         $       7,866
    Interest payments                                                                            77                    75


</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  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 January 29, 2000.

(2)......Changes in accounting methodology

As more fully  discussed in the  Company's  Current  Report on Form 8-K filed on
March 2, 2000, the Company changed its accounting methodology, effective January
30, 2000 (the first day of the first quarter of fiscal  2000),  to recognize the
sale and related gross profit from layaways upon delivery of the  merchandise to
the customer.  This new accounting  methodology  for layaways  reduced  earnings
(before  the  cumulative  effect  of the  accounting  change)  by  approximately
$500,000,  or $0.02 per diluted share,  for the twenty-six  weeks ended July 29,
2000; the effect for the thirteen weeks ended July 29, 2000 was not significant.

     As also  disclosed  in  that  Current  Report,  the  Company  retroactively
restated  its  balance  sheet  and  statement  of  operations  as of and for the
thirteen and  twenty-six  weeks ended July 31, 1999 to accrue for sales  returns
and adopt a change in accounting  methodology  related to leased  departments in
response to the Securities and Exchange  Commission's Staff Accounting  Bulletin
No. 101, "Revenue Recognition in Financial Statements."

(3)  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 on May 31, 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.

(4) 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.


<PAGE>


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

(5) Recent accounting pronouncements

Accounting for derivative instruments and hedging activities

The American  Institute of Certified Public  Accountants has issued Statement of
Financial  Accounting  Standards No. 133 "Accounting for Derivative  Instruments
and Hedging  Activities" ("SFAS No.133") which, as amended, is effective for the
Company in fiscal 2001.  This  standard  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.

(6)  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. 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
disputes  these claims and intends to defend this matter  vigorously.  It is too
early  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.  While the costs and other  effects of
pending  proceedings  could  have a  material  adverse  effect on the  Company's
business,  financial  condition  and  operating  results,  management  currently
believes that the ultimate outcome of all pending legal proceedings  (other than
the matter noted in the paragraph  above),  individually  and in the  aggregate,
should not have a material  adverse effect on the Company's  financial  position
and results of operations.






<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 July 29, 2000 and July 31,
1999 and the related  consolidated  statements of operations  and cash flows for
the thirteen and twenty-six week periods then ended. These financial  statements
are the responsibility of the Company's management.

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

Based on our reviews, we are not aware of any material modifications that should
be made to such 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 January 29, 2000 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 14,  2000,  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  29, 2000 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
August 15, 2000











<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  acceptable  leases  for new store  locations;  (vii) the
timing,  magnitude  and costs of opening new  stores;  (viii)  individual  store
performance,  including  new stores;  (ix) employee  relations;  (x) the 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 success of the new credit card program; (xiv) the impact
of  the  stores'  new  presentation  strategy;   (xv)  the  ability  to  achieve
improvements  in  efficiency  in  merchandise  distribution  through  the second
distribution center, without material start-up problems; and (xvi) the Company's
ability  to  successfully  execute  its  business  plans  and  strategies.   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                    Twenty-six
                                                           Weeks Ended                 Weeks Ended
                                                   --------------------------    -----------------
                                                       July 29,    July 31,          July 29,   July 31,
                                                      2000           1999           2000          1999
                                                   ------------  ------------    -----------   -------
<S>                                                <C>            <C>            <C>           <C>

    Sales                                            100.0%          100.0%        100.0%        100.0%
    Cost of  sales and occupancy expenses             77.9            69.9          74.8          70.3
                                                     -----           -----         -----         -----
    Gross profit                                      22.1            30.1          25.2          29.7
    Selling, general and administrative expenses      24.2            24.5          25.2          24.6
                                                     -----           -----         -----         -----
    (Loss) earnings from operations                   (2.1)            5.6           -             5.1
    Interest expense                                     -             -             -             -
    Investment income                                  0.2             0.2           0.2           0.2
                                                     -----           -----         -----         -----
    (Loss) earnings before income taxes               (1.9)            5.8           0.2           5.3
    (Benefit) provision for income taxes              (0.7)            2.2           0.1           2.0
                                                     ------          -----         -----         -----
    Net (loss) earnings                               (1.2)%           3.6%          0.1%          3.3%
                                                     ======          =====         =====         =====

</TABLE>

Thirteen Weeks Ended July 29, 2000 Compared with Thirteen Weeks Ended July 31,
1999

Overview  During the second  quarter of fiscal 2000, the Company opened four new
stores and relocated one store, bringing the total number of stores in operation
at July  29,  2000 to 297,  compared  with  269 at July  31,  1999.  During  the
corresponding  period of the previous  fiscal year,  the Company  opened two new
stores,  relocated five stores and remodeled two stores. Net loss for the second
quarter  of fiscal  2000 was  $3,502,000,  or 1.2% of sales,  compared  with net
earnings of $9,873,000, or 3.6% of sales, for the second quarter of fiscal 1999.


<PAGE>



Sales  Sales for the second  quarter of fiscal 2000 were  $295,496,000,  an 8.9%
increase over the  $271,462,000  in sales for the second quarter of fiscal 1999.
This increase of $24,034,000  consisted  primarily of additional  sales from new
and  transition  stores which was offset by a 1.8% decrease in comparable  store
sales. Sales for the second quarter of fiscal 2000 were particularly weak in the
men's and  junior's  divisions as well as all basic denim  departments.  Average
price per unit of merchandise  sold during the second quarter of fiscal 2000 was
lower  than  the  second  quarter  of  fiscal  1999 as a result  of  significant
promotional  activity  which further  contributed to a decline in the comparable
store sales during the second quarter of fiscal 2000.

Gross profit Gross profit for the second quarter of fiscal 2000 was $65,343,000,
or 22.1% of sales, a $16,394,000  decrease from the $81,737,000 in gross profit,
or 30.1% of sales, generated for the second quarter of the previous fiscal year.
The 8.0% decrease in gross profit,  as a percent of sales, in the second quarter
of fiscal 2000 compared with the second  quarter of fiscal 1999 resulted from an
increase in cost of sales of 7.7% and an increase  in  occupancy  costs of 0.3%.
During the second quarter of fiscal 2000, gross margins were negatively impacted
as the  Company  reacted  to  declining  comparable  store  sales by  increasing
promotional  activities.  The  increased  promotional  activity was necessary to
liquidate excess merchandise to reach acceptable  inventory levels. The increase
in occupancy costs primarily  resulted from higher rents associated with new and
relocated stores and a decrease in comparable store sales as discussed above.

Selling, general and administrative expenses Selling, general and administrative
expenses  for the second  quarter of fiscal 2000 were  $71,512,000,  or 24.2% of
sales, an increase of $4,967,000 from  $66,545,000,  or 24.5% of sales,  for the
second  quarter of fiscal  1999.  The 0.3%  decrease  in  selling,  general  and
administrative expenses, as a percent of sales, for the second quarter of fiscal
2000  compared  with the second  quarter of fiscal 1999 resulted from (i) a 0.2%
decrease in stores'  utilities  expenses,  (ii) a 0.1% decrease in  professional
fees,  (iii) a 0.2%  decrease in store  supplies  and  repairs  and  maintenance
expenses,  and  (iv) a net 0.2%  decrease  in all  other  selling,  general  and
administrative  expenses which were  partially  offset by a (a) 0.2% increase in
store salaries and (b) 0.2% increase in depreciation and amortization expense.

Interest  expense  Interest  expense  for the  second  quarter  of  fiscal  2000
decreased by $2,000  compared  with the second  quarter of the  previous  fiscal
year.

Investment  income  Investment  income  for the second  quarter  of fiscal  2000
decreased by $82,000  compared  with the second  quarter of the previous  fiscal
year primarily as a result of a decrease in invested funds during the period.

Income taxes The benefit for income taxes for the second  quarter of fiscal 2000
was $2,101,000,  for an effective tax rate of 37.5% of loss before income taxes,
compared with a provision for income taxes of  $5,965,000,  for an effective tax
rate of 37.7% of earnings  before  income taxes,  for the second  quarter of the
previous fiscal year.

Twenty-Six  Weeks Ended July 29, 2000 Compared with Twenty-Six  Weeks Ended July
31, 1999

Overview During the twenty-six  weeks ended July 29, 2000, the Company opened 12
new stores, relocated one store and closed two stores, bringing the total number
of stores in  operation at July 29, 2000 to 297,  compared  with 269 at July 31,
1999. During the  corresponding  period of the previous fiscal year, the Company
opened 12 new  stores,  relocated  12 stores  and  remodeled  four  stores.  Net
earnings for the twenty-six weeks ended July 29, 2000 were $572,000,  or 0.1% as
a percent of sales,  compared with  $17,298,000,  or 3.3% as a percent of sales,
for the twenty-six weeks ended July 31, 1999.

Sales Sales for the twenty-six  weeks ended July 29, 2000 were  $573,779,000,  a
9.9% increase over the $522,211,000 in sales for the corresponding period of the
previous fiscal year. This increase of $51,568,000 consisted of additional sales
from new and transition stores which was offset by a 1.6% decrease in comparable
store sales.  The sluggish  sales during the first quarter of fiscal 2000 caused
inventory  levels  to rise  above  the  Company's  business  plan.  The  Company
responded  with  intense  promotional  activities  during the second  quarter of
fiscal  2000 that  lowered the average  price per unit of  merchandise  sold and
ultimately overall sales.

Gross  profit  Gross  profit for the  twenty-six  weeks  ended July 29, 2000 was
$144,547,000, or 25.2% of sales, a $10,661,000 decrease from the $155,208,000 in
gross profit, or 29.7% of sales,  generated for the corresponding  period of the
previous fiscal year. The 4.5% decrease in gross profit,  as a percent of sales,
for the twenty-six  weeks ended July 29, 2000 compared with the twenty-six weeks
ended July 31,  1999  resulted  from an increase in cost of sales of 4.2% and an
increase in occupancy  costs of 0.3%.  The  increase in cost of sales  primarily
resulted  from  promotional   activities,   including  additional  markdowns  on
clearance of spring and summer  merchandise.  The  increase in  occupancy  costs
primarily  resulted from higher rents  associated with new and relocated  stores
and a decrease in comparable store sales as discussed above.

Selling, general and administrative expenses Selling, general and administrative
expenses  for the  twenty-six  weeks ended July 29, 2000 were  $144,453,000,  or
25.2% of sales, an increase of $15,754,000 from $128,699,000, or 24.6% of sales,
for the  corresponding  period of the previous fiscal year. The 0.6% increase in
selling,  general and  administrative  expenses,  as a percent of sales, for the
twenty-six  weeks ended July 29, 2000 compared with the  twenty-six  weeks ended
July 31, 1999 resulted from (i) a 0.4% increase in advertising  and  promotional
expenses and (ii) a 0.5% increase in store  salaries  which were offset by (a) a
0.2% decrease in stores'  utilities  expenses and (b) a net 0.1% decrease in all
other selling, general and administrative expenses.

Interest  expense  Interest expense for the twenty-six weeks ended July 29, 2000
increased  by $1,000  compared  with the  corresponding  period of the  previous
fiscal year.

Investment income Investment income for the twenty-six weeks ended July 29, 2000
decreased  by $18,000  compared  with the  corresponding  period of the previous
fiscal year  primarily  as a result of a decrease in invested  funds  during the
period.

Income taxes The provision for income taxes for the twenty-six  weeks ended July
29, 2000 was  $467,000,  for an effective  tax rate of 37.5% of earnings  before
income taxes,  compared with $10,382,000,  for an effective tax rate of 37.5% of
earnings  before  income  taxes,  for the  corresponding  period of the previous
fiscal year.

Cumulative  effect of  accounting  change - The Company  changed its  accounting
methodology,  effective  January 30, 2000 (the first day of the first quarter of
fiscal 2000),  to recognize the sale and related gross profit from layaways upon
delivery of the merchandise to the customer.  The cumulative  effect of this new
accounting  methodology for layaways was recorded in the first quarter of fiscal
2000 and reduced  earnings by  $207,000,  net of a tax benefit of  $124,000.  In
addition,  this new accounting methodology for layaways reduced earnings (before
cumulative effect of accounting change) by approximately  $500,000, or $0.02 per
diluted  share,  for the twenty-six weeks ended July 29, 2000; the effect on the
thirteen weeks ended July 29, 2000 was not significant.

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  July  29,  2000,  the  Company's  working  capital  was
$91,701,000  compared  with  $110,148,000  at July 31,  1999.  At July 29,  2000
compared  with  July  31,  1999,  (i) cash and  cash  equivalents  decreased  by
$13,225,000,  (ii) net property and equipment  increased by  $11,041,000,  (iii)
inventories  increased by  $15,307,000  and (iv) accounts  payable  increased by
$21,386,000.  The net increase in inventories  was primarily due to the addition
of  internally  operated shoe  departments  as well as for new stores which were
offset by lower inventories on a store by store basis for existing stores. Trade
payables  as a percent of  inventories  increased  to 69.0% at July 29,  2000 as
compared with 63.9% at July 31, 1999.

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 on May 31, 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 July 29,  2000,  the  Company  had no cash  borrowings  and  $68,295,000  was
outstanding  for  letters  of  credit  compared  with  no  cash  borrowings  and
$54,187,000  outstanding  for  letters  of credit at July 31,  1999.  During the
twenty-six  weeks  ended  July 29,  2000,  the  Company  had no cash  borrowings
compared with average cash  borrowings  of $19,000 (with the highest  balance of
$2,000,000  in March 1999)  during the  twenty-six  weeks  ended July 31,  1999.
Letters of credit outstanding  averaged  $65,897,000 during the twenty-six weeks
ended July 29, 2000 compared with $47,128,000  during the twenty-six weeks ended
July 31, 1999. The highest balance of letters of credit  outstanding  during the
twenty-six  weeks ended July 29, 2000 was  $79,789,000  (in June 2000)  compared
with $58,464,000 (in July 1999) during the twenty-six weeks ended July 31, 1999.


<PAGE>



Cash Flows  Operating  activities  provided  cash of $297,000 in the  twenty-six
weeks ended July 29, 2000 compared with $16,047,000 in the corresponding  period
of the previous  fiscal year.  Cash used for  increases in inventory  during the
twenty-six  weeks  ended July 29,  2000 and July 31,  1999 was  $42,079,000  and
$43,979,000,  respectively.  Accounts  payable  provided cash of $30,071,000 and
$26,794,000  in the  twenty-six  weeks  ended July 29,  2000 and July 31,  1999,
respectively.  Other assets and  liabilities  provided cash of $3,452,000 in the
twenty-six   weeks  ended  July  29,  2000  compared  with   $5,428,000  in  the
corresponding period of the previous fiscal year.  Depreciation and amortization
expenses were $9,486,000 and $7,819,000 for the twenty-six  weeks ended July 29,
2000 and July 31, 1999, respectively.

Cash flows from investing activities reflected a $17,304,000 and $16,662,000 net
use of cash for the  twenty-six  weeks  ended July 29,  2000 and July 31,  1999,
respectively.  Cash was used primarily to fund capital expenditures for (i) new,
relocated and remodeled  stores,  (ii) the  construction  of a new  distribution
center, and (iii) for general corporate purposes.

Cash used by financing  activities for the twenty-six  weeks ended July 29, 2000
was $22,659,000  compared with $17,819,000 for the  corresponding  period of the
previous  fiscal  year.  The  Company's  cash  management  program  used cash of
$20,689,000  in  the  twenty-six   weeks  ended  July  29,  2000  compared  with
$16,851,000 for the corresponding period of the previous fiscal year. During the
twenty-six weeks ended July 29, 2000, the Company received  $502,000 in cash and
realized  a tax  benefit of  $45,000,  compared  with  $73,000 in cash and a tax
benefit of $30,000 during the corresponding period of the previous year from the
issuance of common stock upon the exercise of stock  options.  In addition,  the
Company  purchased  423,000  shares  of its  common  stock for an  aggregate  of
$2,517,000  during  the  twenty-six  weeks  ended  July 29,  2000  under a stock
repurchase  plan  authorized by the  Company's  Board of Directors in June 1999.
Since the inception of the plan, the Company has purchased  1,008,300  shares of
its common stock for an aggregate of $7,024,000.

Outlook The Company  plans to open  approximately  18 new stores and relocate or
remodel  approximately  14 stores  during the last two  quarters of fiscal 2000.
Management estimates that capital expenditures of approximately $37,700,000 will
be required for (i) opening new stores,  (ii) upgrading  existing stores,  (iii)
construction  of  a  new  distribution   center,  (iv)  upgrading  the  existing
distribution  center,  computer  systems  and  equipment,  and (v)  for  general
corporate  purposes  during the remainder of fiscal 2000. The Company also plans
to continue  purchasing  shares of its common  stock,  from time to time, in the
open  market  or in  privately  negotiated  transactions,  depending  on  price,
prevailing market conditions and other factors.

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.  However,  an adverse outcome of pending
litigation  (as  described  in  "Note  (6)   Contingencies"   in  the  Notes  to
Consolidated Financial Statements) could negatively affect working capital.

The  Company is  reevaluating  its  business  plan for the second half of fiscal
2000, and is now planning  comparable store sales to be flat for that period. As
a result,  the Company no longer believes that, as had been  previously  stated,
earnings  per share for fiscal  2000 will reach the $0.81 per share  recorded in
fiscal 1998.  Comparable  store sales for August 2000 decreased 1.9% from August
1999.  During August 2000, the Company  continued  clearing summer  inventory by
selling that  merchandise  at a lower  average price per unit compared with
August of last year.

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  33.2% of the  Company's  annual sales based on the
Company's  last three fiscal years ended  January 29,  2000.  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 29, 2000,  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

The Company held its Annual Meeting of Shareholders  (the "Meeting") on June 21,
2000 at which the election of directors was submitted to a vote of shareholders.

At the Meeting,  the following  persons were elected as directors of the Company
for three year terms expiring at the 2003 Annual Meeting of Shareholders:

Harry M. Call -  31,331,195  shares of common  stock  were voted in favor of his
election;  218,318 shares of common stock were withheld and 1,121,867  shares of
common  stock were not voted.  There were no  abstentions  or broker  non-votes.
Effective July 28, 2000, Mr. Call resigned from the Board.

Samuel J. Furrow - 31,330,650  shares of common stock were voted in favor of his
election;  218,863 shares of common stock were withheld; and 1,121,867 shares of
common stock were not voted. There were no abstentions or broker non-votes.

The other  directors of the Company  include Robert M.  Goodfriend and Robert F.
Koppel, whose terms expire at the 2001 Annual Meeting of Shareholders, and Irwin
L.  Lowenstein  and Cheryl L.  Turnbull,  whose terms  expire at the 2002 Annual
Meeting of Shareholders.

Item 5.  -  Other Information  - None

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

10.77    Separation agreement and general release between the Registrant and
           Keith J. Reichelderfer.*
10.78    Separation agreement and general release between the Registrant and
           Thomas R. Kelly, Jr.*
10.79    Goody's Family Clothing, Inc. Amended and Restated 1991 Stock Incentive
           Plan.*
10.80    Goody's Family Clothing, Inc. Amended and Restated 1993 Stock Option
           Plan.*
10.81    Goody's Family Clothing, Inc. Amended and Restated 1997 Stock Option
           Plan.*
10.82    Goody's Family Clothing, Inc. Amended and Restated Discounted Stock
           Option Plan for Directors.*
10.83    Employment agreement between the Registrant and John A. Payne dated
           July 18, 2000.*
10.84    Separation agreement and general release between the Registrant and
           Harry M. Call.*
15       Accountants' Awareness Letter
27       Financial Data Schedule
        * - The indicated exhibit is a management  contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form 10-Q.
        b)   Reports on Form 8-K  -  None



<PAGE>





                          GOODY'S FAMILY CLOTHING, INC.



                                   SIGNATURES



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





                                                   GOODY'S FAMILY CLOTHING, INC.
                                                                   (Registrant)


             Date:    August 31, 2000               /s/ Robert M. Goodfriend
                    --------------------    ---------------------------------
                                                       Robert M. Goodfriend
                                                       Chairman of the Board and
                                                       Chief Executive Officer


             Date:    August 31, 2000               /s/ Lana Cain Krauter
                    --------------------    -----------------------------
                                                       Lana Cain Krauter
                                                       President, Special
                                                       Assistant to the Chairman



             Date:    August 31, 2000               /s/ Edward R. Carlin
                    --------------------    ----------------------------
                                                       Edward R. Carlin
                                                       Executive Vice President,
                                                       Chief Financial Officer
                                                       and Secretary
                                                       (Principal Financial
                                                       Officer)



             Date:    August 31, 2000               /s/ David G. Peek
                    --------------------    -------------------------
                                                       David G. Peek
                                                       Vice President, Corporate
                                                       Controller and
                                                       Chief Accounting Officer
                                                       (Principal Accounting
                                                       Officer)





<PAGE>