2

                            UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington D.C.  20549


                              FORM 10-Q

      [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 30, 2005

                                  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 No.  1-10892


                        HAROLD'S STORES, INC.
        (Exact name of registrant as specified in its charter)



        Oklahoma                                    73-1308796
    (State or other                                (IRS Employer
    jurisdiction of                             Identification No.)
    incorporation or
     organization)

   5919 Maple Avenue                              (214) 366-0600
  Dallas, Texas  75235                        (Registrant's telephone
 (Address of  principal                               number,
   executive offices)                          including area code)
       (Zip Code)

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   [   ]

Indicate by check mark whether the registrant is an accelerated  filer
(as defined in Rule 12b-2 of the Exchange Act)

             Yes   [   ]                     No   [X]

Indicate  by check mark whether the registrant is a shell company  (as
defined in Rule 12b-2 of the Exchange Act)

             Yes   [   ]                     No   [X]

Indicate  the  number of shares outstanding of each  of  the  issuer's
classes of common stock, as of the latest practicable date.

As  of  August 31, 2005, the registrant had 6,223,508 shares of Common
Stock outstanding.



                  Harold's Stores, Inc. & Subsidiaries
                                Index to
                      Quarterly Report on Form 10-Q
                   For the Period Ended July 30, 2005


Part I - FINANCIAL INFORMATION                                        Pag
                                                                       e

Item Financial Statements
1.

     Consolidated Balance Sheets - July 30, 2005 (unaudited) and        3
     January 29, 2005

     Consolidated Statements of Operations -
          Thirteen and Twenty-Six Weeks ended July 30, 2005             5
          (unaudited) and July 31, 2004 (Restated), (unaudited)

     Consolidated Statements of Cash Flows -
          Twenty-Six Weeks ended July 30, 2005 (unaudited) and July     6
          31, 2004 (Restated), (unaudited)

     Notes to Interim Consolidated Financial Statements                 7

Item Management's Discussion and Analysis of Financial Condition and   13
2.   Results of Operations

Item Quantitative and Qualitative Disclosures About Market Risk        17
3.

Item Controls and Procedures                                           17
4.

Part II - OTHER INFORMATION

Item Legal Proceedings                                                 17
1.

Item Unregistered Sales of Equity Securities and Use of Proceeds       17
2.

Item Defaults Upon Senior Securities                                   17
3.

Item Submission of Matters to a Vote of Security Holders               18
4.

Item Other Information                                                 18
5.

Item Exhibits                                                          19
6.

     Signatures                                                          7 20

  The  financial information included in this Form 10-Q  has  not
been  subjected to a timely quarterly review as required by  Rule
10-01(d) of Regulation S-X.

       HAROLD'S STORES, INC. AND SUBSIDIARIES
             CONSOLIDATED BALANCE SHEETS
                       ASSETS
                   (In Thousands)

                                    July 30,  January
                                     2005       29,
                                               2005
                                    (Unaud
                                     ited)

Current assets:

Cash and cash equivalents                 $         $
                                      1,324       674
Trade accounts receivable, less
allowance for doubtful accounts       6,718     7,343
of $200 as of July 30 and
January 29
Note and other receivables               78       125
Merchandise inventories              19,970    20,123
Prepaid expenses                      1,017     1,254

Total current assets                 29,107    29,519

Property and equipment, at cost      44,578    44,211
Less accumulated depreciation        (32,64     (30,66
and amortization                         6)         5)

Net property and equipment           11,932    13,546

Total assets                         $41,03    $43,06
                                          9         5




       HAROLD'S STORES, INC. AND SUBSIDIARIES
            CONSOLIDATED BALANCE SHEETS
       LIABILITIES AND STOCKHOLDERS' DEFICIT
          (In Thousands Except Share Data)

                                    July 30,   January
                                     2005       29,
                                               2005
                                    (Unaud
                                     ited)

Current liabilities:

Accounts payable                           $        $
                                      6,369    7,116
Redeemable gift certificates            765    1,130
Accrued payroll expenses and            707      613
bonuses
Accrued rent expense                  1,235    1,141
Current maturities of long-term      20,952    19,95
debt (See Note 6)                                  8

Total current liabilities            30,028    29,95
                                                   8

Accrued rent expense, net of          4,988    5,630
current maturities
Long-term debt, net of current        1,762      580
maturities

Total liabilities                    36,778    36,16
                                                   8

Commitments and contingencies
(See Note 8)

Convertible preferred stock of
$.01 par value
Amended      Series      2001-A,
authorized    600,000    shares,
issued  and outstanding  338,681      6,774    6,725
as  of July 30 and 336,231 as of
January 29
Series     2002-A,    authorized
300,000   shares,   issued   and
outstanding 222,418 as  of  July      4,448    4,340
30 and 217,732 as of January 29
Series     2003-A,    authorized
100,000   shares,   issued   and
outstanding 55,077 as of July 30      5,495    5,426
and 54,514 as of January 29
2001-A  and  2002-A entitled  to
$20.00  per  share,  and  2003-A
entitled  to $100.00 per  share,
in  each  case plus accrued  but
unpaid dividends in liquidation

                                     16,717    16,49
                                                   1

Stockholders' deficit:

Common stock of $.01 par value
 Authorized  25,000,000  shares;
   issued     and    outstanding         62       62
   6,223,508 as of July  30  and
   6,222,308 as of January 29
Additional paid-in capital           34,469    34,46
                                                   8
Accumulated deficit                  (46,98     (44,1
                                         5)       22)
                                     (12,45     (9,59
                                         4)        2)
Less:  Treasury stock of 205 shares
as  of  July  30 and January  29        (2)       (2)
recorded at cost
Total stockholders' deficit          (12,45     (9,59
                                         6)        4)

Total liabilities and                $41,03    $43,0
stockholders' deficit                     9       65


             HAROLD'S STORES, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF OPERATIONS
              (In Thousands Except Per Share Data)
                           (Unaudited)

                               13 Weeks Ended     26 Weeks Ended
                                July     July      July     July
                                30,      31,       30,      31,
                                2005     2004      2005     2004
                                        (Restat            (Restat
                                         ed)                ed)

Sales                           $20,2    $19,2     $44,2    $43,4
                                   98       90        62       58

Costs and expenses:
Costs of goods sold (including
occupancy and central buying
expenses, exclusive of items    15,55    12,86     30,02    27,74
shown separately below)             8        9         6        1

Selling, general and             6,307    6,412     13,70    13,66
administrative expenses                                8        9

Depreciation and amortization     969    1,020     1,943    2,052

Interest expense                  357      203       696      418

Total costs and expenses        23,19    20,50     46,37    43,88
                                    1        4         3        0

Loss before income taxes       (2,893    (1,214    (2,11    (422)
                                    )         )       1)

Benefit for income taxes            -        -         -        -

Net loss                       $(2,89    $(1,21   $(2,11        $
                                   3)        4)       1)    (422)


NET LOSS APPLICABLE TO COMMON
STOCKHOLDERS:

Net loss                       $(2,89    $(1,21   $(2,11        $
                                   3)        4)       1)    (422)

Less:  Preferred stock
dividends and accretion of        375      205       752      746
preferred stock issuance
costs

Net loss applicable to common  $(3,26    $(1,41   $(2,86   $(1,16
stockholders                       8)        9)       3)       8)

Net loss per common share:
Basic                          $(0.53    $(0.23   $(0.46    $(0.1
                                    )         )        )       9)
Diluted                        $(0.53    $(0.23   $(0.46    $(0.1
                                    )         )        )       9)



        HAROLD'S STORES, INC. AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (In Thousands)
                     (Unaudited)

                                      26 Weeks Ended
                                    July 30,   July 31,
                                      2005      2004
                                               (Restate
                                                 d)

Cash flows from operating
activities:
Net loss                                   $          $
                                     (2,111)      (422)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization          1,943     2,052
Gain on sale of assets                  (20)       (45)
Changes in assets and
liabilities:
Decrease in trade and other              617       860
accounts receivable
Decrease (increase) in                   153      (983)
merchandise inventories
Decrease in prepaid expenses             237         11
Decrease in accounts payable           (747)     (1,125
                                                      )
Decrease in accrued expenses           (819)      (607)

Net cash used in operating             (747)      (259)
activities

Cash flows from investing
activities:
Acquisition of property and            (329)     (1,142
equipment                                             )
Proceeds from disposal of                 20        45
property and equipment
Issuance of note receivable                6        (2)
Payments received for notes               49         9
receivable

Net cash used in investing             (254)     (1,090
activities                                            )

Cash flows from financing
activities:
Borrowings on long-term debt           1,300         -
Payments on long-term debt             (721)      (135)
Advances on revolving line of         50,099    49,963
credit
Payments on revolving line of        (48,502     (48,31
credit                                     )         6)
Proceeds from exercise of common           1        14
stock options
Preferred stock dividends              (526)      (528)

Net cash provided by financing         1,651       998
activities

Increase (decrease) in cash              650      (351)
Cash and cash equivalents at             674     1,118
beginning of period
Cash and cash equivalents at end           $         $
of period                              1,324       767


Non-cash investing and financing
activities:
Issuance of preferred stock in             -       142
lieu of rent
Preferred stock dividends paid           199       184
in shares of preferred stock

             HAROLD'S STORES, INC. AND SUBSIDIARIES
       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                 July 30, 2005 and July 31, 2004
                           (Unaudited)

1.   Unaudited Interim Periods

      In the opinion of the Company's management, all adjustments
(all of which are normal and recurring) have been made which  are
necessary  to fairly state the financial position of the  Company
as  of  July 30, 2005 and the results of its operations and  cash
flows  for  the twenty-six week periods ended July 30,  2005  and
July  31,  2004.  The results of operations for the thirteen  and
twenty-six week periods ended July 30, 2005 and July 31, 2004 are
not  necessarily indicative of the results of operations that may
be  achieved for the entire year.  For further information, refer
to  the  consolidated financial statements and footnotes  thereto
included in the Company's Annual Report on Form 10-K for the year
ended January 29, 2005.

2.   Definition of Fiscal Year

     The Company has a 52-53 week year which ends on the Saturday
closest  to January 31.  The period from January 30, 2005 through
January 28, 2006, has been designated as 2005.

3.   Basis of Presentation

      The  consolidated financial statements include the accounts
of  the  Company  and its subsidiaries, all of which  are  wholly
owned.   All  significant intercompany accounts and  transactions
have been eliminated.

4.   Impact of New Accounting Pronouncements

     On December 16, 2004, the FASB issued FASB Statement No. 123
(revised 2004) ("SFAS 123(R)"), "Share-Based Payment", which must
be  adopted by the Company no later than January 29, 2006.   SFAS
123(R) requires an entity to recognize compensation expense in an
amount equal to the fair value of share-based payments granted to
employees.   The Company will adopt SFAS 123(R) in  the  required
period  and  apply  the  standard using the modified  prospective
method,  which requires compensation expense to be  recorded  for
new  and modified awards.  For any unvested portion of previously
issued  and outstanding awards, compensation expense is  required
to  be  recorded  based  on  the previously  disclosed  SFAS  123
methodology,  and  amounts.   Prior  periods  presented  are  not
required  to  be  restated.  The Company is still  assessing  the
impact  on its results of operations and financial position  upon
the adoption of SFAS 123(R), but it is expected to be similar  to
the pro forma information set forth in Note 10 below.

5.   Restatement of Financial Statements

      In light of an SEC clarification on lease accounting issued
in  February 2005, the Company re-evaluated its lease  accounting
practices in the first quarter of 2005 and has corrected the  way
it  accounts  for  its leases, specifically  the  accounting  for
operating  leases  with  scheduled  rent  increases  and   tenant
allowances.

      Under  the  requirements of FASB Technical  Bulletin  85-3,
"Accounting  for Operating Leases with Scheduled Rent Increases,"
rent  expense should be amortized on a straight-line  basis  over
the  term  of  the  lease.   In prior periods,  the  Company  had
determined  that the term of the lease begins on the commencement
date  of  the  lease, which generally coincides  with  the  store
opening  date, instead of at the time the Company takes  physical
possession  of  the property to start construction  on  leasehold
improvements.  This had the effect of excluding the  construction
period  of  the  stores from the calculation of the  period  over
which  rent is expensed.  The Company has restated its previously
reported   Consolidated  Financial  Statements  to  correct   its
accounting   for  scheduled  rent  increases  by  including   the
construction period.

      In  addition,  under FASB Technical Bulletin 88-1,  "Issues
Relating  to  Accounting for Leases," lease  incentives  such  as
tenant   allowances   received  from  the   landlord   to   cover
construction costs incurred by the Company should be reflected as
a  deferred liability, amortized over the term of the  lease  and
reflected  as  a  reduction  to rent expense.   The  Company  had
previously classified tenant allowances as a reduction  to  store
build  out  costs  (leasehold improvements).   As  a  result,  it
reflected the amortization as a reduction to depreciation expense
instead  of  as  a  reduction to rent expense.  The  Company  has
restated   its   previously   reported   Consolidated   Financial
Statements to properly account for tenant allowances.

      As  a result of these restatements, the Company's financial
results for the thirteen and twenty-six weeks ended July 31, 2004
have  been  adjusted as follows (in thousands, except  per  share
data):


                              As                   As
                           Previous             Restated
                              ly
                           Reported

                               Thirteen Weeks Ended
                           July 31,             July 31,
                             2004     Adjustme    2004
                                        nts
Sales                      $19,290          -    $19,290
Costs and expenses:
Cost of goods sold          13,134      (265)     12,869
Selling, general and         6,412          -      6,412
administrative expenses
Depreciation and               770        250      1,020
amortization
Interest expense               203          -        203
                            20,519       (15)     20,504
Loss before income taxes    (1,229)        15    (1,214)
Benefit for income taxes         -          -          -
Net loss                          $        15          $
                            (1,229)              (1,214)
NET LOSS APPLICABLE TO
COMMON STOCKHOLDERS:
Net loss                          $        15          $
                            (1,229)              (1,214)
Less:  Preferred stock
dividends and accretion        205          -        205
of preferred stock
issuance costs
Net loss applicable to            $        15          $
common stockholders         (1,434)              (1,419)
Net loss per common
share:
Basic                             $      0.00          $
                             (0.23)               (0.23)
Diluted                           $      0.00          $
                             (0.23)               (0.23)


                              Twenty-Six Weeks Ended
                           July 31,             July 31,
                             2004     Adjustme    2004
                                        nts
Sales                      $43,458          -    $43,458
Costs and expenses:
Cost of goods sold          28,271      (530)     27,741
Selling, general and        13,669          -     13,669
administrative expenses
Depreciation and             1,551        501      2,052
amortization
Interest expense               418          -        418
                            43,909       (29)     43,880
Loss before income taxes      (451)        29      (422)
Benefit for income taxes         -          -          -
Net loss                          $        29          $
                              (451)                (422)
NET LOSS APPLICABLE TO
COMMON STOCKHOLDERS:
Net loss                          $        29          $
                              (451)                (422)
Less:  Preferred stock
dividends and accretion        746          -        746
of preferred stock
issuance costs
Net loss applicable to            $        29          $
common stockholders         (1,197)              (1,168)
Net loss per common
share:
Basic                             $      0.00          $
                             (0.19)               (0.19)
Diluted                           $      0.00          $
                             (0.19)               (0.19)

6.   Long-term Debt

     The Company's original three-year credit facility with Wells
Fargo  Retail  Finance  II, LLC, ("WFRF")  was  entered  into  on
February  5,  2003  and  provided  the  Company  with  a  maximum
available  credit  limit  of  $22 million.   This  agreement  was
scheduled  to  expire in February 2006.  As discussed  below,  on
April  29,  2004, the maximum available credit line was increased
to  the  lesser  of  $25 million or $22 million plus  outstanding
participant  advances, and the expiration date  was  extended  to
February   5,   2007.   The  credit  facility   is   secured   by
substantially all assets of the Company and its subsidiaries  and
is  subject  to a borrowing base calculation based  primarily  on
inventory  and  accounts  receivable.   The  facility   has   two
financial  covenants, a minimum excess availability  covenant  of
$1.35   million  and  a  maximum  capital  expenditure  covenant,
established at $2.75 million for 2005.  Interest rates under  the
facility  are  at prime plus 0.5% or LIBOR plus 2.50%,  with  the
ability  to  reduce  the  rate if the  Company  achieves  certain
financial  criteria.   The balance outstanding on  the  Company's
line  of  credit at July 30, 2005 was $20,775,000 which  includes
the  $4  million outstanding under the bridge facility  discussed
below.   At  July 30, 2005 the Company's availability  under  the
WFRF  line  of  credit was approximately $2.9 million  above  the
minimum availability requirement of $1.35 million and the average
interest rate on the credit line was 5.74%.

     Subsequent  to  securing the initial  credit  facility,  the
Company  negotiated  an  increase of  $2  million  in  its  total
borrowing  availability under its existing credit  facility  with
WFRF.  The Company obtained this increase in order to provide for
additional  working capital.  The full $2 million  was  available
for  borrowing  on  July 15, 2003 and has been  extended  to  the
Company  by Wells Fargo based upon a loan participation agreement
between  Wells  Fargo and RonHow, LLC, an entity  established  in
July 2003 which is owned and controlled directly or indirectly by
Ronald  de Waal and W. Howard Lester.  Mr. de Waal and Mr. Lester
are  both major beneficial owners of the Company's common  stock,
and Mr. Lester is also a director of the Company.

     In order to achieve additional liquidity, on April 29, 2004,
the  Company  completed an amendment to the credit facility  with
WFRF  which increased the Company's borrowing availability  under
the  facility.   The  amendment increased the  Company's  maximum
inventory advance rate cap from 75% to 80% during non-peak  times
and  from 80% to 85% during peak times.  Peak times were  amended
to  include  the eight weeks prior to Easter and the eight  weeks
prior  to  October 1.  Additionally, the amendment  extended  the
term of the credit facility by one year, with a new expiration of
February  5,  2007.   The  amendment also increased  the  maximum
revolver amount from $22 million to the lesser of $25 million  or
$22  million plus outstanding participant advances.  Finally, the
amendment  provided for an additional increase of $2  million  in
the  Company's  borrowing availability under the  facility  based
upon  an  increase  in the existing loan participation  agreement
between WFRF and RonHow, LLC.  WFRF will continue to serve as the
lending agent for the Company under the credit facility, and  the
principal  covenants  and  conditions imposed  upon  the  Company
pursuant   to  the  WRFR  credit  facility  agreement  have   not
materially  changed.   RonHow, LLC's right to  repayment  of  any
advances under the credit facility that are attributable  to  its
total  $4 million participation is generally subordinate  to  the
repayment rights of the other credit facility lenders.   However,
the  Company  may repay these advances provided it meets  certain
conditions, including the maintenance of an average daily  excess
availability  under the credit facility of at least $2.5  million
for  the  30  days  prior  to and 30 days  projected  immediately
following   the  repayment.   The  average  excess   availability
requirement  is  higher  than the excess  availability  otherwise
required  of  the  Company  under the credit  facility.   If  the
Company  does not repay the new $2 million loan participation  of
RonHow  during the 18 months subsequent to April 29, 2004, RonHow
will  have  an  option  at  that  time  to  convert  any  of  the
incremental  $2 million not repaid into shares of authorized  but
unissued  2003-A Preferred Stock, which will be convertible  into
shares of common stock at a price of $2.524 per share, which  was
the  20-day  average closing price of the Company's common  stock
for  the  period ending immediately before closing  of  the  loan
amendment.   Additionally,  if the Company  has  not  repaid  the
initial  $2 million of loan participation by February  2006,  the
Company  will  pay  an  additional  4%  fee  per  annum  on   the
outstanding   participation  amount  up  to  $2  million.    This
transaction was approved by the independent directors.

     The  Company  was in compliance with its debt covenants  for
the quarter ended July 30, 2005.  Although the Company's line  of
credit with WFRF does not expire until February 2007, the Company
has classified its borrowings under its line of credit as current
in  its  consolidated  balance sheets due to  the  terms  of  its
agreement with the lender.  Under the bank agreement, there is an
acceleration clause which potentially allows the bank  to  demand
immediate  payment  of  all  outstanding  borrowings   upon   the
occurrence  of  a  material  adverse  change  in  the   Company's
operations   or  financial  position.   Determination   of   what
constitutes a material adverse change is at the discretion of the
bank,  however,  it is subject to reasonableness  standards.   In
addition,  the  Company  is  required  to  maintain  a   lock-box
agreement  with  the  bank whereby all cash received  is  applied
against  current  borrowings.  As a result of  these  items,  the
Company is required to classify its line of credit borrowings  as
current   as   proscribed   by   EITF   95-22,   "Balance   Sheet
Classification  of Borrowings Outstanding under Revolving  Credit
Agreements that include both a Subjective Acceleration Clause and
a Lock-Box Arrangement."

7.   Income Taxes

     The  Company's federal net operating losses of approximately
$21.6 million will begin to expire in 2021.  The Company also has
state  net operating losses of approximately $30.7 million  which
begin  to  expire  in  2005.  The Company  provides  a  valuation
allowance  for  all  deferred tax assets  because  the  Company's
recent history of operating losses made the realization of  these
assets more unlikely than likely.

     The  ability  of  the Company to utilize net operating  loss
carryforwards to reduce future federal taxable income and federal
income tax of the Company is subject to various limitations under
the  Internal Revenue Code of 1986 ("the Code"), as amended.  The
utilization  of  such  carryforwards  may  be  limited  upon  the
occurrence  of certain ownership changes, including the  issuance
or  exercise of rights to acquire stock, the purchase or sale  of
stock by 5% stockholders, as defined in the Treasury regulations,
and  the  offering of stock by the Company during any  three-year
period  resulting in an aggregate change of more than 50% in  the
beneficial ownership of the Company.

      In  the event of an ownership change (as defined for income
tax  purposes),  Section  382  of  the  Code  imposes  an  annual
limitation  on the amount of a corporation's taxable income  that
can  be  offset  by  these  carryforwards.   The  limitation   is
generally  equal to the product of (i) the fair market  value  of
the  equity  of  the  Company multiplied  by  (ii)  a  percentage
approximately  equivalent to the yield on  long-term  tax  exempt
bonds during the month in which an ownership change occurs.   The
Company's management, in consultation with its tax advisors,  has
been  assessing the impact its preferred stock issuances  had  on
the  change  in  the  beneficial ownership of  the  Company,  and
whether  or not such a change would impact the Company's  ability
to  utilize its net operating loss carryforwards ("NOLs").  After
thorough review, it was determined that a change in ownership had
occurred on October 1, 2002, and that this change resulted  in  a
limitation  on  the Company's ability to utilize its  NOLs  under
Section  382  of  the Code.  As a result of the  limitation,  the
Company  may  only  utilize $1.0 million per year  of  its  total
October 1, 2002 pre-change NOL of $12.5 million.  Any portion  of
the  $1.0  million annual limitation not utilized in a particular
year  may  be  carried over to the next year and  added  to  that
year's limitation.  Based on the Company's 2004 projected taxable
loss,  the cumulative excess annual limitation carryover to  2005
is  approximately $2.4 million.  In 2005 the Company's total  NOL
available for use is $12.6 million.

8.   Commitments and Contingencies

     The  Company  is  occasionally involved in  various  claims,
administrative agency proceedings and litigation arising  out  of
the  normal  conduct of its business.  At July  30,  2005,  there
existed  only one minor litigation matter.  Although the ultimate
outcome of such litigation cannot be predicted, the management of
the  Company, after discussions with counsel, believes  that  the
resulting liability, if any, will not have a material effect upon
the Company's financial position or results of operations.

      Effective  August  23,  2005 the Company  entered  into  an
agreement with H.D. Investments, LLC to sell its Norman, Oklahoma
office  location at a sales price of $1.25 million.  The  closing
of  this transaction is contingent upon the Company and the buyer
finalizing an agreement for the Company to lease the first  floor
of  the  building  from  H.D.  Investments,  LLC  and  the  buyer
obtaining  and approving the final plans for the remodel  of  the
first  floor.   The  contract  is  subject  to  a  due  diligence
feasibility period that expires September 22, 2005.  If the  sale
of  the  building were to close, the Company expects to record  a
gain on the sale of approximately $875,000.

9.   Preferred Stock

     On  February  28,  2001, the Company executed  a  definitive
agreement  to  allow  an investor to purchase  from  the  Company
300,000  shares  of  convertible  preferred  stock  for  a  total
purchase  price  of  $6  million.   Under  this  preferred  stock
agreement,  each  of  the  300,000  initially  issued  shares  of
preferred  stock is convertible into common stock of the  Company
at  a  fixed rate of $1.275 per share.  The preferred shares have
voting  rights  equal to the number of common shares  into  which
they  may be converted.  Until converted, the preferred stock  is
entitled to receive quarterly dividends that cumulate annually at
a rate of 10% per annum, which are reduced to 8% per annum if the
Company's  operating  income for any  fiscal  year  ending  after
February 28, 2001 exceeds $4,735,000.  Dividends were payable 50%
in  cash  and  50% in additional shares of preferred stock  until
February 28, 2003 and thereafter are paid in additional shares of
preferred stock or cash as the holder of the preferred stock  may
elect.   Shares of preferred stock issued in respect of dividends
are  convertible into common stock based upon an  average  market
price  of  the common stock as of the respective dividend  dates.
These preferred shares are presently redeemable at the option  of
the  Company at a price equal to the initial purchase price  plus
cumulated and accrued but unpaid dividends.

     On  August  2,  2002,  the  Company  executed  a  definitive
agreement  to  allow a group of investors to  purchase  from  the
Company  200,000  shares of Series 2002-A  convertible  preferred
stock  for  a  total  purchase price of $4 million.   Under  this
preferred  stock agreement, each of the 200,000 initially  issued
shares of preferred stock is convertible into common stock of the
Company at a fixed rate of $2.72 per share.  The preferred shares
have  voting  rights  equal to the number of common  shares  into
which  they  may  be converted.  Until converted,  the  preferred
stock  is  entitled to receive quarterly dividends that  cumulate
annually  at a rate of 8% per annum, which is reduced to  6%  per
annum  if  certain profitability targets are met by the  Company.
Dividends  were payable 50% in cash and 50% in additional  shares
of  preferred stock until July 1, 2003 and thereafter are paid in
additional shares of preferred stock or cash as the holder of the
preferred  stock may elect.  Following the third  anniversary  of
the original issuance date, the Series 2002-A Preferred Stock  is
redeemable at the option of the Company at a price equal  to  the
initial  purchase  price plus cumulated and  accrued  but  unpaid
dividends.

     On  February  5, 2003, the Company closed on  a  $5  million
private equity investment by Inter-Him, N.V., of which Ronald  de
Waal is a Managing Director, and W. Howard Lester, a director  of
the  Company  (the  "Investors").   The  Investors  purchased  an
aggregate  of  50,000 shares of a new series of preferred  stock,
designated Series 2003-A Preferred Stock, at a purchase price  of
$100.00  per  share.  Each of the 50,000 shares of Series  2003-A
Preferred Stock initially issued is convertible into common stock
at a fixed rate of $1.15 per share, and otherwise provides rights
and  preferences substantially similar to the Company's  existing
Series  2002-A  Preferred  Stock.  The  percentage  ownership  of
common  stock on an as-converted basis by Inter-Him  and  Mr.  de
Waal  is approximately 51.1% (assuming conversion of all  of  the
Company's  outstanding preferred stock).  Dividends were  payable
50% in cash and 50% in additional shares of preferred stock until
January 1, 2004, and thereafter are paid in additional shares  of
preferred stock or cash as the holder of the preferred stock  may
elect.   Following the third anniversary of the original issuance
date,  the  Series  2003-A Preferred Stock is redeemable  at  the
option  of  the Company at a price equal to the initial  purchase
price plus cumulated and accrued but unpaid dividends.

     None  of  the  Company's outstanding  preferred  shares  are
included in the stockholders' equity section of the balance sheet
because  the  preferred shareholders have special  voting  rights
that  empower them to elect a majority of the board of  directors
and maintain effective control over the Company.

10.  Stock Options

     The Company follows the intrinsic value method of accounting
for  common  stock options to employees, in accordance  with  the
provisions  of  Accounting  Principles  Board  Opinion  No.   25,
"Accounting   for  Stock  Issued  to  Employees",   and   related
interpretations.

Had  the Company elected to recognize compensation expense  based
on  the fair value of the stock options granted as of their grant
date  per  the  standards  of Statement of  Financial  Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", the
Company's  2005 and 2004 pro forma net income and pro  forma  net
income  per  share would have differed from the amounts  actually
reported  as  shown  in the table below.  The pro  forma  amounts
shown   reflect  only  options  granted  in  1995  through  2005.
Therefore, the full impact of calculating compensation  cost  for
stock  options based on their fair value is not reflected in  the
pro  forma net income amounts presented because compensation cost
is  reflected over the options' vesting period of up to ten years
and  compensation cost for options granted prior to  January  29,
1995 is not considered.

                               13 Weeks Ended     26 Weeks Ended
                                July     July     July     July
                                30,      31,      30,       31,
                                2005     2004     2005     2004
                                        (Restat           (Restat
                                         ed)                ed)
                                (In thousands, except per share
                                             data)

Net loss applicable to common  $(3,268   $(1,419   $(2,863   $(1,16
stockholders, as reported           )        )         )       8)

Add:
Stock-based employee
compensation expense included      -         -        -        -
in reported net loss

Deduct:
Stock-based employee
compensation expense               74      205      156      420
determined under fair value
method for all awards

Pro forma net loss applicable  $(3,342   $(1,624   $(3,019   $(1,588
to common stockholders              )        )         )        )

Net loss per average common
share:
Basic, as reported             $(0.53)   $(0.23)   $(0.46)   $(0.19
                                                                )
Basic, pro forma               $(0.54)   $(0.26)   $(0.49)   $(0.26
                                                                )

Diluted, as reported           $(0.53)   $(0.23)   $(0.46)   $(0.19
                                                                )
Diluted, pro forma             $(0.54)   $(0.26)   $(0.49)   $(0.26
                                                                )

11.  Revenue Recognition

      Sales from store locations represented 96% of the Company's
total  sales for the twenty-six weeks ended July 30, 2005.  These
sales  are  recognized  at the time of the  customer's  purchase.
During  the  third quarter of 2003, the Company returned  to  the
direct  channel  business by offering direct  response  catalogs.
During  the  third quarter of 2004, the Company returned  to  the
internet  commerce business by offering purchase options  through
its  web  site.   The  sales  related to  these  direct  response
catalogs  and  internet  transactions  were  approximately   four
percent  of total sales for the twenty-six weeks ended  July  30,
2005,  and  a  return reserve was established  for  this  revenue
stream beginning August 2003.  Direct channel and internet  sales
are  recognized at the time the order is shipped to the customer.
All  sales  are net of returns and exclude sales tax.  Gift  card
sales  are  recognized as revenue when the gift card is redeemed,
not when it is sold.

12.
     Earnings per Share

     Outstanding shares for purposes of basic and diluted
earnings per share were calculated as follows:

                              13 Weeks Ended     26 Weeks Ended
                              July     July      July      July
                              30,       31,       30,       31,
                              2005     2004      2005      2004
                                      (Restat             (Restat
                                        ed)                 ed)
                                        (in thousands)

Net loss applicable to
common shareholders -        $(3,268   $(1,419   $(2,863   $(1,168
basic and diluted                 )         )         )         )

Average common shares         6,223     6,215     6,223     6,213
outstanding

Effect of dilutive
securities:
Employee stock options            -         -         -         -

Convertible preferred             -         -         -         -
stock

Diluted average common        6,223     6,215     6,223     6,213
shares outstanding

     Approximately  1,848,630 shares and 907,842 shares  for  the
twenty-six  weeks  ended  July  30,  2005  and  July  31,   2004,
respectively, related to outstanding employee stock options, were
not  included in the calculation of diluted earnings per  average
common share because the effect of including those shares is anti-
dilutive as the exercise price of the stock options exceeded  the
average  common stock market price during the respective  period.
Approximately  616,176 and 600,980 preferred  shares  convertible
into  11,501,556 and 11,299,851 common shares, for the twenty-six
weeks  ended July 30, 2005 and July 31, 2004, respectively,  were
not  included in the calculation of diluted earnings per  average
common share because the effect of including those shares is anti-
dilutive.

13.  Reclassifications

     Certain reclassifications have been made to the January  29,
2005  balances  to  conform to the July  30,  2005  presentation.
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     From  time  to time, the Company may publish forward-looking
statements  relating  to  certain matters  including  anticipated
financial performance, business prospects, the future opening  or
closing   of   stores,  inventory  levels,  anticipated   capital
expenditures,  and  other  matters.  All  statements  other  than
statements of historical fact contained in this Form 10-Q  or  in
any  other  report of the Company are forward-looking statements.
The  Private Securities Litigation Reform Act of 1995 provides  a
safe  harbor for forward-looking statements.  In order to  comply
with  the  terms of that safe harbor, the Company  notes  that  a
variety of factors, individually or in the aggregate, could cause
the  Company's actual results and experience to differ materially
from  the anticipated results or other expectations expressed  in
the   Company's  forward-looking  statements  including,  without
limitation,  the  following:   the  ability  of  the  Company  to
generate cash flow from operations in amounts sufficient to  meet
debt  obligations  and  provide working  capital  and  funds  for
growth,  ability  to  fund  operating losses,  consumer  spending
trends  and  habits; competition in the retail clothing  segment;
the  customary risks of purchasing merchandise abroad,  including
longer  lead  times,  higher  initial  purchase  commitments  and
foreign  currency fluctuations; the Company's ability to  attract
and   retain  qualified  personnel;  weather  conditions  in  the
Company's  operating  regions; laws and  government  regulations;
general   business  and  economic  conditions;  availability   of
capital;  the  existence  or  absence of  operating  initiatives,
publicity,  advertising  and  promotional  efforts;  changes   in
accounting policies; and the ability of new management to improve
the  Company's financial condition and performance.  In addition,
the  Company  disclaims any intent or obligation to update  those
forward-looking statements.

Overview

      Harold's  is a multi-channel specialty retailer of  ladies'
and  men's apparel, including accessories and footwear.  Harold's
markets  its merchandise through retail stores, catalogs and  its
website at www.harolds.com.

Results of Operations

      The  following table sets forth for the periods  indicated,
the percentage of net sales represented by items in the Company's
statements of operations.

                              13 Weeks Ended     26 Weeks Ended
                              July     July      July      July
                              30,       31,       30,       31,
                              2005     2004      2005      2004
                                      (Restat             (Restat
                                        ed)                 ed)
Sales                        100.0%    100.0%    100.0%    100.0%

Costs of goods sold           (76.6)    (66.7)    (67.8)   (63.8)

Selling, general and         (31.1)    (33.2)    (31.0)   (31.4)
administrative expenses

Depreciation and              (4.8)     (5.3)     (4.4)    (4.7)
amortization

Interest expense              (1.8)     (1.1)     (1.6)    (1.0)

Loss before income taxes     (14.3)     (6.3)     (4.8)    (0.9)

Benefit for income taxes          -         -         -         -

Net loss                     (14.3)%    (6.3)%   (4.8)%    (0.9)%

      The following table reflects the sources of the changes  in
Company  sales for the periods indicated, with percentage changes
compared to the comparable period of the prior year.

                          13 Weeks Ended      26 Weeks Ended
                          July      July      July      July
                          30,       31,       30,       31,
                          2005      2004      2005      2004

Sales (000's)            20,298    19,290    44,262    43,458

Total sales increase        5.2%    (1.4)%      1.9%    (1.8)%
(decrease)
Change in comparable
store sales                 0.0%      2.3%      0.0%      5.7%
(52 week basis) (1)
Store locations:
Existing stores             41        41        41        42
Stores closed                -         -         -        (1)
New stores opened            -         -         -         -
Total stores at end of      41        41        41        41
period

( The  Company considers a store comparable if it  has  been
1 open  for  12 full months and has not changed  its  square
) footage by more than 20%.  Closed and relocated stores are
  excluded from the comparable calculation beginning in  the
  month   in   which  the  store  is  closed  or  relocated.
  Renovated stores are considered comparable as long as  the
  store square footage does not change by more than 20%.

     The Company opened no new stores during the twenty-six weeks
ended July 30, 2005 and July 31, 2004 and closed no stores for
the twenty-six weeks ended July 30, 2005 compared to the twenty-
six weeks ended July 31, 2004 in which one store was closed.  The
Company currently has no plans to close additional stores.
However, it does have plans to potentially relocate stores.  The
flat comparable store sales for the thirteen and twenty-six weeks
ended July 30, 2005 are primarily due to mixed customer reactions
to the Company's merchandise assortments leading to sales below
Company plans.  The Company's direct sales (internet and catalog)
were $670,000 during the quarter, five times last year's sales of
$134,000.  Additionally, the Company conducted a warehouse sale
in July this year that was not held last year, resulting in
$475,000 of additional sales.

      Gross margin represents net sales less cost of products and
merchandising.   Cost  of  products  and  merchandising  consists
primarily   of   product  and  operating  costs  (e.g.,   product
development, sourcing, inbound freight, merchandising,  inventory
control,  inspection, warehousing, internal transfer,  purchasing
and  receiving costs, inventory markdowns and occupancy costs for
the  Company's  retail stores).  The Company's gross  margin  was
23.4% for the second quarter of 2005, as compared to 33.3% in the
same  period  of last year.  The gross margin for the  twenty-six
week  period  ended July 30, 2005 declined to  32.2%  from  36.2%
during the same period of the prior year.  All of the decrease in
gross margin is attributable to incremental markdowns incurred on
excess  spring  and summer merchandise.  Based  on  prior  season
successes, the Company increased purchases of ladies' apparel for
the  spring  season, but sales did not meet expectations.   As  a
result,  management  marked down the  merchandise  and  has  been
aggressive in its clearance activities.

       Selling,  general  and  administrative  expenses   consist
primarily of retail store selling costs, costs to produce,  print
and  distribute  direct response catalogs, as well  as  corporate
administrative   costs.  Selling,  general   and   administrative
expenses  (including  advertising and catalog  production  costs)
decreased  to  31.1%  of  sales for the second  quarter  of  2005
compared to 33.2% for the second quarter of 2004 and decreased to
31.0%  of  sales  for the twenty-six weeks ended  July  30,  2005
compared  to  31.4% for the same period of the prior  year.   The
decrease  is  principally due to continued expense  controls  and
further  leveraging  of fixed expenses due  to  the  total  sales
increase.

      Depreciation and amortization expense decreased to 4.8%  of
sales  for  the second quarter of 2005 compared to 5.3%  for  the
second  quarter of 2004 and decreased to 4.4% of  sales  for  the
twenty-six  weeks ended July 30, 2005 compared to  4.7%  for  the
same period of the prior year.  These decreases are partially due
to  the total sales increase and partially due to an increase  in
the Company's fully depreciated assets.

      The Company reported a net loss of $2,893,000 or $0.53  per
basic  and  diluted share during the second quarter  of  2005  as
compared  to  a  net loss of $1,214,000 or $0.23  per  basic  and
diluted  share  for  the second quarter of last  year.   For  the
twenty-six week period ended July 30, 2005, the Company  reported
a  net  loss  of $2,111,000 or $0.46 per basic and diluted  share
compared to a net loss of $422,000 or $0.19 per basic and diluted
share  for  the same period of the prior year.  These losses  are
primarily  the  result of declines in gross margin  as  described
above.

       The   average  balance  of  total  outstanding  debt   was
$22,992,000 for the twenty-six weeks ended July 30, 2005 compared
to  $19,195,000  for the same period of 2004.  This  increase  in
average  balances resulted principally from increased merchandise
purchases  that  were  not offset by increased  sales.   Interest
expense  increased slightly due to a combination of the Company's
higher  average debt balance and increasing interest rates.   The
average  interest rate on the Company's line of credit was  5.74%
at  the  end of the second quarter 2005 compared to 3.94% at  the
end of the second quarter 2004.

Liquidity and Capital Resources

     The Company's working capital needs arise primarily from the
need  to support costs incurred in advance of revenue generation,
such   as  inventory  acquisition  and  direct  response  catalog
development, production and mailing costs.  Other liquidity needs
relate to the revolving customer charge accounts on the Company's
proprietary  credit card, the need to cover operating  cash  flow
deficits  and  to invest in remodeling, fixtures  and  equipment.
The Company recognizes two selling seasons that correspond to the
fashion seasons.  The spring season begins in January and ends in
July.   The fall season begins in July and ends in January.   The
Company  has  relied on its bank credit facility  to  meet  these
needs as well as proceeds from preferred stock investments of  $6
million  in  February  2001, $4 million in  August  2002  and  $5
million  in  February  2003.   The  Company  experienced  deficit
operating  cash flows of $747,000 for the twenty-six weeks  ended
July  30,  2005  compared  to deficit  operating  cash  flows  of
$259,000  for  the twenty-six weeks ended July  31,  2004.   This
decrease in cash flows is principally related to the increase  of
the  Company's net loss (as described above) and partially offset
by the Company's decrease in merchandise inventories and decrease
in  prepaid  expenses compared to the same period of  2004.   The
Company's decrease in merchandise inventories is attributable  to
two  factors.   First,  much of the 2005 spring  merchandise  was
received  prior to year end 2004 compared to a lesser  amount  of
2004 spring merchandise received prior to year end 2003.  Second,
much  of the 2005 fall merchandise was received prior to the  end
of  the  second quarter 2005 compared to a lesser amount of  2004
fall  merchandise received prior to the end of the second quarter
of  2004.   Although merchandise inventories have decrease  since
the  beginning of the 2005 year, inventories increased $1,274,000
from  second quarter 2004 to second quarter 2005.  Both of  these
factors caused the change in merchandise inventory from year  end
to  the  end of the second quarter to be smaller in 2005 compared
to the same change for 2004.

      The  Company's ability to achieve positive cash flows  from
operating activities depends on its ability to improve sales  and
gross  margin which should allow the Company to sustain a  return
to profitability.  Additionally, the Company may experience needs
for additional capital.  While the Company has been successful in
covering cash flow deficits through line of credit borrowings and
private equity investments from its principal shareholders, there
can be no assurances that these, or any other financing resources
will be available for future needs.

     The Company's original three-year credit facility with Wells
Fargo  Retail  Finance  II, LLC, ("WFRF")  was  entered  into  on
February  5,  2003  and  provided  the  Company  with  a  maximum
available  credit  limit  of  $22 million.   This  agreement  was
scheduled  to  expire in February 2006.  As discussed  below,  on
April  29,  2004, the maximum available credit line was increased
to  the  lesser  of  $25 million or $22 million plus  outstanding
participant  advances, and the expiration date  was  extended  to
February   5,   2007.   The  credit  facility   is   secured   by
substantially all assets of the Company and its subsidiaries  and
is  subject  to a borrowing base calculation based  primarily  on
inventory  and  accounts  receivable.   The  facility   has   two
financial  covenants, a minimum excess availability  covenant  of
$1.35   million  and  a  maximum  capital  expenditure  covenant,
established at $2.75 million for 2005.  Interest rates under  the
facility  are  at prime plus 0.5% or LIBOR plus 2.50%,  with  the
ability  to  reduce  the  rate if the  Company  achieves  certain
financial  criteria.   The balance outstanding on  the  Company's
line  of  credit at July 30, 2005 was $20,775,000 which  includes
the  $4  million outstanding under the bridge facility  discussed
below.   At  July 30, 2005 the Company's availability  under  the
WFRF  line  of  credit was approximately $2.9 million  above  the
minimum availability requirement of $1.35 million and the average
interest rate on the credit line was 5.74%.

     Subsequent  to  securing the initial  credit  facility,  the
Company  negotiated  an  increase of  $2  million  in  its  total
borrowing  availability under its existing credit  facility  with
WFRF.  The Company obtained this increase in order to provide for
additional  working capital.  The full $2 million  was  available
for  borrowing  on  July 15, 2003 and has been  extended  to  the
Company  by Wells Fargo based upon a loan participation agreement
between  Wells  Fargo and RonHow, LLC, an entity  established  in
July 2003 which is owned and controlled directly or indirectly by
Ronald  de Waal and W. Howard Lester.  Mr. de Waal and Mr. Lester
are  both major beneficial owners of the Company's common  stock,
and Mr. Lester is also a director of the Company.

     In order to achieve additional liquidity, on April 29, 2004,
the  Company  completed an amendment to the credit facility  with
WFRF  which increased the Company's borrowing availability  under
the  facility.   The  amendment increased the  Company's  maximum
inventory advance rate cap from 75% to 80% during non-peak  times
and  from 80% to 85% during peak times.  Peak times were  amended
to  include  the eight weeks prior to Easter and the eight  weeks
prior  to  October 1.  Additionally, the amendment  extended  the
term of the credit facility by one year, with a new expiration of
February  5,  2007.   The  amendment also increased  the  maximum
revolver amount from $22 million to the lesser of $25 million  or
$22  million plus outstanding participant advances.  Finally, the
amendment  provided for an additional increase of $2  million  in
the  Company's  borrowing availability under the  facility  based
upon  an  increase  in the existing loan participation  agreement
between WFRF and RonHow, LLC.  WFRF will continue to serve as the
lending agent for the Company under the credit facility, and  the
principal  covenants  and  conditions imposed  upon  the  Company
pursuant   to  the  WRFR  credit  facility  agreement  have   not
materially  changed.   RonHow, LLC's right to  repayment  of  any
advances under the credit facility that are attributable  to  its
total  $4 million participation is generally subordinate  to  the
repayment rights of the other credit facility lenders.   However,
the  Company  may repay these advances provided it meets  certain
conditions, including the maintenance of an average daily  excess
availability  under the credit facility of at least $2.5  million
for  the  30  days  prior  to and 30 days  projected  immediately
following   the  repayment.   The  average  excess   availability
requirement  is  higher  than the excess  availability  otherwise
required  of  the  Company  under the credit  facility.   If  the
Company  does not repay the new $2 million loan participation  of
RonHow  during the 18 months subsequent to April 29, 2004, RonHow
will  have  an  option  at  that  time  to  convert  any  of  the
incremental  $2 million not repaid into shares of authorized  but
unissued  2003-A Preferred Stock, which will be convertible  into
shares of common stock at a price of $2.524 per share, which  was
the  20-day  average closing price of the Company's common  stock
for  the  period ending immediately before closing  of  the  loan
amendment.   Additionally,  if the Company  has  not  repaid  the
initial  $2 million of loan participation by February  2006,  the
Company  will  pay  an  additional  4%  fee  per  annum  on   the
outstanding   participation  amount  up  to  $2  million.    This
transaction was approved by the independent directors.

     The  Company  was in compliance with its debt covenants  for
the quarter ended July 30, 2005.  Although the Company's line  of
credit with WFRF does not expire until February 2007, the Company
has classified its borrowings under its line of credit as current
in  its  consolidated  balance sheets due to  the  terms  of  its
agreement with the lender.  Under the bank agreement, there is an
acceleration clause which potentially allows the bank  to  demand
immediate  payment  of  all  outstanding  borrowings   upon   the
occurrence  of  a  material  adverse  change  in  the   Company's
operations   or  financial  position.   Determination   of   what
constitutes a material adverse change is at the discretion of the
bank,  however,  it is subject to reasonableness  standards.   In
addition,  the  Company  is  required  to  maintain  a   lock-box
agreement  with  the  bank whereby all cash received  is  applied
against  current  borrowings.  As a result of  these  items,  the
Company is required to classify its line of credit borrowings  as
current   as   proscribed   by   EITF   95-22,   "Balance   Sheet
Classification  of Borrowings Outstanding under Revolving  Credit
Agreements that include both a Subjective Acceleration Clause and
a Lock-Box Arrangement."

     At  July 30, 2005 the Company's availability under the  WFRF
line  of  credit was approximately $2,878,000 million  above  the
minimum availability requirement of $1.35 million and the average
interest rate on the credit line was 5.74%.  The Company's credit
line  had  an average balance of $21,092,000 and $17,663,000  for
the  twenty-six  weeks ended July 30, 2005  and  July  31,  2004,
respectively.  During the twenty-six weeks ended July  30,  2005,
the  WFRF line of credit had a high balance of $22,839,000.   The
balance outstanding on July 30, 2005 was $20,775,000.

The Company considers the following as measures of liquidity and
capital resources as of the dates indicated:

                             July     January     July
                              30,       29,       31,
                             2005      2005      2004
                                                (Restat
                                                  ed)
Working capital (000's)      $(921)    $(439)    $(442)
Current ratio                 .97:1     .99:1     .98:1
Ratio of working capital     (.02):    (.01):    (.01):
to total assets                   1         1         1
Ratio of total debt to       (1.82)    (2.14)    (2.11)
stockholders' deficit            :1        :1        :1

Seasonality

      The  Company's business is subject to seasonal  influences,
with  the major portion of sales realized during the fall  season
(third and fourth quarters) of each year, which includes the back-
to-school and holiday selling seasons.  In light of this pattern,
selling, general and administrative expenses are typically higher
as  a  percentage  of sales during the spring season  (first  and
second quarters) of each year.

Inflation

      Inflation affects the costs incurred by the Company in  its
purchase of merchandise and in certain components of its selling,
general  and  administrative expenses.  The Company  attempts  to
offset  the  effects  of inflation through  price  increases  and
control  of expenses, although the Company's ability to  increase
prices   is  limited  by  competitive  factors  in  its  markets.
Inflation   has  had  no  meaningful  effect  on  the   Company's
operations.

Critical Accounting Estimates and Commitments

      There  have  been  no  material changes  in  the  Company's
critical  accounting estimates or in its commitments  from  those
disclosed  in  the company's Annual Report on Form 10-K  for  the
year ended January 29, 2005.

Third Quarter Sales Expectations

     During  the  last  week of August 2005,  the  United  States
experienced  one of the worst natural disasters in  history  with
hurricane  Katrina.   This event directly  impacted  two  of  the
Company's  full-price  retail  stores  located  in  Baton  Rouge,
Louisiana  and Jackson, Mississippi and indirectly affected  many
other  stores throughout the southeast region.  The total  impact
to the Company cannot be fully quantified at this time, but sales
since  that date have not met the Company's plan.  The impact  of
the hurricane on the Company was partially offset by August sales
which exceeded Company expectations due to accelerated selling on
spring and summer clearance items.

ITEM  3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET
RISK

     The  primary  objective  of this disclosure  is  to  provide
forward-looking  quantitative and qualitative  information  about
the  Company's  potential exposure to  market  risks.   The  term
"market  risk" for the Company refers to the risk of loss arising
from  adverse  changes  in  interest rates  and  various  foreign
currencies.   The  disclosures  are  not  meant  to  be   precise
indicators  of  expected future losses, but rather indicators  of
reasonably  possible  losses.  There  have  been  no  significant
changes  to  this forward-looking information during  the  second
quarter of 2005 that would materially alter the Company's  market
risk exposures.

ITEM 4.   CONTROLS AND PROCEDURES

     The  Company's  Principal Executive  Officer  and  Principal
Financial  Officer have reviewed and evaluated the  effectiveness
of  the  Company's disclosure controls and procedures (as defined
in  Exchange Act Rule 240.13a-15(e) and 15d-15(e)) as of the  end
of  the  period covered by this report.  Disclosure controls  and
procedures  include, without limitation, controls and  procedures
designed  to ensure that information required to be disclosed  by
an  issuer in reports that it files or submits under the Exchange
Act  is  accumulated and communicated to the issuer's management,
including   its  principal  executive  and  principal   financial
officers, or persons performing similar functions, as appropriate
to  make timely decisions regarding required disclosures.   Based
on  that  evaluation,  the Principal Executive  Officer  and  the
Principal  Financial Officer have concluded  that  the  Company's
current  disclosure  controls  and procedures  are  effective  to
ensure  that information required to be disclosed by the  Company
in the reports that it files or submits under the Exchange Act is
recorded,  processed, summarized and reported,  within  the  time
periods  specified  in  the Securities and Exchange  Commission's
rules and forms.

     No  change  in the Company's internal control over financial
reporting  occurred  during  the  second  quarter  of  2005  that
materially  affected,  or  is  reasonably  likely  to  materially
affect, the Company's internal control over financial reporting.

                             PART II

ITEM 1.   LEGAL PROCEEDINGS

     None.

ITEM 2.    UNREGISTERED  SALES OF EQUITY SECURITIES  AND  USE  OF
     PROCEEDS

     On May 1, 2005, 1,220 shares of the Company's Amended Series
2001-A  Preferred  Stock  ("2001 Preferred")  were  issued  as  a
dividend to one of the existing holders of 2001 Preferred at  his
election  pursuant to the original terms of the  2001  Preferred.
Each  share  of  2001  Preferred  issued  in  this  dividend   is
convertible  into  approximately 18.69 shares of  Company  common
stock.

     On July 1, 2005, 2,379 shares of the Company's Series 2002-A
Preferred  Stock ("2002 Preferred") were issued as a dividend  to
two  of  the existing holders of 2002 Preferred at their election
pursuant to the original terms of the 2002 Preferred.  Each share
of  2002  Preferred issued in this dividend is  convertible  into
approximately 12.58 shares of Company common stock.

     Also,  on  July 1, 2005, 286 shares of the Company's  Series
2003-A  Preferred  Stock  ("2003 Preferred")  were  issued  as  a
dividend to one of the existing holders of the 2003 Preferred  in
accordance  with the original terms of the 2003 Preferred.   Each
share  of  2003 Preferred issued in this dividend is  convertible
into approximately 62.89 shares of Company common stock.

     Because  the  shares of 2001 Preferred, 2002  Preferred  and
2003 Preferred described above were all issued as preferred stock
dividends  in accordance with the original terms of each  series,
the  Company  believes  that no sale of securities  has  occurred
which  would  require the registration of such shares  under  the
Securities Act.  However, even if the issuance of such shares  is
deemed  to  be  a  sale for purposes of the Securities  Act,  the
Company  believes the issuance of such shares was, in each  case,
exempt  from  registration under the Securities Act  pursuant  to
Section  4(2)  thereof.   These shares were  issued  without  any
public solicitation to a limited group of investors, all of  whom
are either directors of the Company or beneficially own in excess
of  10% of the Company's outstanding common stock and all of whom
acquired such shares for investment.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      The 2005 Annual Meeting of Shareholders of the Company  was
held on June 23, 2005.  The following matters were submitted to a
vote of the Company's shareholders:

1.    The  election of seven directors (constituting  the  entire
  board  of  directors)  for the ensuing  year  and  until  their
  successors are duly elected and qualified.  The results of  the
  election for each director were as follows:

    Director         Votes For      Votes
                                 Withheld

Hubert W. Mullins    16,822,      51,018
                         455

Clark J. Hinkley     16,834,      38,681
                         792

Rebecca Powell       16,820,      52,476
Casey                    997

William E. Haslam    6,724,8 *         -
                          72

James D. Abrams      4,705,9           -
                          65

Robert L.            6,724,8 *         -
Anderson                  72

Margaret A.          4,705,9           -
Gilliam                   65

W. Howard Lester     6,724,8 *         -
                          72

Leonard M. Snyder    16,845,      27,862
                         611

  *The  Company has three series of preferred stock  as  follows:
  Amended   Series  2001-A,  Series  2002-A  and  Series   2003-A
  ("Preferred  Stock").   The  holders  of  Preferred  Stock  are
  entitled  to  vote together with all the other holders  of  the
  Company's  Common  Stock  on  all  matters  presented  to   the
  shareholders  (including  with  respect  to  the  election   of
  directors),  and each share of Preferred Stock is  entitled  to
  cast  a number of votes equal to the number of shares of Common
  Stock  into  which  such  share of  Preferred  Stock  could  be
  converted  at  the conversion rates described in the  preferred
  stock  agreements.   The  holders of the  Preferred  Stock  are
  entitled  voting  as  a  separate class to  elect  a  specified
  number  of  directors.  With respect to these three  directors,
  the  votes  represent  shares of Preferred  Stock  (on  an  as-
  converted basis) voted in favor of their election.

Subsequent  to the election of directors, on July 25,  Hubert  W.
Mullins resigned as a director and Chief Executive officer of the
Company.

ITEM 5.   OTHER INFORMATION

      Effective  April  25,  2005 the  Company  entered  into  an
agreement  with  Gerald Kucera to sell the Austin,  Texas  outlet
store  location at a sales price of $2.5 million.  The  agreement
was  amended  on  May  26, 2005 to extend the feasibility  period
allowed the prospective buyer for due diligence.  The feasibility
period was scheduled to end on June 27, 2005 and was extended  by
the buyer for an additional 15 days.  After the additional 15-day
extension, the buyer cancelled the contract forfeiting $20,000 of
escrow funds.

      Effective  August  23,  2005 the Company  entered  into  an
agreement with H.D. Investments, LLC to sell its Norman, Oklahoma
office  location at a sales price of $1.25 million.  The  closing
of  this transaction is contingent upon the Company and the buyer
finalizing an agreement for the Company to lease the first  floor
of  the  building  from  H.D.  Investments,  LLC  and  the  buyer
obtaining  and approving the final plans for the remodel  of  the
first  floor.   The  contract  is  subject  to  a  due  diligence
feasibility period that expires September 22, 2005.  If the  sale
of  the  building were to close, the Company expects to record  a
gain on the sale of approximately $875,000.

ITEM 6.   EXHIBITS

     See the Exhibit Index accompanying this report.


                           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, hereunto duly authorized.



                      HAROLD'S STORES, INC.

                     By:  /s/ Leonard Snyder
                         Leonard Snyder
                 Interim Chief Executive Officer

                     By: /s/ Jodi L. Taylor
                         Jodi L. Taylor
                     Chief Financial Officer


Date: September 13, 2005

                           INDEX TO EXHIBITS

No.  Description

3.1  Certificate  of Incorporation of the Company,  as  amended
     (Incorporated  by reference to Exhibit 3.1  to  Form  10-K
     for the year ended February 3, 2001).

3.2  By-laws  of  the  Company (Incorporated  by  reference  to
     Exhibit   3.2   to   Form   8-B  Registration   Statement,
     Registration No. 1-10892).

4.1  Specimen  Certificate  for Common Stock  (Incorporated  by
     reference   to   Exhibit  4.1  to  Form  S-1  Registration
     Statement, Registration No. 33-15753).

4.2  Certificate of Elimination of Designations of  the  Series
     2001-A  Preferred  Stock  (Incorporated  by  reference  to
     Exhibit 4.1 to Form 8-K dated August 2, 2002).

4.3  Certificate  of Designations of the Amended Series  2001-A
     Preferred Stock (Incorporated by reference to Exhibit  4.2
     to Form 8-K dated August 2, 2002).

4.4  Certificate   of   Designations  of  the   Series   2002-A
     Preferred Stock (Incorporated by reference to Exhibit  4.3
     to Form 8-K dated August 2, 2002).

4.5  Amendment to the Certificate of Designation of the
     Amended Series 2001-A Preferred Stock ($0.01 Par Value)
     of Harold's Stores, Inc., dated February 4, 2003
     (Incorporated by reference to Exhibit 4.1 to Form 8-K
     dated February 4, 2003).

4.6  Certificate   of   Designations  of  the   Series   2003-A
     Preferred Stock (Incorporated by reference to Exhibit  4.2
     to Form 8-K dated February 4, 2003).

10.  Lease Agreement effective May 1, 1996 between Company  and
1    Carousel  Properties, Inc. (Campus Corner  Store,  Norman,
     Oklahoma)  (Incorporated by reference to Exhibit  10.7  to
     Form  S-2  Registration Statement, Registration  No.  333-
     04117)  and  amendment to Lease Agreement dated  April  4,
     2002.  (Incorporated by reference to Exhibit 10.1 to  Form
     10-Q for the quarter ended May 4, 2002).

10.  Amended  and Restated Lease Agreement dated as of June  3,
2    1996   between  Company  and  329  Partners   II   Limited
     Partnership  (East  Lindsey  Warehouse  Facility,  Norman,
     Oklahoma)  (Incorporated by reference to Exhibit 10.13  to
     Amendment  No.  1  to  Form  S-2  Registration  Statement,
     Registration No. 333-04117).

10.  Amended and Restated Lease Agreement dated as of June  20,
3    2001   between  Company  and  329  Partners   II   Limited
     Partnership     (Outlet    Store,    Norman,     Oklahoma)
     (Incorporated by reference to Exhibit 10.6  to  Form  10-K
     for the year ended February 2, 2002).

10.  2002  Performance  and Equity Incentive Plan  of  Company.
4*   (Incorporated  by reference to Definitive Proxy  Statement
     dated  May  17,  2002, for annual meeting of  shareholders
     held on June 20, 2002.

10.  Employment  Agreement  dated  February  9,  2004   between
5*   Company  and Hubert W. Mullins (Incorporated by  reference
     to  Exhibit  10.5 to Form 10-K for the year ended  January
     31, 2004).

10.  Employment  Agreement  dated  February  9,  2004   between
6*   Company  and  Clark Hinkley (Incorporated by reference  to
     Exhibit  10.6 to Form 10-K for the year ended January  31,
     2004).

10.  Stock  Option  Agreement dated February 23,  2001  between
7*   Company  and  Clark Hinkley (Incorporated by reference  to
     Exhibit 10.12 to Form 10-K for the year ended February  3,
     2001).

10.  First  Amendment to Stock Option Agreement dated  February
8*   9,  2004  between Company and Clark Hinkley  (Incorporated
     by  reference  to Exhibit 10.8 to Form 10-K for  the  year
     ended January 31, 2004).

10.  Employment  and  Deferred  Compensation  Agreement   dated
9*   February  1,  1998  between Company and Harold  G.  Powell
     (Incorporated by reference to Exhibit 10.25 to  Form  10-Q
     for quarter ended May 2, 1998).

10.  First Amendment dated February 28, 2001 to Employment  and
10*  Deferred   Compensation  Agreement  between  Company   and
     Harold  G.  Powell (Incorporated by reference  to  Exhibit
     10.17 to Form 10-K for the year ended February 3, 2001).

10.  Series  2001-A  Preferred Stock Purchase  Agreement  dated
11   February  23,  2001  between Company  and  Inter-Him  N.V.
     (Incorporated  by reference to Exhibit 10.1  to  Form  8-K
     dated February 28, 2001).

10.  Investor Rights Agreement dated February 28, 2001  between
12   Company and Inter-Him N.V.  (Incorporated by reference  to
     Exhibit 10.2 to Form 8-K dated February 28, 2001).

10.  Voting  Agreement dated February 28, 2001  among  Company,
13   Inter-Him  N.V. and the other stockholders  named  therein
     (Incorporated  by reference to Exhibit 10.3  to  Form  8-K
     dated February 28, 2001).

10.  Right  of First Refusal Agreement dated February 28,  2001
14   among  Company, Inter-Him N.V. and the other  stockholders
     named  therein (Incorporated by reference to Exhibit  10.4
     to Form 8-K dated February 28, 2001).

10.  First  Amended  and Restated Stockholders Agreement  dated
15   June  15,  1998  among  certain  stockholders  of  Company
     (Incorporated by reference to Exhibit 10.2  to  Form  10-Q
     for quarter ended August 1, 1998).

10.  First  Amendment dated February 28, 2001 to First  Amended
16   and   Restated   Stockholders  Agreement   among   certain
     stockholders  of  Company (Incorporated  by  reference  to
     Exhibit 10.6 to Form 8-K dated February 28, 2001).

10.  Series 2002-A Preferred Stock Purchase Agreement dated  as
17   of  June  26,  2002, by and among Harold's  Stores,  Inc.,
     Inter-Him,  N.V.,  W. Howard Lester,  William  E.  Haslam,
     Clark J. Hinkley and Margaret A. Gilliam (Incorporated  by
     reference  to  Exhibit 10.1 to Form 8-K  dated  August  2,
     2002).

10.  First  Amendment to Investor Rights Agreement dated as  of
18   August 2, 2002, by and among Harold's Stores, Inc., Inter-
     Him,  N.V., W. Howard Lester, William E. Haslam, Clark  J.
     Hinkley   and   Margaret  A.  Gilliam   (Incorporated   by
     reference  to  Exhibit 10.2 to Form 8-K  dated  August  2,
     2002).

10.  First  Amendment to Right of First Refusal Agreement dated
19   as  of August 2, 2002, by and among Harold's Stores, Inc.,
     Inter-Him, N.V., W. Howard Lester, Harold G. Powell,  Anna
     M.  Powell,  Rebecca Powell Casey, H. Rainey Powell,  Lisa
     Powell  Hunt, Clay M. Hunt and Arvest Trust Company,  N.A.
     (Incorporated  by reference to Exhibit 10.3  to  Form  8-K
     dated August 2, 2002).

10.  First Amendment to Voting Agreement dated as of August  2,
20   2002,  by  and  among  Harold's Stores,  Inc.,  Inter-Him,
     N.V.,  W.  Howard  Lester, William  E.  Haslam,  Clark  J.
     Hinkley,  Margaret A. Gilliam, Harold G. Powell,  Anna  M.
     Powell,  Rebecca  Powell  Casey, H.  Rainey  Powell,  Lisa
     Powell  Hunt, Clay M. Hunt and Arvest Trust Company,  N.A.
     (Incorporated  by reference to Exhibit 10.4  to  Form  8-K
     dated August 2, 2002).

10.  Series 2003-A Preferred Stock Purchase Agreement dated  as
21   of  February 5, 2003, by and among Harold's Stores,  Inc.,
     Inter-Him  N.V.  and  W.  Howard Lester  (Incorporated  by
     reference  to Exhibit 10.1 to Form 8-K dated  February  4,
     2003).

10.  Second Amendment to Investor Rights Agreement dated as  of
22   February  5,  2003,  by and among Harold's  Stores,  Inc.,
     Inter-Him  N.V.  and  W.  Howard Lester  (Incorporated  by
     reference  to Exhibit 10.2 to Form 8-K dated  February  4,
     2003).

10.  Loan  and Security Agreement dated as of February 5, 2003,
23   by  and  among  Wells Fargo Retail Finance, LLC,  Harold's
     Stores,  Inc.,  Harold's Financial  Corporation,  Harold's
     Direct,  Inc.,  Harold's Stores of Texas,  L.P.,  Harold's
     Stores  of  Georgia, L.P., and Harold's of  Jackson,  Inc.
     (Incorporated  by reference to Exhibit 10.3  to  Form  8-K
     dated February 4, 2003).

10.  Series  2003-A Preferred Stock Investment Agreement  dated
24   as  of  February 4, 2003, by and between Harold's  Stores,
     Inc.    and    329    Partners-II   Limited    Partnership
     (Incorporated  by reference to Exhibit 10.6  to  Form  8-K
     dated February 4, 2003).

10.  Form  of  Indemnification Agreement  between  Company  and
25   members  of  its  Board  of  Directors  (Incorporated   by
     reference  to  Exhibit 10.36 to Form  10-K  for  the  year
     ended February 1, 2003).

10.  Form  of  Waiver  of  Claims  and  Covenant  Not  to   Sue
26   Directors  between principal shareholders of  the  Company
     and   members   of  the  Company's  Board   of   Directors
     (Incorporated by reference to Exhibit 10.37 to  Form  10-K
     for the year ended February 1, 2003).

10.  Participation Agreement dated as of July 10, 2003, by  and
27   between  Wells  Fargo Retail Finance II, LLC  and  RonHow,
     LLC (Incorporated by reference to Exhibit 10.3 to Form  8-
     K dated July 10, 2003).

10.  Amended and Restated Participation Agreement dated  as  of
28   April  29, 2004, by and between Wells Fargo Retail Finance
     II,  LLC  and  RonHow, LLC (Incorporated by  reference  to
     Exhibit 10.28 to Form 10-K for the year ended January  31,
     2004).

10.  Assignment  and  Assumption of Lease Agreement  and  Third
29   Amendment to Lease Agreement dated October 1, 2003 by  and
     between  Company  and 329 Partners-II Limited  Partnership
     (Dallas  Buying  Office, Dallas, Texas)  (Incorporated  by
     reference  to Exhibit 10.1 to Form 10-Q dated November  1,
     2003).

10.  Option  Agreement  between Company and  RONHOW  LLC  dated
30   April  30,  2004  (Incorporated by  reference  to  Exhibit
     10.30 to Form 10-K for the year ended January 31, 2004).

10.  First  Amendment to Loan and Security Agreement  dated  as
31   of  February  5,  2003, by and among  Wells  Fargo  Retail
     Finance,  LLC,  Harold's Stores, Inc., Harold's  Financial
     Corporation,  Harold's Direct, Inc.,  Harold's  Stores  of
     Texas,  L.P.,  Harold's  Stores  of  Georgia,  L.P.,   and
     Harold's  of  Jackson, Inc. (Incorporated by reference  to
     Exhibit 10.31 to Form 10-K for the year ended January  31,
     2004).

10.  Second  Amendment to Loan and Security Agreement dated  as
32   of  April  29,  2004,  by  and among  Wells  Fargo  Retail
     Finance,  LLC,  Harold's Stores, Inc., Harold's  Financial
     Corporation,  Harold's Direct, Inc.,  Harold's  Stores  of
     Texas,  L.P.,  Harold's  Stores  of  Georgia,  L.P.,   and
     Harold's  of  Jackson, Inc. (Incorporated by reference  to
     Exhibit 10.32 to Form 10-K for the year ended January  31,
     2004).

10.  Agreement  for  Purchase  and  Sale  of  Norman,  Oklahoma
33   office  building  by  and between Harold's  Stores,  Inc.,
     Corner Properties, Inc. and H.D. Investments, LLC.

22.  Subsidiaries  of  Company (Incorporated  by  Reference  to
1    Exhibit   22.1   to   Form  8-B  Registration   Statement,
     Registration No. 1-10892).

31.  Certification  of  Chief  Executive  Officer  Pursuant  to
1    Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.  Certification  of  Chief  Financial  Officer  Pursuant  to
2    Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.  Certification  of Chief Executive Officer Pursuant  to  18
1    U.S.C. Section 1350.

 32.  Certification of Chief Financial Officer Pursuant to 18
 2    U.S.C. Section 1350
 ___________________________
 *  Constitutes a management contract or compensatory  plan  or
 arrangement  required  to  be filed  as  an  exhibit  to  this
 report.