<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 31, 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 Number                         0-12188
                      ----------------------------------------------------------

                                 DEB SHOPS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                        Pennsylvania                             23-1913593
--------------------------------------------------------------------------------
                (State or other jurisdiction of              (I.R.S. Employer
                 incorporation or organization)             Identification No.)

      9401 Blue Grass Road, Philadelphia, Pennsylvania             19114
--------------------------------------------------------------------------------
          (Address of principal executive offices)               (Zip Code)

                                 (215) 676-6000
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
--------------------------------------------------------------------------------
              (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 ________

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
                                  Yes __X__         No ________

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


Common Stock, Par Value $.01                         14,319,308
----------------------------               ----------------------------------
         (Class)                           (Outstanding at September 6, 2005)


<PAGE>
<TABLE>
<CAPTION>
                                            DEB SHOPS, INC. AND SUBSIDIARIES







                                                        I N D E X
                                                        ---------






                                                                                                                   PAGE
                                                                                                                   ----
<S>                        <C>                                                                                     <C>
PART I.                    Financial Information:

         Item 1.           Financial Statements


                           Consolidated Balance Sheets
                           July 31, 2005 (Unaudited) and January 31, 2005                                          1

                           Consolidated Statements of Operations (Unaudited)
                           Three Months and Six Months Ended July 31, 2005 and 2004                                2

                           Consolidated Statements of Cash Flows (Unaudited)
                           Six Months Ended July 31, 2005 and 2004                                                 3

                           Notes to Consolidated Financial Statements
                           July 31, 2005 (Unaudited)                                                               4-7

         Item 2.           Management's Discussion and Analysis of Financial Condition
                           and Results of Operations - July 31, 2005                                               8-12

         Item 3.           Quantitative and Qualitative Disclosures About
                           Market Risk                                                                             13

         Item 4.           Controls and Procedures                                                                 13


PART II.                   Other Information

         Item 4.           Submission of Matters to a Vote of Security Holders                                     13

         Item 6.           Exhibits                                                                                14

         Exhibit Index                                                                                             15
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                     DEB SHOPS, INC. AND SUBSIDIARIES
                                       CONSOLIDATED BALANCE SHEETS

                                                                          JULY 31,           JANUARY 31,
                                                                            2005                2005
                                                                        (UNAUDITED)
--------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                 <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                             $119,077,100        $ 30,298,970
  Marketable securities                                                   69,625,000         146,100,000
  Merchandise inventories                                                 35,426,613          30,560,176
  Prepaid expenses and other                                               2,470,084           2,616,185
  Deferred income taxes                                                      910,889             910,889
                                                                        --------------------------------
     Total current assets                                                227,509,686         210,486,220

PROPERTY, PLANT AND EQUIPMENT - AT COST
  Land                                                                       150,000             150,000
  Buildings                                                                2,365,697           2,365,697
  Leasehold improvements                                                  54,202,583          53,168,985
  Furniture and equipment                                                 16,629,095          16,568,516
                                                                        --------------------------------
                                                                          73,347,375          72,253,198
  Less accumulated depreciation and amortization                          50,927,218          48,993,382
                                                                        --------------------------------
     Net property, plant and equipment                                    22,420,157          23,259,816

OTHER ASSETS
  Deferred income taxes                                                    7,421,935           7,421,935
  Other                                                                    1,712,223           1,712,223
                                                                        --------------------------------
     Total other assets                                                    9,134,158           9,134,158
                                                                        --------------------------------
                 Total assets                                           $259,064,001        $242,880,194
                                                                        ================================

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Trade accounts payable                                                $ 30,926,970        $ 26,921,683
  Accrued expenses and other                                               9,087,517           9,580,192
  Dividends payable                                                       87,719,562           1,734,052
  Income taxes payable                                                     1,281,660           4,618,905
                                                                        --------------------------------
     Total current liabilities                                           129,015,709          42,854,832

Deferred lease credits                                                    10,977,708          11,114,224

SHAREHOLDERS' EQUITY
  Series A Preferred Stock, par value $1.00 per share:
       Authorized - 5,000,000 shares
       Issued and outstanding - 460 shares,
           liquidation value $460,000                                            460                 460
  Common Stock, par value $.01 per share:
       Authorized - 50,000,000 shares
       Issued  - 15,688,290 shares                                           156,883             156,883
  Additional paid in capital                                              14,050,759           7,232,646
  Retained earnings                                                      113,352,700         193,467,638
                                                                        --------------------------------
                                                                         127,560,802         200,857,627
  Less common treasury shares, at cost:
    July 31, 2005 -1,368,982; January 31, 2005 - 1,926,279                 8,490,218          11,946,489
                                                                        --------------------------------
                                                                         119,070,584         188,911,138
                                                                        --------------------------------
                 Total liabilities and shareholders' equity             $259,064,001        $242,880,194
                                                                        ================================
</TABLE>

See notes to consolidated financial statements.




                                                   -1-


<PAGE>
<TABLE>
<CAPTION>
                                                 DEB SHOPS, INC. AND SUBSIDIARIES
                                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                                           (UNAUDITED)

                                                 THREE MONTHS ENDED JULY 31,                  SIX MONTHS ENDED JULY 31,
                                         ------------------------ -------------------- --------------------- -------------------
                                                  2005                   2004                  2005                 2004
---------------------------------------- ------------------------ -------------------- --------------------- -------------------
                                                                      (AS RESTATED,                             (AS RESTATED,
                                                                       SEE NOTE B)                               SEE NOTE B)
<S>                                      <C>                      <C>                  <C>                   <C>
Net sales                                            $75,966,094         $ 72,830,500         $ 153,450,841       $ 145,911,083
                                         ------------------------ -------------------- --------------------- -------------------

Costs and expenses:
  Cost of sales, including
    buying and occupancy costs                        46,934,240           47,152,220           102,617,057         100,812,040
  Selling and administrative                          18,526,050           17,470,560            35,621,310          34,604,528
  Depreciation and amortization                        1,282,574            1,291,690             2,649,381           2,607,920
                                         ------------------------ -------------------- --------------------- -------------------
                                                      66,742,864           65,914,470           140,887,748         138,024,488

Operating income                                       9,223,230            6,916,030            12,563,093           7,886,595
Other income, principally interest                     1,324,850              459,270             2,373,305             864,623
                                         ------------------------ -------------------- --------------------- -------------------
Income before income taxes                            10,548,080            7,375,300            14,936,398           8,751,218
Income tax provision                                   3,958,000            2,732,250             5,586,000           3,229,500
                                         ------------------------ -------------------- --------------------- -------------------
Net income                                           $ 6,590,080         $  4,643,050         $   9,350,398       $   5,521,718
                                         ======================== ==================== ===================== ===================

Net income per common share
                  Basic                              $      0.47         $       0.34         $        0.67       $        0.40
                                         ======================== ==================== ===================== ===================
                  Diluted                            $      0.46         $       0.34         $        0.66       $        0.40
                                         ======================== ==================== ===================== ===================

Cash dividend declared
  per common share                                   $     6.125         $      0.525         $       6.250       $        0.65
                                         ======================== ==================== ===================== ===================

Weighted average number of
  common shares outstanding
                  Basic                               14,080,355           13,723,122            13,930,967          13,705,255
                                         ======================== ==================== ===================== ===================
                  Diluted                             14,160,816           13,723,122            14,054,870          13,710,813
                                         ======================== ==================== ===================== ===================
</TABLE>




See notes to consolidated financial statements.











                                                               -2-


<PAGE>
<TABLE>
<CAPTION>
                                              DEB SHOPS, INC. AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (UNAUDITED)





                                                                                               SIX MONTHS ENDED JULY 31,
                                                                                         ----------------------------------
                                                                                             2005                  2004
 --------------------------------------------------------------------------------------- ----------------------------------
                                                                                                             (AS RESTATED, SEE
                                                                                                                  NOTE B)
<S>                                                                                      <C>                  <C>
 Cash flows from operating activities:
   Net income                                                                            $  9,350,398          $  5,521,718
   Adjustments to reconcile net income to
      net cash provided by (used in) operating activities:
       Depreciation and amortization                                                        2,649,381             2,607,920
       Loss on retirement of property, plant and equipment                                     34,704                92,910
       Changes in operating assets and liabilities:
          Increase in merchandise inventories                                              (4,866,437)           (4,137,201)
          Decrease (increase) in prepaid expenses and other                                   446,101              (389,028)
          Increase in trade accounts payable                                                4,005,287             2,452,178
          (Decrease) increase in accrued expenses and other                                  (492,675)              107,354
          Decrease in income taxes payable                                                 (2,816,345)             (562,460)
          Decrease in deferred lease credits                                                 (436,516)             (264,586)
                                                                                         ----------------------------------
            Net cash provided by operating activities                                       7,873,898             5,428,805
                                                                                         ----------------------------------

 Cash flows from investing activities:
   Purchases of property, plant and equipment                                              (1,844,430)           (1,524,749)
   Purchases of investment securities                                                     (71,100,000)          (41,150,000)
   Sales of investment securities                                                         147,575,000            33,700,000
                                                                                         ----------------------------------
          Net cash provided by (used in) investing activities                              74,630,570            (8,974,749)
                                                                                         ----------------------------------

 Cash flows from financing activities:
       Preferred stock cash dividends paid                                                    (27,600)              (27,600)
       Common stock cash dividends paid                                                    (3,452,222)           (3,423,976)
       Proceeds from exercise of stock options                                              9,753,484             1,520,000
                                                                                         ----------------------------------
          Net cash provided by (used in) financing activities                               6,273,662            (1,931,576)
                                                                                         ----------------------------------

 Increase (decrease) in cash and cash equivalents                                          88,778,130            (5,477,520)
 Cash and cash equivalents at beginning of period                                          30,298,970            34,064,418
                                                                                         ----------------------------------
 Cash and cash equivalents at end of period                                              $119,077,100          $ 28,586,898
                                                                                         ==================================

 Supplemental disclosures of cash flow information:
   Cash paid during the period for:
     Income taxes, net                                                                   $  8,432,000          $  4,650,000
                                                                                         ==================================
</TABLE>


See notes to consolidated financial statements.






                                       -3-


<PAGE>

                        DEB SHOPS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JULY 31, 2005

- A - ORGANIZATION / BASIS OF PRESENTATION
         Deb Shops, Inc. operates 326 women's and men's specialty apparel retail
stores in regional malls and strip shopping centers principally located in the
East and Midwest regions of the United States. We operate 317 stores under the
name "DEB" which offer moderately priced, fashionable, coordinated women's
sportswear, dresses, coats, lingerie, accessories and shoes for junior and
plus-sizes. DEB merchandise consists of clothing and accessories appealing
primarily to fashion-conscious junior and plus-sized female consumers between
the ages of 13 and 25. One hundred and fifty-four of the DEB stores contain
plus-size departments. We also operate Tops `N Bottoms, a 19 location chain in
11 states. Two of the Tops `N Bottoms stores operate as combination stores with
DEB, and we operate 13 Tops `N Bottoms departments within DEB stores. The Tops
`N Bottoms stores sell moderately priced men's and women's apparel. In addition,
we operate three outlet stores under the name "CSO." The outlet stores offer the
same merchandise as DEB at reduced prices and serve as clearance stores for
slow-moving inventory.

         The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States ("GAAP") for interim financial information. Accordingly, they do
not include all of the information and footnotes required by GAAP for complete
financial statements. In the first and third quarters, cost of goods sold and
inventories are estimated based on the use of the gross profit method. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six-month periods ended July 31, 2005 are not
necessarily indicative of the results that may be expected for the fiscal year
ending January 31, 2006. For further information, refer to the consolidated
financial statements and footnotes thereto included in our Annual Report on Form
10-K/A for the fiscal year ended January 31, 2005.

         The preparation of the consolidated financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

         Certain amounts in the January 31, 2005 consolidated balance sheet have
been reclassified to conform to the current period presentation.

 -B- RESTATEMENT OF FINANCIAL STATEMENTS
         As a result of the publicity on the restaurant industry financial
statement restatements related to leases, we commenced a review of certain of
our accounting policies related to leases during January 2005. Subsequently, on
February 7, 2005, the Office of the Chief Accountant of the Securities and
Exchange Commission ("SEC") issued a letter to the American Institute of
Certified Public Accountants expressing its views regarding certain
operating-lease-related accounting issues and their application under GAAP.
Based on our internal review, and after consultation with the Audit Committee of
our Board of Directors and our predecessor independent registered public
accounting firm on April 19, 2005, we restated our financial statements for
periods prior to fiscal 2005 to correct our accounting for landlord allowances,
calculation of straight-line rent expense, recognition of rent holiday periods,
and depreciation of leasehold improvements for our retail stores. Where
applicable, we have accounted for the effects of this restatement in the
accompanying consolidated financial statements.

         In prior years, we classified our investments in auction rate
certificates as cash and cash equivalents. During fiscal 2005, additional
clarification was provided regarding the financial statement classification of
this type of investment. Pursuant to this guidance, auction rate securities are
not to be classified as cash and cash equivalents. As a result, we have
classified our auction rate certificates as marketable securities and have
restated the consolidated statements of cash flows for the six months ended July
31, 2004 to reflect the purchase and sale activity of these securities within
the investing activities section of the consolidated statements of cash flows.
This change had no effect on current or total assets or net income.


                                       -4-


<PAGE>



         Following is a summary of the effects of these adjustments on our
consolidated statements of operations for the three and six-months ended July
31, 2004 and on our consolidated statement of cash flows for the six months
ended July 31, 2004:
<TABLE>
<CAPTION>
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------------------------------------------------
                                                      AS PREVIOUSLY
                                                         REPORTED          ADJUSTMENTS          AS RESTATED
                                                    ------------------- ------------------- ---------------------
<S>                                                 <C>                 <C>                 <C>
THREE MONTHS ENDED JULY 31, 2004:
   Cost of sales, including
      buying and occupancy costs                    $    47,463,674      $      (311,454)     $  47,152,220
   Depreciation and amortization                    $       962,399      $       329,291      $   1,291,690
   Operating income                                 $     6,933,867      $       (17,837)     $   6,916,030
   Other income, principally interest               $       442,917      $        16,353      $     459,270
   Income before income taxes                       $     7,376,784      $        (1,484)     $   7,375,300
   Income tax provision                             $     2,737,000      $        (4,750)     $   2,732,250
   Net income                                       $     4,639,784      $         3,266      $   4,643,050
   Basic net income per share                       $          0.34      $            --      $        0.34
   Diluted net income per share                     $          0.34      $            --      $        0.34

SIX MONTHS ENDED JULY 31, 2004:
   Cost of sales, including
      buying and occupancy costs                    $   101,434,947       $     (622,907)     $ 100,812,040
   Depreciation and amortization                    $     1,949,339       $      658,581      $   2,607,920
   Operating income                                 $     7,922,269       $      (35,674)     $   7,886,595
   Other income, principally interest               $       831,917       $       32,706      $     864,623
   Income before income taxes                       $     8,754,186       $       (2,968)     $   8,751,218
   Income tax provision                             $     3,239,000       $       (9,500)     $   3,229,500
   Net income                                       $     5,515,186       $        6,532      $   5,521,718
   Basic net income per share                       $          0.40       $           --      $        0.40
   Diluted net income per share                     $          0.40       $           --      $        0.40
</TABLE>

<TABLE>
<CAPTION>
                                      CONSOLIDATED STATEMENT OF CASH FLOWS
-----------------------------------------------------------------------------------------------------------------
                                                       AS PREVIOUSLY
                                                         REPORTED          ADJUSTMENTS          AS RESTATED
                                                    ------------------- ------------------- ---------------------
<S>                                                 <C>                 <C>                 <C>
SIX MONTHS ENDED JULY 31, 2004:
   Net cash provided by operating activities        $     5,191,224      $       237,581      $   5,428,805
   Purchases of property, plant and
     equipment                                      $    (1,287,168)     $      (237,581)     $  (1,524,749)
   Purchases of marketable securities               $        --          $   (41,150,000)     $ (41,150,000)
   Sales of marketable securities                   $        ---         $    33,700,000      $  33,700,000
  Net cash used in investing activities             $    (1,287,168)     $    (7,687,581)     $  (8,974,749)
  Increase (decrease) in cash and cash
     equivalents                                    $     1,972,480      $    (7,450,000)     $  (5,477,520)
  Cash and cash equivalents at
     beginning of period                            $   166,264,418      $  (132,200,000)     $  34,064,418
  Cash and cash equivalents at
     end of period                                  $   168,236,898      $  (139,650,000)     $  28,586,898
</TABLE>





                                       -5-

<PAGE>

- C - NET INCOME PER SHARE
         The table below sets forth the reconciliation of the numerators and
denominators of the basic and diluted net income per common share computations.
<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED JULY 31,                  SIX MONTHS ENDED JULY 31,
                                       --------------------- --------------------- ------------------- --------------------
                                               2005                  2004                 2005                 2004
-------------------------------------- --------------------- --------------------- ------------------- --------------------
                                                                (AS RESTATED)                             (AS RESTATED)
<S>                                    <C>                   <C>                   <C>                 <C>
Net income                             $      6,590,080        $     4,643,050        $    9,350,398      $    5,521,718
Dividends on preferred stock                    (13,800)               (13,800)              (27,600)            (27,600)
                                       --------------------- --------------------- ------------------- --------------------
Income available to
      common shareholders              $      6,576,280        $     4,629,250        $    9,322,798      $    5,494,118
                                       ===================== ===================== =================== ====================
Basic weighted average
     number of common
     shares outstanding                      14,080,355             13,723,122            13,930,967          13,705,255
Effect of dilutive stock options                 80,461                 -                    123,903               5,558
                                       --------------------- --------------------- ------------------- --------------------
Diluted weighted average
     number of common
     shares outstanding                      14,160,816             13,723,122            14,054,870          13,710,813
                                       ===================== ===================== =================== ====================
</TABLE>


         For the periods indicated, we issued the following number of common
shares as a result of stock option exercises.
<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED JULY 31,                  SIX MONTHS ENDED JULY 31,
                                       ------------------------------------------- ----------------------------------------
                                               2005                  2004                 2005                 2004
-------------------------------------- --------------------- --------------------- ------------------- --------------------
<S>                                    <C>                   <C>                   <C>                 <C>
Common shares issued                          463,547                42,000               557,297             42,000
                                       ===================== ===================== =================== ====================
</TABLE>

         For each of the periods indicated, the effect of these exercises is
included in the basic and diluted weighted average number of common shares
outstanding.

         Options to purchase 135,500 shares of common stock, at a weighted
average exercise price of $23.75 per share, were outstanding at July 31, 2005.
At July 31, 2004, options to purchase 1,218,000 shares of common stock, at a
weighted average exercise price of $23.77 were outstanding. The effect of these
options on the diluted weighted average number of common shares outstanding at
July 31, 2005 and 2004 is reflected in the above table that reconciles
numerators and denominators of the basic and diluted net income per common share
computations.

-D - INCOME TAXES
       Our effective tax rate differs from the federal statutory rate due
primarily to state income taxes, offset by tax-exempt interest earnings.

- E - STOCK RELATED COMPENSATION
         We have a stock option plan whereby options may be granted to employees
or non-employee directors on the basis of contributions to our operations.
Details concerning the plan are described in Note G to the financial statements
included in our Annual Report on Form 10-K/A for the fiscal year ended January
31, 2005. We continue to use the accounting method under Accounting Principles
Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to Employees,"
and related interpretations for this plan. Under APB No. 25, generally, when the
exercise price of our stock options equals the market price of the underlying
stock on the date of the grant, no compensation expense is recognized.




                                       -6-


<PAGE>




- E - STOCK RELATED COMPENSATION (CONTINUED)

         Had we recognized compensation cost for the stock option plan
consistent with the provisions of Statement of Financial Accounting Standards
No. 123 ("FAS No. 123"), "Accounting for Stock-Based Compensation," net income
and basic and diluted net income per share would have been adjusted to the
following pro forma amounts.
<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED JULY 31,                SIX MONTHS ENDED JULY 31,
                                        ------------------------------------------ ----------------------------------------
                                               2005                  2004                 2005                2004
                                        -------------------- --------------------- ------------------- --------------------
                                                                (AS RESTATED)                             (AS RESTATED)
<S>                                     <C>                  <C>                   <C>                 <C>
Net income as reported                  $   6,590,080        $   4,643,050         $   9,350,398       $   5,521,718
Stock-based employee
     compensation cost                        (45,891)            (213,045)             (138,070)           (274,548)
                                        -------------------- --------------------- ------------------- --------------------
Pro-forma net income                        6,544,189            4,430,005             9,212,328           5,247,170
Dividends on preferred stock                  (13,800)             (13,800)              (27,600)            (27,600)
                                        -------------------- --------------------- ------------------- --------------------
Pro forma net income available
     to common shareholders             $   6,530,389        $   4,416,205         $   9,184,728       $   5,219,570
                                        ==================== ===================== =================== ====================

Basic net income per common
    share, as reported                  $        0.47        $        0.34         $        0.67       $        0.40
Pro forma basic net income
    per common share                    $        0.46        $        0.32         $        0.66       $        0.38
Diluted net income per
    common share, as reported           $        0.46        $        0.34         $        0.66       $        0.40
Pro forma diluted net income
    per common share                    $        0.46        $        0.32         $        0.65       $        0.38
</TABLE>

             On December 16, 2004, the Financial Accounting Standards Board
(FASB) issued FASB Statement No. 123(R), "Share-Based Payment" ("FAS 123(R)").
FAS 123(R) revised FAS No. 123, and requires companies to expense the fair value
of employee stock options and other forms of stock-based compensation. Companies
must adopt FAS 123(R) no later than the beginning of their next fiscal year that
begins after June 15, 2005. Accordingly, we will be required to adopt FAS 123(R)
in our first quarter of fiscal 2007.

            Previously, in complying with FAS 123, we disclosed the value of
stock options granted and its pro forma impact on our net income in a footnote
to our consolidated financial statements. We are currently considering which
transition method we will select in adopting FAS 123(R), and whether this new
accounting requirement will result in any changes in compensation strategies.
Information contained in the footnotes provides the impact on pro forma net
income for past financial statements. The impact of the adoption of FAS 123(R)
is not expected to have a material impact on our future financial statements.










                                       -7-

<PAGE>

ITEM 2.
-------

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

FORWARD-LOOKING STATEMENTS
         We have made in this report, and from time to time may otherwise make,
"forward-looking statements" (as that term is defined under federal securities
laws) concerning our future operations, performance, profitability, revenues,
expenses, earnings and financial condition. This report includes, in particular,
forward-looking statements regarding expectations of future performance, store
openings and closings and other matters. Such forward-looking statements are
subject to various risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of factors. Such
factors may include, but are not limited to, our ability to improve or maintain
sales and margins, respond to changes in fashion, find suitable retail locations
and our ability to attract and retain key management personnel. Such factors may
also include other risks and uncertainties detailed in our other filings with
the Securities and Exchange Commission, including our Annual Report on Form
10-K/A for the fiscal year ended January 31, 2005 (the "2005 10-K/A"). We assume
no obligation to update or revise our forward-looking statements even if
experience or future changes make it clear that any projected results expressed
or implied therein will not be realized.

CRITICAL ACCOUNTING POLICIES
         Our critical accounting policies are discussed in Management's
Discussion and Analysis of Financial Condition and Results of Operations and
notes accompanying the consolidated financial statements that appear in the 2005
10-K/A. There were no material changes subsequent to the filing of the 2005
10-K/A in our critical accounting policies or in the assumptions or estimates
used to prepare the financial information appearing in this report.

RESTATEMENT OF FINANCIAL STATEMENTS
         As a result of the publicity on the restaurant industry financial
statement restatements related to leases, we commenced a review of certain of
our accounting policies related to leases during January 2005. Subsequently, on
February 7, 2005, the Office of the Chief Accountant of the Securities and
Exchange Commission ("SEC") issued a letter to the American Institute of
Certified Public Accountants expressing its views regarding certain
operating-lease-related accounting issues and their application under GAAP.
Based on our internal review, and after consultation with the Audit Committee of
our Board of Directors and our predecessor independent registered public
accounting firm on April 19, 2005, we restated our financial statements for
periods prior to fiscal 2005 to correct our accounting for landlord allowances,
calculation of straight-line rent expense, recognition of rent holiday periods,
and depreciation of leasehold improvements for our retail stores. Where
applicable, we have accounted for the effects of this restatement in the
accompanying consolidated financial statements.

         The details of the restatement are more fully described in our 2005
10-K/A. The discussion contained in this "Management's Discussion and Analysis
of Financial Condition and Results of Operations" gives effect to the
restatement.

OVERVIEW
         This Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the financial
statements and accompanying notes appearing elsewhere in this report. As used in
this report, the term "fiscal 2006" refers to our fiscal year that will end on
January 31, 2006. The term "fiscal 2005" refers to our fiscal year that ended on
January 31, 2005.

         We operate 326 women's and men's specialty apparel retail stores in
regional malls and strip shopping centers principally located in the East and
Midwest regions of the United States. We operate 317 stores under the name "DEB"
which offer moderately priced, fashionable, coordinated women's sportswear,
dresses, coats, lingerie, accessories and shoes for junior and plus-sizes. One
hundred and fifty-four of the DEB stores contain plus-size departments. We also
operate Tops `N Bottoms, a 19 location chain in 11 states. Two of the Tops `N
bottoms stores operate as combination stores with DEB, and we operate 13 Tops `N
Bottoms departments within DEB stores. The Tops `N Bottoms stores sell
moderately priced men's and women's apparel. In addition, we operate three
outlet stores under the name "CSO." The outlet stores offer the same merchandise
as DEB at reduced prices and serve as clearance stores for slow-moving
inventory.


                                       -8-




<PAGE>

         For the six months ended July 31, 2005 (the "Current Year-to-Date
Period"), our merchandise assortment was well received, as evidenced by a 5.7%
increase in comparable store sales versus the six months ended July 31, 2004
(the "Comparable Year-to-Date Period"). The increase in sales, combined with
lower levels of promotional activity, allowed us to expand gross margins by 220
basis points and achieve a 280 basis point improvement in operating income. The
increases we experienced in the Current Year-to-Date Period were relatively
consistent in each of the first two quarters of the fiscal year.

         The following table sets forth certain store information.
<TABLE>
<CAPTION>
                                                                                           STORE DATA (1)
                                                                            THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                                 JULY 31,                        JULY 31,
                                                                   ----------------------------------- ---------------------------
                                                                         2005              2004            2005         2004
                                                                   ----------------- ----------------- ------------ --------------
<S>                                                                <C>               <C>               <C>          <C>
Stores open at end of the period                                          326               327               326        327
Average number in operation during the period                             323               329               323        329
Average net sales per store (in thousands)                               $235              $221              $475       $443
Average operating income
    per store (in thousands)                                             $ 29               $21(2)            $39        $24(2)
Comparable store sales (3)- percent change                                4.5%             (0.5)%             5.7%       0.9%
</TABLE>

         The following table sets forth, for the periods indicated, selected
statement of operations data expressed as a percentage of net sales:
<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                               JULY 31,                         JULY 31,
                                                                   ---------------------------------- ------------------------------
                                                                        2005              2004            2005           2004
                                                                                      (AS RESTATED)                  (AS RESTATED)
                                                                   ----------------- ---------------- ------------- ----------------
<S>                                                                 <C>              <C>              <C>           <C>
Net sales                                                               100.0%            100.0%            100.0%     100.0%
Gross margin                                                             38.2%             35.3%             33.1%      30.9%
Operating income                                                         12.1%              9.5%              8.2%       5.4%
Income before income taxes                                               13.9%             10.1%              9.7%       6.0%
Income tax provision                                                      5.2%              3.7%              3.6%       2.2%
                                                                   ----------------- ---------------- ------------- ----------------
Net income                                                                8.7%              6.4%              6.1%       3.8%
                                                                   ================= ================ ============= ================
</TABLE>

RESULTS OF OPERATIONS

  THREE MONTHS ENDED JULY 31, 2005 COMPARED TO THREE MONTHS ENDED JULY 31, 2004

NET SALES
         Net sales increased 4.3% during the three months ended July 31, 2005
(the "Current Quarter") to $75,966,000 from $72,831,000 in the quarter ended
July 31, 2004 (the "Comparable Quarter"). The $3,136,000 increase was the result
of a 4.5% or $3,165,000 comparable store sales increase, offset by the effect of
operating fewer stores during the Current Quarter as compared to the Comparable
Quarter. We believe that the comparable store sales increase is attributable to
improved customer acceptance of our merchandise offerings as evidenced by an
increase in net sales per transaction versus the Comparable Quarter.








        ____________________________________
(1)      Includes Tops `N Bottoms stores.
(2)      As restated.
(3)      Comparable stores sales include stores open for both periods. A store
         is added to the comparable store base in its 13th month of operation.

                                       -9-




<PAGE>

COST OF SALES, INCLUDING BUYING AND OCCUPANCY COSTS
         Cost of sales, including buying and occupancy costs, decreased $218,000
or 0.5% during the Current Quarter to $46,934,000 from $47,152,000 in the
Comparable Quarter. As a percentage of sales, these costs decreased to 61.8%
from 64.7% in the Comparable Quarter. The decrease between periods was due to an
increase in merchandise margins arising from improved customer acceptance of our
product offering and an increase in the leveraging of buying and occupancy costs
as a result of our 4.5% comparable store sales increase. Buying and occupancy
costs were 16.7% and 17.2% of net sales for the Current Quarter and Comparable
Quarter, respectively.

SELLING AND ADMINISTRATIVE EXPENSES
         Selling and administrative expenses increased $1,055,000 or 6.0% during
the Current Quarter to $18,526,000 from $17,471,000 in the Comparable Quarter.
As a percentage of net sales, these costs increased to 24.4% from 24.0% in the
Comparable Quarter. The increase was due to increases in payroll expenses,
insurance costs and merchant fees related to credit card sales.

DEPRECIATION AND AMORTIZATION
         Depreciation expense decreased $9,000 or 0.7% to $1,283,000 in the
Current Quarter from $1,292,000 in the Comparable Quarter. As a percentage of
net sales, these expenses decreased to 1.7% from 1.8% in the Comparable Quarter.
The percentage decrease was due to the leveraging of these expenses as a result
of our 4.5% increase in comparable store sales.

OTHER INCOME, PRINCIPALLY INTEREST
         Other income, principally interest, increased $866,000 or 188.5% to
$1,325,000 in the Current Quarter from $459,000 in the Comparable Quarter. The
increase was the result of more than a 100% increase in average interest rates
and greater average invested balances during the Current Quarter versus the
Comparable Quarter.

INCOME TAX PROVISION
         The income tax provision for the Current Quarter was $3,958,000,
resulting in a 37.5% effective tax rate, as compared to $2,732,000 and a 37.1%
effective tax rate for the Comparable Quarter. The effective tax rate for the
Current Quarter resulted from increasing the anticipated tax rate for fiscal
2006 to 37.4%. The effective tax rate for the Comparable Quarter represents the
actual effective rate for fiscal 2005.


    SIX MONTHS ENDED JULY 31, 2005 COMPARED TO SIX MONTHS ENDED JULY 31, 2004

NET SALES
         Net sales increased 5.2% during the Current Year-to-Date Period to
$153,451,000 from $145,911,000 in the Comparable Year-to-Date Period. The
$7,540,000 increase was the result of a 5.7% or $8,020,000 comparable store
sales increase, offset by the effect of operating fewer stores during the
Current Year-to-Date Period as compared to the Comparable Year-to-Date Period.
We believe that the comparable store sales increase is attributable to improved
customer acceptance of our merchandise offerings as evidenced by an increase in
net sales per transaction versus the Comparable Year-to-Date Period.


COST OF SALES, INCLUDING BUYING AND OCCUPANCY COSTS
         Cost of sales, including buying and occupancy costs, increased
$1,805,000 or 1.8% during the Current Year-to-Date Period to $102,617,000 from
$100,812,000 in the Comparable Year-to-Date Period. As a percentage of sales,
these costs decreased to 66.9% from 69.1% in the Comparable Year-to-Date Period.
The nominal increase was due to the aforementioned $7,540,000 increase in sales.
The decrease as a percentage of sales was due to an increase in merchandise
margins arising from improved customer acceptance of our product offering and an
increase in the leveraging of buying and occupancy costs as a result of our 5.7%
comparable store sales increase. Buying and occupancy costs were 16.3% and 17.3%
of net sales for the Current Year-to-Date Period and Comparable Year-to-Date
Period, respectively.






                                      -10-



<PAGE>

SELLING AND ADMINISTRATIVE EXPENSES
         Selling and administrative expenses increased $1,017,000 or 2.9% during
the Current Year-to-Date Period to $35,621,000 from $34,605,000 in the
Comparable Year-to-Date Period. As a percentage of net sales, these costs
decreased to 23.2% from 23.7% in the Comparable Year-to-Date Period. The nominal
increase was due to increases in payroll expenses, insurance costs and merchant
fees related to credit card sales, offset by the fact that the Comparable
Year-to-Date Period included a payment made relating to an employee separation
matter.

DEPRECIATION AND AMORTIZATION
         Depreciation expense increased $41,000 or 1.6% to $2,649,000 in the
Current Year-to-Date Period from $2,608,000 in the Comparable Year-to-Date
Period. As a percentage of net sales, these expenses decreased to 1.7% from 1.8%
in the Comparable Quarter. The percentage decrease was due to the leveraging of
these expenses as a result of our 5.7% increase in comparable store sales.

OTHER INCOME, PRINCIPALLY INTEREST
         Other income, principally interest, increased $1,509,000 or 174.5% to
$2,373,000 in the Current Year-to-Date Period from $865,000 in the Comparable
Year-to-Date Period. The increase was the result of more than a 100% increase in
average interest rates and greater average invested balances during the Current
Year-to-Date Period versus the Comparable Year-to-Date Period.

INCOME TAX PROVISION
         The income tax provision for the Current Year-to-Date Period was
$5,586,000, resulting in a 37.4% effective tax rate, as compared to $3,230,000
and a 37.0% effective tax rate for the Comparable Year-to-Date Period. The
effective tax rate for the Current Year-to-Date Period is the rate anticipated
for fiscal 2006. The actual effective tax rate for fiscal 2005 was 37.1%.


LIQUIDITY AND CAPITAL RESOURCES

         As of July 31, 2005, we had cash and cash equivalents of $119,077,000
and marketable securities of $69,625,000 compared to cash and cash equivalents
of $28,587,000 and marketable securities of $139,650,000 as of July 31, 2004. Of
the $119,077,000 in cash and cash equivalents on hand at July 31, 2005,
approximately $87,700,000 was used to fund the $6.125 per common share dividend
that was paid on August 16, 2005. The cash and cash equivalents are invested
principally in money market mutual funds while the marketable securities are
invested principally in auction market securities, which trade on a par-in,
par-out basis and provide interest-rate reset options on a revolving 35-day
basis. Because we regularly liquidate our investments in these securities for
reasons including, among others, changes in market interest rates and changes in
the availability of and the yield on alternative investments, we have classified
these securities as available for sale. We do not invest for trading purposes
and therefore do not believe we have significant exposure to market risk with
respect to our investments.

         During the Current Year-to-Date and Comparable Year-to-Date periods, we
funded all of our operating needs internally, including capital expenditures for
the opening of new stores and the remodeling of existing stores. For the Current
Year-to-Date period, cash provided by operations was $7,874,000, resulting
primarily from net income and the non-cash charge for depreciation and
amortization and by the increase in trade accounts payable, offset by the
related increase in merchandise inventories. Tax payments also offset operating
cash flows. During the Comparable Year-to-Date Period, cash provided by
operations was $5,429,000. These funds were provided by net income and the
non-cash charges for depreciation and amortization, as well as from increases in
trade accounts payable and accrued expenses. Offsetting these items were uses of
cash relating to the seasonal increase in merchandise inventories, income tax
payments and an increase in prepaid expenses. Using retail sales divided by
average inventory at retail for the applicable periods, the inventory turnover
rates were approximately 1.4 times during both the Current Year-to-Date and
Comparable Year-to-Date Periods.

         During the Current Year-to-Date Period, net cash provided by investing
activities was $74,631,000. These funds were generated from the net sales of
marketable securities, primarily to fund the special $6.00 per common share
dividend we paid on August 16, 2005. We also used $1,844,000 for capital
additions relating to the opening of four new stores and the remodeling of 11
existing stores. During the Comparable Year-to-Date Period, cash used in
investing activities was $8,975,000. These funds were used for the purchase of
marketable securities and for the opening of two new stores and the remodeling
of six existing stores.

                                      -11-



<PAGE>


         During the Current Year-to-Date Period, net cash provided by financing
activities was $6,274,000. These funds were provided by employee stock option
exercises, offset by the payment of dividends on preferred and common stock.
During the Comparable Year-to-Date Period, we used $1,932,000 in financing
activities. These funds were used for the payment of dividends on preferred and
common stock partially offset by proceeds from the exercise of employee stock
options.

         On May 11, 2005, our Board of Directors approved a special dividend of
$6.00 per share on our common stock. This special dividend was incorporated into
our regularly scheduled dividend payment on August 16, 2005 for shareholders of
record as of July 29, 2005. The total payout to shareholders relating to the
special dividend was approximately $85,916,000.

         We believe that our existing cash and marketable securities, net of the
payment of the aforementioned special dividend, and internally generated funds
will be sufficient to meet our anticipated capital expenditures, none of which
are material, and current operating needs. We have an unsecured line of credit
in the amount of $20,000,000 as of July 31, 2005. Of this amount, $1,007,000 was
outstanding as letters of credit for the purchase of inventory. We lease our
retail apparel stores, warehouse and office building for original periods
ranging from one to 20 years. Following is a summary of our contractual
obligations for minimum rental payments on our non-cancelable operating leases
and minimum payments on our other commitments as of July 31, 2005.
<TABLE>
<CAPTION>
                                                       Payments Due by Period
Contractual
  obligations        Total           Less than 1 year        1-3 years           3-5 years       More than 5 years
                 ---------------------------------------------------------------------------------------------------
<S>              <C>                 <C>                   <C>                 <C>                <C>
Operating
  leases         $  135,027,000        $  24,449,000       $  40,271,000       $  29,153,000       $  41,154,000
Letters of
  credit              1,007,000            1,007,000               -                   -                   -
                 ---------------------------------------------------------------------------------------------------

    Total        $  136,034,000        $  25,456,000       $  40,271,000       $  29,153,000       $  41,154,000
                 ===================================================================================================
</TABLE>
         The above table excludes approximately $87,700,000 in dividends, which
were accrued at July 31, 2005 and were paid on August 16, 2005, to shareholders
of record on July 29, 2005.

OTHER MATTERS

         Seasonality and Quarterly Results

         Our operating results are subject to seasonal fluctuations. Highest
sales levels have historically occurred during the five-month period from August
1 to December 31 of each year (the back-to-school and holiday periods). Sales
generated during these periods have traditionally had a significant impact on
our results of operations. Any decreases in sales for these periods or in the
availability of working capital needed in the months preceding these periods
could have a material adverse effect on our results of operations. Results of
operations in any one fiscal quarter are not necessarily indicative of the
results of operations that can be expected for any other fiscal quarter or for
the full fiscal year.

         Our results of operations may also fluctuate from quarter to quarter as
a result of the amount and timing of expenses incurred in connection with, and
sales contributed by, new stores, store remodels and the integration of new
stores into our operations.






                                      -12-
<PAGE>


ITEM 3.
-------

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         As of July 31, 2005, we had cash and cash equivalents of $119,077,000
and marketable securities of $69,625,000 compared to cash and cash equivalents
of $28,587,000 and marketable securities of $139,650,000 as of July 31, 2004. Of
the $119,077,000 in cash and cash equivalents on hand at July 31, 2005,
approximately $87,700,000 was used to fund the $6.125 per common share dividend
that was paid on August 16, 2005. The cash and cash equivalents are invested
principally in money market mutual funds while the marketable securities are
invested principally in auction market securities, which trade on a par-in,
par-out basis and provide interest-rate reset options on a revolving 35-day
basis. Because we regularly liquidate our investments in these securities for
reasons including, among others, changes in market interest rates and changes in
the availability of and the yield on alternative investments, we have classified
these securities as available for sale. We do not invest for trading purposes
and therefore do not believe we have significant exposure to market risk with
respect to our investments.

ITEM 4.
-------

CONTROLS AND PROCEDURES

     (a) Evaluation of Disclosure Controls and Procedures

     Our chief executive officer and chief financial officer, with the
participation of other members of management, have evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934, as amended) as of the end of the period
covered by this report (the "Evaluation Date") and, based on that evaluation,
concluded that, as of the Evaluation Date, the disclosure controls and
procedures were effective for recording, processing, summarizing and reporting
information that is required to be disclosed in our reports under the Securities
Exchange Act of 1934, as amended, within the time periods specified in the SEC's
rules and forms.

     (b) Changes in Internal Control over Financial Reporting

     There has not been any change in our internal control over financial
reporting during the quarter ended July 31, 2005 that has materially affected or
is reasonably likely to materially affect our internal control over financial
reporting.

PART II.          OTHER INFORMATION

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

         Our annual meeting was held on Wednesday, May 11, 2005. Total votes
present either in person or by proxy were 12,683,989.

         Votes were cast as follows for the election of directors:

                                                   FOR              WITHHELD
                                                ----------          --------
                  Marvin Rounick                12,554,578          129,411
                  Warren Weiner                 12,554,578          129,411
                  Jack A. Rounick               12,554,144          129,845
                  Barry H. Feinberg             12,596,398           87,591
                  Barry H. Frank                12,536,811          147,178
                  Ivan Inerfeld                 12,596,398           87,591
                  Ned J. Kaplin                 12,657,301           26,688

         There were no other matters voted on at the meeting.

                                      -13-

<PAGE>

ITEM 6.           EXHIBITS
-------           --------


                         Exhibit 31.1     Section 302 Certification by President
                                          and Chief Executive Officer

                         Exhibit 31.2     Section 302 Certification by Chief
                                          Financial Officer

                         Exhibit 32.1     Certification of Periodic Report by
                                          President and Chief Executive Officer

                         Exhibit 32.2     Certification of Periodic Report by
                                          Chief Financial Officer



                                   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.




                                                     DEB SHOPS, INC.





         DATE: September 7, 2005                     By: Marvin Rounick
                                                         --------------
                                                         Marvin Rounick
                                                         President and Chief
                                                         Executive Officer







         DATE: September 7, 2005                     By: Barry J. Susson, CPA
                                                         --------------------
                                                         Barry J. Susson, CPA
                                                         Chief Financial Officer














                                      -14-


<PAGE>




                                  EXHIBIT INDEX

         Exhibit 31.1      Section 302 Certification by President and Chief
                           Executive Officer

         Exhibit 31.2      Section 302 Certification by Chief Financial Officer

         Exhibit 32.1      Certification of Periodic Report by President and
                           Chief Executive Officer

         Exhibit 32.2      Certification of Periodic Report by Chief Financial
                           Officer














                                      -15-