**SECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549

**FORM 10–Q**

**(Mark One)**

   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended            October  31, 2002           

**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.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     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| (Exact name        of registrant as specified in its charter)Pennsylvania23-1913593(State or other      jurisdiction of(I.R.S. Employerincorporation      or organization)Identification      No.)  9401 Blue Grass Road, Philadelphia,      Pennsylvania19114(Address of principal executive      offices)(Zip Code)(215) 676–6000
(Registrant's telephone number, including area code)Not Applicable
(Former name and 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 $.0113,684,900(Class)(Outstanding at December 6, 2002)
**DEB SHOPS, INC. AND SUBSIDIARIES  I N D E X**
    PART IItem 1.Financial Information:       Consolidated      Balance Sheets -October 31, 2002 and January 31, 20021        Consolidated      Statements of Operations - Nine Months and Three Months Ended October 31, 2002 and 20012        Consolidated      Statements of Cash Flows -Nine Months Ended October 31, 2002 and October      31, 20013        Notes      to Consolidated Financial Statements -October 31, 20024        Item 2.Management's Discussion      and Analysis of Financial Condition and Results of Operations5 - 9          Item 3.Quantitative and      Qualitative Disclosures About Market Risk9          Item 4.Controls and Procedures 9        PART II. Other Information9
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**DEB SHOPS, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS  (Unaudited)**
  **OCTOBER 31,      2002**  **JANUARY 31,      2002**      **ASSETS**      **CURRENT ASSETS**         Cash and cash      equivalents**$** 139,696,775   $ 135,251,663     Merchandise      inventories 22,237,843   31,041,713    Prepaid expenses      and other 3,414,672  2,863,473     Prepaid income      taxes 1,551,904  —    Deferred income      taxes 1,595,816  1,240,047                     Total      Current Assets 168,497,010   170,396,896      **PROPERTY, PLANT AND EQUIPMENT,      at cost**         Land 150,000  150,000    Buildings 2,365,697   4,347,697    Leasehold improvements 41,384,267  39,058,583    Furniture and      equipment 17,415,377  17,025,868        61,315,341  60,582,148           Less accumulated      depreciation           and      amortization 41,508,981  41,554,322        19,806,360  19,027,826             **OTHER ASSETS**                Deferred income      taxes 4,391,299  4,306,068    Other 1,962,223  2,212,223                     Total      Other Assets 6,353,522  6,518,291        $194,656,892  $195,943,013             **LIABILITIES AND SHAREHOLDERS'      EQUITY**      **Current Liabilities**         Trade accounts      payable$18,026,162 $24,222,316    Accrued expenses 8,934,327  9,417,972    Income taxes      payable —  4,344,448                     Total      Current Liabilities 26,960,489  37,984,736                           **Shareholders' Equity**         Series A Preferred      Stock, par value $1.00           a      share:         Authorized      - 5,000,000 shares         Issued and      outstanding – 460 shares,           liquidation      value $460,000         Common Stock,      par value $.01 a share: 460  460      Authorized      - 50,000,000 shares           Issued      - 15,688,290 shares 156,883  156,883    Additional      paid in capital 5,864,790  5,864,790    Retained earnings 174,098,990  164,732,974        180,121,123  170,755,107           Less common      treasury shares, at cost -           October      31, 2002: 2,003,390;           January      31, 2002: 2,063,390 12,424,720  12,796,830        167,696,403  157,958,277        $194,656,892 $195,943,013      
See notes to consolidated financial statements.

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**DEB SHOPS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)**
   **Nine Months      Ended October 31,**  **Three Months      Ended October 31,**          **2002**  **2001**  **2002**  **2001**           Revenues                Net Sales $234,878,505 $222,967,066 $81,231,521 $80,465,432                         Costs and Expenses                Cost of sales, including     buying and occupancy costs  162,007,445  156,536,992  58,572,362  57,917,199    Selling and administrative  49,480,329  46,116,226  16,976,288  15,711,467    Depreciation and amortization  2,811,972    2,881,038   957,922   938,354    Non-recurring loss on sale of     subsidiary  **—**  7,381,152  —    7,381,152               214,299,746   212,915,408  76,506,572  81,948,172                                       Operating Income   20,578,759  10,051,658   4,724,949  (1,482,740)Other income, Principally Interest  1,508,225  3,500,936  479,610  1,017,749                                       Income (Loss) Before Income Taxes  22,086,984  13,552,594  5,204,559  (464,991)Income Taxes (Benefit)   8,280,00   5,080,000  1,950,000  (176,000)                        Net Income (Loss) $13,806,984  $8,472,594 $3,254,559 $(288,991)                        Net Income (Loss) Per Common         Share                   Basic  $ 1.01  $0.62  $ 0.24  $ ( 0.02)                Diluted  $ 0.99  $0.62  $ 0.24 $ ( 0.02)                        Cash Dividend Declared                Per Common Share  $ 0.325  $ 0.250   $ 0.100   $ 0.075                          Weighted Average Number of   Common Shares Outstanding                   Basic    13,667,798    13,539,161   13,684,900    13,554,900                  Diluted   13,858,446   13,631,904    13,778,395    13,554,900           
See notes to consolidated financial statements.

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**DEB SHOPS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)**
  **Nine Months      Ended October 31,**      **2002**  **2001**      Cash flows provided by operating      activities:         Net income $ 13,806,984 $ 8,472,594    Adjustments      to reconcile net income to net      cash provided by operating activities:               Depreciation and amortization  2,811,972   2,881,038          Deferred income tax (benefit) ( 441,000) ( 300,000)         Loss on retirement of property,      plant and equipment  83,369   64,238          Non-recurring loss on sale of      subsidiary, net of income tax benefit —   4,611,152          Change in operating assets and      liabilities:                  Decrease in merchandise inventories  8,803,870   3,086,033             (Increase) in prepaid expenses      and other and prepaid income taxes ( 2,103,103) ( 448,719)            (Decrease) increase in trade      accounts payable ( 6,196,154)   734,029              (Decrease) in accrued expenses ( 279,014) ( 1,349,663)            (Decrease) in income taxes payable ( 4,344,448) ( 3,360,680)                 Net cash provided by operating      activities  12,142,476   14,390,022             Cash flows (used in) investing      activities:         Purchase of property, plant      and equipment, net ( 3,673,875) ( 3,967,875)   Proceeds from sale of subsidiary,      net of cash retained —     1,008,769                  Net cash (used in) investing      activities ( 3,673,875) ( 2,959,106)                   Cash flows (used in) financing      activities:               Preferred stock cash dividends      paid ( 41,400) ( 41,400)         Common stock cash dividends      paid ( 4,100,972) ( 3,045,603)         Proceeds from exercise of stock      options   420,000   585,000          Principal payments under capital      lease obligations  ( 301,117) ( 329,550)                 Net cash (used in) financing      activities  ( 4,023,489) ( 2,831,553)            Increase in cash and cash equivalents        4,445,112   8,599,363 Cash and cash equivalents at      beginning of period  135,251,663   111,648,544     Cash and cash equivalents at      end of period$139,696,775 $120,247,907             Supplemental disclosures of cash      flow information:         Cash paid during the period      for:                         Income taxes, net $ 14,617,352  $ 11,249,866 
See notes to consolidated financial statements.

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**DEB SHOPS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)OCTOBER 31, 2002**

**NOTE A – BASIS OF PRESENTATION**

     The accompanying unaudited consolidated financial statements have been prepared in accordancewith accounting principles generally accepted in the United States for interim financial information and with the instructions toForm 10–Q and Article 10 of Regulation S–X.  Accordingly, they do not include all of the information and footnotes requiredby accounting principles generally accepted in the United States for complete financial statements.  In the first quarter and the thirdquarter 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.  Operatingresults for the three and nine months ended October 31, 2002 are not necessarily indicative of the results that may be expected for thefiscal year ending January 31, 2003.  The Balance Sheet at January 31, 2002 has been derived from the audited financial statements at that date.For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report onForm 10–K for the fiscal year ended January 31, 2002.

     Certain prior year amounts have been reclassified to conform with the current year presentation.  

**NOTE B – NON–RECURRING ITEMS**

     Effective September 30, 2001, the Company sold the stock of its subsidiary, Books Management, Inc. (“BMI”).   For the eight months endedSeptember 30, 2001, BMI had net sales of $11,897,341 and operating income of $661,882.  For the two months ended September 30, 2001, BMI hadnet sales of $3,789,801 and operating income of $418,271.  As a result of the transaction, the Company recorded a non–recurringpre–tax loss of $7,381,152 ($4,611,152 net of tax, or a loss per share of ($0.34)).

**NOTE C – NET INCOME PER SHARE**

     The table below sets forth the reconciliation of the numerators and denominators of the basic anddiluted net income per common share computations.  
  **Nine Months      Ended October 31,**  **Three Months      Ended October 31,**        **2002**  **2001**  **2002**  **2001**          Net income (loss)$13,806,984 $8,472,594 $ 3,254,559 $(288,991)             Dividends on preferred stock  (41,400)  (41,400)  (13,800)  (13,800)                      Income (loss) available to   common shareholders$13,765,584 $8,431,194 $ 3,240,759 $(302,791)                      Basic weighted average   number of common   shares outstanding  13,667,798   13,539,161  13,684,900  13,554,900              Effect of dilutive stock options  190,648   92,743   93,495     —                       Diluted weighted average   number of common   shares outstanding 13,858,446  13,631,904  13,778,395  13,554,900                       
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**Item 2.**

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

**Forward–Looking Statements**

     Deb Shops, Inc. (the "Company") has made in this report, and from time to time may otherwise make, “forward–lookingstatements” (as that term is defined under federal securities laws) concerning the Company’s future operations, performance,profitability, revenues, expenses and financial condition.  This report includes, in particular, forward–looking statements regardingstore openings, closings and other matters.  Such forward–looking statements are subject to various risks and uncertainties.  Actualresults could differ materially from those currently anticipated due to a number of factors.  Such factors may include, but are not limited to, theCompany’s ability to improve margins, respond to changes in fashion, and attract and retain key management personnel.  Such factorsmay also include other risks and uncertainties detailed in the Company’s filings with the Securities and Exchange Commission, includingthe Company’s Annual Report on Form 10–K for the fiscal year ended January 31, 2002. 

**Overview**

     The Company operates 321 women's specialty apparel retail stores offering moderately priced,fashionable, coordinated sportswear, dresses, coats, lingerie, accessories and shoes for junior and plus sized women.  The Company alsooperates six Tops `N Bottoms stores which sell moderately priced men's and women's apparel.

     Effective September 30, 2001, the Company sold the stock of its subsidiary, Books Management,Inc. (“BMI”).  As a result of the transaction, the Company recorded a non–recurring pre–tax loss of $7,381,152($4,611,152 net of tax, or a loss per share of ($0.34)).  For the eight months ended September 30, 2001 BMI had net sales of $11,897,000and operating income of $662,000.  For the two months ended September 30, 2001, BMI had net sales of $3,790,000 and operating income of$418,000.  

     Results of operations for the Company for the three and nine months ended October 31, 2002 and 2001, arediscussed below on a consolidated basis and separately for the “Apparel Business” to provide relevant information concerning theCompany's retail apparel store business.

**Results of Operations – Consolidated**

     Consolidated net sales increased $11,911,000 (5.3%) to $234,879,000 in the nine months ended October 31, 2002 from $222,967,000 in the nine months ended October 31, 2001, and increased $18,716,000 (9.2%) in the nine months ended October 31, 2001 from the nine months ended October 31, 2000.  Consolidated net sales increased $766,000 (1.0%) to $81,232,000 in the three months ended October 31, 2002 from $80,465,000 in the three months ended October 31, 2001 and increased $7,218,000 (9.9%) in the three months ended October 31, 2001 from the three months ended October 31, 2000.  The increases in the three and nine month periods ended October 31, 2002 were the result of increased apparel store sales. 

     The changes in net sales, cost of sales, selling and administrative expense and net income are more fully described below under the caption “Results of Operations – Apparel Business.”

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     Other income, principally interest, decreased ($1,993,000) (56.9%) to $1,508,000 in the ninemonths ended October 31, 2002 from $3,501,000 in the nine months ended October 31, 2001 and decreased ($296,000) (7.8%) in the ninemonths ended October 31, 2001 from the nine months ended October 31, 2000.  Other income, principally interest, decreased ($538,000)(52.9%) to $480,000 in the three months ended October 1, 2002 from $1,018,000 in the three months ended October 31, 2001 and decreased($245,000) (19.4%) in the three months ended October 31, 2001 from the three months ended October 31, 2000.  Interest income is offsetby losses on the disposition of fixed assets. The decreases in the nine and three months ended October 31, 2002 were primarily the resultof lower interest rates partially offset by earnings on higher cash balances.  The decreases during the nine and three months endedOctober 31, 2001 were primarily the result of gradually declining interest rates partially offset by higher cash balances and, to a lesserextent, decreased write–offs from the disposition of fixed assets. 

     Income before income taxes was $22,087,000, $13,553,000 and $17,925,000 for the nine monthsended October 31, 2002, October 31, 2001 and October 31, 2000, respectively.  Excluding the non–recurring loss on the sale of BMIdiscussed above, income before income taxes for the nine months ended October 31, 2001 was $20,934,000.  Excluding the non–recurringloss, income before income taxes increased $1,153,000 and $3,009,000 for the nine months ended October 31, 2002 and October 31, 2001,respectively.  Income (loss) before income taxes (benefit) was $5,205,000, ($465,000), and $6,417,000 for the three months ended October31, 2002, October 31, 2001 and October 31, 2000, respectively.  Excluding the non–recurring loss, income before income taxes was$6,916,000 for the three months ended October 31, 2001. Excluding the non–recurring loss, income before income taxes decreased$1,712,000 for the three months ended October 31, 2002 compared to the three months ended October 31, 2001, and increased $499,000 forthe three months ended October 31, 2001 compared to the three months ended October 31, 2000.  The increase for the nine months endedOctober 31, 2002 is attributable to increased sales and margins, reduced by increased selling and administrative expenses and decreasedother income.  The decrease for the three months ended October 31, 2002 is attributable to the decline in comparable store sales,increased selling and administrative expenses and decreased other income.  The decreases for the nine and three months ended October 31,2001 were primarily the result of the non–recurring loss from the sale of BMI. 

**Results of Operations – Apparel Business**

     Net sales increased $23,809,000 (11.3%) to $234,879,000 in the nine months endedOctober 31, 2002 from $211,070,000 in the nine months ended October 31, 2001 and increased $19,873,000 (10.4%) in the nine monthsended October 31, 2001 from the nine months ended October 31, 2000.  Net sales increased $4,556,000 (5.9%) to $81,232,000 in thethree months ended October 31, 2002 from $76,676,000 in the three months ended October 31, 2001 and increased $8,420,000 (12.3%)in the three months ended October 31, 2001 from the three months ended October 31, 2000.  The increases in net sales for the nineand three months ended October 31, 2002 resulted primarily from sales in stores open less than one year.  The increases in net salesfor the nine and three months ended October 31, 2001 resulted primarily from increased customer acceptance of the Company's products,which is attributable to the Company's continual refining of its focus on its younger customers.

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     The following table sets forth certain store information:
   **Nine Months      Ended October 31,(1)**  **Three Months      Ended October 31,(1)**       **2002**  **2001**  **2002**  **2001**          Stores open at end of the period  324   307   324  307 Average number in operation during      the period  318  295   322  300  Average net sales per store (in      thousands)$739  $715  $252   $256  Average operating income per      store   (in thousands) $ 65  $ 57   $15  $18 Comparable Store Sales(2)      – Percent Change  2.9%  5.3% (1.6%)  6.1%
     Cost of sales, including buying and occupancy costs, increased $14,010,000(9.5%) to $161,990,000 in the nine months ended October 31, 2002 from $147,980,000 in the nine months ended October 31, 2001 andincreased $12,824,000 (9.5%) in the nine months ended October 31, 2001 from the nine months ended October 31, 2000.  Cost of sales,including buying and occupancy costs, increased $3,312,000 (6.0%) to $58,564,000 in the three months ended October 31, 2002 from$55,252,000 in the three months ended October 31, 2001 and increased $6,468,000 (13.3%) in the three months ended October 31, 2001from the three months ended October 31, 2000.  The increases in cost of sales, including buying and occupancy costs, in the nineand three months ended October 31, 2002 and October 31, 2001 were principally due to the increases in sales during the periods.As a percentage of net sales, these costs were 69.0% and 70.1% during the nine months ended October 31, 2002 and 2001, respectively,and 72.1% and 72.1% during the three months ended October 31, 2002 and 2001, respectively.  The percentage decrease for the ninemonths ended October 31, 2002 as compared to the nine months ended October 31, 2001, resulted from increased margins.Buying and occupancy costs were 16.0% and 16.0% of net sales for the nine months ended October 31, 2002 and 2001,respectively, and 15.7% and 15.3% of net sales for the three months ended October 31, 2002 and 2001, respectively.The percentage increase for the three months ended October 31, 2002 as compared to the three months endedOctober 31, 2001, resulted principally from decreased comparable store sales during the period. 

     Selling and administrative expenses increased $5,728,000 (13.1%) to $49,464,000 in thenine months ended October 31, 2002 from $43,736,000 in the nine months ended October 31, 2001 and increased $4,136,000 (10.4%) inthe nine months ended October 31, 2001 from the nine months ended October 31, 2000.  Selling and administrative expenses increased$1,888,000 (12.5%) to $16,970,000 in the three months ended October 31, 2002 from $15,082,000 in the three months endedOctober 31, 2001 and increased $1,506,000 (11.1%) in the three months ended October 31, 2001 from the three months endedOctober 31, 2000.  The increase in selling and administrative costs for the nine and three months ended October 31, 2002 and 2001was primarily due to increased store operating costs.  As a percentage of net sales, these expenses were 21.1% and 20.7% in the ninemonths ended October 31, 2002 and 2001, respectively, and 20.9% and 19.7% in the three months ended October 31, 2002 and 2001,respectively.  The percentage increase for the nine months ended October 31, 2002, as compared to the nine months endedOctober 31, 2001, resulted primarily from the percentage decline in sales growth during the period.  The percentage increasefor the three months ended October 31, 2002, as compared to the three months ended October 31, 2001, resulted from decreasedcomparable store sales during the period.

(1)

Includes Tops 'N Bottoms stores.

(2)

Comparable store sales include stores open for both periods in the current format and location.A store is added to the comparable store base in its 13th month of operation.

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     Depreciation expense increased $269,000 to $2,768,000 in the nine months ended October 31, 2002from $2,499,000 in the nine months ended October 31, 2001 and decreased ($408,000) in the nine months ended October 31, 2001 from the ninemonths ended October 31, 2000.  Depreciation expense increased $105,000 to $943,000 in the three months ended October 31, 2002 from$838,000 in the three months ended October 31, 2001 and decreased ($134,000) in the three months ended October 31, 2001 from the threemonths ended October 31, 2000.  The increases for the nine and three months ended October 31, 2002 were primarily attributable tonew store openings and remodeling of existing stores.  The decreases for the nine and three months ended October 31, 2001 were primarilyattributable to a revision in the estimated lives of warehouse assets.  

     Operating income was $20,656,000 in the nine months ended October 31, 2002 as compared tooperating income of $16,855,000 in the nine months ended October 31, 2001 and $13,533,000 in the nine months ended October 31, 2000.Operating income was $4,754,000 in the three months ended October 31, 2002 as compared to operating income of $5,503,000 in the threemonths ended October 31, 2001 and $4,922,000 in the three months ended October 31, 2000.  As a percentage of sales, operating incomewas 8.8% and 8.0% in the nine months ended October 31, 2002 and 2001, respectively, and 5.9% and 7.2% in the three months endedOctober 31, 2002 and 2001, respectively.  The increase in operating income for the nine months ended October 31, 2002 was primarilyattributable to the increases in sales and margins, partially offset by increases in selling and administrative expenses.  Thedecrease in operating income for the three months ended October 31, 2002 was primarily attributable to decreases in comparable samestore sales and increases in selling and administrative expenses.  The Company believes that the decreases in comparable same storesales are attributable primarily to current economic conditions and there can be no assurance that such conditions will not continueto adversely affect comparable store sales into the foreseeable future.  The increases in operating income for the nine and threemonths ended October 31, 2001 were primarily attributable to the increases in sales, partially offset by increases in selling andadministrative expenses.

**Liquidity and Capital Resources – Consolidated**

     During the nine months ended October 31, 2002 and 2001, the Company funded internally allof its operating needs, including capital expenditures for the opening of new apparel stores and for the remodeling of existing apparelstores.  Total cash provided by operating activities for the nine months ended October 31, 2002 and 2001 was $12,143,000 and $14,390,000,respectively.  For the nine months ended October 31, 2002, cash provided by operations was the result of net income, a decrease inmerchandise inventories and non–cash charges for depreciation, partially offset by decreases in trade accounts payable, incometaxes payable and prepaid expenses and other and prepaid income taxes.  For the nine months ended October 31, 2001, cash provided byoperations was the result of net income adjusted for the non–recurring loss on sale of a subsidiary, a decrease in merchandiseinventories and non–cash charges for depreciation and amortization partially offset by increases in prepaid expenses anddecreases in accrued expenses and income taxes payable.  The inventory turnover rate for the apparel business was approximately 2.2times during the nine months ended October 31, 2002 and 2.3 times during the nine months ended October 31, 2001.    

     Net cash used in investing activities was $3,674,000 and $2,959,000 for the nine months endedOctober 31, 2002 and 2001, respectively. For the nine months ended October 31, 2002 these funds were principally used for the opening ofnew stores and the remodeling of existing stores.  For the nine months ended October 31, 2001, these funds were principally used for theopening of new stores and the remodeling of existing stores partially offset by the proceeds from the sale of a subsidiary.  

     Net cash used in financing activities was $4,023,000 and $2,832,000 for the nine months endedOctober 31, 2002 and 2001, respectively. For the nine months ended October 31, 2002 and 2001, these funds were principally used for thepayment of dividends on preferred and common stock, partially offset by proceeds from stock options exercised. 

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     As of October 31, 2002, the Company had cash and cash equivalents of $139,697,000 compared with$120,248,000 at October 31, 2001.

     On May 30, 2002, the Company announced a special dividend of $0.05 per share on its common stock,and an increase to its existing quarterly dividend from $0.075 to $0.10 per share of common stock.  On May 16, 2001, the Company alsoannounced a special dividend of $0.05 per share on its common stock, and an increase to its existing quarterly dividend from $0.05 to$0.075 per share of common stock.  The Company believes that, despite these dividend increases, internally generated funds will besufficient to meet its anticipated capital expenditures, none of which are material, and current operating needs.

**Item 3.**

**QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

     As of October 31, 2002, the Company had cash and cash equivalents of $139,697,000 compared to$120,248,000 as of October 31, 2001, and $98,429,000 as of October 31, 2000.  These funds are invested primarily in money market funds andshort–term municipal bonds, all of which are fully insured or guaranteed by letters–of–credit.  The Company does not investfor trading purposes.  Accordingly, the Company does not believe it has significant exposure to market risk with respect to its investments.

**Item 4.**

**CONTROLS AND PROCEDURES**

     (a)  Within 90 days prior to the date of this report, the principal executive officerand principal financial officer evaluated the Company's controls and procedures relating to its reporting and disclosure obligations. Theseofficers have concluded that these disclosure controls and procedures are sufficient to provide that (i) material information relating tothe Company, including its consolidated subsidiaries, is made known to these officers by other employees of the Company and itsconsolidated subsidiaries, particularly material information related to the period for which this periodic report is being prepared;and (ii) this information is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specifiedin the rules and forms of the Securities and Exchange Commission.

     (b)  There have been no significant changes in the Company's internal controls or inother factors that could significantly affect these controls subsequent to the date of their evaluation.

**Part II.     Other Information**

Items 1 – 5.     Not Applicable

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    Item 6.EXHIBITS AND REPORTS ON FORM 8–K.     (a)     Exhibits               Exhibit 99.1     Certification of Periodic Report      by President and Chief Executive Officer               Exhibit 99.2     Certification of Periodic Report      by Vice President, Finance, and Chief Financial Officer     (b)     Reports on Form 8–K               No reports on Form 8–K were filed by the Company during the quarter ended October 31, 2002.
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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  DEB SHOPS, INC.                         DATE: December 6, 2002By /s/ Marvin Rounick         Marvin RounickPresident and Chief Executive Officer                      DATE: December 6, 2002By /s/ Lewis Lyons         Lewis LyonsVice President, FinanceChief Financial Officer     
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**Section 302 Certification by President and Chief Executive Officer**

I, Marvin Rounick, certify that:

1.     I have reviewed this quarterly report on Form 10–Q of Deb Shops, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

4.     The registrant's other certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–14 and 15d–14) for the registrant and wehave:

a)     designed such disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this quarterly report is being prepared;

b)     evaluated the effectiveness of the registrant's disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)     presented in this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant's other certifying officers and I have disclosed, based on our most recentevaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing theequivalent function):

a)     all significant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for theregistrant's auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other employees who havea significant role in the registrant's internal controls; and

6.     The registrant's other certifying officers and I have indicated in this quarterly reportwhether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 DATE: December 6, 2002/s/ Marvin Rounick         Marvin Rounick, President and Chief Executive Officer     
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**Section 302 Certification by Vice President, Finance, and Chief Financial Officer**

I, Lewis Lyons, certify that:

1.     I have reviewed this quarterly report on Form 10–Q of Deb Shops, Inc.

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included inthis quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

4.     The registrant's other certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–14 and 15d–14) for the registrant andwe have:

a)     designed such disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this quarterly report is being prepared;

b)     evaluated the effectiveness of the registrant's disclosure controls and procedures asof a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)     presented in this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant's other certifying officers and I have disclosed, based on our most recentevaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalentfunction):

a)     all significant deficiencies in the design or operation of internal controls which couldadversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant'sauditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other employees who havea significant role in the registrant's internal controls; and

6.     The registrant's other certifying officers and I have indicated in this quarterly reportwhether or not there were significant changes in internal controls or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 DATE: December 6, 2002/s/ Lewis Lyons         Lewis Lyons, Vice President, Finance, and Chief Financial Officer      |