UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                  Washington, D.C. 20549
                                      FORM 10-K
|x| Annual Report Pursuant To Section 13 or 15(d) Of The Securities Exchange Act
    of 1934 (No Fee Required)
    For the fiscal year ended February 1, 1997
                                                               AND
|x| Transition Report Pursuant To Section 13 or 15(d) Of The Securities Exchange
    Act of 1934 (No Fee  Required) For the  transition  period from December 31,
    1995 to February 3, 1996

    Commission file number 0-15385

                         ONE PRICE CLOTHING STORES, INC.
             (Exact name of registrant as specified in its charter)
<TABLE>
<S>    <C>     <C>                                                                       <C>
                           Delaware                                                                  57-0779028
       (State or other jurisdiction of organization)                                     (I.R.S. Employer Identification No.)

               1875 East Main Street
            Highway 290, Commerce Park
               Duncan, South Carolina                                                                    29334
         (Address of principal executive offices)                                                      (Zip Code)
</TABLE>
  Registrant's telephone number, including area code:  (864) 433-8888

  Securities registered pursuant to Section 12(b) of the Act:          None

  Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<S>                                                                   <C>
                                                                      Common Stock, $0.01 Par Value
                                                                              (Title of Class)
</TABLE>
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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the 
registrant as of April 17, 1997:
Common Stock, $0.01 Par Value - $28,346,650

The number of shares  outstanding of the issuer's  classes of common stock as of
April 17, 1997: Common Stock, $0.01 Par Value - 10,435,031 shares

DOCUMENTS INCORPORATED BY REFERENCE
Portions  of the  proxy  statement  to be  filed  with  respect  to  the  annual
shareholders  meeting to be held June 4, 1997 are incorporated by reference into
Part III.



                                               

<PAGE>



PART I

ITEM 1.         BUSINESS

General

One Price Clothing Stores,  Inc. (the "Registrant" or the "Company")  operates a
chain of off-price  retail women's and children's  specialty  stores  offering a
wide variety of first quality, contemporary,  in-season apparel and accessories.
In January  1997,  the  Company  announced  its plans to expand its  merchandise
offering  to include  additional  categories  and styles to be offered at retail
price points other than its previous  uniform retail price of $7. This expansion
of its product line at alternative  retail price points is initially expected to
comprise approximately 20 percent of a typical store's assortment. At this time,
the Company  plans  to continue  to price its core  inventory  at the $7 retail
price. The Company purchases  merchandise at heavily  discounted prices in large
quantities  from a broad  mix of  manufacturers,  jobbers,  importers  and other
suppliers. The Company is able to acquire such merchandise at heavily discounted
prices because of imbalances  between supply and demand,  order cancellation and
vendor  needs for  liquidity.  The  Company is able to take  advantage  of these
circumstances  because of its  willingness to purchase large  quantities and odd
lots and to buy goods  later in the  season  than  many  other  retailers.  This
purchasing  strategy allows the Company to obtain a price advantage and to react
quickly  to  seasonal  fashion  preferences  and  weather  conditions  affecting
consumer  spending.  It is the  Company's  policy to offer  only  first  quality
apparel;  the Company does not purchase "seconds" or irregular  merchandise from
its suppliers.

Change in Fiscal Year

In March 1996,  the Company  elected to change its fiscal year from the Saturday
nearest  December 31 to the  Saturday  nearest  January 31,  beginning in fiscal
1996.  This  change was made to conform  the  Company's  fiscal  calendar to the
seasonal  patterns it experiences,  as well as to enhance  comparability  of its
fiscal quarterly and annual results with those of other retail companies. Except
as  otherwise  noted in this Annual  Report on Form 10-K,  "fiscal  1996" is the
52-week period ended February 1, 1997, "the Transition  Period" is the five-week
period  ended  February  3, 1996,  "fiscal  1995" is the  52-week  period  ended
December 30, 1995 and "fiscal  1994" is the 52-week  period  ended  December 31,
1994.

Company History and Organization

The Company  opened its first  store in August  1984.  The  Company  changed its
corporate  domicile  from  South  Carolina  to  Delaware  on April  9,  1987 and
completed the initial  public  offering of its Common Stock on May 27, 1987. All
information  contained  herein has been  adjusted  to reflect  the  issuance  of
10.120811  shares of the Company's  Common Stock,  $.01 par value,  (the "Common
Stock")  in  exchange  for each  share  of  Common  Stock  then  outstanding  in
connection  with the  Company's  re-incorporation  in Delaware,  a 3-for-2 stock
split  effected in the form of a stock  dividend paid on October 15, 1987, and a
3-for-2 stock split  effected in the form of a stock  dividend paid on April 29,
1994. On February 9, 1994, a wholly-owned  subsidiary of the Company,  One Price
Clothing of Puerto Rico,  Inc.,  was  incorporated  in Puerto Rico. It commenced
operations  on May 28,  1994.  As used  herein,  unless  the  context  otherwise
indicates,  the "Company" refers to One Price Clothing Stores,  Inc., a Delaware
corporation,  to its immediate predecessor,  a South Carolina corporation of the
same name, to the South  Carolina  corporation's  predecessor,  a North Carolina
corporation  organized  in 1984 under the name J. K.  Apparel,  Inc.  and to One
Price Clothing of Puerto Rico, Inc.

On January 31, 1997, a subsidiary of the Company, One Price Clothing -- U.S. 
Virgin Islands, Inc. was incorporated in the Virgin Islands.  It commenced 
operations on March 20, 1997.


<PAGE>

Industry Segments

The Company operates in only one industry  segment.  All of the Company's assets
and significant  revenues and pre-tax earnings relate to retail sales of women's
and   children's   apparel  and   accessories  to  the  general  public  through
Company-operated  stores.  Other than operations in Puerto Rico, the Company had
no operations  outside the  continental  United States at the end of fiscal 1996
and no export  sales.  Reference  is  hereby  made to the  financial  statements
included in Part II for information  about the Company's  assets,  net sales and
profitability.

Operations

The  Company  operates  a chain  of  off-price  retail  women's  and  children's
specialty  stores  offering  a wide  variety  of  first  quality,  contemporary,
in-season  apparel and  accessories.  The stores' core merchandise is offered at
the uniform retail price of $7. Beginning in fiscal 1997, the Company will offer
an expanded  selection of merchandise at alternative  price points.  The Company
registered the trademark "One Price" with the United States Patent and Trademark
Office  in June  1990 for a  ten-year  period  with  the  option  to renew  upon
expiration.  The Company intends to apply for renewal for this  trademark.  This
trademark  was accorded  incontestable  status by the United  States  Patent and
Trademark Office. The Company considers the "One Price" trademark to be valuable
and  significant  to the conduct of its business.  The Company  registered  "One
Price" and "Un Solo Precio" in Mexico in June,  1993.  Management has decided to
forego use of this mark at this time in Mexico  which may result in the  lapsing
of such  registration  in Mexico.  The Company has been  notified of approval to
register "One Price" and "One Price Plus" in Canada.  Management  has decided to
forego  use of these  trademarks  in Canada at this  time,  which may  result in
lapsing of the  applications  in Canada.  The Company has registered  "Ropa a un
Precio" in the United  States and is using  this  trademark  in its stores  with
Spanish-speaking customers.

The One Price Store. The Company's typical store has approximately  3,300 square
feet, of which  approximately 2,400 square feet is devoted to selling space. All
of the Company's stores are located in leased  facilities with convenient access
to adequate parking or public transportation. At February 1, 1997, approximately
85% of the  Company's  stores  were  located in strip  shopping  centers and the
remaining  stores  were  located in central  business  districts  or malls.  The
Company does not franchise its stores.

The  Company's  stores  are  primarily  located  in or near  communities  with a
population of at least 40,000 - 50,000, as well as in large metropolitan  areas.
Most of the  Company's  stores are open seven days a week and  typical  hours of
operation  are from 10:00  a.m.  until 7:00 p.m.  or 9:00 p.m.,  Monday  through
Saturday,  with shorter  hours on Sunday.  A typical  store  employs a full-time
manager,  one or  two  full-time  assistant  managers  and up to ten  additional
part-time sales associates.

The Company's  stores are designed for customer  convenience  and for attractive
presentation  of  merchandise.  All  apparel  is  displayed  on  hangers  and is
organized  by  classification,  style and color,  promoting a pleasant  shopping
environment and customer convenience.

The Company's store  operations  department is headed by a Senior Vice President
of Stores who is assisted by two Directors of Store  Operations and Regional and
District  Sales  Managers.  Each  Regional  Sales  Manager  is  responsible  for
approximately  9 districts.  Each  District  Sales  Manager is  responsible  for
approximately  10 to 12 stores and visits each store in his or her district on a
regular or as-needed basis to provide  assistance in promoting sales,  training,
store  layout and  merchandise  presentation,  and to monitor  adherence  to the
Company's operational and management policies.


<PAGE>



Store  Locations and Expansion.  At February 1, 1997,  the Company  operated 645
stores in 27 states and Puerto Rico. The Company opened 23 stores,  relocated 11
stores  and  closed 66  underperforming  stores in fiscal  1996.  The  Company's
expansion plans in 1997 include opening approximately 65 new stores primarily in
existing markets,  closing approximately 30 stores, and relocating approximately
10 stores.

Purchasing. The Company's practice is to offer value to its customers by selling
desirable women's and children's  apparel and accessories at considerably  lower
prices  than  generally  would be  available  from  department  stores and other
specialty retailers. The Company purchases its merchandise at heavily discounted
prices and on favorable terms from manufacturers,  jobbers,  importers and other
vendors.

The  Company  typically  is  able  to  purchase   merchandise  from  vendors  at
substantially discounted prices as a result of the following circumstances:  the
inability  of a  manufacturer  or  importer  to dispose of  merchandise  through
regular channels,  the discontinuance of merchandise because of changes in color
or  style,   over-production   by  manufacturers,   cancellation  of  orders  by
conventional  retail  stores,  the  need of  catalog  retailers  to  dispose  of
inventories of unordered catalog merchandise, and manufacturers' need to utilize
excess capacity or import quota or need for liquidity. The Company's ability and
willingness  to  purchase  in large  quantities  and in odd-lot  or  broken-size
assortments  and its  reputation  for  reliability  in the industry  provide the
Company  with   purchasing   advantages.   The  Company  buys  its   merchandise
opportunistically which includes the purchase of merchandise close to and during
each selling season, later than department stores and other specialty retailers.
This  purchasing  strategy  permits the  Company to react to fashion  trends and
opportunistic  developments  during a selling season. The Company also purchases
selected merchandise in advance of a selling season.

During fiscal 1996, the Company  purchased  merchandise from  approximately  900
vendors,  including  manufacturers,  jobbers,  importers and other  vendors.  No
vendor  accounted  for more than 10% of the  Company's  total  purchases for the
year.

Although  there can be no assurance that the Company will be able to continue to
acquire  sufficient  quantities of first quality  merchandise at such low prices
and on favorable  terms,  the Company  continues to add new vendors and believes
that adequate sources of first quality  merchandise are available at appropriate
price  levels.  The Company  does not maintain  long-term or exclusive  purchase
commitments or arrangements with any vendor.

Corporate Offices and Distribution  Center. The Company's  Corporate Offices and
Distribution Center are located in Duncan, South Carolina. With the exception of
functions performed by certain  merchandise  buyers,  regional directors of real
estate,  district  and  regional  sales  managers,  and  certain  administrative
functions performed in Puerto Rico, substantially all purchasing, accounting and
other administrative functions are centralized at the Corporate Offices.

Merchandising.  The Company's merchandising strategy emphasizes contemporary and
in-season  apparel for juniors,  misses,  large-sized  women and  children.  The
Company's target customers are value-and  fashion-conscious  women, primarily in
lower and  middle  income  brackets.  The  Company  offers  only  first  quality
merchandise  and  emphasizes  the value of its  merchandise  compared to similar
merchandise sold elsewhere at higher prices. Women's apparel sold by the Company
includes  contemporary  sportswear such as knit tops,  pants,  blouses,  shirts,
skirts, sweaters, jackets and shorts. In addition, the Company sells other types
of merchandise such as dresses, swimsuits, lingerie and other related items. The
Company  also  offers  selected  accessories  such  as  scarves,  socks,  belts,
handbags,  jewelry and fragrances,  in addition to apparel.  For the first time,
the Company  will be able to offer with  consistency  additional  categories  of
merchandise  such as jeans,  silk jogging  sets,  sweaters and heavier  jackets.
Accessory  sales as a percentage of net sales were 12% in fiscal 1996 and 11% in
both fiscal 1995 and fiscal 1994.  Sales of children's  clothing  comprised less
than 10% of net sales in each of the last three fiscal years.


<PAGE>



Inventory  Monitoring.  The Company's management  information system,  featuring
point-of-sale  cash registers and a computerized  inventory  management  system,
permits  management  to review each store's sales and inventory on a daily and a
weekly basis,  thereby enabling the Company to tailor its purchasing  strategies
and merchandise shipments to stores based on customer demand.

Distribution Systems.

Substantially  all merchandise is shipped directly from vendors to the Company's
Distribution  Center where the goods are  inspected,  processed  and sent to the
Company's  stores.  The  majority  of  shipments  to  stores  are made by common
carriers. During fiscal 1995, the Company implemented a new warehouse management
system to improve the management of the location and flow of merchandise  within
the Distribution Center.

Seasonality

The  Company's  sales and operating  results are seasonal,  as is typical in the
women's retail apparel industry.  Based on the former fiscal calendar (January -
December), the Company's sales historically were lowest during the first quarter
(January - March) and third  quarter (July - September)  and highest  during the
second quarter (April - June) and fourth quarter  (October - December).  Reduced
sales volumes in the first and third  quarters  coincided with the transition of
seasonal merchandise.  Therefore,  increased levels of markdowns occurred during
those  transitional  periods,  and  operating  expenses,  when  expressed  as  a
percentage of sales,  were typically  higher.  As discussed  above,  the Company
changed  its fiscal  year end to conform  the fiscal  calendar  to the  seasonal
patterns  it  experiences.  As a  result,  the  Company's  historical  quarterly
patterns have  changed.  Fiscal 1996 and proforma  fiscal 1995  produced  higher
sales and operating  results in the first quarter  (February - April) and second
quarter (May - July) compared to the third quarter (August - October) and fourth
quarter (November - January). Management is unable to predict if this trend will
continue in the  future.  Management  does  believe,  however,  that the pricing
flexibility afforded by the new merchandising strategy should enable the Company
to increase its absolute and relative  sales  performance  in the second half of
the fiscal year since the Company will be able to offer its  customers a greater
selection of fall and winter apparel categories.

Working Capital Requirements

In March 1996, the Company replaced its then existing credit  facilities with an
agreement  with a new lender which  provides for a revolving loan facility of up
to $37,500,000  (including a letter of credit sub-facility of up to $25,000,000)
and a $7,500,000 term loan facility.  Borrowings under the new credit agreement,
based upon a borrowing base formula,  are  collateralized by all assets owned by
the Company  during the term of the agreement  which expires in March 1998.  The
agreement  contains  certain  covenants  and terms  described  in Item 7 of this
report.

Merchandise inventories are typically purchased on credit,  including the use of
letters  of  credit.   Letters  of  credit  are  used  to  purchase  merchandise
inventories from foreign suppliers. All such purchases are paid in United States
dollars; thus, the Company is not subject to foreign currency risks. As a result
of the Company's  opportunistic  buying  strategy and to ensure that an adequate
supply of merchandise is available for shipment to its stores,  the Company may,
at times,  invest a  significant  amount of its working  capital in  merchandise
inventories.

Revenues from retail sales are  recognized at the time of the sale.  The Company
accepts cash, checks,  and, in the majority of its stores,  certain major credit
cards.  All stores offer a liberal  exchange and return policy.  An estimate for
merchandise returns is recorded in the period that the merchandise is sold.

Customers

No  material  part of the  business of the  Company is  dependent  upon a single
customer or a few customers.


<PAGE>



Competition

The women's retail apparel industry is highly  competitive.  In order to compete
effectively,  the Company is dependent upon its ability to purchase  merchandise
at substantial discounts. The Company competes with department stores, specialty
stores, discount stores, other off-price retailers and manufacturer-owned outlet
stores,  many of which are  owned by large  national  or  regional  chains  with
substantially  greater  resources  than  the  Company.   There  are  also  other
competitors  which  employ a  ceiling  price  concept  of $10.  There  can be no
assurance that other retailers with  substantially  greater financial  resources
than the Company will not adopt a purchasing  and marketing  concept  similar to
that of the Company. Management believes that the primary competitive factors in
the retail apparel  industry are price,  quality,  variety of merchandise,  good
site selection and low cost of operation.  The Company  believes that it is well
positioned in all of these areas to compete in its markets.

Environmental Factors

The  Company  is  not  aware  of  any  federal,  state  or  local  environmental
regulations that will materially  affect its operations or competitive  position
or require material capital expenditures.  The Company cannot predict,  however,
the impact of possible future legislation or regulation on its operations.

Employees

At February 1, 1997, the Company had  approximately  4,100  employees,  of which
approximately 52 % were full-time employees.  The Company, like other retailers,
experiences a high turnover rate of full-time and part-time  store employees but
has generally not experienced  difficulties in hiring qualified personnel.  None
of the Company's employees are covered by a collective bargaining agreement, and
management believes that the Company's relationship with its employees is good.

Private Securities Litigation Reform Act of 1995

All  statements  contained  in this  Annual  Report  on Form  10-K as to  future
expectations  and  financial   results  should  be  considered   forward-looking
statements  subject  to  the  safe  harbor  created  by the  Private  Securities
Litigation  Reform Act of 1995.  The  Company  cautions  readers of this  Annual
Report on Form 10-K that a number of important factors could cause the Company's
actual results in 1997 and beyond to differ  materially  from those expressed in
such forward-looking statements.  These factors include, but are not limited to,
the general  economic  conditions  and consumer  demand;  consumer  preferences;
weather  patterns;  competitive  factors,  including  pressure  from pricing and
promotional activities of competitors;  the impact of excess retail capacity and
the availability of desirable store locations on suitable terms;  whether or not
the Company's merchandising strategy to offer expanded categories of merchandise
at  alternative  price  points  will  increase  sales and  operating  results or
increase and attract new customers;  the availability,  selection and purchasing
of attractive  merchandise on favorable terms; import risks, including potential
disruptions and duties,  tariffs and quotas on imported  merchandise;  and other
factors that may be described in the Company's  filings with the  Securities and
Exchange  Commission  from  time to time.  The  Company  does not  undertake  to
publicly update or revise its  forward-looking  statements even if experience or
future  changes make it clear that any  projected  results  expressed or implied
therein will not be realized.


<PAGE>



ITEM 2.         PROPERTIES

The Company leases all of its store locations.  At February 1, 1997, the Company
had 645 stores  operating in 27 states and Puerto Rico.  The Company  leases its
stores under operating  leases generally with initial terms of five to ten years
and with one to two  renewal  option  periods  of five  years  each.  The leases
typically  contain kickout  provisions based on that store's annual sales volume
or the shopping center's  occupancy.  The leases generally provide for increased
rents resulting from increases in operating costs and property taxes. Certain of
the leases provide contingent or percentage rentals based upon sales volume, and
other stores are leased on a month-to-month  basis. To date, the Company has not
experienced difficulty in obtaining leases for suitable locations for its stores
on  satisfactory  terms.  Approximately  70 existing store leases expire or have
initial lease terms  containing  lessee  renewal  options which may be exercised
during fiscal 1997.  Management  believes that the Company will not experience a
significant  increase in lease expense as a result of exercising renewal options
or negotiating  additional  lease terms for such  locations.  The following is a
list of store locations by state as of February 1, 1997:
<TABLE>
<S>                                                                                                 <C>
                                                                                                   NUMBER OF
    STATE                                                                                             STORES
    Alabama................................................................................................ 16
    Arizona...............................................................................................   9
    Arkansas..............................................................................................   4
    California............................................................................................. 50
    Florida................................................................................................ 63
    Georgia...............................................................................................  41
    Illinois..............................................................................................  33
    Indiana................................................................................................ 11
    Kansas................................................................................................   3
    Kentucky..............................................................................................  10
    Louisiana.............................................................................................  18
    Maryland............................................................................................... 15
    Michigan............................................................................................... 16
    Mississippi............................................................................................ 11
    Missouri............................................................................................... 15
    North Carolina......................................................................................... 38
    New Jersey............................................................................................   8
    New Mexico............................................................................................   7
    New York..............................................................................................  16
    Ohio..................................................................................................  23
    Oklahoma.............................................................................................    7
    Pennsylvania..........................................................................................  26
    Puerto Rico...........................................................................................  28
    South Carolina......................................................................................... 35
    Tennessee.............................................................................................. 26
    Texas.................................................................................................. 87
    Virginia............................................................................................... 23
    Wisconsin.............................................................................................   6
    TOTAL STORES...........................................................................................645
</TABLE>

The Company's  Corporate Offices and Distribution  Center are located in Duncan,
South  Carolina on  approximately  82 acres which are owned by the  Company.  In
fiscal  1993,  the Company  completed  a 28,000  square  foot  expansion  of its
Corporate  Offices.  During fiscal 1995, the Company  expanded the  Distribution
Center by approximately 90,000 square feet. These expansions increased the total
size of the Corporate Offices and Distribution  Center to approximately  500,000
square feet.  The  Company's  Distribution  Center should be able to support the
Company's growth over the next several years. The Company's borrowings under its
new credit  facility are secured by all assets  owned by the Company  during the
term of the agreement.
<PAGE>



ITEM 3.            LEGAL PROCEEDINGS

From time to time the Company is a defendant in legal actions  involving  claims
arising in the normal course of its business.  The Company  believes  that, as a
result of its legal defenses and insurance  arrangements,  none of these actions
presently pending, if decided adversely, would have a material adverse effect on
its financial position and results of operations.

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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the Company's fiscal year.

PART II

ITEM 5.           MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
                  RELATED SHAREHOLDER MATTERS

The  Company's  common  stock is traded  under the symbol  ONPR in the  National
Market  System of NASDAQ.  As of April 17, 1997,  there were  approximately  400
shareholders of record.

The Company has never paid cash  dividends  since its  inception.  The Company's
credit  agreement  contains  covenants which,  among other things,  prohibit the
Company from paying  dividends.  Currently,  the Board of  Directors  intends to
continue its policy of retaining  earnings for  operations  and expansion of the
business.

The quarterly high and low sales prices of the Company's  Common Stock as quoted
by NASDAQ are shown below.
<TABLE>
<S>                                     <C>                 <C>                      <C>               <C>
                                            Fiscal Year Ended                           Fiscal Year Ended
                                                  February 1,                               December 30,
                                                     1997                                        1995
                                       ------------------------------------------------------------------------------------
                                            High              Low                     High             Low

     First .................................4 3/4             2 3/4                    8 3/8            6 1/8
     Second ................................6 1/8             3 7/8                    7 1/2            3 3/4
     Third .................................4 1/2             2 7/8                    6 1/8            3 3/4
     Fourth ................................3 3/4             2 1/2                    5 1/2            2 3/4
</TABLE>
The high and low sales  prices of the  Company's  Common Stock during the 5-week
transition period ended February 3, 1996 were $3.37 and $2.50, respectively.



<PAGE>



ITEM 6.          SELECTED FINANCIAL DATA

The following table presents selected financial data for the Company for each of
the five fiscal years ended January 2, 1993 through February 1, 1997,  including
the  5-week  Transition  Period  ended  February  3,  1996,  resulting  from the
Company's  change in fiscal year end.  All of the  selected  financial  data are
extracted from the Company's audited financial  statements and should be read in
conjunction  with the financial  statements and the notes thereto included under
Item 8 of this Form 10-K and  Management's  Discussion and Analysis of Financial
Condition and Results of Operations included under Item 7 of this Form 10-K.
<TABLE>
<S>                                                         <C>            <C>         <C>        <C>      <C>     <C>
                                                               Fiscal      Transition
                                                            Year Ended   Period Ended                      Fiscal Year Ended
                                                               Feb. 1,     Feb. 3,       Dec. 30, Dec. 31,  Jan. 1   Jan. 2,
                                                                1997          1996        1995     1994      1994  1993 (a)
                                                              --------     --------     --------  -----     ------ --------
Dollars in thousands except per share amounts

  1 Net sales                                              $ 298,986       15,022    294,692    283,326  234,698   184,149
  2 (Loss) income before taxes and cumulative effect
      of changes in accounting principles                  $  (1,994)      (9,091)    (2,595)     7,138   13,959    10,913
  3 (Loss) income before cumulative effect of  changes
      in accounting principles                             $  (1,267)      (5,634)    (1,304)     4,389    8,724     6,846
  4 Cumulative effect on prior years of changes
      in accounting principles                             $    --         (1,090)     --           --       --        --
  5 Net (loss) income                                      $  (1,267)      (6,724)    (1,304)     4,389    8,724     6,846
  6 Current assets                                         $   61,891      52,517     35,990     31,252   35,336    27,253
  7 Long-term assets                                       $   39,076      41,663     43,374     36,678   28,865    23,465
  8 Total assets                                           $  100,967      94,180     79,364     67,930   64,201    50,718
  9 Current liabilities                                    $   48,722      40,669     18,594     13,035   14,798    10,861
10  Long term debt and note payable                        $    4,868       6,447      6,579        --       --        --
11  Deferred income taxes                                  $      718         818      1,482      1,449    1,166     1,061
12  Other noncurrent liabilities                           $    2,317       1,089        828        372      411       447
13  Shareholders' equity                                   $   44,342      45,157     51,881     53,074   47,826    38,349
14  Total investment                                       $   66,068      62,378     59,554    `53,226   48,158    39,228
15  Stores (closed) opened during the period, net          #      (43)        (13)        60        101       94        81
16  Stores operating at period-end                         #      645         688        701        641      540       446
17  Number of employees                                    #    4,105       4,574      4,841      4,907    4,199     3,723
18  Weighted average common shares (000)                   #   10,401      10,335     10,314     10,525   10,404    10,304
19  Common shares outstanding at period-end (000)          #   10,436      10,335     10,335     10,305   10,221    10,123
20  (Loss) income per common share before cumulative 
       effect of changes in accounting principles          $    (0.12)      (0.55)     (0.13)      0.42     0.84      0.66
21  Cumulative effect on prior years per common share
      of changes in accounting principles                  $       --       (0.10)      --           --      --        --
22  Net (loss) income per common share                     $    (0.12)      (0.65)     (0.13)      0.42     0.84      0.66
23  Book value per common share                            $     4.25        4.37       5.02       5.15     4.68      3.79
24  Cash dividends declared per common share               $        0           0          0          0        0         0
</TABLE>
    Notes to Summary of Selected Financial Data
<TABLE>
<S> <C>    <C>
    a.  Fiscal year 1992 was a 53-week year, while all other years presented consisted of 52 weeks.

    Line Definitions
    14     Total investment -- Total of all interest-bearing  debt,  capitalized
           leases, net deferred taxes, and shareholders' equity.
    17     Number of employees -- Number of full and part-time employees at year-end.
    23     Book value per common share -- Book value of shareholders' equity per outstanding common share (line
           13 divided by line 19).

</TABLE>


<PAGE>



ITEM 7.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                 AND RESULTS OF OPERATIONS

In March  1996,  the  Company  elected to change  its  fiscal  year end from the
Saturday nearest December 31 to the Saturday nearest January 31. This change was
made to conform the Company's  calendar to the seasonal patterns it experiences,
as well as to enhance the comparability of its quarterly and annual results with
other retail companies.

For  comparability  purposes,  the Company elected to disclose in Item 8 of this
report  certain  unaudited  financial  information  for the 53-week period ended
February  3, 1996  ("proforma  fiscal  1995") and for the 52-week  period  ended
January 28, 1995 ("proforma fiscal 1994").

The Company's  operating  results  reflect the change in fiscal year, as well as
the impact of certain changes in accounting for merchandise  inventories and the
adoption  of the new  accounting  standard  (SFAS 121)  relating  to  long-lived
assets.  The  cumulative  effect of these  changes  in  accounting  methods  was
included  in the  five-week  transition  period  ended  February  3, 1996  ("the
Transition Period").

FINANCIAL SUMMARY

The following  table sets forth,  for the three most recent fiscal years and for
the  five-week  transition  period  ended  February 3, 1996,  certain  financial
statement elements as a percentage of net sales:
<TABLE>
<S>                                                              <C>            <C>                 <C>             <C>
                                                                 Fiscal       Transition
                                                                  Year           Period
                                                                 Ended           Ended                  Fiscal Year Ended
                                                                 Feb. 1,         Feb. 3,           Dec. 30,           Dec. 31,
                                                                  1997             1996              1995              1994
                                                               ---------        ----------        -----------      -----------
     PERCENT OF NET SALES:
     Net sales                                                    100.0%           100.0%            100.0%            100.0%
     Cost of goods sold, distribution and
        buying costs                                               64.7%            96.8%             66.3%             66.8%
                                                                --------        ---------          --------         ---------
     Gross margin                                                  35.3%             3.2%             33.7%             33.2%
                                                                --------       ----------          --------         ---------
     Selling, general and administrative expenses                  25.3%            46.3%             24.3%             22.2%
     Store rent and related expenses                                8.6%            13.5%              8.4%              7.1%
     Depreciation and amortization expense                          1.6%             2.7%              1.5%              1.3%
     Interest expense                                               0.6%             1.2%              0.4%              0.1%
                                                               ---------        ---------         ---------        ----------

                                                                   36.0%            63.7%             34.6%             30.7%
     Interest income                                                0.0%             0.0%              0.0%              0.0%
                                                               ---------        ---------         ---------        ----------
     Net expenses                                                  36.0%            63.7%             34.6%             30.7%
                                                                --------         --------          --------         ---------

     (Loss) income before income taxes and
       cumulative effect of changes in accounting
       principles                                                  (0.7)%          (60.5)%            (0.8)%             2.5%
     (Benefit from) provision for income taxes                     (0.2)%          (23.0)%            (0.4)%             1.0%
                                                                 --------         --------        ----------       ----------
     (Loss) income before cumulative effect
       of changes in accounting principles                        (0.4)%           (37.5)%            (0.4)%             1.5%
     Cumulative effect of changes in
       accounting principles, net of income tax
       benefit                                                       --             (7.3)%              --                --
                                                                 -------           -------         ----------       ----------
     Net (loss) income                                            (0.4)%           (44.8)%            (0.4)%             1.5%
                                                                 =======           =======         =========       ==========

     Stores in operation at period-end                             645               688               701               641
                                                                =========          =======       ==========        ==========
</TABLE>
                                                            

<PAGE>




FISCAL YEAR ENDED FEBRUARY 1, 1997 (FISCAL 1996) COMPARED TO FISCAL YEAR ENDED
DECEMBER 30, 1995 (FISCAL 1995)

Net sales in fiscal  1996  increased  1% to $299.0  million  compared  to $294.7
million in fiscal 1995.  Total net sales for fiscal 1996 compared to the 52-week
period  ended  February 3, 1996  ("adjusted  fiscal  1995")  increased  2%. This
increase  in net  sales  (fiscal  1996  compared  to  adjusted  fiscal  1995) is
primarily due to  improvements in the fourth  quarter,  particularly  during the
last six weeks of fiscal 1996. In fiscal 1996,  comparable store sales decreased
3%  year-to-date  through the third  quarter and  increased 5% during the fourth
quarter,  resulting  in a  comparable  store  sales  decrease of 1% for the year
compared  to  adjusted  fiscal  1995.  Comparable  stores  are  those  stores in
operation  at least 18 months.  Average  store  sales in fiscal 1996 showed some
improvements  over  adjusted  fiscal 1995 but were still less than  historically
high levels  experienced  prior to fiscal  1995.  Total  average  store sales in
fiscal 1996 compared to adjusted  fiscal 1995 were flat on a year-to-date  basis
through the third quarter and increased 10% in the fourth quarter,  resulting in
an increase for the full year of 3%.

Sales trends thus far in fiscal 1997 remain  encouraging with a comparable store
sales  increase  of 9% for the first two months of the fiscal  year  compared to
last  year.  Management  believes  these  trends  are,  in part,  due to  recent
improvements in the women's apparel  industry,  a new merchandise  replenishment
system,  improved  merchandising  mix with added focus on  merchandise  quality,
value,  sizing  and  presentation,  as well as the  favorable  weather  patterns
experienced thus far in the Company's trade area. During the fourth quarter, the
Company tested and, beginning in fiscal 1997, launched the implementation of its
previously announced strategy to add new categories and styles of merchandise at
alternative  price  points.  The Company  also tested and  executed  direct mail
advertising campaigns during the second half of fiscal 1996. Advertising expense
in fiscal 1997 is not expected to increase  materially  compared to fiscal 1996.
Management believes the new merchandising  concept will provide opportunities to
improve sales and operating  results in fiscal 1997 and strengthen the Company's
position in the marketplace.

The Company  aggressively closed  underperforming  stores in fiscal 1996 and the
Transition  Period  and was very  focused  and  selective  in its new store site
selections  during  the  year.  The  Company  opened  23  stores  and  closed 66
underperforming  stores in fiscal 1996 compared to opening 83 stores and closing
23 underperforming  stores in fiscal 1995. The Company closed 13 underperforming
stores in the Transition  Period.  In fiscal 1996,  eleven stores were relocated
compared to 14 relocations in fiscal 1995. The Company's present plan for fiscal
1997 is to open  approximately  65 stores,  primarily in existing  markets,  and
relocate  approximately  10 stores.  Additionally,  approximately  30 stores are
expected  to close in  fiscal  1997,  a number of stores  more  consistent  with
historical averages.

The  Company's  sales and operating  results are seasonal,  as is typical in the
women's retail apparel industry.  Based on the former fiscal calendar (January -
December), the Company's sales historically were lowest during the first quarter
(January - March) and third  quarter (July - September)  and highest  during the
second quarter (April - June) and fourth quarter  (October - December).  Reduced
sales volumes in the first and third  quarters  coincided with the transition of
seasonal merchandise.  Therefore,  increased levels of markdowns occurred during
those  transitional  periods,  and  operating  expenses,  when  expressed  as  a
percentage of sales,  were typically  higher.  As discussed  above,  the Company
changed  its fiscal  year end to conform  the fiscal  calendar  to the  seasonal
patterns  it  experiences.  As a  result,  the  Company's  historical  quarterly
patterns have  changed.  Fiscal 1996 and proforma  fiscal 1995  produced  higher
sales and operating  results in the first quarter  (February - April) and second
quarter (May - July) compared to the third quarter (August - October) and fourth
quarter (November - January). Management is unable to predict if this trend will
continue in the  future.  Management  does  believe,  however,  that the pricing
flexibility afforded by the new merchandising strategy should enable the Company
to increase its absolute and relative  sales  performance  in the second half of
the fiscal year since the Company will be able to offer its  customers a greater
selection of fall and winter apparel categories.

Gross margin as a percentage  of net sales was 35.3% in fiscal 1996  compared to
33.7% in fiscal 1995.  For fiscal 1995 and 1994,  distribution  and  merchandise
acquisition  costs were  reclassified  as a component of cost of goods sold from
selling,  general and  administrative  expenses  to conform to the current  year
presentation. This increase in gross


<PAGE>



margin as a percentage of net sales primarily  resulted from efficiencies in the
Company's  distribution  center  and  lower  levels  of  markdowns  taken due to
management's  efforts  to control  inventory  levels  and flow.  Decreases  as a
percentage of net sales in distribution costs and markdowns were slightly offset
by higher buying costs primarily due to additions to the merchandising  staff at
the  Company's  home office.  Distribution  costs in dollars on an average store
basis  decreased  16% in fiscal 1996  compared to fiscal 1995.  This decrease in
distribution   costs  was  the  result  of  efficiencies   associated  with  the
distribution  center's  first  full year of  operation  since  expansion  of the
facility and the implementation of a new warehouse management system.

Selling,  general and administrative  expenses as a percentage of net sales were
25.3% in fiscal  1996  compared to 24.3% in fiscal  1995.  When  expressed  as a
percentage of net sales,  store  operating costs decreased while home office and
other  expenses  increased.  Selling,  general  and  administrative  expenses in
dollars on an average store basis increased 6%. This increase resulted primarily
from rolling out a direct mail  advertising  campaign in the fourth  quarter,  a
one-time  charge to record  certain  post-retirement  benefits  and  recording a
greater loss on fixed assets as a result of closing more underperforming  stores
than in  fiscal  1995.  Average  salaries  and  wages  in the  Company's  stores
increased 1% in fiscal 1996 compared to fiscal 1995.  This  increase,  affecting
primarily  part-time  associates,  is largely due to the increase in the Federal
Minimum Wage which was effective in October 1996. In September  1997, the second
phase  of the  Federal  Minimum  Wage  increase  will  take  effect.  Management
estimates the  incremental  impact of the increases in the Federal  Minimum Wage
will increase store payroll expense in fiscal 1997 by approximately $900,000.

Store rent expense as a percentage of net sales was 8.6% in fiscal 1996 compared
to 8.4% in fiscal 1995.  Average  store rent expense in dollars  increased 3% in
fiscal  1996  compared  to fiscal  1995  primarily  due to the  Company's  store
expansion  strategy of increasing the  proportion of higher volume stores,  and,
thus  entering  more costly sites with higher  rents,  and the closing of older,
underperforming   stores  which  had  lower   average  rent  costs.   Management
anticipates that this trend of increasing average store rents may continue.  The
Company has  approximately  70 existing leases that expire or have initial lease
terms  containing  lessee renewal  options which may be exercised  during fiscal
1997.  Management  believes  that the  Company  will not  experience  a material
increase in aggregate  store rents as a result of renewal options or negotiating
new lease terms for such locations.

Depreciation  and  amortization  expense  was 1.6% of net sales in  fiscal  1996
compared to 1.5% of net sales in fiscal 1995. This increase in depreciation  and
amortization  expense resulted primarily from the completion of the distribution
center expansion late in the second half of fiscal 1995.

The  effective  income tax rate for fiscal  1996 was 36.5%  compared to 49.7% in
fiscal 1995. This decrease was primarily due to tax benefits generated in fiscal
1995  that did not  recur in  fiscal  1996.  These  tax  benefits  included  the
carryback of the Federal  Targeted Jobs Tax Credit and the recognition in fiscal
1995 of the  deferred  income  tax  asset  associated  with  the  remaining  net
operating loss carryforward generated by the Company's Puerto Rico subsidiary in
1994.  Management  estimates  the  Company's  effective  income tax rate will be
approximately 40% in fiscal 1997.

FIVE-WEEK TRANSITION PERIOD ENDED FEBRUARY 3, 1996 COMPARED TO FOUR-WEEK
PERIOD ENDED JANUARY 28, 1995 (UNAUDITED - SEE NOTE I)

Net sales for the  five-week  period  ended  February  3, 1996 were  $15,022,000
compared to $12,173,000  for the four- week period ended January 28, 1995. On an
average store basis,  net sales decreased 9%.  Comparable  store sales (adjusted
for the calendar shift to compare the five-week period ended February 3, 1996 to
the five-week period ended February 4, 1995) decreased 22%.  Management believes
the decline in sales  reflected  the continued  softness in the women's  apparel
market  experienced  throughout  fiscal  1995 and the impact of adverse  weather
conditions incurred nationwide in January 1996.

During January 1996,  there were no new stores  opened,  one store was relocated
and 13 stores were closed.

Gross margin was 3.2% in January 1996 compared to a deficiency of 5.7% in 
January 1995.  January 1995


<PAGE>



distribution and buying costs were  reclassified as a component of cost of goods
sold from selling, general and administrative expenses to conform to the current
presentation.  The improvement in gross margin was principally due to the change
in accounting for merchandise  inventories  discussed below and  efficiencies in
the Company's distribution center. Like most retailers,  the month of January is
historically the lowest sales month of the year, both in absolute dollars and on
an average store basis,  resulting in substantial markdowns to increase sell-off
of Fall merchandise.

Selling,  general and administrative expenses increased to 46.3% of net sales in
January  1996  compared  to 41.4% in January  1995.  This  increase  in selling,
general and administrative  expenses as a percentage of net sales is largely due
to the decrease in average  store  sales.  Selling,  general and  administrative
expenses on an average store basis,  adjusted for the additional week in January
1996  compared to January 1995,  increased  1%,  primarily due to an increase in
store operations expenses.

Store rent and related expenses  decreased to 13.5% of net sales in January 1996
compared to 14.7% of net sales in January 1995.  This decrease in store rent and
related  expenses as a percentage of net sales is due to recording  rent expense
on a monthly basis in 1996 rather than a weekly basis as in the preceding  year.
Accordingly,  rent  expense in  January  1996,  a  five-week  operating  period,
included one calendar month of rent expense.

Depreciation and amortization  expense as a percentage of net sales increased to
2.7% in  January  1996  compared  to 2.4% in  January  1995.  This  increase  in
depreciation and  amortization  expense was due to the decrease in average store
sales and due to the  completion of the expansion of the Company's  distribution
center late in the second half of fiscal 1995.

Interest expense increased to 1.2% of net sales in January 1996 compared to 0.3%
in January 1995 due to the  increased  level of  borrowings  under the Company's
credit  facilities.  Borrowing levels increased  primarily to fund approximately
$9.3  million  in capital  expenditures  for the period  February  1995  through
January 1996.

The Company's effective tax rate for January 1996 was 38.0%.  The Company's 
effective tax rate for January 1995 was 39.0%.

The Financial Accounting Standards Board ("FASB") issued Statement No. 121 (SFAS
121),  "Accounting  for the  Impairment of Long-Lived  Assets and for Long-Lived
Assets to be Disposed  Of." This  statement  essentially  requires that when the
Company  commits to closing  specific  stores and for other  stores which may be
impaired,  the fixed  assets for such stores must be written  down to  estimated
fair  market  value.  The  Company's  adoption of SFAS 121,  required  for years
beginning after December 15, 1995, resulted in a decrease in net fixed assets of
approximately $1,630,000 and a charge of approximately $1,397,000 (net of income
taxes)  which is  included  in the  cumulative  effect of changes in  accounting
principles in the Statement of Operations for the Transition Period.

The Company also elected to change certain methods of accounting for merchandise
inventories  beginning in the Transition  Period.  The Company  changed from the
lower of average first-in,  first-out (FIFO) cost or market method of accounting
to the lower of cost  (computed  using the FIFO  retail  method) or market.  The
Company believes that the FIFO retail method provides  improved  information for
the operation of its business in a manner consistent with the method used widely
in the retail industry.  The Company is also capitalizing into inventory certain
merchandise  acquisition and distribution  costs to provide a better matching of
revenues and expenses, particularly in interim periods. The effect of the change
to the FIFO retail method was to reduce merchandise inventories by approximately
$1,207,000,  and the effect of capitalizing into inventory  certain  merchandise
acquisition and distribution  costs was to increase  merchandise  inventories by
approximately   $1,698,000.   These  changes  in  accounting   for   merchandise
inventories   resulted  in  a  net  increase  in   merchandise   inventories  of
approximately  $491,000 and a benefit of  approximately  $307,000 (net of income
taxes)  which is  included  in the  cumulative  effect of changes in  accounting
principles in the Statement of Operations for the Transition Period.

<PAGE>

FISCAL YEAR ENDED DECEMBER 30, 1995 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1994

Net sales in fiscal  1995  increased  4% to $294.7  million  compared  to $283.3
million in fiscal 1994. This increase in sales was due to the net addition of 60
stores during the year. Comparable store sales decreased 13% during fiscal 1995.
Management  believes the decline in  comparable  store sales in 1995 compared to
1994 was due to the continued softness in the women's apparel market.

The Company opened 83 stores and closed 23 underperforming stores in fiscal 1995
compared to opening 128 stores and closing 27  underperforming  stores in fiscal
1994. In fiscal 1995,  fourteen stores were relocated  compared to 6 relocations
in fiscal 1994.

Gross  margin as a  percentage  of net sales  increased  to 33.7% in fiscal 1995
compared to 33.2% in fiscal 1994. The  improvement in gross margin was primarily
the result of management's  efforts to control  inventory  levels and flow which
resulted in fewer  markdowns  when expressed as a percentage of net sales and to
the completion of the distribution  center conversion from hanging  merchandise
to a flat pack  operation.  Net sales of apparel and of accessories  represented
approximately 89% and 11%, respectively, of annual sales in both fiscal 1995 and
fiscal 1994.

Selling,  general and  administrative  expenses increased as a percentage of net
sales to 24.3% in fiscal 1995 compared to 22.2% in fiscal 1994. This increase in
selling,  general and administrative expenses, when expressed as a percentage of
net sales,  was  principally  due to the 10%  reduction  in average  store sales
volumes  during  fiscal  1995  compared  to fiscal  1994.  Selling,  general and
administrative expenses in dollars on an average store basis decreased 2% during
fiscal  1995  compared  to fiscal  1994  primarily  as a result of  management's
stringent  efforts to control costs.  Store operations  expenses and expenses at
the Company's home office in dollars on an average store basis  decreased 1% and
6%, respectively.

Store rent expense as a percentage of net sales increased to 8.4% in fiscal 1995
compared to 7.1% in fiscal 1994.  This increase was principally due to the lower
sales volumes  during  fiscal 1995  compared to fiscal 1994.  Average store rent
expense  increased 6% in fiscal 1995  compared to fiscal 1994,  primarily due to
the Company's  store  expansion  strategy of increasing the proportion of higher
volume stores,  and, thus entering into more costly sites with higher rents, and
the closing of older, underperforming stores which had lower average rent costs.

Depreciation and amortization  expense  increased to 1.5% of net sales in fiscal
1995 from 1.3% of net sales in fiscal 1994.  This  increase  resulted  primarily
from the completion of the distribution center expansion.

The  effective  income tax rate for fiscal  1995 was 49.7%  compared to 38.5% in
fiscal 1994.  This  increase  was  primarily  due to the tax benefit  arising in
fiscal 1995 from the  carryback of the Federal  Targeted Job Tax Credits and the
recognition in fiscal 1995 of the deferred income tax  asset associated with the
remaining net operating loss carryforward generated by the Company's Puerto Rico
subsidiary in fiscal 1994.

INFLATION

During its three most recent fiscal years,  the Company believes that the impact
of  inflation  has not been  material to its  financial  condition or results of
operations. However, the impact of the Federal Minimum Wage increase is expected
to  negatively  impact future  results of  operations  as previously  discussed.
Occasionally,  the  Company  may  experience  slight  increases  in the  average
purchase price per unit of merchandise; however, such increases also reflect the
impact of an increase in the quality of goods  purchased  in addition to minimal
inflationary factors.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary needs for liquidity and capital have been to
fund its new store expansion,  the related growth in merchandise inventories and
the  expansion of the home office and  distribution  center.  Until fiscal 1995,
these needs were met  principally  through cash provided by  operations  and the
Company's available line of credit. Beginning in fiscal 1995, additional sources
of financing were  necessary to fund the Company's  liquidity and capital needs.
As a result,  the Company  amended its credit  agreement  to include a term loan
facility.  In fiscal 1996, the Company  replaced this facility with a new 2-year
agreement which, together with cash provided by operations,  is expected to meet
liquidity and capital needs during the period of the agreement .

In March 1996, the Company entered into the new agreement  referenced above with
a lender  providing a revolving loan facility of up to $37,500,000  (including a
letter of credit  sub-facility of up to $25,000,000)  and a $7,500,000 term loan
facility.  The new credit facilities expire in March 1998 and may be extended at
the  lender's  option  for an  additional  year.  Borrowings  under  the  credit
agreement are  collateralized by all assets owned by the Company during the term
of the agreement and bear interest,  at the Company's option (subject to certain
limitations  in the  agreement),  at the prime  rate  plus 0.5% or the  Adjusted
Eurodollar Rate, as defined,  plus 2.5%.  Maximum borrowings under the revolving
credit  facility and utilization of the letter of credit facility are based on a
borrowing base formula determined with respect to eligible inventory (as defined
in the  agreement).  Availability  under the  revolving  facility  fluctuates in
accordance  with the  Company's  seasonal  variations  in inventory  levels.  At
February 1, 1997, when the Company's  inventories  were building in anticipation
of the spring  selling  season,  the Company had  approximately  $3.7 million of
excess availability under the borrowing base formula. The lending formula may be
revised  from  time  to  time  by the  lender  in  response  to  changes  in the
composition of the Company's inventory or other business conditions.  Commencing
July 1996, the term loan is payable in 57 consecutive equal monthly installments
plus  interest.  If the new credit  facility is not  renewed in March 1998,  the
outstanding  balance  under the term loan will be due and  payable at that time.
Certain fees may be payable by the Company for early  termination  of the credit
agreement.

The new credit agreement  contains certain covenants which,  among other things,
restricts  the  ability of the  Company to incur  indebtedness,  or  encumber or
dispose of assets,  and prohibits the Company from repurchasing its Common Stock
or paying dividends.  Additionally, the Company must maintain a minimum adjusted
net worth (as defined in the  agreement)  of  $34,000,000  and maintain  minimum
working capital,  exclusive of amounts  outstanding under the credit facilities,
of $5,000,000. The Company was in compliance with these covenants as of February
1, 1997 and as of the date of this document.

The maximum and average amounts  outstanding  during fiscal 1996, the Transition
Period and fiscal 1995 and amounts  outstanding  at the end of such  periods for
both the term loan and revolving  credit facility are disclosed in Note B to the
Consolidated Financial Statements.

The Company's  weighted  average interest rate for all borrowings was 7.9%, 8.4%
and 8.2% in fiscal 1996,  the Transition  Period and fiscal 1995,  respectively.
The Company had  outstanding  letters of credit for the purchase of  merchandise
inventories  totaling  approximately  $12,490,000 and $11,314,000 at February 1,
1997 and February 3, 1996, respectively.

At February 1, 1997, total merchandise  inventories increased 22% to $48,371,000
compared to $39,773,000 at February 3, 1996. Merchandise  inventories located in
the Company's  stores  increased 8% on a per average store basis due to a higher
proportion of spring  merchandise in anticipation of improved February and March
sales performance.  The increase in total merchandise inventories is principally
due to an increase in  merchandise  in-  transit to the  Company's  distribution
center from its vendors.  In-transit inventories increased compared to last year
because of an increase in spring  merchandise  purchases from foreign suppliers.
In fiscal 1996, import purchases  (including freight and duty) were 31% of total
purchases  compared to 20% in fiscal 1995.  The level and source of  merchandise
inventories are subject to fluctuations  because of the Company's  opportunistic
buying strategy and prevailing business conditions.  In fiscal 1997, the Company
intends to continue this strategy and to purchase  merchandise in advance of the
selling seasons when advantageous. This strategy may affect the level of total

<PAGE>

merchandise  inventories  at  the  end of  each  quarter  in  fiscal  1997,  the
proportion of domestic versus imported  merchandise and the Company's  liquidity
and working capital needs.

Net cash  provided by operating  activities  for fiscal 1996,  1995 and 1994 was
$2,352,000,  $3,694,000  and  $3,627,000,  respectively.  The  decrease  in cash
provided by operating activities in fiscal 1996 compared to fiscal 1995 resulted
primarily from the Company's net operating losses and an increase in merchandise
inventories  (which was only partially offset by an increase in accounts payable
and other  liabilities  and the  Company's  loss on  disposal  of  property  and
equipment).  The loss on disposal of property  and  equipment in fiscal 1996 was
larger than this loss in prior years due to closing more underperforming  stores
in fiscal 1996.

Net  cash  used in  investing  activities  for  fiscal  1996,  1995 and 1994 was
$3,033,000, $11,277,000 and $12,625,000,  respectively,  primarily for leasehold
improvements  and  equipment  for new  stores  opened in each  year,  as well as
expansions to the distribution center including information systems and hardware
in fiscal 1995 and fiscal 1994 and expansion of the home office in fiscal 1994.

Net cash  provided  by  financing  activities  for fiscal  1996 was  $2,834,000,
primarily due to replacing the Company's  existing credit  facilities with a new
agreement,  the effect of which was to provide $7,500,000 from the new term loan
of which  $5,500,000  was used to pay off the  former  term loan.  In  addition,
$1,053,000 was used to pay down the new term loan facility. Net cash provided by
financing  activities  for  fiscal  1995  was  $7,889,000  primarily  due to the
issuance  of  $6,000,000  of long term  debt.  Net cash  provided  by  financing
activities  for fiscal  1994 was  $820,000,  primarily  due to the  exercise  of
options with respect to the Company's Common Stock.

During the  Transition  Period,  net cash of  $10,536,000  was used in operating
activities,  due  to the  operating  loss  for  the  period,  the  increases  in
merchandise inventories, miscellaneous receivables, prepaid expenses (payment of
the  subsequent  month's  store  rents)  and  prepaid  income  taxes  which were
partially offset by an increase in accounts payable and other  liabilities.  Net
borrowings  under the  Company's  credit  facilities of  $10,403,000  during the
Transition  Period were used to fund the cash  requirements  incurred during the
month.

In fiscal 1997, the Company plans to spend approximately $4.0 million on capital
expenditures, most of which will be used to open approximately 65 new stores, to
relocate  approximately 10 stores and to remodel existing stores.  The Company's
liquidity requirements in fiscal 1997 and the foreseeable future are expected to
be met principally  through its existing credit  facilities and cash provided by
operating activities.  If deemed by management to be in the best interest of the
Company,  additional long term debt, capital leases or other permanent financing
may be explored.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

The FASB issued SFAS 128,  "Earnings Per Share,"  effective  for periods  ending
after  December  15,  1997.  The new standard  requires a dual  presentation  of
"basic" and  "diluted" EPS on the face of the income  statement.  If the Company
had applied  the  principles  of SFAS 128 for the fiscal year ended  February 1,
1997,  weighted  average  shares for basic EPS and  diluted  EPS would have been
10,400,789,  the same as that computed under APB Opinion No. 15, the current EPS
accounting standard.

<PAGE>

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

All  statements  contained  in  this  document  as to  future  expectations  and
financial results should be considered forward-looking statements subject to the
safe harbor created by the Private Securities Litigation Reform Act of 1995. The
Company  cautions  readers of this  Annual  Report on Form 10-K that a number of
important factors could cause the Company's actual results in 1997 and beyond to
differ materially from those expressed in such forward-looking statements. These
factors  include,  but are not limited to, the general  economic  conditions and
consumer demand;  consumer preferences;  weather patterns;  competitive factors,
including pressure from pricing and promotional  activities of competitors;  the
impact of  excess  retail  capacity  and the  availability  of  desirable  store
locations on suitable terms; whether or not the Company's merchandising strategy
to offer expanded  categories of  merchandise  at alternative  price points will
increase sales and operating results or increase and attract new customers;  the
availability,  selection and  purchasing of attractive  merchandise on favorable
terms;  import risks,  including potential  disruptions and duties,  tariffs and
quotas on imported  merchandise;  and other  factors  described in the Company's
filings with the  Securities  and  Exchange  Commission  from time to time.  The
Company  does not  undertake  to publicly  update or revise its  forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied therein will not be realized.


<PAGE>



ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Shareholders of
One Price Clothing Stores, Inc.
Duncan, South Carolina


We have  audited  the  accompanying  consolidated  balance  sheets  of One Price
Clothing Stores,  Inc. and subsidiary (the "Company") as of February 1, 1997 and
February  3,  1996,  and the  related  consolidated  statements  of  operations,
shareholders'  equity,  and cash  flows for the years  ended  February  1, 1997,
December  30, 1995 and  December  31, 1994 and for the  one-month  period  ended
February 3, 1996.  Our audits also  included the  financial  statement  schedule
listed in the Index at Item 14 (d). These consolidated  financial statements and
financial statement schedule are the responsibility of the Company's management.
Our  responsibility  is to express an  opinion on these  consolidated  financial
statements and financial statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial position of the Company as of February 1, 1997
and February 3, 1996,  and the results of its  operations and its cash flows for
the years ended  February 1, 1997,  December  30, 1995 and December 31, 1994 and
for the one-month  period ended  February 3, 1996, in conformity  with generally
accepted accounting  principles.  Also, in our opinion, such financial statement
schedule,  when  considered  in  relation  to the basic  consolidated  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

As discussed in Note J to the  financial  statements,  in the  one-month  period
ended February 3, 1996, the Company  adopted  Statement of Financial  Accounting
Standards No. 121 and changed its method of accounting for inventories.


DELOITTE & TOUCHE LLP
Greenville, South Carolina

March 14, 1997


<PAGE>



                                 ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
                                            CONSOLIDATED BALANCE SHEETS
<TABLE>
<S>                                                                             <C>                 <C>
                                                                                 February 1,         February 3,
                                                                                   1997                 1996
Assets -- Note B
CURRENT ASSETS
   Cash and cash equivalents                                                     $ 2,557,000        $    404,000
   Miscellaneous receivables, net of allowance for
     doubtful accounts of $144,000 (1996) and
     $233,000 (1995)                                                               1,120,000           1,182,000
   Merchandise inventories                                                        48,371,000          39,773,000
   Federal and state income taxes receivable                                       4,237,000           4,674,000
   Prepaid expenses                                                                3,671,000           4,203,000
   Deferred income taxes -- Note D                                                 1,935,000           2,281,000
                                                                             ---------------        ------------
     TOTAL CURRENT ASSETS                                                         61,891,000          52,517,000
PROPERTY AND EQUIPMENT, net -- Note C                                             36,388,000          39,281,000

OTHER ASSETS                                                                       2,688,000           2,382,000
                                                                             ---------------       -------------
                                                                                $100,967,000         $94,180,000
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
   Accounts payable                                                              $25,908,000         $22,998,000
   Current portion of long-term debt and note payable
      -- Note B                                                                   16,565,000          11,868,000
   Accrued salaries and wages                                                      1,504,000           1,107,000
   Accrued employee benefits                                                       2,327,000           2,404,000
   Sales tax payable                                                                 775,000             693,000
   Other accrued and sundry liabilities                                            1,643,000           1,599,000
                                                                             ---------------       -------------
     TOTAL CURRENT LIABILITIES                                                    48,722,000          40,669,000
                                                                              --------------        ------------
LONG-TERM DEBT  -- Note B                                                          4,868,000           6,447,000
                                                                             ---------------       -------------
DEFERRED INCOME TAXES -- Note D                                                      718,000             818,000
                                                                            ----------------      --------------
OTHER NONCURRENT LIABILITIES -- Note G                                             2,317,000           1,089,000
                                                                             ---------------       -------------
COMMITMENTS AND CONTINGENCIES -- Note E
SHAREHOLDERS' EQUITY -- Notes B, F and H
   Preferred Stock, par value $0.01 - authorized
      and unissued 500,000 shares
   Common Stock, par value $0.01 - authorized 35,000,000
      shares; issued and outstanding 10,435,531
      (1996) and 10,335,031 (1995) shares                                            104,000             103,000
   Additional paid-in capital                                                     11,453,000          11,002,000
   Retained earnings                                                              32,785,000          34,052,000
                                                                              --------------        ------------
                                                                                  44,342,000          45,157,000
                                                                                $100,967,000         $94,180,000
</TABLE>
See notes to consolidated financial statements


<PAGE>



                              ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<S>                                               <C>                  <C>               <C>              <C>
                                                        Fiscal         Transition
                                                      Year Ended       Period Ended             Fiscal Year Ended
                                                     February 1,          February 3,    December 30,      December 31,
                                                            1997        1996 - Note I           1995           1994
                                                    ---------------------------------     -----------------------------

NET SALES                                            $298,986,000      $ 15,022,000       $294,692,000       $283,326,000
Cost of goods sold, distribution and buying costs     193,318,000        14,545,000        195,304,000        189,176,000
                                                    --------------    --------------      -------------      ------------
GROSS MARGIN                                          105,668,000           477,000         99,388,000         94,150,000
Selling, general and administrative
   expenses -- Notes C and G                           75,564,000         6,957,000         71,498,000         63,008,000
Store rent and related expenses                        25,566,000         2,030,000         24,810,000         20,210,000
Depreciation and amortization expense                   4,778,000           411,000          4,394,000          3,612,000
Interest expense                                        1,897,000           173,000          1,326,000            271,000
                                                    --------------   ---------------      -------------      ------------
                                                      107,805,000         9,571,000        102,028,000         87,101,000
Interest income                                           143,000             3,000             45,000             89,000
                                                    --------------   ---------------      -------------      ------------

NET EXPENSES                                          107,662,000         9,568,000        101,983,000         87,012,000
                                                    --------------   ---------------      -------------      ------------
(LOSS) INCOME BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES                                (1,994,000)       (9,091,000)        (2,595,000)        7,138,000

(Benefit from) provision for income taxes
   -- Note D                                              (727,000)       (3,457,000)        (1,291,000)        2,749,000
                                                    ---------------    --------------     --------------     ------------

(LOSS) INCOME BEFORE CUMULATIVE
   EFFECT OF  CHANGES IN ACCOUNTING
   PRINCIPLES                                           (1,267,000)       (5,634,000)        (1,304,000)        4,389,000

Cumulative effect of changes in accounting
   principles, net of income tax
   benefit of $706,0000 -- Note J                            --           (1,090,000)               --             --
                                                     --------------      ------------     --------------      ------------

NET (LOSS) INCOME                                    $  (1,267,000)      $(6,724,000)      $ (1,304,000)     $  4,389,000
                                                    ===============      ============     ==============     ============

PER COMMON SHARE AMOUNTS
    -- Notes J and L:
 (Loss) income before cumulative effect
   of changes in accounting principles               $       (0.12)      $     (0.55)      $      (0.13)     $       0.42
 Cumulative effect of changes in accounting
   principles,  net of income tax benefit                      --              (0.10)               --               --
                                                     --------------      ------------      ---------------   ------------

NET (LOSS) INCOME PER COMMON SHARE                   $       (0.12)      $     (0.65)      $      (0.13)     $        0.42
                                                     ==============      ============      ===============   =============

Weighted average shares outstanding                     10,400,789        10,335,031         10,313,860         10,524,978
                                                    ===============      ============      ===============   ==============
</TABLE>
See notes to consolidated financial statements




<PAGE>



                              ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
                             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<S>                                          <C>              <C>          <C>            <C>               <C>
                                                                               Additional
                                                   Common Stock             Paid-in         Retained
                                               Shares         Amount         Capital        Earnings         Total
Balance at January 1, 1994                    10,221,498       $102,000    $10,033,000      $37,691,000     $47,826,000
     Stock options exercised                      83,758          1,000        858,000                          859,000
    Net income                                                                                4,389,000       4,389,000
                                              -----------       --------    -----------      -----------     -----------
Balance at December  31, 1994                 10,305,256        103,000     10,891,000       42,080,000      53,074,000
     Stock options exercised                      29,775                       111,000                          111,000
     Net loss                                                                                (1,304,000)     (1,304,000)
                                              ----------        --------    -----------      -----------     ---------- 
Balance at December 30, 1995                  10,335,031        103,000     11,002,000       40,776,000      51,881,000
     Net loss                                                                                (6,724,000)     (6,724,000)
                                              ----------        --------    -----------      -----------  -------------
Balance at February 3, 1996                   10,335,031        103,000     11,002,000       34,052,000      45,157,000
     Stock options exercised                     100,500          1,000        451,000                          452,000
     Net loss                                                                                (1,267,000)     (1,267,000)
                                              ----------       --------     ----------       -----------   ------------
Balance at February 1, 1997                   10,435,531       $104,000    $11,453,000      $32,785,000     $44,342,000
                                              ==========     ==========    ===========      ============    ===========
</TABLE>



See notes to consolidated financial statements


<PAGE>



                                ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                              <C>              <C>            <C>            <C>
                                                                       Fiscal     Transition
                                                                  Year Ended      Period Ended           Fiscal Year Ended
                                                                   February 1,    February 3,     December 30,   December 31,
                                                                     1997         1996 - Note I       1995           1994
                                                                   --------------------------------------------------------
OPERATING ACTIVITIES
     Net (loss) income                                             $(1,267,000)    $ (6,724,000)  $ (1,304,000)  $  4,389,000
     Adjustments to reconcile net (loss) income to
          net cash provided by (used in) operating activities:
           Depreciation and amortization                             4,778,000         411,000       4,394,000      3,612,000
           Changes in accounting principles                               --         1,090,000           --              --
           Provision for supplemental post-retirement
                benefits                                               970,000           --              --              --
           Deferred income taxes                                       246,000         (146,000)     (351,000)       (145,000)
           Loss (gain) on disposal of property and equipment         1,261,000          (31,000)      789,000         947,000
           Decrease (increase) in other noncurrent assets              579,000         (161,000)     (522,000)        253,000
           Increase in other noncurrent liabilities                    151,000          271,000       500,000            --
           Changes in operating assets and liabilities:
                Decrease (increase) in miscellaneous
                    receivables and prepaid expenses                   594,000       (2,520,000)      (42,000)       (644,000)
                (Increase) in merchandise inventories               (8,598,000)     (10,321,000)   (2,624,000)     (3,022,000)
                Decrease (increase) in Federal and
                    state income taxes receivable                      437,000       (3,311,000)   (1,292,000)     (2,661,000)
                Increase in accounts payable and other liabilities   3,201,000       10,906,000     4,146,000         898,000
NET CASH PROVIDED BY (USED IN) OPERATING
   ACTIVITIES                                                        2,352,000      (10,536,000)    3,694,000       3,627,000
                                                                ---------------    -------------    -----------    ----------

INVESTING ACTIVITIES
   Purchases of property and equipment                              (2,674,000)         (80,000)  (10,865,000)    (12,294,000)
   Purchases of other noncurrent assets                               (359,000)         (41,000)     (412,000)      ( 331,000)
                                                                 -------------- -------------------------------   ------------
NET CASH USED IN INVESTING ACTIVITIES                               (3,033,000)        (121,000)  (11,277,000)    (12,625,000)
                                                                 --------------  --------------- -------------    ------------

FINANCING ACTIVITIES
   Net borrowings from revolving credit facility                     2,171,000       10,403,000     2,412,000            --
   Proceeds from long term debt borrowings                           7,500,000             --       6,000,000            --
   Repayment of long term debt                                      (6,553,000)            --        (500,000)           --
   Debt financing costs incurred                                      (698,000)            --         (90,000)           --
   Decrease in amount due to related party                             (38,000)         (10,000)      (44,000)        (39,000)
   Proceeds from exercise of Common Stock options                      452,000             --         111,000         859,000
                                                                  -------------   ---------------  ------------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                            2,834,000       10,393,000      7,889,000        820,000
                                                                  -------------   ---------------  -----------     -----------

INCREASE (DECREASE) IN  CASH
  AND CASH EQUIVALENTS                                               2,153,000         (264,000)      306,000      (8,178,000)

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                                 404,000          668,000       362,000       8,540,000
                                                               ----------------   ---------------   -----------    ----------

CASH AND CASH EQUIVALENTS AT END
   OF PERIOD                                                     $   2,557,000    $     404,000  $    668,000    $    362,000
                                                                 ==============   =============  =============   ============

SUPPLEMENTAL CASH FLOW INFORMATION
   Interest paid                                                 $   1,777,000  $       244,000   $ 1,117,000    $     298,000
   Income taxes paid                                                    68,000             --         477,000        5,330,000
   Noncash financing activities - capital leases                       237,000             --            --              --
</TABLE>
See notes to consolidated financial statements


<PAGE>



ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

February 1, 1997

NOTE A - Operations and Summary of Significant Accounting Policies

Business:  One Price  Clothing  Stores,  Inc.  and  subsidiary  (the  "Company")
operates a chain of off-price  retail  women's and children's  specialty  stores
offering a wide variety of first quality,  contemporary,  in-season  apparel and
accessories.  The  majority of the stores'  core  merchandise  is offered at the
uniform retail price of $7.  Beginning in fiscal 1997, the Company will offer an
expanded  selection of merchandise at higher price points.  At February 1, 1997,
the Company operated 645 stores in 27 states and Puerto Rico.

Fiscal Year:  Beginning in fiscal 1996,  the Company's year ends on the Saturday
nearest  January  31. See Note I.  "Fiscal  1996" is the  52-week  period  ended
February 1, 1997; "the Transition Period" is the five-week period ended February
3, 1996; "fiscal 1995" is the 52-week period ended December 30, 1995 and "fiscal
1994" is the 52-week period ended December 31, 1994. Certain disclosures related
to the  Transition  Period  were not  included  in these  Notes to  Consolidated
Financial Statements due to immateriality.

Principles of Consolidation:  The consolidated  financial statements include the
accounts  of the  Company  and  its  wholly-owned  subsidiary.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

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

Cash and Cash Equivalents:  The Company considers all highly liquid  investments
with an original  maturity  of three  months or less when  purchased  to be cash
equivalents.

Merchandise Inventories: Beginning in January 1996, merchandise inventories are
stated at the lower of cost (computed using the first-in, first-out (FIFO) 
retail method) or market.  See Note J.

Depreciation:  Depreciation is computed by the  straight-line  method,  based on
estimated  useful  lives of 10 years for land  improvements,  33 to 40 years for
buildings,  5 to 10 years  for  leasehold  improvements  and 3 to 15  years  for
fixtures and equipment.

Income Taxes:  Deferred income tax assets and  liabilities  represent the future
income tax effect of temporary differences between the book and tax bases of the
Company's assets and liabilities,  assuming they will be realized and settled at
the amount reported in the Company's financial statements.

Purchased Software: Purchased software is included in other assets and is 
amortized over its estimated useful life of 5 years using the straight-line 
method.

Revenue Recognition: Revenues from retail sales are recognized at the time of 
the sale.  An estimate for merchandise returns is recorded in the period that 
the merchandise is sold.

Store Preopening Costs: Costs associated with the opening of new stores are 
expensed as incurred.



<PAGE>



Store Closing  Costs:  At the time  management  commits to close a store and for
other stores which may be impaired as  determined  using the  principles of SFAS
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for Long- Lived
Assets to be Disposed  of," the fixed assets are written down to estimated  fair
market value and a provision is made for any  remaining  store lease  obligation
after closing or penalty, if any, to cancel the lease obligation. See Note J.

Advertising  and  Promotional  Costs:  Advertising  and  promotional  costs  are
expensed when incurred.  Such expenses were  $987,000,  $324,000 and $347,000 in
fiscal 1996, 1995 and 1994, respectively.

Net (Loss)  Income  Per Common  Share:  Net  (loss)  income per common  share is
computed by dividing net (loss) income by the weighted  average number of shares
of Common Stock and dilutive  common stock  equivalent  shares for stock options
outstanding, unless antidilutive, during the period. See Notes F and L.

Reclassifications: Certain amounts included in prior periods' financial 
statements have been reclassified to conform to the fiscal 1996 presentation.

NOTE B -  Credit Facilities

In March 1996,  the Company  entered into a credit  agreement with a new lender,
providing a revolving loan facility of up to $37,500,000  (including a letter of
credit  sub-facility of up to $25,000,000)  and a $7,500,000 term loan facility.
The credit  facilities  expire in March 1998 and may be extended at the lender's
option  for an  additional  year.  Borrowings  under the  credit  agreement  are
collateralized  by all  assets  owned  by the  Company  during  the  term of the
agreement  and bear  interest,  at the  Company's  option  (subject  to  certain
limitations  in the  agreement),  at the prime  rate  plus 0.5% or the  Adjusted
Eurodollar Rate, as defined,  plus 2.5%.  Maximum borrowings under the revolving
credit  facility and utilization of the letter of credit facility are based on a
borrowing base formula determined with respect to eligible inventory (as defined
in the  agreement).  Availability  under the  revolving  facility  fluctuates in
accordance  with the  Company's  seasonal  variations  in inventory  levels.  At
February 1, 1997, when the Company's inventories are building in anticipation of
the Spring selling season,  the Company had approximately $3.7 million of excess
availability  under the  borrowing  base  formula.  The  lending  formula may be
revised  from  time  to  time  by the  lender  in  response  to  changes  in the
composition of the Company's inventory or other business conditions.  Commencing
July 1996, the term loan is payable in 57 consecutive equal monthly installments
plus  interest.  If the  credit  facility  is not  renewed  in March  1998,  the
outstanding  balance  under the term loan will be due and  payable at that time.
Certain fees may be payable by the Company for early  termination  of the credit
agreement.

The credit  agreement  contains  certain  covenants  which,  among other things,
restricts  the  ability of the  Company to incur  indebtedness,  or  encumber or
dispose of assets,  and prohibits the Company from repurchasing its Common Stock
or paying dividends.  Additionally, the Company must maintain a minimum adjusted
net worth (as defined in the  agreement)  of  $34,000,000  and maintain  minimum
working capital,  exclusive of amounts  outstanding under the credit facilities,
of $5,000,000. The Company was in compliance with these covenants as of February
1, 1997.

At February 3, 1996, current  obligations  totaling  $2,947,000 under the former
credit agreement were classified as long term, as the Company had the intent and
ability to refinance such obligations on a long-term basis.

<PAGE>



The maximum and average amounts  outstanding  during fiscal 1996, the Transition
Period and fiscal 1995 and amounts  outstanding  at the end of such  periods for
both the term loan and revolving credit facility are presented as follows:
<TABLE>
<S>                                                                 <C>                    <C>                          <C> 
                                                                         Fiscal              Transition                  Fiscal
                                                                    Year Ended             Period Ended                 Year Ended
                                                                     February 1,              February 3,              December 30,
                                                                         1997                     1996                      1995


Revolving Credit Facility:
     Maximum amounts outstanding                                           $19,241,000            $13,281,000            $20,689,000
     Average amounts outstanding                                            10,792,000              7,488,000             13,217,000
     Outstanding at period end                                              14,986,000             12,815,000              2,412,000

Term Loan:
     Maximum amounts outstanding                                             7,500,000              5,500,000              6,000,000
     Average amounts outstanding                                             6,889,000              5,500,000              3,047,000
     Outstanding at period end                                               6,447,000              5,500,000              5,500,000
</TABLE>

The Company's  weighted  average interest rate for all borrowings was 7.9%, 8.4%
and 8.2% in fiscal 1996,  the Transition  Period and fiscal 1995,  respectively.
The Company had  outstanding  letters of credit for the purchase of  merchandise
inventories totaling approximately  $12,490,000 and $11,314,000,  at February 1,
1997 and February 3, 1996, respectively.

The  fair  value  of  the  Company's   outstanding  debt  at  February  1,  1997
approximates the carrying value.

NOTE C - Property and Equipment
<TABLE>
<S>                                                                             <C>                      <C>
                                                                                   February 1,            February 3,
                                                                                      1997                    1996
   Land                                                                         $     914,000          $     914,000
   Land improvements                                                                  494,000                494,000
   Building                                                                        16,028,000             16,005,000
   Leasehold improvements                                                          11,392,000             10,702,000
   Fixtures and equipment                                                          29,017,000             29,015,000
                                                                                 -------------          ------------
                                                                                   57,845,000             57,130,000
   Less accumulated depreciation                                                  (21,457,000)           (17,849,000)
                                                                                 -------------          -------------
                                                                                  $36,388,000            $39,281,000
                                                                                  ============           ===========
</TABLE>
In accordance with the principles of SFAS 121 (which was adopted on December 31,
1995 - See Note J), the Company evaluates  whether assets,  largely store lease-
hold  improvements  and fixtures and  equipment,  may be impaired based on store
lease termination and renewal decisions and estimated  undiscounted
future cash flows of the individual  stores.  For stores which are determined to
be impaired, leasehold improvements are written off and fixtures and equipment
are  written  down based upon  management's  estimate  of  recoverability.  Such
impairment loss for fiscal 1996 was  approximately $600,000 and is included
in selling, general and administrative expenses in the accompanying Consolidated
Statement of Operations.
 
<PAGE>



NOTE D - Income Taxes

The (benefit from) provision for income taxes consists of the following:
<TABLE>
<S>                                                    <C>             <C>               <C>             <C>
                                                            Fiscal       Transition
                                                         Year Ended      Period Ended            Fiscal Year Ended
                                                        February 1,      February 3,    December 30,    December 31,
                                                           1997            1996             1995             1994
                                                     ------------------------------------------------------------
    Current:
      Federal                                            $(982,000)     $(2,875,000)    $(1,001,000)     $2,400,000
      State and local                                        1,000         (436,000)        62,000          494,000
      Puerto Rico                                            8,000                --           --              --
    Deferred:
      Federal                                              265,000          (63,000)         (5,000)       (116,000)
      State and local                                     (149,000)         (13,000)       (145,000)        (29,000)
      Puerto Rico                                          130,000          (70,000)       (202,000)          --
                                                        -----------   --------------   -------------     ----------
   Total (benefit from) provision for income taxes       $(727,000)     $(3,457,000)    $(1,291,000)     $2,749,000
                                                         ==========     ============    ============     ==========
</TABLE>
Presented  below are the elements which comprise  deferred income tax assets and
liabilities:
<TABLE>
<S>                                                                             <C>                      <C>
                                                                                February 1,             February 3,
                                                                                    1997                 1996
Gross deferred income tax assets:
  Accrued employee benefits deductible
     for tax purposes when paid                                                 $   773,000            $   792,000
  Excess of tax over financial statement
     basis of inventory                                                             923,000              1,060,000
  Accrued retirement benefits deductible
     for tax purposes when paid                                                     502,000                142,000
  Accrued store closing costs deductible
    for tax purposes when paid                                                      634,000                784,000
  State and local net operating loss carryforwards                                  973,000                121,000
  Puerto Rico net operating loss carryforward                                       154,000                284,000
  Miscellaneous                                                                      94,000                302,000
                                                                              --------------          ------------
         Gross deferred income tax assets                                         4,053,000              3,485,000
                                                                                 -----------           -----------

Gross deferred income tax liabilities:
  Excess of financial statement over tax basis
      of property and equipment                                                  (2,422,000)            (1,931,000)
  Miscellaneous                                                                     (60,000)               (91,000)
                                                                              --------------           ------------
       Gross deferred income tax liabilities                                     (2,482,000)            (2,022,000)
                                                                                ------------           ------------
Valuation allowance                                                                (354,000)                --
                                                                               -------------           ------------
Net deferred income tax asset                                                   $ 1,217,000            $ 1,463,000
                                                                                ============           ===========
</TABLE>
The net deferred  income tax asset is  recognized  in the  accompanying  balance
sheets as follows:
<TABLE>
<S>                                                                             <C>                      <C>
                                                                                 February 1,           February 3,
                                                                                   1997                  1996
  Current assets                                                                 $1,935,000             $2,281,000
  Noncurrent liabilities                                                           (718,000)              (818,000)
                                                                               -------------           ------------

  Net deferred income tax asset                                                  $1,217,000             $1,463,000
                                                                                 ===========            ==========
</TABLE>


 
<PAGE>



At February 1, 1997, the Company had net operating loss and credit carryforwards
for state income tax purposes aggregating  approximately $973,000 of tax benefit
which is available to offset future  taxable  income  through  2011.  Management
cannot  be  assured  that  the  deferred  income  tax  asset  related  to  these
carryforwards will be fully utilized before expiration. Accordingly, a valuation
allowance for $354,000 was provided for this deferred tax asset.

In fiscal 1994, the Company's  Puerto Rico subsidiary  generated a net operating
loss of  approximately  $696,000  which is  available to offset  future  taxable
income in Puerto Rico through 2001. As of February 1, 1997, $395,000 of such net
operating loss remains unused and is available to be carried forward. Management
believes  that  scheduled  reversals of temporary  differences  and  anticipated
future taxable  income are  sufficient to realize the remaining  Puerto Rico net
operating  loss.  Accordingly,  no  valuation  allowance  was  provided for this
deferred tax asset.

A  reconciliation  of the  statutory  Federal  income  tax  rate  to the  annual
effective income tax rate follows:
<TABLE>
<S>                                               <C>               <C>                   <C>               <C>
                                                    Fiscal            Transition           Fiscal               Fiscal
                                                    Year Ended       Period Ended        Year Ended           Year Ended
                                                   February 1,       February 3,         December 30,         December 31,
                                                     1997              1996                1995                    1994

      Federal income tax at statutory rate           35.0 %               35.0  %              35.0 %            35.0 %
      State and local income tax, net of Federal
         tax benefit                                  4.6 %                4.2  %               3.2 %             4.5 %
      Puerto Rico net operating loss                     --                 --                  7.8 %             3.4 %
      Tax benefit from carryback of Federal
         Targeted Jobs Tax Credits                       --                 --                  5.9 %               --
      Other, net                                      (3.1)%               (1.2)%             ( 2.2)%            (4.4)%
                                                     -------             --------            --------           -------
                                                      36.5 %              38.0 %               49.7 %            38.5%
                                                     =======             ========            ========           =======
</TABLE>
 NOTE E - Leases

The Company leases its stores under operating  leases with initial terms of five
years with one to two  renewal  option  periods of five years  each.  The leases
generally provide for increased  payments  resulting from increases in operating
costs, common area maintenance costs and property taxes. Substantially all store
leases also  provide  the  Company  with an option to  terminate  the  agreement
without  penalty if certain  conditions are present.  Most of the leases provide
contingent or  percentage  rentals based upon sales volume and others are leased
on a month-to-month basis.

In addition, the Company has operating leases for automobiles,  trucks, trailers
and certain computer and other equipment with one to ten year terms.

Future  minimum  rental  commitments  as of February  1, 1997 for  noncancelable
leases   (including   those  which  may  qualify  for  early   termination)  are
approximately as follows:
<TABLE>
<S>               <C>                           <C>                   <C>                 <C>            
                 Fiscal Year                        Stores                 Other                 Total

                    1997                        $18,679,000            $1,436,000         $ 20,115,000
                    1998                         14,471,000             1,210,000           15,681,000
                    1999                         10,979,000               519,000           11,498,000
                    2000                          6,967,000                53,000            7,020,000
                    2001                          4,018,000                22,000            4,040,000
                    Later                        10,591,000                19,000           10,610,000
                                               ------------         -------------        -------------
                    Total                       $65,705,000            $3,259,000         $ 68,964,000
                                                ===========            ==========         ============

</TABLE>

<PAGE>



Total rental expense for operating leases was as follows:
<TABLE>
<S>                                          <C>                  <C>                <C>              <C>          
                                                  Fiscal            Transition          Fiscal             Fiscal
                                              Year Ended          Period Ended        Year Ended      Year Ended
                                               February 1,           February 3,       December 30,   December 31,
                                                    1997                1996              1995              1994

      Minimum rentals                          $22,061,000          $ 1,792,000       $21,686,000       $16,962,000
      Contingent rentals                         5,103,000              331,000         4,739,000         3,836,000
                                             -------------        -------------     -------------     -------------
                                               $27,164,000          $ 2,123,000       $26,425,000       $20,798,000
                                               ===========          ===========       ===========       ===========
</TABLE>
The Company's  capital leases for certain office equipment and computer software
were calculated using interest rates appropriate at the inception of each lease.
Future minimum lease payments for capitalized  lease  obligations as of February
1, 1997 were as follows:
<TABLE>
<S>                                                                               <C>
      Fiscal Year:
          1997                                                                      $105,000
          1998                                                                       105,000
          1999                                                                        54,000
                                                                                  ----------
      Total minimum obligations                                                      264,000
      Less interest                                                                  (27,000)
                                                                                  -----------
      Present value of net minimum obligations                                       237,000
      Less current portion                                                           (88,000)
                                                                                   ----------
      Long-term obligations at February 1, 1997                                     $149,000
                                                                                   =========
</TABLE>

     NOTE F - Employee Benefits

Stock Option  Plans:  The Company has three stock option plans (the 1991,  1988,
and 1987 Plans) which provide for grants to certain officers, directors, and key
employees  of stock  options to purchase  shares of Common Stock of the Company.
Options  granted under the plans expire ten years from the date of grant and, to
date,  have been  granted at prices not less than the fair  market  value at the
date of grant.  Effective  October 27, 1988, the Board of Directors  retired all
unissued options under the Company's 1987 Plan.  Options canceled  subsequent to
October 27, 1988 under the 1987 Plan are  retired.  Options  canceled  under the
1991 and 1988 Plans are available for  reissuance.  At February 1, 1997, a total
of 304,000 shares of Common Stock were reserved for issuance under the Company's
option plans.

      Effective  April 1995, the Company  adopted the 1995 Director Stock Option
Plan which  provides for annual grants to  non-employee  members of the Board of
Directors.  Such  grants are  immediately  exercisable  on the date of grant and
expire ten years from the date of grant.  At February 1, 1997,  70,000 shares of
Common Stock were  reserved for issuance  under the 1995  Director  Stock Option
Plan.



<PAGE>



      A summary of the  activity in the  Company's  stock  option  plans for the
fiscal year ended February 1,1997, the Transition Period ended February 3, 1996,
the fiscal year ended December 30, 1995 and the fiscal year ended December 31,
1994 is presented below.
<TABLE>
<S>                                     <C>          <C>       <C>          <C>              <C>           <C>             <C>
                                                                   
                                               Fiscal              Transition                          Fiscal              Fiscal  
                                                1996                  Period                         1995                    1994
                                        ---------------------------------------------------- -----------------------     ----------
                                                    Weighted                Weighted                        Weighted       
                                          Number    Average     Number       Average          Number         Average       Number
                                            of      Exercise     of         Exercise            of          Exercise         of
                                         Shares      Price      Shares        Price           Shares          Price        Shares

Outstanding at beginning of period        588,245    $7.84     561,145       $8.11            550,943         $8.45        601,967
Options granted                           234,250    $3.80      31,500       $3.12            108,000         $6.33         77,250
Options exercised                        (100,500)   $3.92         --          --             (29,775)        $3.59        (83,825)
Options canceled                         (166,150)   $8.04      (4,400)      $8.12            (68,023)        $9.99        (44,449)
                                         ---------             --------                       --------
Outstanding at end of period              555,845    $6.79     588,245       $7.84            561,145         $8.11        550,943  
                                        =========             ========                       ========                      =======

Exercisable at end of period              237,015              249,775                        247,175                         --    
                                        =========              =======                       ========

Weighted average fair value of
   options granted during the
   period (see below)                                $1.86                   $1.70                            $3.54           --

</TABLE>
         The  following  table  summarizes   information   about  stock  options
outstanding at February 1, 1997:
<TABLE>
<S>       <C>                                <C>              <C>               <C>            <C>           <C>
                                                          Options Outstanding                Options Exercisable
                                                               Weighted
                                                 Number         Average         Weighted                      Weighted
                Range of                             of       Remaining          Average      Number           Average
                Exercise                          Shares      Contractual        Exercise       of           Exercise
                   Prices                     Outstanding     Life (Years)        Price       Shares           Price

           $  2.75 to $  3.12                   109,500             9.6        $ 2.86         6,900          $  3.09
           $  3.19 to $  4.12                   103,150             8.7        $ 4.06         9,500          $  3.54
           $  4.50 to $  5.83                    96,795             6.9        $ 5.13        77,295          $  5.04
           $  6.25 to $  8.67                    94,650             6.9        $ 6.95        49,800          $  7.13
           $  9.06 to $12.42                    103,600             6.0        $10.90        73,420          $ 10.85
           $14.00 to $19.00                      48,150             7.3        $15.81        20,100          $ 15.77
                                                --------                                     ------
           $  2.75 to $19.00                    555,845             7.6        $ 6.79        237,015         $  8.07
                                                =======                                      =======
</TABLE>

           The Company  applies the  principles  of APB Opinion 25 in accounting
for employee  stock option plans.  Accordingly,  no  compensation  cost has been
recognized in the Company's  financial  statements.  Had compensation  cost been
determined on the basis of SFAS 123, "Accounting for Stock-Based  Compensation,"
compensation  expense would have been recorded based on the estimated fair value
of stock options granted during the fiscal years presented. The total fair value
of stock  options  granted was estimated at $435,000 and $382,000 for the fiscal
years ended February 1, 1997 and December 30, 1995, respectively, based upon the
Black-Scholes option pricing model. The following  weighted-average  assumptions
were used in the  Black-Scholes  option pricing model for stock options granted:
risk- free  interest  rates of  approximately  6.0% and 6.5% for fiscal 1996 and
1995,  respectively,  an expected life of  approximately  one year from the vest
date for fiscal 1996 and 1995 and 65%  expected  volatility  for fiscal 1996 and
1995.  The  expected  life of the stock  options  granted  and the  stock  price
volatility  during the expected  life of the options were  estimated  based upon
historical experience and management's  expectations.  Had compensation cost for
the Company's  stock option plans been  determined  based on the estimated  fair
value at the grant dates for awards under those plans consistent with the method
of SFAS 123,  the  Company's  net loss and net loss per common  share would have
been impacted as indicated in the proforma amounts below.


<PAGE>



<TABLE>
<S>       <C>                                <C>            <C>                          <C>

                                                                              Fiscal Year Ended
                                                                February 1,              December 30,
                                                                   1997                       1995
                                                              ------------               ------------
           Net loss                             Actual        $(1,267,000)               $(1,304,000)
                                                              ============               ============
                                                Proforma      $(1,373,000)               $(1,356,000)
                                                              ============               ============
           Net loss per common share            Actual        $     (0.12)               $     (0.13)
                                                              ============               ============
                                                Proforma      $     (0.13)               $     (0.13)
                                                              ============               ============
</TABLE>
  Retirement  Plan:  The Company has a 401(k) and  profit-sharing  plan, the One
  Price Clothing Stores, Inc. Retirement Plan (the "Plan"). All employees in the
  United  States  who are 21  years of age or  older  with at least  one year of
  service are eligible to participate in the Plan.  Effective  January 1995, the
  Company  increased its  contribution  obligation to 50% of each  participant's
  contribution  with a maximum  contribution of 2.5% of the  participant's  base
  compensation.  Prior to January 1995, the Company was obligated under the Plan
  to make a matching contribution of 25% of each participant's contribution with
  a  maximum  matching   contribution  of  1.25%  of  the   participant's   base
  compensation.  In  addition,  the  Company  may make an  annual  discretionary
  contribution   on  behalf   of  the   participants;   no  such   discretionary
  contributions   have  been  made  by  the  Company.   Employer   contributions
  (approximately $296,000,  $292,000 and $132,000 in fiscal 1996, 1995 and 1994,
  respectively) vest ratably over five years.

  Stock  Purchase Plan:  The Company  adopted a Stock  Purchase Plan,  effective
  March 1995, that allows participating  employees to purchase,  through payroll
  deductions,  shares of the Company's Common Stock at prevailing market prices.
  All  full-time  associates  who are 18 years of age or older with at least six
  months of service are eligible to  participate in the Stock Purchase Plan. The
  Stock  Purchase Plan provides that  participants  may authorize the Company to
  withhold  from net  earnings  and deposit  such  amounts  with an  independent
  custodian.  The custodian  purchases Common Stock of the Company at prevailing
  market prices and distributes the shares  purchased to the  participants  upon
  request. The Company pays expenses associated with the purchases of the Common
  Stock and administration of the Stock Purchase Plan.

  NOTE G -  Related Party Transactions

  In fiscal 1996,  the Company  entered into a deferred  compensation  agreement
  with its Chairman of the Board of Directors and Chief Executive  Officer.  The
  agreement provides for 120 consecutive  monthly payments of $13,750 (including
  interest)  beginning upon the earlier of the date of retirement or death.  The
  estimated present value of the obligation, approximately $970,000, was charged
  to selling, general and administrative expenses in fiscal 1996 and is included
  in other noncurrent liabilities at February 1, 1997.

  The Company also has a deferred compensation agreement with a former executive
   officer who is currently a member of the Company's  Board of  Directors.  The
   agreement  provides  for  monthly  payments   aggregating   $75,000  annually
   (including interest) through July 2002.

  The Company paid approximately  $64,000,  $171,000 and $32,000 in fiscal 1996,
  1995 and 1994,  respectively,  for legal services  provided by the law firm of
  which a Company Director is a member.

<PAGE>

  NOTE H - Shareholders' Equity

  In March 1994, the Company declared a 3-for-2 stock split effected in the form
  of a stock dividend payable April 29, 1994 to shareholders of record as of the
  close of business on April 15, 1994.  Accordingly,  Common Stock  outstanding,
  the weighted  average  number of common and common  equivalent  shares and per
  share amounts were retroactively adjusted to give effect to the stock split.

  The  Company  adopted  a  Shareholders  Rights  Plan in  November  1994.  Each
  shareholder  of record on November  15, 1994 is entitled to one Right for each
  share of Common Stock held on such date.  Each Right  entitles the  registered
  holder to  purchase  from the  Company  one half  share of  Common  Stock at a
  specified  price.  The Rights become  exercisable  only upon the occurrence of
  certain  conditions set forth in the Shareholders  Rights Plan relating to the
  acquisition of 20% or more of the outstanding shares of Common Stock.

  NOTE I - Change in Fiscal Year End

  Beginning  in fiscal  1996,  the Company  changed its fiscal year end from the
  Saturday  nearest  December 31 to the Saturday nearest January 31. This change
  was made to conform the Company's fiscal calendar to the seasonal  patterns it
  experiences,  as well as to enhance  comparability  of its fiscal  quarter and
  annual  results with other retail  companies.  The  Consolidated  Statement of
  Operations  and the  Consolidated  Statement  of Cash Flows for the five- week
  period ended February 3, 1996 are presented in the financial  statements.  For
  comparative  purposes,  the  Condensed  Consolidated  Statement of  Operations
  (Unaudited) and the Condensed Consolidated Statement of Cash Flows (Unaudited)
  for the four-week period ended January 28, 1995, are as follows:

  Condensed Consolidated Statement of Operations (Unaudited)
<TABLE>
<S>                                                                                            <C>  
                                                                                             Four-Week Period
                                                                                                Ended January 28,
                                                                                                           1995

  NET SALES                                                                                          $ 12,173,000
  Cost of goods sold, distribution and buying costs                                                    12,861,000
                                                                                                    -------------
                                                                                                         (688,000)

  Selling, general and administrative expenses                                                          5,042,000
  Store rent and related expenses                                                                       1,792,000
  Depreciation and amortization expense                                                                   297,000
  Interest expense                                                                                         34,000
                                                                                                    -------------
                                                                                                        7,165,000
  Interest income                                                                                           3,000
                                                                                                    -------------
  NET EXPENSES                                                                                          7,162,000
                                                                                                    -------------
  LOSS BEFORE BENEFIT FROM INCOME TAXES                                                                (7,850,000)
  Benefit from income taxes                                                                            (3,061,000)
                                                                                                    --------------
  NET LOSS                                                                                          $  (4,789,000)
                                                                                                    ==============

  NET LOSS PER COMMON SHARE                                                                         $       (0.46)
                                                                                                    ==============
  Weighted average common shares outstanding                                                           10,305,738
                                                                                                    ==============

</TABLE>

 
<PAGE>



  Condensed Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<S>                                                                                                 <C>
                                                                                                 Four-Week Period
                                                                                                Ended  January 28,
                                                                                                     1995
  Net cash used in operating activities                                                             $  (4,864,000)
                                                                                                    --------------
  Net cash used in investing activities - purchases of property and
        equipment                                                                                      (1,664,000)
  Financing activities:
        Net borrowings from revolving credit facility                                                   8,064,000
        Decrease in amount due to related party                                                            (4,000)
        Proceeds from exercise of Common Stock options                                                     11,000
                                                                                                    -------------
               Net cash provided by financing activities                                                8,071,000
                                                                                                    -------------
  Increase in cash and cash equivalents                                                                 1,543,000
  Cash and cash equivalents at beginning of period                                                        362,000
                                                                                                    -------------
  Cash and cash equivalents at end of period                                                        $   1,905,000
                                                                                                    =============
</TABLE>
  To aid in  comparative  analysis,  the  Company  has  elected to  present  the
  unaudited  proforma  results of operations  for the 12 month period (53 weeks)
  ended  February 3, 1996 and the 12 month period (52 weeks)  ended  January 28,
  1995  below.  The  unaudited  proforma  results  presented  for the year ended
  January  28,  1995 do not  reflect  the impact of the  changes  in  accounting
  principles effective in January 1996.

  Condensed Consolidated Statements of Operations (Unaudited)
<TABLE>
<S>                                                                         <C>                     <C>  
                                                                            Proforma                Proforma
                                                                              53 Weeks               52 Weeks
                                                                               Ended                  Ended
                                                                              February 3,           January 28,
                                                                               1996                    1995
                                                                            -------------           -----------
  NET SALES                                                                 $297,541,000              $284,994,000
  Cost of goods sold, distribution and buying costs                          196,987,000               191,490,000
                                                                           --------------            -------------
  GROSS MARGIN                                                               100,554,000                93,504,000
                                                                           --------------           --------------
  Selling, general and administrative expenses                                73,414,000                64,099,000
  Store rent and related expenses                                             25,048,000                20,597,000
  Depreciation and amortization expense                                        4,508,000                 3,665,000
  Interest expense                                                             1,465,000                   302,000
                                                                           --------------           --------------
                                                                             104,435,000                88,663,000
  Interest income                                                                 45,000                    79,000
                                                                           --------------           --------------
  NET EXPENSES                                                               104,390,000                88,584,000
                                                                           --------------            -------------

  (LOSS) INCOME BEFORE INCOME TAXES AND
     CUMULATIVE EFFECT OF CHANGES IN
      ACCOUNTING PRINCIPLES                                                   (3,836,000)                4,920,000
  (Benefit from) provision for income taxes                                   (1,687,000)                1,840,000
                                                                            --------------           -------------
  (LOSS) INCOME BEFORE CUMULATIVE EFFECT
     OF CHANGES IN ACCOUNTING PRINCIPLES                                      (2,149,000)                3,080,000
  Cumulative effect of changes in accounting principles
     net of income tax benefit of $706,000                                    (1,090,000)                    --
                                                                            --------------          --------------
  NET (LOSS) INCOME                                                         $ (3,239,000)           $    3,080,000
                                                                            ==============          ==============
  PER COMMON SHARE AMOUNTS:
  (Loss) income before cumulative effect
      of changes in accounting principles                                   $      (0.21)            $        0.29
  Cumulative effect of changes in accounting principles,
      net of income tax benefit                                                    (0.10)                      --
                                                                            -------------            --------------
  NET (LOSS) INCOME PER COMMON SHARE                                        $      (0.31)            $        0.29
                                                                            =============            ==============

  Weighted average common shares outstanding                                  10,316,471                10,515,237
                                                                            ============              ============
</TABLE>
                                                         

<PAGE>




  NOTE J - Changes in Accounting Principles

  The Financial  Accounting Standards Board ("FASB") issued Statement No. 121
  (SFAS  121), "Accounting for the  Impairment  of  Long-Lived  Assets  and for
  Long-Lived Assets to be Disposed Of." This statement essentially requires that
  when the Company commits to closing specific stores and for other stores which
  may be  impaired, the fixed assets for such  stores  must be  written  down to
  estimated fair market value. The Company's adoption of SFAS 121, required for 
  years beginning after December 15, 1995, resulted in a decrease in net fixed 
  assets of approximately $1,630,000 and a charge of approximately $1,397,000 
  (net of income taxes) which is included in the cumulative effect of changes in
  accounting principles in the Statement of Operations for the Transition 
  Period.

  The  Company  also  elected  to  change  certain  methods  of  accounting  for
  merchandise  inventories  beginning  in the  Transition  Period.  The  Company
  changed from the lower of average  first-in,  first-out  (FIFO) cost or market
  method of  accounting  to the lower of cost  (computed  using the FIFO  retail
  method) or market.  The Company  believes that the FIFO retail method provides
  improved  information for the operation of its business in a manner consistent
  with the  method  used  widely in the  retail  industry.  The  Company is also
  capitalizing into inventory certain  merchandise  acquisition and distribution
  costs to provide a better  matching of revenues and expenses,  particularly in
  interim  periods.  The effect of the change to the FIFO  retail  method was to
  reduce merchandise inventories by approximately $1,207,000,  and the effect of
  capitalizing into inventory certain  merchandise  acquisition and distribution
  costs was to increase  merchandise  inventories by  approximately  $1,698,000.
  These  changes in accounting  for  merchandise  inventories  resulted in a net
  increase in merchandise inventories of approximately $491,000 and a benefit of
  approximately  $307,000  (net  of  income  taxes)  which  is  included  in the
  cumulative  effect of changes in  accounting  principles  in the  Statement of
  Operations for the Transition Period.

  NOTE K -  Quarterly Results (Unaudited)

  The  following is a summary of quarterly (13 weeks)  operations  for the years
  ended  February 1, 1997 and December 30, 1995 (in  thousands  except per share
  data). In management's opinion, the unaudited quarterly information includes
  all adjustments, consisting of normal recurring adjustments, necessary for
  a fair presentation of the information shown.
<TABLE>
<S>                                                         <C>               <C>            <C>           <C>
                                                                                  1996 Quarters Ended
                                                              May 4,            August 3,       November 2,   February 1,
                                                               1996               1996            1996            1997
         Net sales                                           $76,294            $87,450         $63,899        $71,343
         Gross margin                                         28,727             31,220          21,277         24,444
         Net income (loss)                                     1,237              2,940          (2,763)        (2,681)
         Net income (loss) per common share                     0.12               0.28           (0.26)         (0.26)

                                                                                   1995 Quarters Ended
                                                            April 1,           July 1,      September 30,   December 30,
                                                              1995              1995            1995            1995
                                                             ------------------------------------------------------------

         Net sales                                           $54,639           $86,647         $74,307         $79,099
         Gross margin                                         14,572            32,932          24,437          27,447
         Net (loss) income                                    (5,084)            4,314          (1,135)            601
         Net (loss) income per common share                    (0.49)             0.42           (0.11)           0.06
</TABLE>

  Unaudited proforma fiscal 1995 quarterly results (before the cumulative effect
  of the  changes  in  accounting  principles  effective  in  January  1996) are
  presented below (in thousands  except per share data) to reflect the change in
  fiscal year end. Each quarter  consists of 13 weeks except the fourth  quarter
  of 1995 which consists of 14 weeks.  Unaudited  proforma fiscal 1994 quarterly
  results  are also  presented  below (in  thousands  except per share  data) to
  reflect the change in fiscal year.  Each quarter of fiscal 1994 consists of 13
  weeks.


<PAGE>


<TABLE>
<S>                                                        <C>               <C>            <C>               <C>       

                                                                             Fiscal 1995 Quarters Ended - Proforma
                                                           April 29,           July 29,     October 28,       February 3,
                                                              1995               1995            1995               1996
                                                           ----------         ----------    ---------------    ---------
         Net sales                                         $67,722            $86,157         $69,451           $74,211
         Gross margin                                       24,727             31,141          22,712            21,974
         Income (loss) before cumulative effect
           of changes in accounting principles                 667              2,936          (2,276)           (3,476)
         Net income (loss) per common share
           before cumulative effect of changes
           in accounting principles                           0.06               0.28           (0.22)            (0.34)
</TABLE>
<TABLE>
<S>                                                         <C>                 <C>             <C>             <C>     
                                                                       Fiscal 1994 Quarters Ended - Proforma
                                                           April 30,           July 30,      October 29,      January 28,
                                                               1994              1994          1994                 1995
                                                           ----------          --------   --------------      ----------
         Net sales                                          $ 69,504            $ 80,898         $ 61,825       $ 72,767
         Gross margin                                         25,849              27,362           19,311         20,982
         Net income (loss)                                     3,885               3,204           (1,904)        (2,105)
         Net income (loss) per common share                     0.37                0.30            (0.18)         (0.20)
</TABLE>

  In  the  above  presentation,  certain  distribution  and  buying  costs  were
  reclassified  to  cost of  sales  from  selling,  general  and  administrative
  expenses to enhance comparability to fiscal 1996 operating results.

  NOTE L - Effect of New Accounting Pronouncements

  The FASB issued SFAS 128,  "Earnings Per Share,"  effective for periods ending
  after  December 15, 1997.  The new standard  requires a dual  presentation  of
  "basic" and "diluted" EPS on the face of the income statement.  If the Company
  had applied the  principles of SFAS 128 for the fiscal year ended  February 1,
  1997,  weighted  average  shares for basic EPS and diluted EPS would have been
  10,400,789,  the same as that  computed  under APB Opinion No. 15, the current
  EPS accounting standard.



<PAGE>



  ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                 FINANCIAL DISCLOSURE
                  None

  PART III

  ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  On April 1, 1997,  the Company  filed a report on Form 8-K dated April 1, 1997
  to report that Henry D. Jacobs,  Jr., the  Company's  Chairman,  President and
  Chief  Executive  Officer  announced  his  resignation  of  his  positions  as
  President  and Chief  Executive  Officer.  He will continue as Chairman of the
  Board of Directors of the Company. Mr. Larry I. Kelley, formerly President and
  Chief  Executive  Officer of Casual Male Big and Tall, a division of J. Baker,
  Inc., was appointed to the position of President and Chief Executive  Officer,
  effective April 24, 1997.

  The remaining  information  required under this item is incorporated herein by
  reference to the sections  entitled  "Election of  Directors"  and  "Executive
  Officers of the Company" and "Section  16(a)  Beneficial  Ownership  Reporting
  Compliance"  of  the  Company's   definitive   Proxy   Statement  (the  "Proxy
  Statement")  filed with the Securities  and Exchange  Commission in connection
  with the Annual Meeting of Shareholders to be held June 4,1997.

  ITEM 11.       EXECUTIVE COMPENSATION

  The information  required under this item is incorporated  herein by reference
  to the  sections  entitled  "Compensation  Committee  Interlocks  and  Insider
  Participation,"  "Compensation of Executive Officers,"  "Employment  Contracts
  and Deferred  Compensation  Arrangements,"  "Compensation  Committee Report on
  Executive  Compensation,"  "Performance  Graph" and  "Election  of Directors -
  Directors' Fees" of the Proxy Statement.

  ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The information  required under this item is incorporated  herein by reference
  to the sections entitled "Security  Ownership of Certain  Beneficial  Owners,"
  "Election of Directors"  and "Security  Ownership of  Management" of the Proxy
  Statement.

  ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  The information  required in this item is incorporated  herein by reference to
  the  sections  entitled   "Compensation   Committee   Interlocks  and  Insider
  Participation"   and   "Employment   Contracts   and   Deferred   Compensation
  Arrangements" of the Proxy Statement.

  PART IV

  ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
                REPORTS ON FORM 8-K

  (a) 1.   Financial Statements
          The  following financial statements  of One Price  Clothing  Stores,  
          Inc. are included  in Part II, Item 8:  

          Independent  Auditors'  Report

          Consolidated Balance  Sheets as of February 1, 1997,  and February 3,
          1996  

          Consolidated Statements of Operations for the fiscal year ended 
          February 1, 1997, the  Transition  Period ended February 3, 1996, and
          the fiscal years ended December 30, 1995 and December 31, 1994
<PAGE>




          Consolidated  Statements  of  Shareholders'  Equity  for the
          fiscal year ended February 1, 1997,  the  Transition  Period
          ended  February 3, 1996 and the fiscal years ended  December
          30, 1995 and December 31, 1994

          Consolidated  Statements  of Cash Flows for the  fiscal  year
          ended February 1, 1997, the Transition  Period ended February
          3, 1996 and the fiscal  years  ended  December  30,  1995 and
          December 31, 1994

          Notes to Consolidated Financial Statements

  (a) 2.  Financial Statement Schedule

          The following financial statement schedule of One Price Clothing 
          Stores, Inc. is included in Item 14 (d):

                   Schedule II -- Valuation and Qualifying Accounts.

                   Schedules not listed above have been omitted because they are
                   not  applicable  or  the   information  is  included  in  the
                   financial statements or notes thereto.

  (a) 3.  Exhibits including those incorporated by reference:

 Exhibit
 Number          Description

3(a)             Certificate  of  Incorporation  of the  Registrant,  as amended
                 through April 1987: Incorporated by reference to exhibit of the
                 same number to Registrant's Registration Statement on Form S-1,
                 filed April 10, 1987 (File No. 33-13321) ("the S-1").

3(a)(1)          Certificate of Amendment of Certificate of Incorporation of the
                 Registrant:  Incorporated  by  reference to exhibit of the same
                 number to Registrant's  Annual Report on Form 10-K for the year
                 ended January 1, 1994 (File No. 0-15385)("the 1993 Form 10-K").

3(b)             Restated  By-Laws of the  Registrant,  as of July 22,  1992 and
                 amended as of July 20, 1994 and March 14, 1996. Incorporated by
                 reference to exhibit of the same number to Registrant's  Annual
                 Report on Form 10-K for the year ended  December 30, 1995 (File
                 No. 0-15385)("the 1995 Form 10-K").

4(a)             See Exhibits 3(a), 3(a)(1), and 3(b).

4(b)             Specimen of Certificate of the Registrant's Common Stock: 
                 Incorporated by reference to Exhibit 1 to the Registrant's 
                 Registration Statement on Form 8-A filed with the Securities 
                 and Exchange Commission on June 23, 1987 (File No. 0-15385).

4(c)             Shareholder Rights Agreement by and between the Registrant and 
                 Wachovia Bank of North Carolina, N. A. as Rights Agent dated 
                 November 3, 1994:  Incorporated by reference to Exhibit 2 to 
                 the Registrant's Form 8-K filed November 10, 1994 
                 (File No. 0-15385).

4(d)             Loan and Security  Agreement by and between Congress  Financial
                 Corporation  (Southern)  as Lender and the  Registrant  and One
                 Price Clothing of Puerto Rico,  Inc., as Borrowers  dated March
                 25, 1996:  Incorporated  by reference to exhibit of same number
                 to the 1995 Form 10-K.



<PAGE>



4(e)             The Company hereby agrees to furnish to the Commission upon 
                 request of the Commission a copy of any instrument with respect
                 to long-term debt not being registered in a principal amount 
                 less than 10% of the total assets of the Company and its 
                 subsidiaries on a consolidated basis.

 Material Contracts -- Executive Compensation Plans and Arrangements:

10(a)*           Stock Option Plan of the Registrant dated February 20, 1987 and
                 related  forms of  Incentive  and Non-  qualified  Stock Option
                 Agreements:  Incorporated  by reference to Exhibit 10(d) to the
                 S-1.

10(b)*           Stock Option Plan of the Registrant dated December 12, 1988 and
                 related forms of Incentive and Non-qualified Stock Option 
                 Agreements: Incorporated by reference to Exhibit 10(a) to the 
                 Registrant's Annual Report on Form 10-K for the year ended 
                 December 31, 1988 (File No. 0-15385) ("the 1988
                 Form 10-K").

10(c)*           One Price Clothing Stores, Inc. 1991 Stock Option Plan: 
                 Incorporated by reference to Exhibit 10(b) to the Registrant's 
                 Annual Report on Form 10-K for the year ended December 28, 1991
                 (File No. 0-15385) ("the 1991 Form 10-K").

10(d)*           Summary of Officer Bonus Plan: Incorporated by reference to 
                 Exhibit 10 to Registrant's Quarterly
                 Report on Form 10-Q for the quarter ended May 4, 1996 
                 (File No. 0-15385) ("the April 1996 Form 10-Q").

10(e)*           Form of Employment Agreement between Registrant and Henry D. 
                 Jacobs, Jr.: Incorporated by reference to Exhibit 10(j) to the
                 1988 Form 10-K.

10(f)*           Key man term insurance policy, issued February 20, 1993, on the
                 life of Henry D. Jacobs, Jr.:
                 Incorporated by reference to Exhibit 10(g) to the Registrant's
                 Annual Report on Form 10-K for the year ended January 2, 1993 
                 (File No. 0-15385)("the 1992 Form 10-K").

10(g)*           Employment Agreement dated January 16, 1995 and Amendment to 
                 Employment Agreement dated January 20, 1997 between the 
                 Registrant and Stephen A. Feldman.

10(h)*           Disability Income Policy for the benefit of Henry D. Jacobs,
                 Jr.: Incorporated by reference to Exhibit 10(i) to the 1992 
                 Form 10-K.

10(i)*           Agreement dated June 24, 1992 between the Registrant and 
                 Raymond S. Waters: Incorporated by reference to Exhibit 10(l) 
                 to the 1992 Form 10-K.

10(j)*           Directors' Stock Option Plan effective April 19, 1995:  
                 Incorporated by reference to Exhibit 10(m) in to
                 Registrant's Annual Report on Form 10-K for the year ended 
                 December 31, 1994 (File No. 0-15385)("the 1994 Form 10-K").

10(k)*           Amendment Number One to One Price Clothing Stores, Inc. 
                 Director Stock Option Plan dated March 14, 1996: Incorporated 
                 by Reference to Exhibit 10(a) to the April 1996 Form 10-Q.

10(l)*           Employment  Agreement  dated  March 30, 1992 and  Amendment  to
                 Employment   Agreement  dated  February  4,  1997  between  the
                 Registrant and Ronald Swedin.

10(m)*           Employment  Agreement  dated  December  12,  1995  between  the
                 Registrant  and Thomas  Unrine.  Incorporated  by  reference to
                 Exhibit 10(o) to the 1995 Form 10-K.

10(n)*           Agreement dated March 25, 1997 between the Registrant and Henry
                 D. Jacobs, Jr.


<PAGE>



10(o)*           Employment Agreement dated March 26, 1997 between the 
                 Registrant and Larry I. Kelley.

10(p)*           Addendum to Employment Agreement dated March 6, 1997 between 
                 the Registrant and Henry D. Jacobs, Jr.

 Material Contracts -- Other:    None

11               Statement regarding computation of per share earnings

21               Subsidiaries of the Registrant

23               Consent of Deloitte & Touche LLP

27               Financial Data Schedule (electronic filing only)
 ---------------------------------------

* Denotes a management contract or compensatory plan or agreement.

(b)          Reports on Form 8-K.

             On January 22, 1997,  the Company  filed a report on Form 8-K dated
             January  21, 1997 to announce  that the  Company is  expanding  its
             merchandise offering to include other retail price points.

             No other  reports on Form 8-K were  required to be filed during the
             last quarter of the period covered by this report.

             On April 1,  1997,  the  Company  filed a report  on Form 8-K dated
             April 1, 1997 to report that Henry D. Jacobs,  Jr.,  the  Company's
             Chairman,  President  and Chief  Executive  Officer  announced  his
             resignation  of his  positions  as  President  and Chief  Executive
             Officer.  He will continue as Chairman of the Board of Directors of
             the  Company.  Mr. Larry I. Kelley,  formerly  President  and Chief
             Executive  Officer of Casual  Male Big and Tall,  a division  of J.
             Baker,  Inc.,  was appointed to the position of President and Chief
             Executive Officer, effective April 24, 1997.

(c)          Exhibits.

             The  response to this portion of Item 14 is submitted as a separate
             section of this report.

(d)          Financial Statement Schedules.

             The  response to this portion of Item 14 is submitted as a separate
             section of this report.



<PAGE>



 SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) of the Securities  Exchange
 Act of 1934,  the  Registrant  has duly  caused this report to be signed on its
 behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S>                                          <C>
                                              ONE PRICE CLOTHING STORES, INC.

 Date: April 23, 1997                         /s/ Henry D. Jacobs, Jr.
                                               ------------------------
                                               Henry D. Jacobs, Jr.
                                               Chairman of the Board of Directors

 Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  this
 report  has been  signed  below  by the  following  persons  on  behalf  of the
 Registrant and in the capacities and on the dates indicated.

 Date: April 23,  1997                         /s/ Henry D. Jacobs, Jr.
                                               ------------------------
                                               Henry D. Jacobs, Jr.
                                               Chairman of the Board of Directors
                                               (principal executive officer)

 Date: April 23, 1997                          /s/ Stephen A. Feldman
                                               ----------------------
                                               Stephen A. Feldman
                                               Executive Vice President and Chief Financial Officer
                                               (principal financial officer)

 Date: April 23, 1997                          /s/ David F. Bellet
                                               -------------------
                                               David F. Bellet
                                               Director

 Date: April 23, 1997                          /s/ Cynthia R. Cohen
                                               --------------------
                                               Cynthia R. Cohen
                                               Director

 Date: April 23, 1997                          /s/ Charles D. Moseley, Jr.
                                               ---------------------------
                                               Charles D. Moseley, Jr.
                                               Director

 Date: April 23, 1997                          /s/ Laurie M. Shahon
                                               --------------------
                                               Laurie M. Shahon
                                               Director

 Date: April 23, 1997                          /s/ Malcolm L. Sherman
                                               ----------------------
                                               Malcolm L. Sherman
                                               Director

 Date: April 23, 1997                          /s/ James M. Shoemaker, Jr.
                                               ---------------------------
                                               James M. Shoemaker, Jr.
                                               Director

 Date: April 23, 1997                          /s/ Raymond S. Waters
                                               ---------------------
                                               Raymond S. Waters
                                               Director

</TABLE>


<PAGE>





                                         ONE PRICE CLOTHING STORES, INC.
                                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<S>                        <C>                     <C>                          <C>           <C>                  <C>            
         COL. A
                                  COL. B                             COL. C                            COL. D               COL. E

       DESCRIPTION                                                  ADDITIONS
                          Balance at               Charged to                   Charged         Deduction -           Balance
                          Beginning of             Cost &                       to Other-       Describe (1)          at End of
                          Period                   Expenses                     Describe                               Period

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




  YEAR ENDED
  FEBRUARY 1, 1997

  Allowance for
  doubtful accounts                 $233,000            $685,000                                $774,000               $144,000
                                    ========            ========                                ========               ========

  Valuation allowance 
  for deferred income
  tax assets                            --              $354,000                                     --                $354,000
                                                        ========                                                       ========
  TRANSITION
  PERIOD ENDED
  FEBRUARY 3, 1996

  Allowance for
  doubtful accounts                 $205,000            $108,000                                $ 80,000               $233,000
                                    ========            ========                                ========               ========

  YEAR ENDED
  DECEMBER 30, 1995

  Allowance for
  doubtful accounts                 $189,000            $607,000                                $591,000               $205,000
                                    ========            ========                                ========               ========


  YEAR ENDED
  DECEMBER 31, 1994

  Allowance for
  doubtful accounts                 $135,000            $822,000                                $768,000               $189,000
                                    ========            ========                                ========               ========
</TABLE>





  (1) Write-offs charged against the allowance for returned customer checks



<PAGE>



                                                ONE PRICE CLOTHING STORES, INC.
                                                         EXHIBIT INDEX

<TABLE>
<S>          <C>

  Exhibit
  Number     Description

  3(a)       Certificate of Incorporation of the Registrant,  as amended through
             April 1987: Incorporated by reference to exhibit of the same number
             to Registrant's Registration Statement on Form S-1, filed April 10,
             1987 (File No. 33-13321) ("the S-1").

3(a)(1)      Certificate  of Amendment of Certificate  of  Incorporation  of the
             Registrant: Incorporated by reference to exhibit of the same number
             to  Registrant's  Annual  Report  on Form  10-K for the year  ended
             January 1, 1994 (File No. 0-15385)("the 1993 Form 10-K").

3(b)         Restated By-Laws of the Registrant, as of July 22, 1992 and amended
             as of July 20, 1994 and March 14, 1996.  Incorporated  by reference
             to exhibit of the same number to Registrant's Annual Report on Form
             10-K for the year ended  December 30, 1995 (File No.  0-15385)("the
             1995 Form 10-K").

4(a)         See Exhibits 3(a), 3(a)(1), and 3(b).

4(b)         Specimen of Certificate of the Registrant's Common Stock: Incorporated
             by reference to Exhibit 1 to the Registrant's Registration Statement 
             on Form 8-A filed with the  Securities  and Exchange  Commission  on 
             June 23, 1987 (File No. 0-15385).

4(c)         Shareholder Rights Agreement by and between the Registrant and 
             Wachovia Bank of North Carolina, N. A. as Rights Agent dated 
             November 3, 1994:  Incorporated by reference to Exhibit 2 to the 
             Registrant's Form 8-K filed November 10, 1994 (File No. 0-15385).

4(d)         Loan and  Security  Agreement  by and  between  Congress  Financial
             Corporation  (Southern) as Lender and the  Registrant and One Price
             Clothing of Puerto Rico,  Inc., as Borrowers  dated March 25, 1996:
             Incorporated  by  reference  to exhibit of same  number to the 1995
             Form 10-K.




<PAGE>



4(e)         The Company hereby agrees to furnish to the Commission upon request
             of  the  Commission  a copy  of  any  instrument  with  respect  to
             long-term debt not being registered in a principal amount less than
             10% of the total  assets of the Company and its  subsidiaries  on a
             consolidated basis.

 Material Contracts -- Executive Compensation Plans and Arrangements:

10(a)*       Stock  Option Plan of the  Registrant  dated  February 20, 1987 and
             related  forms  of  Incentive  and  Non-  qualified   Stock  Option
             Agreements: Incorporated by reference to Exhibit 10(d) to the S-1.

10(b)*       Stock  Option Plan of the  Registrant  dated  December 12, 1988 and
             related  forms  of  Incentive  and  Non-  qualified   Stock  Option
             Agreements:  Incorporated  by  reference  to  Exhibit  10(a) to the
             Registrant's Annual Report on Form 10-K for the year ended December
             31, 1988 (File No. 0-15385) ("the 1988 Form 10-K").

10(c)*       One Price Clothing Stores, Inc. 1991 Stock Option Plan: Incorporated by reference to Exhibit 10(b) to the
             Registrant's Annual Report on Form 10-K for the year ended December 28, 1991 (File No. 0-15385) ("the
             1991 Form 10-K").

10(d)*       Summary of Officer Bonus Plan: Incorporated by reference to Exhibit 10 to Registrant's Quarterly Report
             on Form 10-Q for the quarter ended May 4, 1996 (File No. 0-15385) ("the April 1996 Form 10-Q").

10(e)*       Form of Employment Agreement between Registrant and Henry D. Jacobs, Jr.: Incorporated by reference
             to Exhibit 10(j) to the 1988 Form 10-K.

10(f)*       Key man term insurance policy, issued February 20, 1993, on the life of Henry D. Jacobs, Jr.:
             Incorporated by reference to Exhibit 10(g) to the Registrant's Annual Report on Form 10-K for the year
             ended January 2, 1993 (File No. 0-15385)("the 1992 Form 10-K").

10(g)*       Employment Agreement dated January 16, 1995 and Amendment to Employment Agreement dated
             January 20, 1997 between the Registrant and Stephen A. Feldman.

10(h)*       Disability Income Policy for the benefit of Henry D. Jacobs, Jr.: Incorporated by reference to Exhibit 10(I)
             to the 1992 Form 10-K.

10(i)*       Agreement dated June 24, 1992 between the Registrant and Raymond S. Waters: Incorporated by
             reference to Exhibit 10(l) to the 1992 Form 10-K.

10(j)*       Directors' Stock Option Plan effective April 19, 1995:  Incorporated by reference to Exhibit 10(m) in to
             Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 0-15385)("the
             1994 Form 10-K").

10(k)*       Amendment Number One to One Price Clothing Stores, Inc. Director Stock Option Plan dated March 14,
             1996: Incorporated by Reference to Exhibit 10(a) to the April 1996 Form 10-Q.

10(l)*       Employment   Agreement  dated  March  30,  1992  and  Amendment  to
             Employment  Agreement dated February 4, 1997 between the Registrant
             and Ronald Swedin.

10(m)*       Employment Agreement dated December 12, 1995 between the Registrant
             and Thomas  Unrine.  Incorporated  by reference to Exhibit 10(o) to
             the 1995 Form 10-K.

10(n)*       Agreement dated March 25, 1997 between the Registrant and Henry D. Jacobs, Jr.

10(o)*       Employment Agreement dated March 26, 1997 between the Registrant and Larry I. Kelley.



<PAGE>



10(p)*       Addendum to Employment Agreement dated March 6, 1997 between the Registrant and Henry D. Jacobs,
             Jr.

 Material Contracts -- Other:     None

11           Statement regarding computation of per share earnings

21           Subsidiaries of the Registrant

23           Consent of Deloitte & Touche LLP

27           Financial Data Schedule (electronic filing only)
 ---------------------------------------

* Denotes a management contract or compensatory plan or agreement.

(b)          Reports on Form 8-K.

             On January 22, 1997,  the Company  filed a report on Form 8-K dated
             January  21, 1997 to announce  that the  Company is  expanding  its
             merchandise offering to include other retail price points.

             No other  reports on Form 8-K were  required to be filed during the
             last quarter of the period covered by this report.


             On April 1,  1997,  the  Company  filed a report  on Form 8-K dated
             April 1, 1997 to report that Henry D. Jacobs,  Jr.,  the  Company's
             Chairman,  President  and Chief  Executive  Officer  announced  his
             resignation  of his  positions  as  President  and Chief  Executive
             Officer.  He will continue as Chairman of the Board of Directors of
             the  Company.  Mr. Larry I. Kelley,  formerly  President  and Chief
             Executive  Officer of Casual  Male Big and Tall,  a division  of J.
             Baker,  Inc.,  was appointed to the position of President and Chief
             Executive Officer, effective April 24, 1997.

(c)          Exhibits.

             The  response to this portion of Item 14 is submitted as a separate
section of this report.

(d)          Financial Statement Schedules.

             The  response to this portion of Item 14 is submitted as a separate
section of this report.

</TABLE>
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