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 January 31, 1998
                                       OR
| | Transition Report Pursuant To Section 13 or 15(d) Of The Securities Exchange
    Act of 1934 (No Fee Required)For the transition period from

    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:

                   Common Stock, $0.01 Par Value
                          (Title of Class)

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. [x]

The aggregate market value of the voting stock held by non-affiliates of the 
registrant as of April 17, 1998: Common Stock, $0.01 Par Value - $13,871,245

The number of shares  outstanding of the issuer's  classes of common stock as of
April 17, 1998: Common Stock, $0.01 Par Value - 10,435,531 shares

DOCUMENTS INCORPORATED BY REFERENCE
Portions  of the  proxy  statement  to be  filed  with  respect  to  the  annual
shareholders meeting to be held June 10, 1998 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.
During fiscal 1997, the Company  expanded its  merchandise  offerings to include
additional categories and styles of merchandise to be sold at price points other
than its previous  uniform $7 price point.  This  merchandise  mix expansion was
designed to meet customer demand for items that the Company could not profitably
offer for sale at a retail  price of $7. 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.

Company History and Organization

The Company  opened its first  store in August  1984.  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. On
January 31, 1997, a wholly-owned  subsidiary of the Company,  One Price Clothing
-- U.S. Virgin Islands,  Inc. was  incorporated in the U. S. Virgin Islands.  It
commenced  operations  on March  20,  1997.  On June 11,  1997,  a  wholly-owned
subsidiary,  One Price Realty, Inc. was incorporated in South Carolina,  to hold
title to the Company's Home Office and Distribution Center facilities in Duncan,
South Carolina.  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. to One Price Clothing of Puerto Rico,
Inc., to One Price Clothing - U.S. Virgin Islands, Inc. and to One Price Realty,
Inc.

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 and the U.S.
Virgin Islands,  the Company had no operations  outside the  continental  United
States at the end of fiscal 1997 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.  Prior to fiscal 1997, this merchandise was
offered at the uniform retail price of $7. The Company  currently offers most of
its  merchandise  at or below $7 and offers  certain  additional  categories and
styles prices  higher than $7 when such  merchandise  is clearly  desired by the
Company's customers. Such higher priced merchandise is offered primarily at $10.
A limited  number of items  will be priced  at $12 and $15.  This  expansion  of
merchandise  categories  at prices  higher  than $7 is  referred  to within  the
Company as its "Expanded Price Program" or "EPP."

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 these  marks 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 those
stores with Spanish-speaking customers.

The One Price Store. The Company's typical store has approximately  3,300 square
feet, of which  approximately 2,450 square feet is devoted to selling space. The
Company's  current  strategy  is to open  stores  larger  than this  average and
expects to continue the trend. All of the Company's stores are located in leased
facilities with convenient access to adequate parking or public  transportation.
At January 31, 1998,  approximately  80% 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 regional and district sales managers. Each regional
sales manager is responsible for approximately 8 districts.  Each district sales
manager is responsible for  approximately 11 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.

Store  Locations and Expansion.  At January 31, 1998,  the Company  operated 660
stores in 27 states,  the District of Columbia,  Puerto Rico and the U.S. Virgin
Islands.  The  Company  opened 64  stores,  relocated  13 stores  and  closed 49
underperforming  stores in fiscal 1997. The Company will limit the number of new
store  openings in fiscal  1998 to those for which the Company is  contractually
obligated. The Company will close the remainder of the 75 underperforming stores
originally  identified in its  restructuring  plan described in Items 7 and 8 of
this document.  Approximately 30 such underperforming  stores were closed during
January  1998.  The Company will also limit the number of stores it relocates in
fiscal 1998.

Purchasing. The Company's practice is to offer value to its customers by selling
desirable,  first quality  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 1997, the Company  purchased  merchandise from  approximately  750
vendors,  including  manufacturers,  jobbers,  importers and other  vendors.  No
vendor  accounted  for more than 10% of the  Company's  total  purchases for the
fiscal year. The number of vendors in any particular  fiscal year fluctuates due
to the Company's opportunistic buying strategy.

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 (including those based in the
Company's New York City office), regional directors of real estate, district and
regional sales managers, loss prevention investigators and field audit personnel
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.  Accessory sales as a
percentage  of net sales were 12%in both  fiscal 1997 and 1996 and 11% in fiscal
1995,  respectively.  Sales of children's  clothing as a percentage of net sales
were 8% in both fiscal  1997 and 1996 and 9% in fiscal  1995,  respectively.  In
fiscal 1997,  the Company began  offering  additional  categories of merchandise
such as jeans,  silk jogging sets,  sweaters and heavier jackets at price points
other than its previous uniform $7 retail price point. In addition,  the Company
adjusted its base prices in Puerto Rico and the U.S. Virgin Islands to $8. Also,
the base price for plus-sized  apparel in the United States was adjusted  upward
to $8.

Inventory Monitoring.  The Company's management  information systems,  featuring
point-of-sale  cash registers and a computerized  inventory  management  system,
permit  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.

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.

Seasonality

The  Company's  sales and operating  results are  seasonal.  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. The 1997 and 1996 fiscal
years 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.
However,  management is developing  merchandise  strategies that should increase
sales volume in the third and fourth quarters.

Working Capital Requirements

The Company's  revolving  credit  facility,  which provides up to $37,500,000 of
borrowing  capacity  (including  a  letter  of  credit  sub-facility  of  up  to
$25,000,000),   expires  in  March  2001.  Borrowings  under  the  facility  are
collateralized  by all  assets  owned  by the  Company  during  the  term of the
agreement   (other  than  the  land,   building,   fixtures   and   improvements
collateralizing  the mortgage loan  discussed  below).  During fiscal 1997,  the
Company repaid the term loan portion of its primary credit  facility and entered
into a  twenty-year  mortgage  agreement  with a commercial  bank of  $8,125,000
secured  by  the  land,  building,  fixtures  and  improvements  located  at the
Company's Duncan,  South Carolina Corporate Office and Distribution Center. Also
during fiscal 1997, the Company entered into an agreement with a commercial bank
to provide an additional  letter of credit  facility of up to  $3,000,000.  This
agreement was recently amended to extend the term of the agreement  through June
1999. These lending  agreements contain certain covenants and terms described in
Items 7 and 8 of this report.

Merchandise  inventories  are  typically  purchased  on credit or,  for  certain
merchandise inventories from foreign suppliers, by the use of letters of credit.
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 certain major credit cards. All stores offer a liberal
exchange  and return  policy.  A reserve for  estimated  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.

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 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,  fashion content,  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 January 31, 1998, the Company had  approximately  4,300  employees,  of which
approximately 49% 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  including,  but not limited to,  statements
containing   the  words   "believe,"   "anticipates,"   "expects,"  and  similar
expressions, 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 fiscal 1998 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  alternative  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;  credit  availability,  including
adequate levels of credit support  provided to certain of the Company's  vendors
by  factors  and  insurance   companies;   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.

ITEM 2.     PROPERTIES

The Company leases all of its store locations.  At January 31, 1998, the Company
had 660 stores operating in 27 states, the District of Columbia, Puerto Rico and
the U. S. Virgin Islands.  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  and/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  80 existing store leases expire or have
initial lease terms containing  lessee renewal  options,  which may be exercised
during fiscal 1998.  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 as of January 31, 1998:
<TABLE>
<S> <C>                                                                                                       <C>
                                                                                                              NUMBER OF
    STATE                                                                                                      STORES
    Alabama................................................................................................      14
    Arizona ..................................................................................................   11
    Arkansas .................................................................................................    5
    California ...............................................................................................   65
    Florida ..................................................................................................   64
    Georgia ..................................................................................................   37
    Illinois .................................................................................................   32
    Indiana ..................................................................................................   10
    Kansas ...................................................................................................    3
    Kentucky .................................................................................................    8
    Louisiana ................................................................................................   18
    Maryland .................................................................................................   17
    Michigan .................................................................................................   17
    Mississippi ..............................................................................................   12
    Missouri .................................................................................................   18
    North Carolina ...........................................................................................   36
    New Jersey ...............................................................................................    8
    New Mexico ...............................................................................................    7
    New York .................................................................................................   14
    Ohio .....................................................................................................   21
    Oklahoma .................................................................................................    8
    Pennsylvania .............................................................................................   25
    Puerto Rico ..............................................................................................   30
    South Carolina ...........................................................................................   33
    Tennessee ................................................................................................   24
    Texas ....................................................................................................   92
    U.S. Virgin Islands ......................................................................................    2
    Virginia .................................................................................................   21
    Washington, DC ...........................................................................................    2
    Wisconsin ................................................................................................    6
    TOTAL STORES..............................................................................................  660
</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
mortgage loan facility are secured by the Company's real property located at its
corporate  offices  including  land,   buildings,   fixtures  and  improvements.
Borrowings under the credit agreement with the primary lender are collateralized
by all assets owned by the Company  during the term of the agreement  other than
the land, building, fixtures and improvements collateralizing the mortgage loan.

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, 1998,  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,  debt  repayment 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>                   <C>

                                                          Fiscal Year Ended                        Fiscal Year Ended
                                                               January 31,                               February 1,
                                                                 1998                                       1997
                                                        ---------------------------          --------------------------
                                                        High               Low               High                 Low

     First ........................................     4 1/2              3 1/8             4 3/4                2 3/4
     Second ...................................         4 7/8              3 5/16            6 1/8                3 7/8
     Third ......................................       3 5/8              3                 4 1/2                2 7/8
     Fourth ....................................        3 1/8              1 1/8             3 3/4                2 1/2
</TABLE>

ITEM 6.  SELECTED FINANCIAL DATA

The following table presents selected financial data for the Company for each of
the five fiscal years ended January 1, 1994 through January 31, 1998,  including
the 5-week period ended February 3, 1996 ("the  Transition  Period"),  resulting
from the Company's  change in fiscal year end. 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>    
                                                                            Transition
                                                   Fiscal Year Ended   Period Ended      Fiscal Year Ended
                                                  January    February    February 3,   December     December    January 1,
                                                     31,         1,                       30,          31,
                                                     1998       1997        1996         1995         1994         1994
                                                  ---------------------- ------------ ------------ ------------------------
    Dollars in thousands except per share
    amounts

  1 Net sales                                   $    302,285    298,986       15,022      294,692      283,326     234,698
  2 Restructuring charge                        $      2,265         --           --           --           --          --
  3 (Loss) income before income taxes and
    cumulative effect of changes in accounting
    principles                                  $    (13,493)    (1,994)      (9,091)      (2,595)        7,138      13,959
  4 (Loss) income before cumulative effect of
    changes in accounting principles            $    (11,320)    (1,267)      (5,634)      (1,304)        4,389       8,724
  5 Cumulative effect on prior years of changes
     in accounting principles                   $         --         --       (1,090)          --            --          --
  6 Net  (loss) income                          $    (11,320)    (1,267)      (6,724)      (1,304)        4,389       8,724
  7 Current assets                              $     48,331     61,891       52,517       35,990        31,252      35,336
  8 Long-term assets                            $     39,781     39,076       41,663       43,374        36,678      28,865
  9 Total assets                                $     88,112    100,967       94,180       79,364        67,930      64,201
 10 Current liabilities                         $     44,080     48,722       40,669       18,594        13,035      14,798
 11 Long-term debt                              $      7,915      4,868        6,447        6,579            --          --
 12 Deferred income taxes                       $         --        718          818        1,482         1,449       1,166
 13 Other noncurrent liabilities                $      3,095      2,317        1,089          828           372         411
 14 Shareholders' equity                        $     33,022     44,342       45,157       51,881        53,074      47,826
 15 Stores opened (closed) during the period,   #        
    net                                                   15        (43)         (13)          60           101          94
 16 Stores operating at period-end              #        660        645          688          701           641         540
 17 Number of employees                         #      4,269      4,105        4,574        4,841         4,907       4,199
 18 Weighted average common shares (000) -    
     diluted                                    #     10,436     10,401       10,335       10,314        10,527      10,484
 19 Common shares outstanding at period-end     
     (000)                                      #     10,436     10,436       10,335       10,335        10,305      10,221
 20 Diluted (loss) income per common share
     before cumulative effect of changes in         
     accounting principles                             (1.08)     (0.12)       (0.55)      (0.13)          0.42        0.83
 21 Cumulative effect on prior years per common
    share of changes in accounting principles   $         --         --        (0.10)          --            --         --
 22 Diluted net (loss) income per common share  $      (1.08)     (0.12)       (0.65)      (0.13)          0.42        0.83
 23 Cash dividends declared per common share    $         --         --           --           --            --          --

</TABLE>

    Notes to Selected Financial Data

    Line Definitions
   17 Number of employees -- Number of full and part-time employees at year-end.

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").

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 accounting  standard  (SFAS 121) relating to long-lived  assets.
The cumulative effect of these changes in accounting methods was included in the
Transition Period.

FINANCIAL SUMMARY

The following  table sets forth,  for the three most recent fiscal years and for
the Transition  Period,  certain  financial  statement  elements  expressed as a
percentage of net sales:
<TABLE>
<S>  <C>                                                       <C>               <C>                <C>               <C>    

                                                                                                 Transition           Fiscal
                                                                      Fiscal Year                  Period              Year
                                                                           Ended                   Ended              Ended
                                                                 Jan. 31,        Feb. 1,           Feb. 3,           Dec. 30,
                                                                  1998           1997               1996               1995
                                                               -----------    ---------          ----------         ---------
     PERCENT OF NET SALES:
     Net sales                                                    100.0%           100.0%            100.0%            100.0%
     Cost of goods sold, distribution and
        buying costs                                               66.8%            64.7%             96.8%             66.3%
                                                                 -------         --------          --------           -------
     Gross margin                                                  33.2%            35.3%              3.2%             33.7%
                                                                 -------         --------          --------           -------
     Selling, general and administrative expenses                  25.8%            25.3%             46.3%             24.3%
     Restructuring charge                                           0.7%               --                --                --
     Store rent and related expenses                                8.7%             8.6%             13.5%              8.4%
     Depreciation and amortization expense                          1.7%             1.6%              2.7%              1.5%
     Interest expense, net                                          0.7%             0.6%              1.2%              0.4%
                                                                 -------         --------          --------          --------
     Net expenses                                                  37.6%            36.0%             63.7%             34.6%
                                                                 -------         --------          --------          --------
     Loss before income taxes and
       cumulative effect of changes in accounting
       principles                                                  (4.4)%           (0.7)%           (60.5)%           (0.8)%
     Benefit from income taxes                                     (0.7)%           (0.3)%           (23.0)%           (0.4)%
                                                                 --------          -------           -------         --------
     Loss before cumulative effect
       of changes in accounting principles                         (3.7)%           (0.4)%           (37.5)%           (0.4)%
     Cumulative effect of changes in
       accounting principles, net of income tax
       benefit                                                        --              --              (7.3)%              --
                                                                 --------          -------           -------         --------
     Net loss                                                      (3.7)%           (0.4)%           (44.8)%           (0.4)%
                                                                 =======           =======           =======         ========

     Stores in operation at period-end                              660              645               688               701
                                                                 =======           =======           =======          =======

</TABLE>

FISCAL YEAR ENDED JANUARY 31, 1998 (FISCAL 1997) COMPARED TO FISCAL YEAR ENDED 
FEBRUARY 1, 1997 (FISCAL 1996)

Net sales in fiscal  1997  increased  1% to $302.3  million  compared  to $299.0
million in fiscal  1996.  This  increase in net sales is  primarily  due to more
stores being in operation,  on average, during fiscal 1997 as compared to fiscal
1996. In fiscal 1997,  comparable store sales decreased 1% for the year compared
to fiscal  1996.  Comparable  stores are those  stores in  operation at least 18
months.

The Company opened 64 stores during fiscal 1997,  relocated 13 stores and closed
49  underperforming  stores.  The company  opened 23 stores  during fiscal 1996,
relocated 11 stores and closed 66 underperforming stores.

During fiscal 1997, the Company implemented its previously announced strategy to
offer  additional  categories  of  merchandise  at price  points  other than its
traditional $7 retail price. However, during the implementation of this strategy
(which is  referred  to within the Company as its  "Expanded  Price  Program" or
"EPP"),   management  believes  that  the  Company  confused  its  customers  by
introducing  too many items at price  points  higher than its  previous $7 price
point.  In addition,  these  higher  priced items were offered at too many price
points.  This  combination  of too many  higher  priced  items at too many price
points  had  a  negative   effect  on  markdowns   and   selling,   general  and
administrative  ("SG&A") expenses as discussed below.  During the fourth quarter
of fiscal 1997, the Company adjusted its pricing and  merchandising  strategy by
increasing  the  portion  of its  merchandise  priced at $7 or less.  Also,  the
Company established clear policies to limit its higher price point items to only
that  merchandise  which  has  been  determined  to be  clearly  desired  by its
customers and cannot be offered for $7, thus focusing its merchandising strategy
on  quality,  value and  selection.  Such  higher  priced  items will be offered
primarily at $10. A limited number of items will be priced at $12 and $15.

In response to lower than expected  operating  results,  the Company announced a
restructuring  plan during the fourth  quarter of fiscal 1997. The plan includes
initiatives  which are  designed  to return  the  Company  to  profitability  by
lowering  operating costs,  redeploying  assets and curtailing the number of new
store openings  until the Company's  existing  stores are operating  profitably.
Under the restructuring plan the Company will close approximately 75 low-volume,
underperforming  stores and eliminate  approximately 300 positions.  The Company
recorded a one-time  charge of  $2,265,000  during the fourth  quarter of fiscal
1997 to cover costs  associated  with the plan.  The total charge of  $2,265,000
includes  costs to close stores,  such as the noncash  write-off of fixed assets
and store supplies of $1,378,000,  lease buyouts of approximately  $398,000, and
employee  severance,  outplacement  costs and other  miscellaneous  expenses  of
approximately  $489,000.  These initiatives,  in the aggregate,  are expected to
result in future annualized cost savings of approximately $6.5 million.

Gross margin as a percentage  of net sales was 33.2% in fiscal 1997  compared to
35.3% in fiscal 1996. This decrease in gross margin as a percentage of net sales
primarily  resulted from a significantly  higher level of markdowns taken during
fiscal 1997.  Higher levels of markdowns  were taken during the third quarter of
fiscal  1997 in an  effort  to  clear  transitional  merchandise  which  was not
"fashion right." Higher levels of markdowns were taken during the fourth quarter
of fiscal 1997 in order to clear  inventory as part of the Company's  initiative
to  aggressively  close  underperforming  stores and to adjust  price  points in
certain merchandise  downward as part of the Company's strategy to offer most of
its merchandise at $7 or under.

SG&A expenses as a percentage of net sales were 25.8% in fiscal 1997 compared to
25.3% in fiscal 1996.  When expressed as a percentage of net sales,  home office
and store  operating  costs  increased.  SG&A  expenses in dollars on an average
store basis  increased 5%. These  increases  resulted  primarily  from increased
marketing  costs as a result of producing  in-store signs and posters to promote
the new  merchandising  strategy  and to display  the many new price  points and
increased  equipment lease costs in the Company's home office.  Average salaries
and wages in the Company's stores increased 6% in fiscal 1997 compared to fiscal
1996. This increase,  affecting  primarily part-time  associates,  was due to an
increase in average  store hours and to  increases  in the Federal  Minimum Wage
which were effective in October 1996 and September 1997.  Management allocated a
higher  number of average  payroll  hours per store in fiscal  1997  compared to
fiscal 1996 because management believed  introduction of the higher price points
would necessitate additional training and a higher level of customer service. In
fiscal 1998,  management  intends to focus on process  changes which will aid in
reducing the rate of increase in store labor costs.

Store rent and related expenses as a percentage of net sales were 8.7% in fiscal
1997 compared to 8.6% in fiscal 1996.  Average  store rent and related  expenses
increased  5% in fiscal  1997  compared  to  fiscal  1996  primarily  due to the
continuation  of the  Company's  store  expansion  strategy  of  increasing  the
proportion of larger, 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 per square foot will continue. The Company has approximately
80 existing  leases that expire or have initial  lease terms  containing  lessee
renewal options which may be exercised during fiscal 1998.  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 1.7% of net sales in  fiscal  1997
compared to 1.6% of net sales in fiscal 1996. This increase in depreciation  and
amortization  expense resulted  primarily from fixed asset additions  associated
with new store openings in fiscal 1997 and to software upgrades in the Company's
home office.

Net  interest  expense was 0.7% of net sales in fiscal 1997  compared to 0.6% of
net sales in fiscal 1996. This increase in net interest  expense resulted from a
combination  of slightly  higher  average  borrowings  and a 0.5% higher average
borrowing rate in fiscal 1997 compared to fiscal 1996.

The  effective  income tax benefit  rate for fiscal  1997 was 16.1%  compared to
36.5% in fiscal 1996. This decrease was primarily  attributable to the recording
of  valuation   allowances   related  to  the  Company's  tax  loss  and  credit
carryforwards  in fiscal 1997.  Management  estimates  the  Company's  effective
income tax rate will be approximately 40% in fiscal 1998; however, if sufficient
levels of  profitability  are not achieved,  the  effective  income tax rate may
increase significantly.

OUTLOOK

Sales  trends thus far in fiscal 1998  through the Easter  holiday are  modestly
ahead of fiscal 1998  planned  levels  through the  corresponding  time  period.
Management  believes this trend is, in part, due to  improvements in the women's
apparel  industry  as a  whole,  as  well  as to an  improved  execution  of its
merchandising strategy of emphasizing value and quality. During fiscal 1998, the
Company  intends to focus its efforts on improving  sales in existing stores and
achieving its margin and cost-containment targets.

Average store rent and related  expenses are expected to increase in fiscal 1998
due to the  structure of leases on stores  opened in fiscal 1997 and the closing
of older,  low-volume  stores.  Management will seek to leverage these increases
through improved average store sales volumes.

As part of its  strategy to focus on  improving  sales in existing  stores,  the
Company will limit the number of new store  openings in fiscal 1998 to those for
which the Company is contractually  obligated.  The Company will close in fiscal
1998 the remainder of the 75 underperforming stores originally identified in the
restructuring  plan.  Approximately 30 such  underperforming  stores were closed
during January 1998.


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. 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 also  capitalizes  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.

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
1% for the year compared to adjusted fiscal 1995.

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. In fiscal 1996, eleven stores were relocated compared to 14 relocations in
fiscal 1995.

Gross margin as a percentage  of net sales was 35.3% in fiscal 1996  compared to
33.7% in fiscal 1995. This increase in gross 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.

Store  rent  expense  as a  percentage  of net sales  were  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.

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.

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.  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.

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 two-year
agreement. In fiscal 1997, the Company extended the maturity date of its primary
credit  facility  and  replaced a portion of this  facility  with a  twenty-year
mortgage  which,  together  with cash provided by operations is expected to meet
liquidity and capital needs during the period of the agreement.

In May and June 1997 and  February  1998,  the  Company  amended  its  financing
arrangements  with its  primary  lender.  Considered  together,  the  amendments
provide a  three-year  extension  through  March 2001 and  continue to provide a
revolving  credit  facility of up to  $37,500,000  (including a letter of credit
sub-facility of up to $25,000,000).  Under the June 1997 amendment,  the Company
was permitted to enter into a mortgage  loan  agreement  with a commercial  bank
(discussed  further  below) and the term loan portion of the agreement  with the
primary  lender  was  repaid.  Under the May 1997  amendment,  the term loan was
increased by approximately $1,450,000 to $7,500,000.

Borrowings under the credit agreement with the primary lender are collateralized
by all assets owned by the Company during the term of the agreement  (other than
the land, building, fixtures and improvements  collateralizing the mortgage loan
discussed below) 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.  The amended agreement provides for a temporary  adjustment to
the lending  formula to increase the  borrowing  availability  during the period
January 30, 1998 through June 30, 1998.  Availability under the revolving credit
facility  fluctuates in accordance  with the  Company's  seasonal  variations in
inventory  levels.  At January 31,  1998,  the Company  had  approximately  $5.4
million of excess  availability  under the revised  borrowing base formula.  The
lending  formula may be revised  from time to time in response to changes in the
composition of the Company's inventory or other business conditions.

The Company's  amended  revolving  credit agreement  contains certain  covenants
which,  among  other  things,  restrict  the  ability  of the  Company  to incur
indebtedness,  or encumber or dispose of assets,  and  prohibit the Company from
repurchasing  its Common Stock or paying  dividends.  The Company is required to
maintain a $5,000,000 minimum level of working capital and to maintain a minimum
adjusted net worth (as defined in the  agreement).  Effective  January 30, 1998,
such minimum net worth  requirement was reduced from $34,000,000 to $25,000,000.
The Company was in compliance with these covenants at January 31, 1998.

In May 1997,  the Company  entered into an agreement  with a commercial  bank to
provide a letter of  credit  facility  of up to  $3,000,000.  Letters  of credit
issued under the agreement are  collateralized  by inventories  purchased  using
such letters of credit.  In March 1998,  the agreement was amended to adjust the
Company's  minimum net worth  requirement  to the same level as that required by
the Company's primary lender under the revolving credit agreement.  On April 21,
1998, the agreement was amended to extend the expiration date of the facility to
the  earlier  of June 1999 or  termination  of the  Company's  revolving  credit
facility with its primary lender.  The agreement,  as amended,  contains certain
restrictive  covenants  which are  substantially  the same as those  within  the
Company's  amended revolving credit facility  discussed above. 

In June 1997,  the Company  repaid the term loan  portion of its primary  credit
facility and entered into a  twenty-year  mortgage  agreement  with a commercial
bank.  The agreement  provides for a mortgage loan of $8,125,000  secured by the
Company's  real  property  located  at its  corporate  offices  including  land,
buildings,  fixtures and  improvements.  Commencing August 1, 1997, the mortgage
loan  is  payable  in 240  consecutive  equal  monthly  installments  (including
interest  at the rate of 9.125% per annum).  Certain  fees may be payable by the
Company  if the  mortgage  loan is  repaid  prior  to June  2014.  The  mortgage
agreement contains certain nonfinancial  covenants with which the Company was in
compliance at January 31, 1998.

The maximum  and average  amounts  outstanding  during  fiscal 1997 and 1996 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 in Item 8 of this document.

The Company's  weighted  average  interest rate for all  borrowings was 8.4% and
7.9% in fiscal 1997 and fiscal 1996,  respectively.  The Company had outstanding
letters  of  credit  for  the  purchase  of  merchandise   inventories  totaling
approximately  $6,075,000  and  $12,490,000  at January 31, 1998 and February 1,
1997, respectively.

At January 31, 1998, total merchandise  inventories decreased 27% to $35,508,000
compared to $48,371,000  at February 1, 1997. The decrease in total  merchandise
inventories  is primarily  due to a decrease in  merchandise  in-transit  to the
Company's  Distribution  Center from its  vendors.  Most of this  year-over-year
in-transit  decrease (a 52%  decrease  compared  to last year)  related to lower
levels of  in-transit  imported  goods.  Presently,  the Company is relying more
heavily on sourcing  inventory  through  opportunistic  purchases  from domestic
vendors. In fiscal 1997, import purchases  (including freight and duty) were 24%
of total  purchases  compared  to 31% in fiscal  1996.  Merchandise  inventories
located in the Company's stores decreased 8% on an average store basis primarily
due to the re-pricing of  merchandise  during the fourth quarter of fiscal 1997.
The level and source of  inventories is subject to  fluctuations  because of the
Company's opportunistic buying strategy and prevailing business conditions.

Net cash  provided by operating  activities  for fiscal 1997,  1996 and 1995 was
$8,660,000,  $2,352,000  and  $3,694,000,  respectively.  The  increase  in cash
provided by operating activities in fiscal 1997 compared to fiscal 1996 resulted
primarily  from the decrease in  merchandise  inventories  and non-cash  charges
including  depreciation  and costs  associated  with  disposal of  property  and
equipment (due to closing stores as part of the  restructuring  plan) which more
than offset the Company's net loss.

Net  cash  used in  investing  activities  for  fiscal  1997,  1996 and 1995 was
$7,134,000,  $3,033,000 and $11,277,000,  respectively,  primarily for leasehold
improvements  and  equipment  for  new  stores  opened  each  year,  as  well as
expansions to the distribution center including information systems and hardware
in fiscal 1995.

Net cash of $2,256,000 was used in financing activities in fiscal 1997 primarily
as a result of a net repayment on the Company's  revolving credit facility which
exceeded  the net  borrowings  on the  Company's  mortgage  loan and  term  loan
facilities.  Net cash of  $2,834,000  was  provided by financing  activities  in
fiscal 1996 primarily as a result of net  borrowings on the Company's  revolving
credit  facility and net borrowings on the Company's term loan  facilities.  Net
cash of $7,889,000 was provided by financing activities in fiscal 1995 primarily
as a result of obtaining a term loan facility.

During the  Transition  Period,  net cash of  $10,393,000  provided by financing
activities was used to offset the $10,536,000 used in operating activities which
resulted primarily from the Company's loss during the period.

In fiscal 1998, the Company plans to spend approximately $2.0 million on capital
expenditures,  most of  which  will be used to  remodel  and  relocate  existing
stores. While the Company's liquidity requirements in the foreseeable future are
expected to be met  principally  through cash provided by operations and the use
of its existing credit facilities, a lack of sufficient improvement in operating
results  during the third and fourth  quarters  of fiscal  1998 may  require the
Company to seek additional financing.  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 considered.

YEAR 2000 SYSTEMS READINESS

The Company has  conducted a  comprehensive  review of its  computer  systems to
identify the systems  that could be affected by the "Year 2000" issue.  Based on
the review, the Company's major systems which would be adversely affected by the
year 2000 will be replaced or upgraded  through the normal  course of  business.
Internal resources will be used in a timely manner to evaluate,  modify and test
the  Company's  other systems which are not scheduled to be upgraded or replaced
through the normal course of business.  Management  believes the  combination of
these efforts will prepare the Company's computer systems for the year 2000 on a
timely basis.  However,  if such modifications and conversions are not completed
timely,  the Year 2000 problem may have a material  impact on the  operations of
the Company.  The incremental costs associated with major system upgrades and/or
replacements,  as well as  internal  efforts  to  evaluate,  modify and test the
Company's  other  systems  are not  expected  to be  material  to the  Company's
consolidated financial statements.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

The FASB  issued  SFAS 130,  "Reporting  Comprehensive  Income,"  effective  for
periods beginning after December 15, 1997. The new standard requires  disclosure
of comprehensive income within the basic financial statements for those entities
with items which qualify as components of  comprehensive  income such as foreign
currency  transactions  and unrealized  gains on securities.  If the Company had
applied the  principles  of SFAS 130 for the fiscal year ended January 31, 1998,
the comprehensive loss would have been the same as the net loss reported for the
period.

The FASB issued SFAS 131,  "Disclosures  about  Segments  of an  Enterprise  and
Related  Information,"  effective for periods beginning after December 15, 1997.
The new standard  requires  disclosure of revenues,  results of  operations  and
assets  of  each  segment  of a  public  enterprise  which  qualifies  based  on
quantifiable  and  decision-making  criteria.  The  Company is in the process of
reviewing  the  effect,  if any,  that  SFAS  131  will  have  on the  Company's
consolidated financial statements.

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  including,  but not limited to,  statements
containing   the  words   "believe,"   "anticipates,"   "expects,"  and  similar
expressions, 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 fiscal 1998 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  alternative  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;  credit  availability,  including
adequate levels of credit support  provided to certain of the Company's  vendors
by  factors  and  insurance   companies;   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.


ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

             Not applicable.


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  subsidiaries  (the "Company") as of January 31, 1998
and February 1, 1997,  and the related  consolidated  statements of  operations,
shareholders'  equity,  and cash flows for the fiscal  years  ended  January 31,
1998,  February 1, 1997 and December 30, 1995 and for the five-week 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 January 31, 1998
and February 1, 1997,  and the results of its  operations and its cash flows for
the fiscal years ended January 31, 1998,  February 1, 1997 and December 30, 1995
and for the  five-week  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  five-week  period
ended February 3, 1996, the Company  adopted  Statement of Financial  Accounting
Standards  No.  121  and  changed  its  method  of  accounting  for  merchandise
inventories.


DELOITTE & TOUCHE LLP
Greenville, South Carolina 
March 20, 1998 (April 21, 1998 as to Note B)


                ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<S>                                                                             <C>                 <C>             


                                                                                 January 31,         February 1,
                                                                                    1998                 1997
Assets -- Note B
CURRENT ASSETS
   Cash and cash equivalents                                                    $  1,827,000         $ 2,557,000
   Miscellaneous receivables, net of allowance for
     doubtful accounts of $196,000 (1997) and
     $144,000 (1996) -- Note G                                                     2,066,000           1,120,000
   Merchandise inventories                                                        35,508,000          48,371,000
   Federal and state income taxes receivable                                       4,637,000           4,237,000
   Prepaid expenses                                                                4,293,000           3,671,000
   Deferred income taxes -- Note D                                                      --             1,935,000
                                                                                ------------        ------------
     TOTAL CURRENT ASSETS                                                         48,331,000          61,891,000
PROPERTY AND EQUIPMENT, net -- Note C                                             36,004,000          36,151,000

OTHER ASSETS -- Note G                                                             3,777,000           2,925,000
                                                                                ------------        ------------
                                                                                $ 88,112,000        $100,967,000
                                                                                ============        ============
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
   Accounts payable                                                             $ 25,391,000         $25,908,000
   Current portion of long-term debt and revolving credit
      facility -- Note B                                                          11,664,000          16,565,000
   Accrued salaries and wages                                                      1,789,000           1,504,000
   Accrued employee benefits                                                       2,271,000           2,327,000
   Other accrued and sundry liabilities -- Note G                                  2,965,000           2,418,000
                                                                                ------------        ------------
     TOTAL CURRENT LIABILITIES                                                    44,080,000          48,722,000
                                                                                ------------        ------------
LONG-TERM DEBT  -- Note B                                                          7,915,000           4,868,000
                                                                                ------------        ------------
DEFERRED INCOME TAXES -- Note D                                                           --             718,000
                                                                                ------------        ------------
OTHER NONCURRENT LIABILITIES -- Notes E and G                                      3,095,000           2,317,000
                                                                                ------------        ------------
COMMITMENTS -- 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 shares                               104,000             104,000
   Additional paid-in capital                                                     11,453,000          11,453,000
   Retained earnings                                                              21,465,000          32,785,000
                                                                                ------------        ------------
                                                                                  33,022,000          44,342,000
                                                                                ------------        ------------
                                                                                $ 88,112,000        $100,967,000
                                                                                ============        ============
</TABLE>

See notes to consolidated financial statements

                ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                 <C>   <C>        <C>    <C>        <C>    <C>        <C>   <C>      

                                                                                             Transition         Fiscal
                                                             Fiscal Year Ended              Period Ended      Year Ended
                                                        January 31,       February 1,      February 3,       December 30,
                                                            1998              1997             1996              1995
                                                       ---------------   ---------------  ---------------   ----------------

NET SALES                                            $    302,285,000 $     298,986,000 $     15,022,000  $     294,692,000
Cost of goods sold, distribution and buying costs         201,901,000       193,318,000       14,545,000        195,304,000
                                                       ---------------   ---------------  ---------------   ----------------
GROSS MARGIN                                              100,384,000       105,668,000          477,000         99,388,000

Selling, general and administrative expenses --
   Notes C and G                                           78,077,000        75,564,000        6,957,000         71,498,000
Restructuring charge - Note L                               2,265,000                --               --                 --
Store rent and related expenses                            26,415,000        25,566,000        2,030,000         24,810,000
Depreciation and amortization expense                       5,131,000         4,778,000          411,000          4,394,000
Interest expense                                            2,078,000         1,897,000          173,000          1,326,000
                                                       ---------------   ---------------  ---------------   ----------------
                                                          113,966,000       107,805,000        9,571,000        102,028,000
Interest income                                                89,000           143,000            3,000             45,000
                                                       ---------------   ---------------  ---------------   ----------------

NET EXPENSES                                              113,877,000       107,662,000        9,568,000        101,983,000
                                                       ---------------   ---------------  ---------------   ----------------

LOSS BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES                                 (13,493,000)       (1,994,000)      (9,091,000)        (2,595,000)

Benefit from income taxes - Note D                        (2,173,000)         (727,000)      (3,457,000)        (1,291,000)
                                                       ---------------   ---------------  ---------------   ----------------

LOSS BEFORE CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES                      (11,320,000)       (1,267,000)      (5,634,000)        (1,304,000)

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

NET LOSS                                             $   (11,320,000)  $    (1,267,000) $    (6,724,000)  $     (1,304,000)
                                                       ===============   ===============  ===============   ================

PER COMMON SHARE AMOUNTS
Loss before cumulative effect
  of changes in accounting principles                $         (1.08)  $         (0.12) $         (0.55)  $          (0.13)
Cumulative effect of changes in accounting
  principles, net of income tax benefit -- Note J                  --                --           (0.10)                 --
                                                       ---------------   ---------------  ---------------   ----------------

NET LOSS PER COMMON SHARE - BASIC                    $         (1.08)  $         (0.12) $         (0.65)  $          (0.13)
                                                       ===============   ===============  ===============   ================

NET LOSS PER COMMON SHARE - DILUTED                  $         (1.08)  $         (0.12) $         (0.65)  $          (0.13)
                                                       ===============   ===============  ===============   ================

Weighted average shares outstanding - basic and
diluted                                                   10,435,531        10,400,789       10,335,031         10,313,860
                                                       ===============   ===============  ===============   ================
</TABLE>

See notes to consolidated financial statements


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


<TABLE>
<S>   <C>                                    <C>              <C>          <C>             <C>              <C>
                                                                            Additional
                                                   Common Stock             Paid-in         Retained
                                               Shares         Amount         Capital        Earnings            Total

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
     Net loss                                       --              --              --      (11,320,000)    (11,320,000)
                                              ----------      ---------    -----------      ------------    ------------
Balance at January 31, 1998                   10,435,531      $ 104,000    $11,453,000      $21,465,000     $33,022,000
                                              ==========      =========    ===========      ===========     ===========
</TABLE>




See notes to consolidated financial statements

                ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

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

                                                                                                      Transition        Fiscal
                                                                        Fiscal Year Ended           Period Ended     Year Ended
                                                                    January 31,    February 1,     February 3,    December 30,
                                                                       1998            1997           1996            1995
                                                                   --------------  -------------  -------------- ---------------
OPERATING ACTIVITIES
   Net loss                                                      $  (11,320,000) $  (1,267,000)   $ (6,724,000)   $ (1,304,000)
                                                                                                    (6,724,000)
   Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
         Depreciation and amortization                                5,131,000      4,778,000         411,000       4,394,000
         Changes in accounting principles                                    --             --       1,090,000              --
         Provision for supplemental post-retirement benefits            128,000        970,000              --              --
         Deferred income taxes                                        1,217,000        246,000        (146,000)       (351,000)
         Loss (gain) on disposal of property and equipment            2,325,000      1,261,000         (31,000)        789,000
         Decrease (increase) in other noncurrent assets                 382,000        579,000        (161,000)       (522,000)
         Increase in other noncurrent liabilities                       435,000        151,000         271,000         500,000
         Changes in operating assets and liabilities:
             (Increase) decrease in miscellaneous
                 receivables and prepaid expenses                    (1,460,000)       594,000      (2,520,000)        (42,000)
             Decrease (increase) in merchandise inventories          12,863,000     (8,598,000)    (10,321,000)     (2,624,000)
             (Increase) decrease in Federal and state
                 income taxes receivable                               (400,000)       437,000      (3,311,000)     (1,292,000)
             (Decrease) increase in accounts payable and other         (641,000)     3,201,000      10,906,000       4,146,000
                 liabilities
                                                                   --------------  -------------  -------------- ---------------
NET CASH PROVIDED BY (USED IN) OPERATING
   ACTIVITIES                                                         8,660,000      2,352,000     (10,536,000)      3,694,000
                                                                   --------------  -------------  -------------- ---------------
INVESTING ACTIVITIES
 Purchases of property and equipment                                 (6,346,000)    (2,674,000)        (80,000)    (10,865,000)
 Purchases of other noncurrent assets                                  (564,000)      (359,000)        (41,000)       (412,000)
 Loan to related party, net of repayment                               (224,000)            --              --              --
                                                                   --------------  -------------  -------------- ---------------
NET CASH USED IN INVESTING ACTIVITIES                                (7,134,000)    (3,033,000)       (121,000)    (11,277,000)
                                                                   --------------  -------------  -------------- ---------------

FINANCING ACTIVITIES
  Net (repayment of) borrowings from revolving credit facility       (3,469,000)     2,171,000      10,403,000       2,412,000
  Proceeds from long term debt borrowings                             9,572,000      7,500,000              --       6,000,000
  Repayment of long term debt                                        (7,957,000)    (6,553,000)             --        (500,000)
  Debt financing costs incurred                                        (259,000)      (698,000)             --         (90,000)
  Decrease in amount due to related parties                             (47,000)       (38,000)        (10,000)        (44,000)
  Payment of capital lease obligations                                  (96,000)            --              --              --
  Proceeds from exercise of Common Stock options                             --        452,000              --         111,000
                                                                   --------------  -------------  -------------- ---------------
  
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                  (2,256,000)     2,834,000      10,393,000       7,889,000
                                                                   --------------  -------------  -------------- ---------------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                       (730,000)     2,153,000        (264,000)        306,000

CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                                           2,557,000        404,000         668,000         362,000
                                                                   --------------  -------------  -------------- ---------------

CASH AND CASH EQUIVALENTS AT END OF
   PERIOD                                                         $   1,827,000  $   2,557,000     $   404,000         668,000
                                                                   ==============  =============  ============== ===============

SUPPLEMENTAL CASH FLOW INFORMATION
  Interest paid                                                   $   1,766,000  $   1,777,000     $   244,000     $ 1,117,000
  Income taxes paid                                                      86,000         68,000              --         477,000
  Noncash financing activities - capital leases                         537,000        237,000              --              --

</TABLE>

See notes to consolidated financial statements


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

January 31, 1998

NOTE A - Operations and Summary of Significant Accounting Policies

Business:  One Price Clothing  Stores,  Inc. and  subsidiaries  (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.  Prior to fiscal 1997, this  merchandise was offered at the uniform
retail price of $7. The Company  currently  offers most of its merchandise at or
below $7 and offers  certain  additional  categories and styles at prices higher
than $7 when such  merchandise  is clearly  desired by the Company's  customers.
Such higher priced  merchandise is offered primarily at $10. A limited number of
items will be priced at $12 and $15. This expansion of merchandise categories at
prices higher than $7 is referred to within the Company as its  "Expanded  Price
Program" or "EPP." At January 31,  1998,  the Company  operated 660 stores in 27
states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

Fiscal Year:  Beginning in fiscal 1996,  the  Company's  fiscal year ends on the
Saturday  nearest  January 31. See Note I. "Fiscal  1997" is the 52-week  period
ended January 31, 1998;  "fiscal 1996" is the 52-week  period ended  February 1,
1997; the  "Transition  Period" is the five-week  period ended February 3, 1996;
and  "fiscal  1995" is the 52-week  period  ended  December  30,  1995.  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  subsidiaries.  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.

Store Closing and Impairment  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,  for stores to be closed,  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 $592,000,  $987,000, and $324,000 in
fiscal 1997, 1996 and 1995, respectively.

Net Loss Per  Common  Share:  Basic net loss per  common  share is  computed  by
dividing  net loss by the  weighted  average  number of shares of Common  Stock.
Diluted  net loss per  common  share is  computed  by  dividing  net loss 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 J.

Reclassifications:   Certain  amounts  included  in  prior  periods'   financial
statements have been reclassified to conform to the fiscal 1997 presentation.

Effect of New Accounting  Pronouncements:  The FASB issued SFAS 130,  "Reporting
Comprehensive  Income," effective for periods beginning after December 15, 1997.
The new standard  requires  disclosure of comprehensive  income within the basic
financial  statements  for those entities with items which qualify as components
of  comprehensive  income such as foreign  currency  transactions and unrealized
gains on  securities.  If the Company had applied the principles of SFAS 130 for
the fiscal year ended January 31, 1998, the  comprehensive  loss would have been
the same as the net loss reported for the period.

The FASB issued SFAS 131,  "Disclosures  about  Segments  of an  Enterprise  and
Related  Information,"  effective for periods beginning after December 15, 1997.
The new standard  requires  disclosure of revenues,  results of  operations  and
assets  of  each  segment  of a  public  enterprise  which  qualifies  based  on
quantifiable  and  decision-making  criteria.  The  Company is in the process of
reviewing  the  effect,  if any,  that  SFAS  131  will  have  on the  Company's
consolidated financial statements.

NOTE B -  Credit Facilities

In May and June 1997 and  February  1998,  the  Company  amended  its  financing
arrangements  with its  primary  lender.  Considered  together,  the  amendments
provide a  three-year  extension  through  March 2001 and  continue to provide a
revolving  credit  facility of up to  $37,500,000  (including a letter of credit
sub-facility of up to $25,000,000).  Under the June 1997 amendment,  the Company
was permitted to enter into a mortgage  loan  agreement  with a commercial  bank
(discussed  further  below) and the term loan portion of the agreement  with the
primary  lender  was  repaid.  Under the May 1997  amendment,  the term loan was
increased by approximately $1,450,000 to $7,500,000.

Borrowings under the credit agreement with the primary lender are collateralized
by all assets owned by the Company during the term of the agreement  (other than
the land, building, fixtures and improvements  collateralizing the mortgage loan
discussed below) 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.  The amended agreement provides for a temporary  adjustment to
the lending  formula to increase the  borrowing  availability  during the period
January 30, 1998 through June 30, 1998.  Availability under the revolving credit
facility  fluctuates in accordance  with the  Company's  seasonal  variations in
inventory  levels.  At January 31,  1998,  the Company  had  approximately  $5.4
million of excess  availability  under the revised  borrowing base formula.  The
lending  formula may be revised  from time to time in response to changes in the
composition of the Company's inventory or other business conditions.

The Company's  amended  revolving  credit agreement  contains certain  covenants
which,  among other  things,  restrict the ability of the Company to incur other
indebtedness,  or encumber or dispose of assets,  and  prohibit the Company from
repurchasing  its Common Stock or paying  dividends.  The Company is required to
maintain a $5,000,000 minimum level of working capital and to maintain a minimum
adjusted  net worth (both as defined in the  agreement).  Effective  January 30,
1998,  such  minimum net worth  requirement  was  reduced  from  $34,000,000  to
$25,000,000.  The Company was in compliance  with these covenants at January 31,
1998.

In May 1997,  the Company  entered into an agreement  with a commercial  bank to
provide a letter of  credit  facility  of up to  $3,000,000.  Letters  of credit
issued under the agreement are  collateralized  by inventories  purchased  using
such letters of credit.  In March 1998,  the agreement was amended to adjust the
Company's  minimum net worth  requirement  to the same level as that required by
the Company's primary lender under the revolving credit agreement.  On April 21,
1998, the agreement was amended to extend the expiration date of the facility to
the  earlier  of June 1999 or  termination  of the  Company's  revolving  credit
facility with its primary lender.  The agreement,  as amended,  contains certain
restrictive  covenants  which are  substantially  the same as those  within  the
Company's amended revolving credit facility discussed above.

In June 1997,  the Company  repaid the term loan  portion of its primary  credit
facility and entered into a  twenty-year  mortgage  agreement  with a commercial
bank.  The agreement  provides for a mortgage loan of $8,125,000  secured by the
Company's  real  property  located  at its  corporate  offices  including  land,
buildings,  fixtures and  improvements.  Commencing August 1, 1997, the mortgage
loan  is  payable  in 240  consecutive  equal  monthly  installments  (including
interest  at the rate of 9.125% per annum).  Certain  fees may be payable by the
Company  if the  mortgage  loan is  repaid  prior  to June  2014.  The  mortgage
agreement contains certain nonfinancial  covenants with which the Company was in
compliance at January 31, 1998.

The maximum  and average  amounts  outstanding  during  fiscal 1997 and 1996 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 Year Ended
                                                                            January 31,                 February 1,
                                                                               1998                          1997
Revolving Credit Facility:
     Maximum amounts outstanding                                            $19,525,000                  $19,241,000
     Average amounts outstanding                                             10,784,000                   10,792,000
     Outstanding at period end                                               11,517,000                   14,986,000

Term Loan:
     Maximum amounts outstanding                                            $ 8,125,000                  $ 7,500,000
     Average amounts outstanding                                              7,517,000                    6,889,000
     Outstanding at period end                                                8,062,000                    6,447,000

</TABLE>

The Company's  weighted  average  interest rate for all  borrowings was 8.4% and
7.9% in fiscal 1997 and fiscal 1996,  respectively.  The Company had outstanding
letters  of  credit  for  the  purchase  of  merchandise   inventories  totaling
approximately  $6,075,000  and  $12,490,000  at January 31, 1998 and February 1,
1997, respectively.

Annual maturities of the term loan are as follows:

Fiscal Year                                 Amount
1998                                      $   147,000
1999                                          161,000
2000                                          174,000
2001                                          193,000
2002                                          212,000
Later                                       7,175,000
Total                                      $8,062,000

The  fair  value  of  the  Company's   outstanding  debt  at  January  31,  1998
approximates the carrying value.

NOTE C - Property and Equipment
<TABLE>
<S> <C>                                                                   <C>                      <C>    
                                                                           January 31,                 February 1,
                                                                              1998                         1997
   Land                                                                   $   914,000              $     914,000
   Land improvements                                                          494,000                    494,000
   Building                                                                16,055,000                 16,028,000
   Leasehold improvements                                                  14,194,000                 11,392,000
   Fixtures and equipment                                                  29,095,000                 28,780,000
                                                                         -------------              ------------
                                                                           60,752,000                 57,608,000
   Less accumulated depreciation                                          (24,748,000)               (21,457,000)
                                                                          ------------               ------------
                                                                          $36,004,000              $  36,151,000
                                                                           ===========              ============
</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
leasehold  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  was  approximately  $425,000  and  $600,000  for  fiscal  1997  and  1996,
respectively, and is included in selling, general and administrative expenses in
the accompanying Consolidated Statement of Operations.

NOTE D - Income Taxes

The benefit from income taxes consists of the following:
<TABLE>
<S>                                                 <C>                  <C>                <C>                    <C>    

                                                                                                Transition            Fiscal
                                                         Fiscal Year Ended                    Period Ended          Year Ended
                                                 January 31,          February 1,              February 3,         December 30,
                                                    1998                 1997                      1996                1995
                                                    ----                 ----                  -----------        -------------
Current
  Federal                                           $(3,670,000)           $(982,000)        $(2,875,000)         $(1,001,000)
  State and local                                       280,000                1,000            (436,000)              61,000
  Puerto Rico                                                --                8,000                  --                   --
Deferred:
  Federal                                               616,000              265,000             (63,000)              (5,000)
  State and local                                       447,000             (149,000)            (13,000)            (144,000)
  Puerto Rico                                           154,000              130,000             (70,000)            (202,000)
                                                    ------------           ----------        ------------         ------------    
Total benefit from income taxes                     $(2,173,000)           $(727,000)        $(3,457,000)         $(1,291,000)
                                                    ============           ==========        ============         ============
</TABLE>

Presented  below are the elements which comprise  deferred income tax assets and
liabilities:
<TABLE>
<S>                                                                    <C>                               <C>
                                                                        January 31,                       February 1,
                                                                           1998                              1997
                                                                        -----------                       -----------
Gross deferred income tax assets:
 Accrued employee benefits deductible
     for tax purposes when paid                                         $  786,000                        $  773,000
 Excess of tax over financial statement
     basis of inventory                                                    375,000                           923,000
 Accrued retirement benefits deductible
     for tax purposes when paid                                            530,000                           502,000
 Accrued store closing cost deductible
     for tax purposes when paid                                            885,000                           634,000
 State and local net operating loss
     carryforwards                                                         999,000                           973,000
 Puerto Rico net operating loss
    carryforwards                                                        1,314,000                           154,000
 Miscellaneous                                                             295,000                            94,000
                                                                         ---------                         ---------  
     Gross deferred income tax assets                                    5,184,000                         4,053,000
Valuation allowance                                                     (3,156,000)                         (354,000)
                                                                       -----------                       -----------
                                                                         2,028,000                         3,699,000
                                                                       -----------                       -----------
Gross deferred income tax liabilities:
 Excess of financial statement over tax
    basis of property and equipment                                     (1,999,000)                      (2,422,000)
 Miscellaneous                                                             (29,000)                         (60,000)
                                                                        -----------                      -----------
    Gross deferred income tax liabilities                               (2,028,000)                      (2,482,000)
                                                                        ------------                     -----------
Net deferred income tax asset                                          $        --                       $1,217,000
                                                                        ============                     ===========

The net  deferred  income tax asset at  February  1, 1997 is  recognized  in the
accompanying balance sheets as follows:

      Current assets                                                     $1,935,000
      Noncurrent liabilities                                               (718,000)
                                                                        -----------
      Net deferred income tax asset                                      $1,217,000
                                                                         ==========
</TABLE>

At January 31, 1998 the Company had net operating loss  carryforwards  for state
income tax purposes aggregating approximately  $8,300,000,  credit carryforwards
for state income tax purposes  aggregating  $349,000,  Puerto Rico net operating
loss  carryforwards  aggregating  $3,345,000,  Virgin Islands net operating loss
carryforwards  aggregating $23,000,  U.S. Federal alternative minimum tax credit
carryforwards  of $87,000,  and net cumulative  temporary  differences  for U.S.
Federal and state income tax purposes aggregating $2,139,000. With the exception
of the U.S. Federal alternative minimum tax credit  carryforwards  (which do not
expire),  these net operating  loss and credit  carryforwards  expire at various
times  between  2000 and 2012.  Management  cannot be assured  that the deferred
income tax assets related to these carryforwards and temporary  differences will
be fully utilized. Accordingly, valuation allowances aggregating $3,156,000 have
been  provided at January 31,  1998 for the full  amount of these  deferred  tax
assets.



<PAGE>



A reconciliation  of the statutory Federal income tax benefit rate to the annual
effective income tax benefit rate follows:
<TABLE>
<S>                                                 <C>                <C>                   <C>                 <C>

                                                                                        Transition           Fiscal
                                                       Fiscal Year Ended                 Period Ended        Year Ended
                                                   January 31,        February 1,        February 3,        December 30,
                                                    1998                1997              1996               1995
                                               ---------------     --------------   -----------------  ----------

      Federal income tax at statutory rate              35.0 %          35.0 %                35.0 %            35.0 %
      State and local income tax, net of Federal
         tax benefit                                     2.7 %           4.6 %                 4.2 %             3.2 %
      Puerto Rico net operating loss                      --              --                     --              7.8 %
      Tax benefit from carryback of Federal
         Targeted Jobs Tax Credits                       0.4 %            --                     --              5.9 %
      Valuation allowances                             (20.8)%            --                     --                --
      Other, net                                        (1.2)%          (3.1)%                (1.2)%            (2.2)%
                                                       -------        --------              --------           --------
                                                        16.1%           36.5 %                38.0 %             49.7 %
                                                       =======        ========            ==========            =======
</TABLE>

 NOTE E - Leases

The Company  leases its stores  under  operating  leases with  initial  terms of
typically  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 for 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 January 31, 1998 for  noncancellable
leases   (including   those  which  may  qualify  for  early   termination)  are
approximately as follows:
<TABLE>
<S>                 <C>                         <C>                     <C>                 <C> 
                 Fiscal Year                        Stores                 Other              Total

                    1998                        $20,704,000             1,357,000           22,061,000
                    1999                         17,133,000             1,113,000           18,246,000
                    2000                         12,786,000               687,000           13,473,000
                    2001                          9,541,000                42,000            9,583,000
                    2002                          7,164,000                41,000            7,205,000
                    Later                        10,264,000                20,000           10,284,000
                                               ------------          ------------         ------------
                    Total                       $77,592,000            $3,260,000          $80,852,000
                                                ===========            ==========         ============
</TABLE>


Total rental expense for operating leases was as follows:
<TABLE>
<S>                                           <C>                 <C>                 <C>                <C>    
                                                                                       Transition           Fiscal
                                                        Fiscal Year Ended            Period Ended        Year Ended
                                               January 31,         February 1,         February 3,       December 30,
                                                   1998                 1997              1996               1995
                                              ----------------    ----------------   --------------      -----------

      Minimum rentals                          $23,244,000          $22,061,000       $ 1,792,000       $21,686,000
      Contingent rentals                         4,932,000            5,103,000           331,000         4,739,000
                                               -----------         ------------       -----------       -----------
                                               $28,176,000          $27,164,000       $ 2,123,000       $26,425,000
                                               ===========          ===========       ===========       ===========

</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 January
31, 1998 were as follows:
<TABLE>
<S>                                                               <C>  

Fiscal Year:
1998                                                              $ 275,000
1999                                                                244,000
2000                                                                186,000
2001                                                                 35,000
2002                                                                 24,000
                                                                  ----------
Total minimum obligations                                           764,000
Less interest                                                       (94,000)
                                                                  ----------
Present value of net minimum obligations                            670,000
Less current portion                                               (226,000)
                                                                  ---------
Long-term obligation at January 31, 1998                          $ 444,000
                                                                  =========
</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 options to purchase shares of Common Stock of the Company.  Options
granted  under the plans  expire  ten years from the date of grant and 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 January 31, 1998, a total of 215,000 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 January 31, 1998,  35,000 shares of
Common Stock were  reserved for issuance  under the 1995  Director  Stock Option
Plan.

Effective April 1997, the Company's  Board of Directors  approved a special
stock option grant for 300,000  shares at the exercise  price of $4.13 per share
(fair  market  value at the  time of  grant)  to its  Chief  Executive  Officer.
Twenty-five  percent of such grant was  immediately  exercisable  on the date of
grant with the remaining  shares  vesting  ratably over four years.  The options
expire ten years from the date of the grant.


A summary of the activity in the Company's stock option plans is presented
below.
<TABLE>
<S>                                    <C>         <C>        <C>          <C>        <C>           <C>       <C>          <C>     



                                                Fiscal                Fiscal               Transition             Fiscal
                                                 1997                  1996                  Period                1995

                                                      Weighted                Weighted              Weighted               Weighted
                                         Number       Average      Number     Average     Number     Average     Number     Average
                                           of         Exercise       of       Exercise      Of      Exercise      Of       Exercise
                                         Shares        Price       Shares      Price      Shares      Price      Shares      Price

Outstanding at beginning of               555,845       $6.79     588,245       $7.84   561,145       $8.11    550,943        $8.45
period
Options granted                           510,250       $3.93     234,250       $3.80    31,500       $3.12    108,000        $6.33
Options exercised                              --          --    (100,500)      $3.92        --          --    (29,775)       $3.59
Options cancelled                        (156,119)      $5.13    (166,150)      $8.04    (4,400)      $8.12    (68,023)       $9.99
                                        ---------                ---------               -------               --------       -----

Outstanding at end of period              909,796       $5.47     555,845       $6.79   588,245       $7.84    561,145        $8.11
                                          =======                 =======               =======                =======


Exercisable at end of  period             370,706                 237,015               249,775                247,175
                                          =======                 =======               =======                =======

Weighted average fair value of
options granted during the
period (see below)                                      $1.94                  $1.86                 $1.70                    $3.54

</TABLE>

         The  following  table  summarizes   information   about  stock  options
outstanding at January 31, 1998:
<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

           $   1.56 to  $ 1.94                       8,500         9.9           $  1.85           --                 --
           $   2.75 to  $ 4.12                     607,250         9.0           $  3.87      142,950          $    3.87
           $   4.50 to  $ 6.67                     136,146         6.0           $  5.54      104,246          $    5.40
           $   7.38 to  $10.46                      66,130         5.8           $  9.14       50,960          $    9.25
           $  11.17 to  $15.62                      72,350         5.1           $ 12.62       60,550          $   12.35
           $  17.25 to  $19.00                      19,600         6.1           $ 17.37       12,000          $   17.39
                                                  --------                                    -------
                                                   909,976         8.0           $  5.47      370,706          $    6.87
                                                   =======                                    =======
</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 $990,000  and  $435,000  for the fiscal  years ended
January  31,  1998  and   February  1,  1997,   respectively,   based  upon  the
Black-Scholes  option pricing model. The following  assumptions were used in the
Black-Scholes option pricing model for stock options granted: risk-free interest
rates of  approximately  6.0% for  fiscal  1997 and 1996;  an  expected  life of
approximately  one year from the vest  date for  fiscal  1997 and 1996;  and 65%
expected  volatility  for fiscal 1997 and 1996.  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.
<TABLE>
<S>       <C>                                  <C>           <C>                     <C>                      <C> 
                                                                                     Fiscal Year Ended
                                                                January 31,             February 1,           December 30,
                                                                   1998                    1997                     1995
           Net loss                             Actual        $(11,320,000)           $(1,267,000)            $ (1,304,000)
                                                              =============           ============            =============
                                                Proforma      $(11,805,000)           $(1,373,000)            $ (1,356,000)
                                                              =============           ============            =============
           Net loss per common share            Actual        $      (1.08)           $     (0.12)            $      (0.13)
                                                              =============            ===========            =============
                                                Proforma      $      (1.13)           $     (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.  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 $306,000, $296,000, and $292,000
in fiscal 1997, 1996 and 1995, 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 1997, the Company entered into a deferred compensation  agreement with
its  President  and Chief  Executive  Officer.  The  agreement  provides for 120
consecutive  monthly payments of $5,000 (including  interest) beginning upon the
date of  retirement.  Approximately  $40,000 of the total  present  value of the
obligation was charged to selling,  general and  administrative  costs in fiscal
1997 and is included in other  noncurrent  liabilities  at January 31, 1998. The
remaining  portion of the total present value of the  obligation,  approximately
$406,000,  will be fully accrued by May 2004,  six years after  commencement  of
employment.  

In fiscal 1997,  the Company  entered into a loan agreement of $225,000 with its
President  and  Chief  Executive  Officer.  The terms of the loan  require  that
minimum  principal  and interest  (set at a floating  rate equal to the rate the
Company  uses under its  revolving  credit  agreement  with its primary  lender)
payments  be made to the  Company  during the course of the loan,  with the full
amount  of the  loan  plus  accrued  interest  due in  full  by  December  2000.
Approximately  $107,000 and $117,000  were included in accounts  receivable  and
noncurrent assets, respectively at January 31, 1998.

The Company also has a deferred compensation  agreement with its Chairman of the
Board of Directors.  The agreement provides for 120 consecutive monthly payments
of  $13,750  (including  interest)  beginning  upon the  earlier  of the date of
retirement or death. When the Company entered into the agreement in fiscal 1996,
the estimated present value of the obligation, $970,000, was charged to selling,
general and  administrative  expenses.  Approximately  $28,000 and $1,002,000 is
included in current liabilities and other noncurrent  liabilities,  respectively
at January 31, 1998.

The Company also has a deferred  compensation  agreement with a former executive
officer  that 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  $76,000,  $64,000 and $171,000 in fiscal 1997,
1996 and 1995,  respectively,  for legal  services  provided  by the law firm of
which a Company Director is a member.

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.

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 net  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.

The FASB issued  Statement  No. 128 (SFAS  128),  "Earnings  Per  Share,"  which
requires a dual  presentation  of "basic" and  "diluted"  EPS on the face of the
income statement.  The Company's adoption of SFAS 128, required for fiscal years
ending after  December 15, 1997,  resulted in weighted  average shares for basic
and diluted EPS of 10,435,531,  10,400,789, 10,335,031 and 10,313,860 for fiscal
years 1997 and 1996, the Transition Period and fiscal 1995,  respectively.  As a
result,  basic and  diluted EPS for all  periods  presented  are the same as EPS
reported under APB Opinion No. 15, which has been superceded by SFAS 128.

NOTE K - Quarterly  Results  (Unaudited)  

The  following is a summary of quarterly  (13 weeks)  operations  for the fiscal
years ended January 31, 1998 and February 1, 1997 (in thousands except per share
data). See below for proforma 1995 quarterly results.

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



                                                                                    Fiscal 1997 Quarters Ended
                                                                 May 2,       August 2,        November 1,      January 31,
                                                                   1997           1997             1997            1998
                                                                 -----------------------------------------------------------

         Net sales                                               $78,899        $86,134        $63,845            $73,407
         Gross margin                                             29,529         31,107         19,565             20,183
         Net income (loss)                                         1,444          2,391         (5,161)            (9,994)
         Net income (loss) per common share                         0.14           0.23          (0.49)             (0.96)

                                                                                    Fiscal 1996 Quarters Ended
                                                                 May 3,       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)
</TABLE>

  The net loss in the fourth quarter of fiscal 1997 was increased by $2,802,000,
  $0.27 per common share, as a result of adjustments to the estimated  effective
  income tax rate used in previous quarters within fiscal 1997.

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

   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 1997 and 1996 operating results.

   NOTE L - Effect of Restructuring

   In response to lower than expected operating results, the Company announced a
   restructuring  plan  during  the  fourth  quarter  of fiscal  1997.  The plan
   includes   initiatives   which  are   designed   to  return  the  Company  to
   profitability by lowering operating costs,  redeploying assets and curtailing
   the number of new store  openings  until the  Company's  existing  stores are
   operating profitably. Under the plan, the Company will close approximately 75
   low-volume, underperforming stores and eliminate approximately 300 positions.
   The  Company  recorded  a  one-time  charge of  $2,265,000  during the fourth
   quarter of fiscal 1997 to cover  costs  associated  with the plan.  The total
   charge of  $2,265,000  includes  costs to close  stores,  such as the noncash
   write-off of fixed assets and store supplies of $1,378,000,  lease buyouts of
   approximately $398,000, and employee severance costs,  outplacement costs and
   other miscellaneous expenses of approximately $489,000.

  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 has continued 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.

  Effective December 10, 1997, David F. Bellet resigned his position as a member
  of the Board of Directors of the  Company  for  personal  reasons  and without
  disagreement with the Company regarding the Company's operations,  policies or
  procedures.

  Effective April 16, 1998,  Leonard Snyder was appointed to the Company's Board
  of Directors.  Pending  appointment by the Board,  Mr. Snyder will succeed Mr.
  Jacobs as Chairman of the Board after the Annual Meeting of Shareholders to be
  held June 10, 1998. Mr. Jacobs will not seek reelection to the Board.

  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 10, 1998.

  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 January 31, 1998 and 
                    February 1, 1997

                    Consolidated  Statements of Operations  for the fiscal years
                    ended January 31, 1998 and February 1, 1997,  the Transition
                    Period  ended  February  3, 1996,  and the fiscal year ended
                    December 30, 1995

                    Consolidated  Statements  of  Shareholders'  Equity  for the
                    fiscal  years ended  January 31, 1998 and  February 1, 1997,
                    the Transition  Period ended February 3, 1996 and the fiscal
                    year ended December 30, 1995

                    Consolidated  Statements  of Cash Flows for the fiscal years
                    ended January 31, 1998 and February 1, 1997,  the Transition
                    Period  ended  February  3, 1996 and the fiscal  years ended
                    December 30, 1995

                    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.

4(e)              Amendment Number One to the Loan and Security Agreement by and
                  between Congress  Financial  Corporation  (Southern) as Lender
                  and the  Registrant,  One Price Clothing of Puerto Rico,  Inc.
                  and  One  Price  Clothing  -  U.S.  Virgin  Islands,  Inc.  as
                  Borrowers  dated May 16,  1997:  Incorporated  by reference to
                  Exhibit  10(a) to the  Registrant's  Quarterly  Report on Form
                  10-Q for the  quarter  ended  May 3, 1997  (File No.  0-15385)
                  ("the April 1997 Form 10-Q").

4(f)              Continuing Commercial Credit Agreement by and between Carolina
                  First Bank as Lender and the Registrant, One Price Clothing of
                  Puerto  Rico,  Inc.  and  One  Price  Clothing  - U.S.  Virgin
                  Islands, Inc. as Borrowers dated May 16, 1997: Incorporated by
                  reference to Exhibit 10(b) to the April 1997 Form 10-Q.

 4(g)             Amendment Number Two to the Loan and Security Agreement by and
                  between Congress  Financial  Corporation  (Southern) as Lender
                  and the  Registrant,  One Price Clothing of Puerto Rico,  Inc.
                  and One Price Clothing U.S. Virgin Islands,  Inc. as Borrowers
                  dated June 17,  1997:  Incorporated  by  reference  to Exhibit
                  10(c) to the  Registrant's  Quarterly  report on Form 10-Q for
                  the quarter ended August 2, 1997 (File No. 0-15385) ("the July
                  1997 Form 10-Q").

 4(h)             Mortgage  and Security  Agreement  by and between  First Union
                  National  Bank,  as Mortgagee  and One Price  Realty,  Inc. as
                  Mortgagor  dated June 17, 1997:  Incorporated  by reference to
                  Exhibit 10(d) to the July 1997 Form 10-Q.

 4(i)             Promissory  Note by and between First Union  National Bank and
                  One Price Realty,  Inc. dated June 17, 1997:  Incorporated  by
                  reference to Exhibit 10(e) to the July 1997 Form 10-Q.

 4(j)             Lease Agreement by and between One Price Clothing Stores, Inc.
                  as Tenant and One Price Realty, Inc. as Landlord dated June 
                  17, 1997:  Incorporated by reference to Exhibit 10(f) to the 
                  July 1997 Form 10-Q.

 4(k)             Amendment  Number Three to the Loan and Security  Agreement by
                  and  between  Congress  Financial  Corporation  (Southern)  as
                  Lender and the Registrant,  One Price Clothing of Puerto Rico,
                  Inc. and One Price Clothing - U.S.
                  Virgin Islands, Inc. as Borrowers dated February 19, 1998.

 4(l)             Amendment Number One to the Continuing Commercial Credit 
                  Agreement by and between Carolina First Bank as Lender and the
                  Registrant, One Price Clothing of Puerto Rico, Inc. and One 
                  Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated 
                  March 20, 1998.

4(m)              Amendment Number Two to the Continuing  Commercial  Credit 
                  Agreement by and between Carolina First Bank as Lender and the
                  Registrant,  One Price Clothing of Puerto  Rico,  Inc. and One
                  Price  Clothing  - U.S.  Virgin  Islands,  Inc. as   Borrowers
                  dated April 21, 1998.

4(n)             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: Incorporated by reference to
                 Exhibit 10(g) to the Registrant's Annual Report on Form 10-K 
                 for the year ended February 1, 1997 ("the 1996 Form 10-K").

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.  Incorporated  by  reference to
                 Exhibit of the same number to the 1996 Form 10-K.

10(m)*           Agreement dated March 25, 1997 between the Registrant and Henry
                 D. Jacobs, Jr.:  Incorporated by reference to
                 Exhibit 10(n) to the 1996 Form 10-K.

10(n)*           Employment Agreement dated March 26, 1997 between the 
                 Registrant and Larry I. Kelley:  Incorporated by
                 reference to Exhibit 10(o) to the 1996 Form 10-K.

10(o)*           Addendum to Employment Agreement dated March 6, 1997 between 
                 the Registrant and Henry D. Jacobs, Jr.: Incorporated by 
                 reference to Exhibit 10(p) to the 1996 Form 10-K.

10(p)*           Stock Option Agreement dated March 26, 1997 between Registrant 
                 and Larry I. Kelley:  Incorporated by reference
                 to Exhibit 10(c) to the April 1997 Form 10-Q.

10(q)*           Employment Agreement dated November 10, 1997 and Amendment to 
                 Employment Agreement dated April 16, 1998 between the 
                 Registrant and A. J. Nepa.

10(r)*           Employment  Agreement  dated  October 21, 1991 and Amendment to
                 Employment   Agreement   dated  April  16,  1998   between  the
                 Registrant and George V. Zalitis.

10(s)*           Letter of Understanding regarding Non-Executive Chairman of the
                 Board position and Consulting Agreement dated April 16, 1998 
                 between the Registrant and Leonard Snyder.

* Denotes a management contract or compensatory plan or agreement.

 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  21,  1998,  the  Company  filed a Report Form 8-K dated
             January  20,  1998 to  announce  that the  Company  took a one-time
             restructuring   charge  in  fiscal  1997  for  several  initiatives
             designed to return the Company to profitability.

             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 29,  1998,  the  Company  filed a report on Form 8-K dated
             April  29,  1998 to  announce  changes  in the  composition  of the
             Company's Board of Directors.

(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.

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.

                                                 ONE PRICE CLOTHING STORES, INC.
<TABLE>
<S>     <C>                                    <C> 

Date:  April 30, 1998                          /s/ Larry I. Kelley
                                               ----------------------------
                                               Larry I. Kelley
                                               President and Chief Executive Officer
                                               (principal executive officer)

 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 30, 1998                          /s/ Henry D. Jacobs, Jr.
                                               ----------------------------
                                               Henry D. Jacobs, Jr.
                                               Chairman of the Board of Directors

Date:  April 30, 1998                          /s/ Larry I. Kelley
                                               ----------------------------
                                               Larry I. Kelley
                                               President and Chief Executive Officer
                                              (principal executive officer)

 Date:  April 30, 1998                         /s/ Stephen A. Feldman
                                               ----------------------------
                                               Stephen A. Feldman
                                               Executive Vice President and Chief Financial Officer
                                               (principal financial and accounting officer)

 Date:  April 30, 1998                         /s/ Cynthia R. Cohen
                                               ---------------------------
                                               Cynthia R. Cohen
                                               Director

Date:  April 30, 1998                          /s/ Charles D. Moseley, Jr.
                                               ---------------------------
                                               Charles D. Moseley, Jr.
                                               Director

Date:  April 30, 1998                          /s/ Laurie M. Shahon
                                               ---------------------------
                                               Laurie M. Shahon
                                               Director

 Date:  April 30, 1998                         /s/ Malcolm L. Sherman
                                               ---------------------------
                                               Malcolm L. Sherman
                                               Director

Date:  April 30, 1998                          /s/ James M. Shoemaker, Jr.
                                               ---------------------------
                                               James M. Shoemaker, Jr.
                                               Director

 Date:  April 30, 1998                         /s/ Raymond S. Waters
                                               ---------------------
                                               Raymond S. Waters
                                               Director
</TABLE>


                         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
   ----------------------- ---------------------- ------------------------------------------ ------------------- -----------------
   ----------------------- ---------------------- ------------------------------------------ ------------------- -----------------
</TABLE>

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

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

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




  FISCAL YEAR ENDED
  JANUARY 31, 1998

  Allowance for
  doubtful accounts           $  144,000         $   432,000                                $380,000             $  196,000
                              ==========         ===========                                ========             ==========

  Valuation allowance for
  deferred income taxes       $  354,000         $ 2,802,000                                $     --             $3,156,000
                              ==========         ===========                                =========            ==========

  FISCAL YEAR ENDED
  FEBRUARY 1, 1997

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

  Valuation allowance for
  deferred income taxes      $        --         $   354,000                                $      --             $ 354,000
                               =========         ===========                                =========             =========

  TRANSITION
  PERIOD ENDED
  FEBRUARY 3, 1996

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

  FISCAL YEAR ENDED
  DECEMBER 30, 1995

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


</TABLE>


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


                         ONE PRICE CLOTHING STORES, INC.
                                  EXHIBIT INDEX



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.

4(e)       Amendment  Number One to the Loan and  Security  Agreement  by and
           between Congress  Financial  Corporation  (Southern) as lender and
           the  Registrant,  One Price Clothing of Puerto Rico,  Inc. and One
           Price Clothing - U.S. Virgin Islands,  Inc. as Borrowers dated May
           16,  1997:  Incorporated  by  reference  to  Exhibit  10(a) to the
           Registrants  Quarterly  Report on Form 10-Q for the quarter  ended
           May 3, 1997 (File No. 0-15385) ("the April 1997 Form 10-Q").

4(f)       Continuing Commercial Credit Agreement by and between Carolina 
           First Bank as Lender and the Registrant, One Price Clothing of 
           Puerto Rico, Inc. and One Price Clothing - U.S. Virgin Islands, 
           Inc. as Borrowers dated May 16, 1997: Incorporated  by reference to 
           Exhibit 10(b) to the April 1997 Form 10-Q.

4(g)       Amendment  Number Two to the Loan and  Security  Agreement  by and
           between Congress  Financial  Corporation  (Southern) as Lender and
           the  Registrant,  One Price Clothing of Puerto Rico,  Inc. and One
           Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated June
           17,  1997:  Incorporated  by  reference  to  Exhibit  10(c) to the
           Registrant's  Quarterly  report on Form 10-Q for the quarter ended
           August 2, 1997 (File No. 0-15385) ("the July 1997 Form 10-Q").

4(h)       Mortgage  and  Security  Agreement  by  and  between  First  Union
           National  Bank,  as  Mortgagee  and  One  Price  Realty,  Inc.  as
           Mortgagor  dated  June 17,  1997:  Incorporated  by  reference  to
           Exhibit 10(d) to the July 1997 Form 10-Q.

4(i)       Promissory  Note by and between First Union  National Bank and One
           Price Realty, Inc. dated June 17, 1997:  Incorporated by reference
           to Exhibit 10(e) to the July 1997 Form 10-Q.

4(j)       Lease Agreement by and between One Price Clothing Stores, Inc. as 
           Tenant and One Price Realty, Inc. as Landlord dated June 17, 1997:
           Incorporated by reference to Exhibit 10(f) to the July 1997 Form 
           10-Q.

4(k)       Amendment Number Three to the Loan and Security Agreement by and 
           between Congress Financial Corporation (Southern) as Lender and 
           the Registrant, One Price Clothing of Puerto Rico, Inc. and One 
           Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated 
           February 19, 1998.

4(l)       Amendment Number One to the Continuing Commercial Credit Agreement
           by and between Carolina First Bank as Lender and the Registrant, 
           One Price Clothing of Puerto Rico, Inc. and One Price Clothing - 
           U.S. Virgin Islands, Inc. as Borrowers dated March 20, 1998.

4(m)       Amendment Number Two to the Continuing Commercial Credit Agreement
           by and between Carolina First Bank as Lender and the Registrant, 
           One Price Clothing of Puerto Rico, Inc. and One Price Clothing - 
           U.S. Virgin Islands, Inc. as Borrowers dated April 21, 1998.

4(n)       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: Incorporated by reference to Exhibit 10(g)
           to the Registrant's  Annual Report on Form 10-K for the year ended
           February 1, 1996 ("the Form 10-K").

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.  Incorporated  by  reference to Exhibit of the
           same number to the 1996 Form 10-K.

10(m)*     Agreement dated March 25, 1997 between the Registrant and Henry D.
           Jacobs,  Jr.:  Incorporated  by reference to Exhibit  10(n) to the
           1996 Form 10-K.

10(n)*     Employment Agreement dated March 26, 1997 between the Registrant 
           and Larry I. Kelley: Incorporated by reference to Exhibit 10(o) to
           the 1996 Form 10-K.

10(o)*     Addendum to Employment  Agreement  dated March 6, 1997 between the
           Registrant and Henry D. Jacobs, Jr.:  Incorporated by reference to
           Exhibit 10(p) to the 1996 Form 10-K.

10(p)*     Stock Option Agreement dated March 26, 1997 between Registrant and
           Larry I. Kelley: Incorporated by reference to Exhibit 10(c) to the
           April 1997 Form 10-Q.

10(q)*     Employment Agreement dated November 10, 1997 and Amendment to 
           Employment Agreement dated April 16, 1998 between
           Registrant and A. J. Nepa.

10(r)*     Employment Agreement dated October 21, 1991 and Amendment to 
           Employment Agreement dated April 16, 1998 between the
           Registrant and George V. Zalitis.

10(s)*     Letter of Understanding  regarding  Non-Executive  Chairman of the
           Board  position  and  Consulting  Agreement  dated  April 16, 1998
           between the Registrant and Leonard Snyder.

* Denotes a management contract or compensatory plan or agreement.


 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  21,  1998,  the  Company  filed a Report Form 8-K dated
             January  20,  1998 to  announce  that the  Company  took a one-time
             restructuring   charge  in  fiscal  1997  for  several  initiatives
             designed to return the Company to profitability.

             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 29,  1998,  the  Company  filed a report on Form 8-K dated
             April  29,  1998 to  announce  changes  in the  composition  of the
             Company's Board of Directors.

(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.