<PAGE>

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

                                    Form 10-Q

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

                  For the quarterly period ended July 29, 2000

                         Commission file number 1-11134

                                 BRADLEES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>

<S>                                                      <C>
MASSACHUSETTS                                            04-3156108
(State or other jurisdiction of                          (I.R.S. employer
incorporation or organization)                           identification number)
</TABLE>

                               One Bradlees Circle
                               Braintree, MA 02184
                    (Address of principal executive offices)
                                   (Zip code)

                                 (781) 380-3000
              (Registrant's telephone number, including area code)

                                      NONE
                                      ----
                     (Former name, former address and former
                   fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes   X    No
     ---
Number of shares of the issuer's common stock outstanding as of September 1,
2000: 9,857,695 shares.

                            Exhibit Index on Page 19
                        Page 1 of 20 (Excluding exhibits)


<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Bradlees, Inc.:

We have reviewed the accompanying condensed consolidated balance sheets of
Bradlees, Inc. and subsidiaries (the "Company") as of July 29, 2000 and July 31,
1999, and the related condensed consolidated statements of operations and cash
flows, for the thirteen and twenty-six week periods then ended. These financial
statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with accounting principles generally accepted in the
United States.

                                                       /S/ARTHUR ANDERSEN LLP
                                                       ----------------------

New York, New York
August 16, 2000 (except with
respect to the matter discussed
in Note 8, as to which the date is
August 27, 2000)

                                       2
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

                         PART 1 - FINANCIAL INFORMATION

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>

<CAPTION>

                                                                         13 WEEKS ENDED
                                                                         --------------
                                                                 JULY 29, 2000    JULY 31, 1999
                                                                 -------------    -------------
<S>                                                                  <C>          <C>
Net sales                                                            $ 360,359    $ 369,148
Leased department and other operating income                             3,801        3,913
                                                                     ---------    ---------
Total revenue                                                          364,160      373,061
Cost of goods sold                                                     249,100      250,182
Selling, store operating, administrative and distribution expenses     100,275      105,618
Depreciation and amortization expense                                    6,176        7,240
Non-recurring benefit - contingency resolution                          (4,262)          --
                                                                     ---------    ---------
     Income from operations                                             12,871       10,021
Interest and debt expense                                                8,395        7,121
Reorganization items                                                        --         (778)
                                                                     ---------    ---------
    Net income                                                       $   4,476    $   3,678
                                                                     =========    =========
    Comprehensive income                                             $   4,476    $   3,678
                                                                     =========    =========
    Net income per share - basic                                     $    0.45    $    0.36
                                                                     =========    =========
    Weighted average shares outstanding                                  9,955       10,242
                                                                     =========    =========
    Net income per share - diluted                                   $    0.45    $    0.33
                                                                     =========    =========
    Weighted average common and common equivalent shares                10,026       11,025
                                                                     =========    =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>

<CAPTION>

                                                                        26 WEEKS ENDED
                                                                        --------------
                                                                 JULY 29, 2000   JULY 31, 1999
                                                                 -------------   -------------
<S>                                                                  <C>          <C>
Net sales                                                            $ 675,284    $ 681,484
Leased department and other operating income                             6,772        6,644
                                                                     ---------    ---------
Total revenue                                                          682,056      688,128
Cost of goods sold                                                     476,656      474,739
Selling, store operating, administrative and distribution expenses     203,308      205,822
Depreciation and amortization expense                                   12,312       14,528
Gain on disposition of property                                         (2,733)          --
Non-recurring benefit - contingency resolution                          (4,262)          --
                                                                     ---------    ---------
     Loss from operations                                               (3,225)      (6,961)
Interest and debt expense                                               15,779       14,003
Reorganization items                                                        --         (778)
                                                                     ---------    ---------
     Loss before cumulative effect of accounting change                (19,004)     (20,186)
Cumulative effect of accounting change                                      --          558
                                                                     ---------    ---------
     Net loss                                                        ($ 19,004)   ($ 20,744)
                                                                     =========    =========
     Comprehensive loss                                              ($ 19,004)   ($ 20,744)
                                                                     =========    =========
     Net loss per share - basic and diluted:
     Loss before cumulative effect of accounting change              ($   1.91)   ($   1.97)
     Cumulative effect of accounting change                                 --        (0.06)
                                                                     ---------    ---------
     Net loss per share - basic and diluted                          ($   1.91)   ($   2.03)
                                                                     =========    =========
     Weighted average shares outstanding - basic and diluted             9,955       10,242
                                                                     =========    =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>

<CAPTION>

                                             JULY 29, 2000  JAN. 29, 2000  JULY 31, 1999
                                             -------------  -------------  -------------
<S>                                              <C>          <C>          <C>
ASSETS
Current assets:
    Cash                                         $   8,249    $   9,786    $  11,504
    Accounts receivable                             12,272       11,524        8,808
    Inventories                                    256,647      248,151      245,271
    Prepaid expenses                                11,345        9,843       11,173
                                                 ---------    ---------    ---------
      Total current assets                         288,513      279,304      276,756
                                                 ---------    ---------    ---------
Property, plant and equipment, net:
  Property excluding capital leases, net            96,528       92,541       91,320
  Property under capital leases, net                21,526       22,358       23,211
                                                 ---------    ---------    ---------
    Total property, plant and equipment, net       118,054      114,899      114,531
                                                 ---------    ---------    ---------
Other assets:
   Lease interests, net                             69,301       71,478       73,623
   Other, net                                        9,049        7,606        7,254
                                                 ---------    ---------    ---------
      Total other assets                            78,350       79,084       80,877
                                                 ---------    ---------    ---------
      Total assets                               $ 484,917    $ 473,287    $ 472,164
                                                 =========    =========    =========

LIABILITIES AND STOCKHOLDERS'
  EQUITY
Current liabilities:
  Accounts payable                               $ 135,724    $ 143,111    $ 138,417
  Accrued expenses                                  16,378       24,841       20,300
  Self-insurance reserves                            6,430        6,553        6,039
  Revolver borrowings                              183,026      129,857      132,147
  Current portion of capital lease obligations
     and notes                                       2,967        2,959        2,532
                                                 ---------    ---------    ---------
     Total current liabilities                     344,525      307,321      299,435
                                                 ---------    ---------    ---------
Long-term liabilities:
  Obligations under capital leases                  21,930       26,096       27,398
  Lease financing obligation                        17,482       17,492       17,500
  Convertible notes payable                             --           --       11,976
  Self-insurance reserves                           12,254       13,304       12,261
  Unfavorable lease liability                       45,373       45,226       44,903
  Other long-term liabilities                       15,812       17,361       24,183
                                                 ---------    ---------    ---------
    Total long-term liabilities                    112,851      119,479      138,221
                                                 ---------    ---------    ---------
Stockholders' equity:
  Common stock 9,954,599 shares outstanding
     (9,966,720 shares at 01/29/00;
       10,242,092 shares at 07/31/99)
       Par value                                       100          100          102
  Additional paid-in-capital                        55,814       55,755       55,150
  Accumulated deficit                              (28,373)      (9,368)     (20,744)
                                                 ---------    ---------    ---------
     Total stockholders' equity                     27,541       46,487       34,508
                                                 ---------    ---------    ---------
Total liabilities and stockholders' equity       $ 484,917    $ 473,287    $ 472,164
                                                 =========    =========    =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>

<CAPTION>

                                                                     JULY 29, 2000   JULY 31, 1999
                                                                     -------------   -------------
<S>                                                                      <C>         <C>
Cash flows from operating activities:
   Net loss                                                              ($19,004)   ($20,744)
   Adjustments to reconcile net loss
       to net cash provided (used) by operating activities:
         Depreciation and amortization expense                             12,312      14,528
         Amortization of deferred financing costs                             777         731
         Gain on disposition of property                                   (2,733)         --
         Non-recurring benefit - contingency resolution                    (4,262)         --
         Amortization of lease interests and unfavorable
            lease liability, net                                            2,324       2,532
         Cumulative effect of accounting change                                --         558
         Reorganization items                                                  --        (778)
         Changes in working capital and other, net                        (22,543)      4,997
                                                                         --------    --------
   Net cash provided (used) by operating activities
      before reorganization items                                         (33,129)      1,824
      Reorganization items:
      Chapter 11 professional fees paid                                      (471)     (6,023)
      Other reorganization expenses paid, net                              (1,599)     (1,343)
                                                                         --------    --------
   Net cash used by reorganization items                                   (2,070)     (7,366)
                                                                         --------    --------
   Net cash used by operating activities                                  (35,199)     (5,542)
Cash flows from investing activities:
   Capital expenditures, net                                              (15,504)     (8,226)
   Lease acquisition costs                                                     --      (1,250)
                                                                         --------    --------
       Net cash used in investing activities                              (15,504)     (9,476)
Cash flows from financing activities:
   Deferred financing costs                                                (1,911)         --
   Payments of convertible notes                                               --     (17,019)
   Net borrowings under revolver                                           53,169      17,697
   Proceeds from lease financing                                               --      17,500
   Proceeds received upon exercise of warrants                                 --         115
   Principal payments on notes and capital lease obligations               (2,092)     (1,256)
                                                                         --------    --------
       Net cash provided by financing activities                           49,166      17,037
Net increase (decrease) in cash                                            (1,537)      2,019
  Cash - Beginning of year                                                  9,786       9,485
                                                                         --------    --------
  Cash - End of period                                                   $  8,249    $ 11,504
                                                                         ========    ========
Supplemental disclosure of cash flow information:
   Cash paid for interest and certain debt fees                          $  9,944    $  7,861
   Cash paid for income taxes                                                  --          --
Supplemental schedule of noncash (investing and financing) activities:
   Capital lease obligations incurred                                          --    $  2,883
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.       BASIS OF PRESENTATION

         Bradlees, Inc. and subsidiaries (collectively "Bradlees" or the
"Company") operate in the discount department store retail segment in the
Northeast United States. The Company emerged from Chapter 11 of the United
States Bankruptcy Code ("Chapter 11") on February 2, 1999. The reorganized
Company adopted fresh-start reporting and gave effect to its emergence as of its
fiscal 1998 year-end (January 30, 1999). Under fresh-start reporting, the final
consolidated balance sheet as of January 30, 1999 became the opening
consolidated balance sheet of the reorganized Company.

         With respect to the unaudited condensed consolidated financial
statements for the 13 weeks (second quarter) and 26 weeks (year-to-date) ended
July 29, 2000 and July 31, 1999, it is the Company's opinion that all necessary
adjustments (consisting of normal and recurring adjustments) have been included
to present a fair statement of results for the interim periods. Diluted net
income per share for the second quarters of both years reflect the impact of
common stock equivalents (stock options and warrants). Shares outstanding and
loss per share were the same for both the basic and diluted calculations for the
year-to-date periods because the inclusion of common stock equivalents would
have reduced the reported loss per share. The presented shares outstanding
include shares of Bradlees Common Stock issued or presumed issued in accordance
with the Company's plan of reorganization. This includes certain shares expected
to be issued as final unresolved pre-petition claims are settled.

         These statements should be read in conjunction with the Company's
financial statements (Form 10-K) for the fiscal year (52 weeks) ended January
29, 2000 ("1999"). Due to the seasonal nature of the Company's business,
operating results for the second quarter and year-to-date period are not
necessarily indicative of results that may be expected for the fiscal year (53
weeks) ending February 3, 2001 ("2000"). Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted,
pursuant to the general rules and regulations promulgated by the Securities and
Exchange Commission (the "SEC").

2.       CUMULATIVE EFFECT OF ACCOUNTING CHANGE

         In December, 1999, the SEC issued Staff Accounting Bulletin (SAB) No.
101, "Revenue Recognition in Financial Statements", which provides guidance on,
among other things, recognition of layaway sales and reporting of leased
department sales. SAB No. 101 requires that layaway sales and the associated
gross margin not be recognized until the customers pick up the merchandise and
that the fee income rather than the sales from leased departments be included in
the presentation of total revenue in SEC filings. The Company elected the early
adoption of the provisions of SAB No. 101 in the fourth quarter of 1999
effective as of the beginning of 1999 and, accordingly, recorded a charge of
$0.6 million in the first quarter of 1999 for the cumulative effect of a change
in accounting method for layaway


                                       7
<PAGE>

sales and has excluded leased department sales from the presentation of total
revenue in the accompanying consolidated statements of operations.

3.       DEBT

         REVOLVER The $290 million Revolver consists of a $250 million senior
secured revolving line of credit (of which $90 million is available for issuance
of letters of credit) ("Tranche A"), a $20 million junior secured "last in-last
out" facility ("Tranche B") and a $20 million secured and fully-funded facility
("Tranche C") that was entered into on June 29, 2000. The Company expects to
continue to use the Revolver primarily for working capital and general business
needs. The Revolver is scheduled to expire on December 23, 2001. Trade and
standby letters of credit outstanding under the Revolver were $16.1 and $21.8
million, respectively, at July 29, 2000 and $23.0 and $21.5 million,
respectively, at July 31, 1999.

         Tranche A has an advance rate equal to 80% of the Loan Value of
Eligible Receivables (as defined), plus generally 72% of the Loan Value of
Eligible Inventory (as defined), subject to certain adjustments. Between March 1
and December 15, the inventory advance rate will be increased to 77% of the Loan
Value of Eligible Inventory provided that the total amount of all Tranche A
advances does not exceed 85% of the Loan to Value Ratio (as defined). The
Company may also borrow up to an additional $20 million under Tranche B provided
that the total borrowings (Tranches A and B) do not exceed 93% of the Loan to
Value Ratio. The total Revolver borrowings (Tranches A, B and C) are not to
exceed (a) the lesser of (i) (x) from January 1 through April 30, 90% of the
Loan Value of Eligible Inventory, (y) from May 1 through September 30, 91.5% of
the Loan Value of Eligible Inventory or (z) from October 1 through December 31,
93% of the Loan Value of Eligible Inventory and (ii) 100% of the current
Appraised Value of Eligible Inventory (as defined), plus (b) 80% of Eligible
Receivables, minus (c) the then amount of all Borrowing Base Reserves (as
defined). Any Tranche C borrowings cannot be repaid prior to the complete
repayment of any borrowings under Tranches A and B.

         The Revolver permits the Company to borrow funds under Tranche A at an
interest rate per annum equal to (a) the higher of (i) the annual rate of
interest as announced by Fleet National Bank as its "Base Rate" and (ii) the
weighted average of the rates on overnight federal funds plus 0.50% per annum;
or (b) 2.25% per annum plus the quotient of (i) the LIBOR Rate in effect divided
by (ii) a percentage equal to 100% minus the percentage established by the
Federal Reserve as the maximum rate for all reserves applicable to any member
bank of the Federal Reserve system in respect of eurocurrency liabilities. Each
of these rates is subject to a 0.50% increase in the event of overadvances.
Tranche B permits the Company to borrow funds at the "Base Rate" plus 7.00% per
annum. Tranche C carries an annual interest rate of 16.50%. The weighted average
interest rate under the Revolver in the first half of 2000 was 8.71% compared to
7.33% in the first half of 1999. In addition, $1.2 million of deferred financing
costs were paid in the second quarter of 2000 in connection with the Tranche C
financing and related Revolver amendment.

         Tranches A and Tranche B are secured by substantially all of the
non-real estate assets of the Company. Tranche C is secured by a second lien on
substantially all of the non-real estate assets of the Company and a first lien
on selected leasehold interests. The Revolver contains


                                       8
<PAGE>

financial covenants including (i) minimum rolling twelve-month EBITDA at the end
of each quarter, (ii) minimum monthly accounts payable to inventory ratio; (iii)
maximum annual capital expenditures; (iv) minimum net availability of $50
million during the month of December; and (v) minimum operating cash flow to
interest expense (effective beginning with the fiscal quarter ending February 3,
2001 but waived for that quarter). Effective May 19, 2000, the Company's capital
expenditure covenant was amended to increase the annual limit to $30 million
from $25 million. The Company is in compliance with the Revolver covenants.

         9% CONVERTIBLE NOTES The 9% Convertible Notes (the "Notes") previously
outstanding were scheduled to mature on February 3, 2004, bore interest at 9%
per annum and were convertible any time after February 2, 2000 into shares of
the Company's Common Stock. The Company had the right to redeem the Notes at any
time, in whole or in part, subject to certain availability levels under the
Revolver, by paying the holder the unpaid principal plus accrued and unpaid
interest. The Company redeemed $17.0 million of the Notes with the proceeds from
its Lease Financing Obligation (see below) in July, 1999 and exercised an option
to repurchase $9 million of the Notes at a discount in December, 1999. The
remaining $3 million of outstanding Notes were redeemed along with associated
accrued and unpaid interest in January, 2000.

         LEASE FINANCING OBLIGATION In July, 1999, the Company and 2500 CPA
Associates, LLC ("CPA") entered into an agreement for the financing of the
Company's leasehold interest in the Yonkers, NY store (the "Lease Financing
Obligation"). Under this agreement, the Company received $17.5 million in
exchange for the assignment of its leasehold interest to CPA and annual
incremental payments of $2.6 million (including interest at an effective rate of
14.8%) under a sublease with CPA for a term of 35 years, including option
periods. The Yonkers store continues to operate as a Bradlees store and the net
proceeds (after certain fees) of $17.2 million were used to pay down $17.0
million of the Notes (see above) and $0.2 million of associated accrued
interest.

         The Lease Financing Obligation is secured by (i) the leasehold interest
in the Yonkers store, (ii) first priority liens on leasehold interests in three
other named stores, as well as any net proceeds received upon any disposition(s)
of such interests, and (iii) a standby letter of credit of $1.1 million.

4.       INCOME TAXES

         The Company provides for income taxes under the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes". On an interim basis, the Company provides for income taxes using the
estimated annual effective rate method. The Company did not recognize a
quarterly or annual income tax expense or benefit in 1999 and did not recognize
a quarterly or year-to-date income tax expense or benefit in the first half of
2000 due to the uncertainty of any net annual income tax expense for financial
reporting for 2000.


                                       9
<PAGE>

5.     REORGANIZATION ITEMS

         There were no reorganization items recorded in the first half of 2000.
In the second quarter of 1999, the Company entered into a lease financing
transaction (Note 3) which allowed its Yonkers, NY store to continue in
operation, resulting in the reversal of reserves totaling $0.8 million that had
been established for the expected store closing costs. Approximately $1.6
million of restructuring costs previously provided for were paid in the first
half of 2000, which included $1.4 million of the $2.0 million payment associated
with the termination of the lease for the Company's previously closed Peabody,
MA store (Note 7). There are no material remaining restructuring costs expected
to be paid.

6.       STOCK OPTIONS

         A total of 1,000,000 shares of Common Stock were reserved for issuance
under the Bradlees Inc. 1999 Stock Option Plan (the "1999 Option Plan"). Through
the second quarter of 2000, the Company has authorized grants of options to
purchase 892,950 shares of Common Stock to senior management and other members
of management, of which options to purchase 824,905 shares were outstanding at
July 29, 2000.

         In May, 2000, the Company's shareholders approved the 2000 Stock Option
and Incentive Plan (the "2000 Stock Plan") which authorizes the Company to issue
up to 1,250,000 shares of Common Stock pursuant to various stock incentive
awards. During the second quarter of 2000, the Company granted options to
purchase 848,870 shares to senior management at $4.00 per share and 17,500
shares to non-employee directors at $4.31 per share, of which options to
purchase 827,733 shares were outstanding at July 29, 2000.

         All of the above options vest in annual one-third increments except for
the non-employee director options which vest after the first year. All vested
options shall be exercisable for a period of 5 years from the date of the grant.

7.     OTHER ITEMS

       The Company recognized a $4.3 million non-recurring benefit in the second
quarter of 2000 resulting from the resolution of the Company's pre-petition
unclaimed property reserves that had been included in accounts payable. These
reserves were eliminated based on an analysis performed by outside consultants
and management after the Company's emergence from Chapter 11 and associated
communications that occurred in the second quarter of 2000 after the filing of
the Company's unclaimed property return for the period ended June 30, 1996.

       The Company adjusted its medical insurance reserves by $1.2 million in
the second quarter of 2000 in accordance with revised estimates provided by
its insurance advisors and claims experience and recognized a credit for such
amount in selling, store operating, administrative and distribution ("SG&A")
expenses. The Company also recorded a $1.9 million credit (included in SG&A
expenses) in the first quarter of 2000 resulting from a change in accounting
estimate associated with the reduction in a severance-related liability. The
previous charge for this severance item was not classified as a
reorganization item.

                                       10
<PAGE>

         In February, 2000, the Company terminated its lease commitment for its
closed store in Peabody, MA with a lump-sum payment of $2.0 million. The Company
recorded a gain of $2.7 million in the first quarter of 2000 associated with the
early termination of the related capital lease obligation.

8.       SUBSEQUENT EVENT

         On August 27, 2000, the United Food and Commercial Workers' Union
Local 1262 (the "Union"), representing approximately 1,500 Bradlees'
employees in 21 stores in New York and New Jersey, conducted a strike vote
for the employees it represents after the Union rejected the Company's latest
contract offer. The employees have authorized the Union to call a strike. The
principal unresolved issue is the Union's request for a funding of an
increase to the benefit level in the Union's pension plan. Any strike of an
extended duration by the Union would likely have a significant adverse impact
on the Company. However, the Company believes that a mutually acceptable
collective bargaining agreement with the Union can be finalized prior to any
strike, and in any event, the Union cannot call a strike until it has
provided due notice to the Company.

                                       11
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

                     MANAGEMENTS DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial information discussed herein should be read in conjunction with
the Condensed Consolidated Financial Statements and Notes included elsewhere in
this Form 10-Q. Also, the following discussions include certain statements which
are or may be construed as "forward-looking statements" (see definition on page
2 of our Form 10-K for the fiscal year ended January 29, 2000) about our
business, sales and expenses, and operating and capital requirements. Any such
statements are subject to the risk factors disclosed in our Form 10-K that could
cause the actual results or requirements to vary materially. For example, our
statements regarding expected fiscal year 2000 levels of borrowings, letters of
credit, amounts available to borrow and capital expenditures are dependent on
our future operating performance and ability to meet our financial obligations,
which are further dependent upon, among other things, the risk factors Disclosed
in our Form 10-K.

RESULTS OF OPERATIONS

Results of operations, expressed in millions of dollars (except per share
amounts) and as a percentage of net sales (on next page), were as follows for
the 13 weeks and 26 weeks ended July 29, 2000 ("Second Quarter 2000" and
"Year-to-Date 2000", respectively) and for the 13 weeks and 26 weeks ended July
31, 1999 ("Second Quarter 1999" and Year-to-Date 1999", respectively):

<TABLE>

<CAPTION>

                                                                 13 Weeks Ended              26 Weeks Ended
                                                          July 29, 2000  July 31, 1999  July 29, 2000  July 31, 1999
                                                          -------------  -------------  -------------  -------------

<S>                                                              <C>           <C>           <C>         <C>
(Dollars in millions except per share amounts)
Net sales                                                        $360.4         $369.1         $675.3         $681.5
Cost of goods sold                                                249.1          250.2          476.7          474.7
                                                                 -------       -------       --------       --------
Gross margin                                                      111.3          118.9          198.6          206.8
Leased department and other operating income                        3.8            3.9            6.8            6.6
                                                                 -------       -------       --------       --------
                                                                  115.1          122.8          205.4          213.4
Selling, store operating, administrative
      and distribution expenses                                   100.3          105.6          203.3          205.8
Depreciation and amortization expense                               6.2            7.2           12.3           14.5
Gain on disposition of property                                       -              -           (2.7)             -
Non-recurring benefit - contingency resolution                     (4.3)             -           (4.3)             -
                                                                 -------       -------       --------       --------
   Income (loss) from operations                                   12.9           10.0           (3.2)          (6.9)
Interest and debt expense                                           8.4            7.1           15.8           14.0
Reorganization items                                                  -           (0.8)             -           (0.8)
                                                                 -------       -------       --------       --------
    Income (loss) before cumulative effect of
       accounting change                                            4.5            3.7          (19.0)         (20.1)
Cumulative effect of accounting change                                -              -              -            0.6
                                                                 -------       -------       --------       --------
 Net income (loss)                                                 $4.5           $3.7         ($19.0)        ($20.7)
                                                                 =======       =======       ========       ========
Basic net income (loss) per share                                 $0.45          $0.36         ($1.91)        ($2.03)
                                                                 =======       =======       ========       ========
Diluted net income (loss) per share                               $0.45          $0.33         ($1.91)        ($2.03)
                                                                 =======       =======       ========       ========
Total revenue increase (decrease)                                 (2.4%)         19.0%          (0.9%)         14.6%
Comparable store sales increase (decrease)                        (6.3%)         19.5%          (4.0%)         16.2%
Number of stores in operation at end of period                      105           102             105            102
</TABLE>


                                       12
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

                     MANAGEMENTS DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS (CONTINUED)

<TABLE>

<CAPTION>

                                                                  13 Weeks Ended                26 Weeks Ended
                                                           July 29, 2000  July 31, 1999  July 29, 2000  July 31, 1999
                                                           -------------  -------------  -------------  -------------
<S>                                                             <C>           <C>              <C>            <C>
As a percentage of net sales,
      results were as follows:
Net sales                                                       100.0  %      100.0  %         100.0  %       100.0  %
Cost of goods sold                                               69.1          67.8             70.6           69.7
                                                           -----------    -----------      -----------    -----------
Gross margin                                                     30.9          32.2             29.4           30.3
Leased department and other operating income                      1.0           1.1              1.0            1.0
                                                           -----------    -----------      -----------    -----------
                                                                 31.9          33.3             30.4           31.3
Selling, store operating, administrative
      and distribution expenses                                  27.8          28.6             30.1           30.2
Depreciation and amortization expense                             1.7           2.0              1.8            2.1
Gain on disposition of property                                     -             -             (0.4)             -
Non-recurring benefit - contingency resolution                   (1.2)            -             (0.6)             -
                                                           -----------    -----------      -----------    -----------
   Income (loss) from operations                                  3.6           2.7             (0.5)          (1.0)
Interest and debt expense                                         2.4           1.9              2.3            2.0
Reorganization items                                                -          (0.2)               -           (0.1)
                                                           -----------    -----------      -----------    -----------
    Income (loss) before cumulative effect of
       accounting change                                          1.2           1.0             (2.8)          (2.9)
Cumulative effect of accounting change                              -             -                -            0.1
                                                           -----------    -----------      -----------    -----------
 Net income (loss)                                                1.2  %        1.0  %          (2.8)  %       (3.0)  %
                                                           ===========    ===========      ===========    ===========
</TABLE>


                                       13
<PAGE>

SECOND QUARTER 2000 COMPARED TO SECOND QUARTER 1999

         Net sales for Second Quarter 2000 declined $8.7 million or 2.4% from
Second Quarter 1999 due to a decrease of 6.3% in comparable store sales (which
include leased shoe department sales), mostly offset by the beneficial impact
from the opening of three new stores since Second Quarter 1999. We believe that
the decrease in comparable store sales was due primarily to an unseasonably cool
and rainy Spring and Summer in the Northeast that adversely impacted sales of
apparel and other seasonal merchandise, slower consumer spending and the impact
from fiscal year 2000 competitive store openings in the vicinity of a
significant number of our stores. Because we are more softlines-oriented than
other discount department store chains, our business was particularly affected
by the poor weather conditions. Second Quarter 1999 comparable store sales had
increased 19.5%. Comparable store sales for the fiscal month of August 2000
declined 5.2% compared to an increase of 13.1% in the prior August period.

         Gross margin decreased $7.6 million in Second Quarter 2000 compared to
Second Quarter 1999 due to the lower sales and a lower gross margin rate (30.9%
vs. 32.2%). The lower gross margin rate was primarily attributable to a lower
mix of softlines and seasonal sales due to the reasons discussed above and an
associated higher level of markdowns to control inventory levels. Leased
department and other operating income had a slight decrease of $0.1 million in
Second Quarter 2000 compared to Second Quarter 1999. Leased department sales
were $14.1 million in Second Quarter 2000 compared to $14.2 million in Second
Quarter 1999.

         Selling, store operating, administrative and distribution ("SG&A")
expenses decreased $5.3 million or 0.8% as a percentage of net sales in Second
Quarter 2000 from Second Quarter 1999. The lower SG&A expenses were primarily
due to decreases in home office and benefits expenses, including a $1.2 million
credit to SG&A expenses for adjustments of medical insurance reserves (Note 7 to
the Condensed Consolidated Financial Statements) and a $0.5 million
reimbursement for medical claim overpayments, partially offset by an increase in
advertising expenses and the impact of the three new stores. The decrease in
home office expenses was principally the result of a lower provision for annual
performance bonuses. The increase in advertising expenses was primarily
attributable to additional two-day sales events to drive customer traffic and
control inventory levels in light of the difficult Northeast retail environment
during Second Quarter 2000.

         Depreciation and amortization expense declined $1.0 million or 0.3% as
a percentage of net sales in Second Quarter 2000 from Second Quarter 1999 due
primarily to certain fixed assets becoming fully-depreciated since Second
Quarter 1999.

         We recorded a benefit of $4.3 million in Second Quarter 2000 for the
resolution of our pre-petition unclaimed property reserves (Note 7).

         Interest and debt expense increased $1.3 million or 0.5% as a
percentage of net sales in Second Quarter 2000 from Second Quarter 1999. This
increase was due primarily to higher seasonal borrowings (see "Liquidity and
Capital Resources") at a higher average interest rate (9.0% vs. 7.4%) and the
interest under the Lease Financing Obligation (Note 3), partially offset


                                       14
<PAGE>

by the interest savings from the early retirement of the 9% Convertible Notes
(Note 3) and lower amortization of the discount associated with the unfavorable
lease liability.

         Last year's $0.8 million credit in reorganization items is discussed in
Note 5.

         We did not record an income tax expense or benefit in Second Quarter
2000 or Second Quarter 1999 (Note 4).

YEAR-TO-DATE 2000 COMPARED TO YEAR-TO-DATE 1999

         Year-to-Date 2000 net sales declined $6.2 million or 0.9% from
Year-to-Date 1999 due to this year's 4.0% decrease in comparable store sales,
mostly offset by the impact from the opening of three stores since Second
Quarter 1999. We believe that the Year-to-Date 2000 decrease in comparable store
sales was due primarily to the same factors discussed above for Second Quarter
2000. We had strong double-digit increases in Year-to-Date 1999 sales of both
hardlines and softlines merchandise, with an overall comparable store sales
increase of 16.2% during that period.

         Gross margin decreased $8.2 million in Year-to-Date 2000 compared to
Year-to-Date 1999 due primarily to a lower gross margin rate (29.4% vs. 30.3%).
The lower year-to-date gross margin rate was principally the result of the same
factors discussed above for Second Quarter 2000. Leased department and other
operating income increased $0.2 million (due mostly to higher year-to-date
leased shoe department sales) but remained the same as a percentage of net
sales.

         Year-to-Date 2000 SG&A expenses decreased $2.5 million or 0.1% as a
percentage of net sales from Year-to-Date 1999. The lower SG&A expenses were
primarily due to the same factors as discussed above for Second Quarter 2000,
along with higher logistics and preopening expenses incurred in the first
quarter of 2000 and a $1.9 million credit to SG&A expenses in the first quarter
for a change in an accounting estimate (Note 7).

         Depreciation and amortization expense declined $2.2 million or 0.3% as
a percentage of net sales in Year-to-Date 2000 from Year-to-Date 1999 due
primarily to certain fixed assets becoming fully-depreciated since Second
Quarter 1999.

         We recorded a gain of $2.7 million in the first quarter of 2000
associated with the early termination of a capital lease obligation (Note 7).

         We recorded a benefit of $4.3 million in Second Quarter 2000 for the
resolution of our pre-petition unclaimed property reserves (Note 7).

         Interest and debt expense increased $1.8 million or 0.3% as a
percentage of net sales in Year-to-Date 2000 from Year-to-Date 1999. This
increase was due primarily to the same factors as discussed above for Second
Quarter 2000.


                                       15
<PAGE>

         Last year's reorganization credit and cumulative effect of accounting
change are discussed in Notes 5 and 2 respectively.

         We did not record an income tax provision in Year-to-Date 2000 due to
the current expectation of no income tax expense or benefit in 2000. There was
also no income tax expense or benefit recorded in Year-to-Date 1999.

LIQUIDITY AND CAPITAL RESOURCES

         We had outstanding borrowings of $183.0 million at July 29, 2000,
exclusive of the issuance of letters of credit, under our $290 million Revolver
(Note 3) compared to $132.1 million at July 31, 1999. Peak and average Revolver
borrowings were approximately $201 and $172 million, respectively, in
Year-to-Date 2000 compared to $142 and $125 million, respectively, in
Year-to-Date 1999. The increase in borrowings from Year-to-Date 1999 was
primarily due to the Year-to-Date 2000 net loss, an increase in inventories and
other working capital changes (discussed below), cash used by reorganization
items since Second Quarter 1999, and the early redemption of the 9% Convertible
Notes.

         We currently expect our borrowings under the Revolver, exclusive of the
issuance of letters of credit, for the full year of 2000 to peak at
approximately $230 million in November, 2000 and average approximately $180
million. The amount available to borrow under the Revolver in 2000 is currently
expected to peak at approximately $290 million in October and November, 2000 and
average approximately $255 million, while total outstanding letters of credit
under the Revolver are expected to peak at approximately $45 million in August,
2000 and average approximately $35 million. The net availability under the
Revolver in December, 2000 is currently expected to range from approximately $65
million to approximately $90 million.

         In Year-to-Date 2000, cash used by operations before reorganization
items was $33.1 million compared to $1.8 million of cash provided by operations
before reorganization items in Year-to-Date 1999. This increase in cash usage
was primarily due to changes in working capital and an increase in the cash loss
from operations (after consideration of the non-cash gain on disposition of
property and the non-recurring benefit in Year-to-Date 2000).

         Accounts receivable at July 29, 2000 increased $3.5 million from July
31, 1999 due primarily to a receivable of approximately $2.4 million recorded as
of July 29, 2000 for expected insurance recoveries associated with costs
resulting from a water main break near our Union Square, NY store. This incident
caused a temporary closing of the store during March, 2000 and a closing of the
bottom floor of the building through mid-August, 2000 due to water damage.

         Inventories at July 29, 2000 increased $11.4 million from July 31, 1999
due primarily to three new stores opened since Second Quarter. Inventories
increased $8.5 million from January 29, 2000 due primarily to a normal seasonal
build-up. We have adjusted our merchandise purchases since April, 2000 in
response to the lower sales volume.

         Accounts payable at July 29, 2000 declined $2.7 million from July 31,
1999 and $7.4 million from January 29, 2000 due primarily to the Second Quarter
2000 write-off of certain


                                       16
<PAGE>

unclaimed property reserves totaling $4.3 million previously included in
accounts payable (Note 7) and a reduction in medical insurance reserves ($1.2
million of which was previously included in accounts payable).

         Accrued expenses at July 29, 2000 were $3.9 million lower than at July
31, 1999 due primarily to a lower provision for annual performance bonuses in
Year-to-Date 2000 and continued payments made against reserves established at
the end of 1998 for reorganization items. Accrued expenses at July 29, 2000 were
$8.5 million lower than at January 29, 2000 due primarily to payments made
against reserves established prior to 2000 for emergence bonuses and the 1999
performance bonuses, along with payments made against the reserves for
reorganization items.

         Other long-term liabilities decreased $8.4 million from July 31, 1999
due primarily to decreases in certain employee benefit liabilities since Second
Quarter 1999, adjustments to restructuring reserves in 1999, paydowns of
long-term notes, the first-quarter 2000 change in accounting estimate described
in Note 7, and a reclassification of a reserve for emergence bonuses to
short-term liabilities at the end of 1999. These factors were partially offset
by an increase in our straight-line rent liability. Other long-term liabilities
decreased $1.5 million from January 29, 2000 due primarily to the first quarter
change in accounting estimate (Note 7).

         We incurred capital expenditures of $15.5 million in Year-to-Date 2000
(compared to $8.2 million in Year-to-Date 1999), primarily for new conveying and
sortation equipment in our Edison distribution center, certain management
information systems and one new store (Staten Island, NY). For all of 2000, we
currently expect total capital expenditures to be approximately $25 million
(compared to $22 million for all of 1999), primarily for the new conveying and
sortation equipment, two new stores (Staten Island and a new store in
Philadelphia that is expected to open early next year), management information
systems (including expenditures for new distribution yard management and
transportation systems and a new merchandise replenishment system) and various
store and other distribution center improvements. We currently expect to finance
these expenditures through internally-generated funds or through funds available
under the Revolver.

         We believe that the availability under our Revolver, together with
our available cash and expected cash flows from 2000 operations, will enable
us to fund our expected needs for working capital, capital expenditures and
debt service requirements. These expectations are dependent upon, among other
things, achieving operating results that are reasonably consistent with our
current plans. In addition, the Revolver expires in December, 2001 and will
need to be repaid, extended or possibly increased prior to that time. Our
ability to meet our financial obligations, make planned capital expenditures
and implement our strategic initiatives will depend on our future operating
performance, which will be subject to financial, competitive, economic and
other factors affecting the industry and our operations, including factors
beyond our control.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       There have been no material changes in our market risk associated with
our financial instruments. We are exposed to market risk from changes in
interest rates which may adversely


                                       17
<PAGE>

affect our financial position, results of operations and cash flows. In seeking
to minimize the risks from interest rate fluctuations, we manage exposures
through our regular operating and financing activities. We do not use financial
instruments for trading or other speculative purposes and are not party to any
leveraged financial instruments.

       We are exposed to interest rate risk primarily through our borrowings
under our $290 million Revolver (see Note 3 to our Condensed Consolidated
Financial Statements). Under the Revolver, we may borrow funds under Tranche A
at an interest rate per annum equal to (a) the higher of (i) the annual rate of
interest as announced by Fleet National Bank as its "Base Rate" and (ii) the
weighted average of the rates on overnight federal funds plus 0.50% per annum;
or (b) 2.25% per annum plus the quotient of (i) the LIBOR Rate in effect divided
by (ii) a percentage equal to 100% minus the percentage established by the
Federal Reserve as the maximum rate for all reserves applicable to any member
bank of the Federal Reserve system in respect of eurocurrency liabilities. Each
of these rates is subject to a 0.50% increase in the event of overadvances.
Tranche B permits the Company to borrow funds at the "Base Rate" plus 7.00% per
annum. Tranche C carries an annual interest rate of 16.50%.


                                       18
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

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

The matters voted upon and approved at the Company's Annual Meeting of
Stockholders held on May 31, 2000 were disclosed in the Company's Form 10-Q for
the quarter ended April 29, 2000. No other matters have been submitted to a vote
of security holders this year.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Index to Exhibits

<TABLE>

<CAPTION>

EXHIBIT NO.                                               EXHIBIT                             PAGE NO.
-----------                                               -------                             --------
<S>               <C>                                                                           <C>
         10       Amendment to Amended and Restated Employment Agreement, dated
                  as of June 7, 2000, between and among Bradlees, Inc., Bradlees
                  Stores, Inc. and Peter Thorner.                                                21

         10.1     Fourth Amendment and Waiver to Credit Agreement dated as of
                  June 29, 2000, among Bradlees Stores, Inc., Bradlees, Inc. and
                  Fleet National Bank and Back Bay Capital Funding, LLC (Tranche
                  C), as Agents.                                                                 23

         10.2     Credit Agreement dated as of February 2, 1999 and Conformed
                  Through the Fourth Amendment and Waiver, among Bradlees
                  Stores, Inc., Bradlees, Inc. and Fleet National Bank and Back
                  Bay Capital Funding, LLC (Tranche C), as Agents.                               37

         11       Computation of earnings per share                                             165

         15       Letter re: unaudited interim financial information.                           166

         27       Financial data schedule (filed on EDGAR)
</TABLE>

(b)      Reports on Form 8-K

      There were no reports on Form 8-K filed during the quarterly period ended
July 29, 2000.


                                       19
<PAGE>

                                 BRADLEES, INC.
                                AND SUBSIDIARIES

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        BRADLEES, INC.

Date:  September 8, 2000                By  /s/ Peter Thorner
                                            -----------------
                                        Peter Thorner
                                        Chairman and Chief Executive Officer

Date:  September 8, 2000                By  /s/ Cornelius F. Moses III
                                            --------------------------
                                        Cornelius F. Moses III
                                        Senior Vice President, Chief Financial
                                        Officer

                                       20