FACTORY 2-U STORES, INC. Announces August Sales.

Business Editors

SAN DIEGO--(BUSINESS WIRE)--Sept. 4, 2002

FACTORY 2-U STORES, INC. (Nasdaq:FTUS) today announced that sales for the four-week period ended August 31, 2002 were $49.2 million, a decrease of 12.5% over sales of $56.2 million for the four-week period ended September 1, 2001. Comparable store sales for the four-week period ended August 31, 2002 decreased 10.7% versus a decrease of 3.9% for the same period last year. The Company did not open or close any stores during the four-week period ended August 31, 2002.

Sales for the thirty weeks ended August 31, 2002 totaled $294.2 million compared to $321.3 million for the thirty weeks ended September 1, 2001, a decrease of 8.4%. Comparable store sales for the thirty weeks ended August 31, 2002 decreased 10.3% versus a decrease of 4.2% for the same period last year. For the thirty weeks ended August 31, 2002, the Company opened 8 new stores and closed 30 stores.

Mike Searles, Chairman and Chief Executive Officer, commented, "The back-to-school season for apparel has been a disappointment for most retailers and sales were below our expectations as well. Our comparable store sales for the first three weeks of August were negative low double-digit and then improved to negative mid single-digit for the last week of August. Our Men's business performed the poorest with negative high double-digit comparable store sales, while Kids performed the best with negative mid single-digit comparable store sales. Geographically, the central valley and San Diego areas of California and San Antonio, Texas area performed the best with negative low single-digit comparable store sales, while the pacific northwest region, Phoenix, Arizona and Los Angeles, California performed the poorest with negative mid double-digit comparable store sales."

We will provide a mid-month sales update for September on September 23, 2002 at 5:00 P.M. Eastern Standard Time. Those interested can access this update message at 1-888-201-9603. This message will remain available until October 21, 2002. We will release our September sales results on October 9, 2002 after the market closes, or approximately 4:00 P.M. Eastern Standard Time.

FACTORY 2-U STORES, INC. operates 257 "Factory 2-U" off-price retail stores which sell branded casual apparel for the family, as well as selected domestics and household merchandise at prices which generally are significantly lower than the prices offered by its discount competitors. The Company operates 33 stores in Arizona, 3 stores in Arkansas, 63 stores in southern California, 62 stores in northern California, 1 store in Idaho, 5 stores in Louisiana, 3 stores in Missouri, 8 stores in Nevada, 9 stores in New Mexico, 2 stores in Oklahoma, 14 stores in Oregon, 2 stores in Tennessee, 36 stores in Texas, and 16 stores in Washington.

Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties, and actual results could differ materially from the Company's present expectations. Among the important factors that could cause actual results to differ materially from those indicated in the forward-looking statements are: customer demand and trends in the off-price apparel industry, the effect of economic conditions, the impact of competitive openings and pricing, supply constraints or difficulties, and other risks detailed in the Company's Securities and Exchange Commission filings.