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

Business Editors

SAN DIEGO--(BUSINESS WIRE)--Jan. 8, 2003

FACTORY 2-U STORES, INC. (Nasdaq:FTUS) today announced that sales for the five-week period ended January 4, 2003 were $83.3 million, a decrease of 6.1% over sales of $88.8 million for the five-week period ended January 5, 2002. Comparable store sales for the five-week period ended January 4, 2003 decreased 3.9% versus a decrease of 13.7% for the same period last year. The Company did not open or close any stores during the five-week period ended January 4, 2003.

Sales for the nine weeks ended January 4, 2003 totaled $131.0 million compared to $142.3 million for the same period last year, a decrease of 7.9%. Comparable store sales for the nine weeks ended January 4, 2003 decreased 6.0% versus a decrease of 13.5% for the same period last year. For the nine weeks ended January 4, 2003, the Company did not open or close any stores.

Sales for the forty-eight weeks ended January 4, 2003 totaled $510.6 million compared to $552.9 million for the forty-eight weeks ended January 5, 2002, a decrease of 7.7%. Comparable store sales for the forty-eight weeks ended January 4, 2003 decreased 7.9% versus a decrease of 8.6% for the same period last year. For the forty-eight weeks ended January 4, 2003, the Company opened 12 new stores and closed 30 stores.

For the five-week period ended January 4, 2003, the Company experienced a 1% decline in comparable store transaction counts and a 2.9% decline in comparable store average purchase size. Merchandise category performance was best in Women's with comparable sales results in the positive low single-digit range and worst in Home with comparable sales in the low double-digit range. Geographically, comparable store sales were best in San Antonio and Dallas, TX and San Diego, CA with comparable store sales in the positive high single to low double-digit range, while comparable store sales were worst in the Pacific Northwest and high desert regions of southern California with comparable store sales results in the negative high single-digit to low double-digit range.

We will provide a mid-month sales update for January on January 20, 2003 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 February 17, 2003. We will release our January sales results on February 5, 2003 after the market closes, or approximately 4:00 P.M. Eastern Standard Time.

We expect to release our fourth quarter operating results on February 26, 2003 after the market closes, or approximately 4:00 P.M. Eastern Standard Time. We will host a real-time webcast presentation and live conference call to discuss our fourth quarter operating results and fiscal 2003 sales and operating results expectations, the same day at 5:00 P.M. Eastern Standard Time. To participate in the call, dial 1-800-843-7949 five minutes before the call or access the Internet at www.factory2-u.com. All shareholders and other interested parties are encouraged to participate. A replay of the call will remain available for 48 hours by telephone or on the Internet through March 12, 2003. You may also obtain a transcript of the call by contacting Kehoe, White & Co., Inc. at 1-562-437-0655.

FACTORY 2-U STORES, INC. operates 261 "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 34 stores in Arizona, 3 stores in Arkansas, 64 stores in southern California, 63 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, 15 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.