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

Business Editors

SAN DIEGO--(BUSINESS WIRE)--Dec. 5, 2001

FACTORY 2-U STORES, INC. (Nasdaq:FTUS) today announced that sales for the four-week period ended December 1, 2001 were $53.5 million, a decrease of 2.5% over sales of $54.9 million for the four-week period ended November 25, 2000. Due to the Company's 53-week fiscal year last year, the Company's comparable sales weeks are compared to an adjusted comparable sales period for last year. Comparable store sales for the four-week period ended December 1, 2001 decreased 13.2% versus an increase of 0.2% for the same period last year. For the four-week period ended December 1, 2001, the Company opened 6 new stores; 1 in Arizona, 1 in Arkansas, 1 in California, 1 in Oklahoma and 2 in Texas.

Sales for the forty-three weeks ended December 1, 2001 totaled $464.2 million compared to $416.8 million for the forty-three weeks ended November 25, 2000, an increase of 11.4%. Comparable store sales for the forty-three weeks ended December 1, 2001 decreased 7.5% versus an increase of 4.6% for the same period last year. For the forty-three weeks ended December 1, 2001, the Company opened 39 new stores and closed 3 stores.

Mike Searles, Chairman and Chief Executive Officer, commented, "Comparable store sales were at the high end of our negative comparable sales range provided in our November mid-month sales update. However, comparable store sales were positive low double-digit during the last week of the month as cooler weather finally arrived in most of our operating areas. Additionally, November marked the first month of our previously announced advertising reductions for the Holiday period. November advertising expenditures were cut by almost 50%, and despite the anticipated lower sales effect from this, we expect November's advertising reduction will result in a positive impact on our fourth quarter operating results. Our Women's, Children's and Home categories performed best with negative mid single-digit comparable store sales, while our Men's and Footwear categories experienced negative high double-digit comparable store sales."

Mr. Searles concluded, "We continue to experience a highly promotional environment as evidenced by the post Thanksgiving offering by many big box discounters, which enticed consumers in with 'close to cost or below cost' items in the electronics and hard goods categories. While our November ending inventory levels were below last year on a comparable store basis, we are still competing for the consumers' apparel dollars by selectively reducing prices on certain categories of merchandise to ensure that we will end the season clean. We expect this higher level of promotional markdown activity to continue through the remaining three weeks of the Holiday season."

We will provide a mid-month sales update for December on December 24, 2001 at 8:00 A.M. Eastern Standard Time. Those interested can access this update message at 1-888-201-9603. This message will remain available until January 21, 2002. We will release our December sales results on January 9, 2002 after the market closes, or approximately 4:00 P.M. Eastern Standard Time.

We expect to release our fourth quarter operating results on February 27, 2002 after the market closes, or approximately 4:00 P.M. Eastern Standard Time. We will host a real-time web cast presentation and live conference call to discuss our fourth quarter operating results and fiscal 2002 sales and earnings 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 17, 2002. 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 279 "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 5 stores in Alabama, 33 stores in Arizona, 3 stores in Arkansas, 62 stores in southern California, 61 stores in northern California, 1 store in Idaho, 5 stores in Louisiana, 1 store in Mississippi, 4 stores in Missouri, 8 stores in Nevada, 10 stores in New Mexico, 3 stores in Oklahoma, 14 stores in Oregon, 2 stores in Tennessee, 50 stores in Texas, and 17 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.