FACTORY 2-U STORES INC. Announces September Sales.

SAN DIEGO--(BUSINESS WIRE)--Oct. 7, 1999--

FACTORY 2-U STORES INC. (Nasdaq:FTUS) today announced that sales for the five week period ended Oct. 2, 1999 increased 20.6% to $37.1 million compared to $30.8 million for the five week period of September 1998. Comparable store sales for September increased 5.5% versus an increase of 19.3% in September 1998.

Sales for the thirty-five weeks ended Oct. 2, 1999 were $252.9 million, an increase of 26.4% over sales of $200.1 million for the first thirty-five weeks of fiscal 1998. Comparable store sales for the first thirty-five weeks increased 14.8% versus an increase of 6.6% for the same period last year.

Mike Searles, Chairman and Chief Executive Officer, commented, "We are pleased with our September performance. As indicated in our August sales release, we are now matching up against our strongest comparative increases from last year's record performance and we are pleased with where we are at this point. Our number of transactions were slightly ahead of last years pace and our average unit retail and purchase size were both higher. Inventory levels ending September, on a per store basis, were the same as last year."

Searles concluded, "So far this year we have remodeled 71 stores, opened 17 new stores and relocated 7 others. Prior to the Holiday selling period we expect to remodel an additional 5 stores and open 14 new stores."

FACTORY 2-U STORES INC. operates 177 "Factory 2-U" and "Family Bargain Center" 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 store competitors. Stores are located in seven western states in the United States.

Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risk 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.