Goody’s Posts 2002 Profit on Flat Sales

Goody’s Family Clothing, Inc. reported net earnings of $3,886,000, or $0.12 per diluted share, for the fourth quarter ended February 1, 2003, compared with a net loss for the fourth quarter ended February 2, 2002, of $7,674,000, or $0.24 per share. Total sales for the fourth quarter of fiscal 2002 were $357.5 million compared with $363.1 million for the fourth quarter of fiscal 2001. Comparable store sales for the fourth quarter of fiscal 2002 decreased 0.4% compared with the fourth quarter of fiscal 2001.

For the year ended February 1, 2003 (“fiscal 2002”), net earnings were $7.6 million, or $0.23 per diluted share, compared with a net loss of $20.2 million, or $0.62 per share, for the year ended February 2, 2002 (“fiscal 2001”). Total sales for fiscal 2002 were $1.193 billion, virtually the same as fiscal 2001 sales. Comparable store sales for fiscal 2002 decreased 1.2% compared with fiscal 2001.

Results for the fourth quarters of fiscal 2002 and fiscal 2001 include pre-tax impairment charges for property and equipment relating to under- performing stores aggregating $3.5 million and $1.9 million, respectively. Additionally, the fourth quarter of fiscal 2001 includes a $1.3 million charge related to corporate restructuring activities.

During fiscal 2002, the Company opened two new stores, relocated or remodeled seven stores, and closed six stores.

“The past several years have been challenging for Goody’s, and the relentlessly difficult economy hasnt helped. But we have met the challenges within our control head on,” stated Robert M. Goodfriend, Goody’s Chairman and Chief Executive Officer. “Consumer research, including an intensive effort to visit one-on-one with shoppers throughout our markets, has given us a clearer idea of our customers shopping needs and their expectations of Goody’s. We are reacting to what were learning and we believe our shoppers will respond positively to our efforts. Even though comparable stores sales decreased this past fiscal year compared with fiscal 2001, our gross profit rate for the fiscal year, with careful inventory management, improved significantly over fiscal 2001; our selling, general and administrative expense rate, including impairment charges, also improved modestly compared with fiscal 2001.

“Clearly, fiscal 2002 results did not meet our expectations,” Goodfriend continued, “but the $0.85 per share improvement in earnings over fiscal 2001 is a solid indication of progress. We ended the year with a strong balance sheet, well managed inventories and no long-term debt. The task that lies ahead for us is to continue our efforts to engage the consumer and respond, while managing our business with focus and consistency.”

For fiscal 2003, the Company currently expects to open approximately 10 new stores, relocate or remodel approximately 14 of its existing stores and close approximately five stores. Additionally, the Company’s business plan for fiscal 2003 calls for: (i) comparable store sales to increase in the low single digits for the full fiscal year, with a larger portion of the increase during the second half of the fiscal year; (ii) a modest increase in gross profit rate over fiscal 2002; (iii) a modest increase in selling, general and administrative expenses with the expense rate modestly decreasing; (iv) an effective income tax rate of approximately 37.0%; (v) capital expenditures of approximately $22.0 million (most of which is allocated for new and existing stores including new point-of-sale, scanners and back-office systems for most of its relocated, remodeled and new stores); and (vi) depreciation of approximately $23.0 million. Actual results may vary from the business plan.

                        GOODY's FAMILY CLOTHING, INC.
                    Consolidated Statements of Operations
                (In thousands, except earnings per share data)

                               Fourth Quarter Ended      Fiscal Year Ended

                              February 1, February 2, February 1, February 2,
                                 2003        2002        2003        2002
                              (13 weeks)  (13 weeks)  (52 weeks)  (52 weeks)

    Sales                     $ 357,532   $ 363,102  $1,193,405  $1,192,546
    Cost of sales
      and occupancy
      expenses                  258,723     284,269     853,583     895,077

    Gross profit                 98,809      78,833     339,822     297,469
    Selling, general
     and
     administrative
     expenses                    92,793      90,048     328,375     328,997
    Restructuring
     charge
     (credit)                        --       1,335         (74)      1,335

    Earnings (loss)
     from
     operations                   6,016     (12,550)     11,521     (32,863)
    Investment
     income                         217         283         624         806
    Interest
     expense                         15          12          24         249

    Earnings (loss)
     before
     income taxes                 6,218     (12,279)     12,121     (32,306)
    Provision
     (benefit) for
     income taxes                 2,332      (4,605)      4,545     (12,115)

    Net earnings (loss)         $ 3,886    $ (7,674)    $ 7,576   $ (20,191)