Gottschalks August Comps Slip 1.1%

Gottschalks Inc. same store sales for the month of August 2006 decreased 1.1% from the prior year. Total sales for the month decreased 4.3% to $47.3 million compared to total sales of $49.6 million in August 2005. Total sales for August 2005 included sales from three stores which were subsequently closed and also reflected the grand opening of Gottschalks River Park lifestyle center store.

For the year-to-date period, same store sales decreased slightly by 0.1%, while total sales decreased 0.3% to $344.2 million from $345.3 million for the same period last year.

Jim Famalette, president and chief executive officer of Gottschalks said, “Our decrease in sales for August compared to the prior year partially reflects the strong results we generated last year during the grand opening celebration for our River Park lifestyle center store. In addition, continuing the trends from the second quarter, our home store division generated weak results during August. However, our core softline merchandise categories continued to perform well. Our best performing merchandise categories included shoes, special sizes, cosmetics and better sportswear. Comparable inventory was even with last year at the end of the month. We remain on track in our initiatives to improve our home store division performance while maintaining emphasis in our softline categories.”

Gottschalks also announced the grand opening of its new store in Eugene, Oregon, which is the Company’s fourth store in Oregon.

Mr. Famalette added, “We are excited about the opening of our store in Valley River Center in Eugene. Not only does this store mark our first lease takeover from Federated Stores, but it also plays a key part in building out our established presence in Oregon. We look forward to bringing the Gottschalks experience to customers in this new market.”

Sales results are summarized as follows:

                                                                 Same Store
                          August 26,   August 27,     Total %      Sales %
                             2006         2005        Change       Change
                                 (in 000's)

    Sales, 4 Weeks Ended   $47,445      $49,577       (4.6%)       (1.4%)

    Sales, 30 Weeks Ended $344,354    $ 345,318       (0.3%)       (0.1%)