Gottschalks Inc. reported same store sales for the month of June
decreased 4.3%. Total sales for the month fell 5.8% to $57.5 million
from $61 million in June 2006.

Jim Famalette, president and chief executive officer of Gottschalks
said, “Our sales performance in June did not meet our expectations. Our
best areas were dresses, shoes, children's and cosmetics, which
benefited from a special event during the month. Despite good results
in these categories, we experienced softness in a number of apparel
categories as well as in our home store merchandise. We ended the month
with comp store inventory 1% below the same period last year. Based on
our combined results for May and June, as well as the current retail
environment, we now expect to incur a loss for the second quarter and
anticipate the full fiscal year earnings will be below those of last

On a year-to-date basis, same store sales decreased 2.1% from the same
period of the prior year. Total sales for the year-to-date period
decreased 3.1% to $245.7 million compared to $253.5 million for the
same period of fiscal 2006. The Fresno, CA-based department store
operated three fewer stores in the month and four fewer stores for the
year-to-date period

As previously announced, Gottschalks has formed a special strategic
committee to identify and evaluate various strategic alternatives to
maximize shareholder value. The company does not currently intend to
disclose further developments or provide updates on the progress or
status of the strategic alternatives review process or of any strategic
alternatives under consideration, unless and until the Board of
Directors has approved a specific transaction.

Gottschalks is a regional department store chain, currently operating
59 department stores and 4 specialty apparel stores in six western
states, including California (38), Washington (8), Alaska (5), Oregon
(4), Nevada (2) and Idaho (2).