Gottschalks same store sales for the month of September 2007 decreased 3.9% from the prior year. Total sales for the month decreased 7.7% to $52.8 million from $57.2 million in September 2006.

On a year-to-date basis, same store sales decreased 3.4% from the comparable period of fiscal 2006. Total sales on a year-to-date basis decreased 4.8% to $382.4 million compared to $401.5 million in the same period of the prior year. The Company operated four fewer stores for the month and year-to-date periods compared to the same periods in fiscal 2006.

Jim Famalette, chairman and chief executive officer of Gottschalks said, “While we generated positive comparable store sales in our Northwest stores during the month, we continued to experience softer sales trends in our California stores. In particular, we experienced generally weak sales across our home store merchandise and men's apparel. Our best performing merchandise categories for the month were special sizes, children's, better sportswear and dresses. Based on current trends we expect third quarter comp store sales to be 4.5% below last year.”

Sales results are summarized as follows:

                                                         Same Store
                           October 6,     September 30,   Total %    Sales %
                              2007            2006        Change     Change
                                   (in 000's)

Sales, 5 Weeks Ended $52,797 $57,172 (3.9)% (7.7)%

Sales, 35 Weeks Ended $382,444 $401,526 (3.4)% (4.8)%

During September, the Company completed an amendment and restatement of its credit agreement with GE Commercial Finance Corporate Lending, which expands its availability to $200 million and extends the agreement to September 2012. As previously announced, the Company's Board of Directors has approved the repurchase of up to two million shares of its common stock over the next twelve months. The Company will finance the purchase of the shares through cash and borrowings from its recently completed credit agreement with GE Commercial Finance Corporate Lending.