FACTORY 2-U STORES INC. (Nasdaq:FTUS) today announced that sales for the four weeks ended May 27, 2000 were $35.6 million, an increase of 34.0% over sales of $26.6 million for the four weeks ended May 29, 1999.

Comparable store sales for the four weeks ended May 27, 2000 increased 4.9% vs. an increase of 19.0% for the same period last year. For the four weeks ended May 27, 2000, the Company opened 4 new stores and closed 2 stores.

Sales for the 17 weeks ended May 27, 2000 were $144.0 million, an increase of 28.9% over sales of $111.6 million for the same period a year ago. Comparable store sales for the 17 weeks ended May 27, 2000 were 4.2% vs. an increase of 20.9% for the same period a year ago. For the 17 weeks ended May 27, 2000, the Company opened 29 new stores and closed 11 stores.

Mike Searles, Chairman and Chief Executive Officer, commented: "We exceeded our planned sales in May, while achieving acceptable comparable store sales on top of last year's strong performance of 19.0%. We experienced our strongest sales performance in our home and men's categories. While all our markets enjoyed positive comparable store sales, our California markets performed the best."

Searles concluded: "We have opened 29 new stores to date and continue to be pleased with our initial sales results. We had four Grand Openings this month and expect to open another 8 to 12 new stores for the remainder of the second quarter. In addition, we have now started construction on our third distribution center located in the Dallas, Texas area. This facility will become operational in the first quarter of fiscal year 2001 and will support our eastward expansion plans."

FACTORY 2-U STORES operates 205 "Factory 2-U" off-price retail stores, which sell branded casual apparel for the family, as well as selected domestics and household merchandise at prices that generally are significantly lower than the prices offered by other discount stores. The Company operates 51 stores in Southern California, 57 stores in Northern California, 15 stores in Washington, 11 stores in Oregon, 7 stores in Nevada, 31 stores in Arizona, 10 stores in New Mexico and 23 stores in Texas.

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.