Factory 2-U Stores Inc (Nasdaq:FTUS) today announced that sales for the five weeks ended July 1, 2000, were $46.0 million, an increase of 25.9% over sales of $36.6 million for the five weeks ended July 3, 1999.

Comparable-store sales for the five weeks ended July 1, 2000, increased 2.2% vs. an increase of 10.3% for the same period last year. For the five weeks ended July 1, 2000, the company opened two new stores and closed one store.

Sales for the twenty-two weeks ended July 1, 2000, were $190.0 million, an increase of 28.2% over sales of $148.2 million for the same period a year ago. Comparable-store sales for the twenty-two weeks ended July 1, 2000, were 3.7% vs. an increase of 18.2% for the same period a year ago. For the twenty-two weeks ended July 1, 2000, the company opened 31 new stores and closed 12 stores.

Mike Searles, chairman and chief executive officer, commented: "With an apparent softening of apparel sales industrywide, we were pleased to report positive comparable-store sales on top of last year's increase of 10.3%. Additionally, we achieved this result despite the reduction of sales caused by the first of July falling two days later in the June sales period than it did a year ago. Our men's, boy's, junior's and domestics categories were our strongest performers with hot-weather merchandise driving apparel sales."

Searles concluded: "We remain on track to open at least 50 net new stores this year. We expect to open 10 stores in July and end our second quarter with 216 stores in operation."

Factory 2-U Stores Inc operates 206 "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 which generally are significantly lower than the prices offered by other discount stores.

The company operates 51 stores in Southern California, 58 stores in Northern California, 15 stores in Washington, 11 stores in Oregon, seven stores in Nevada, 31 stores in Arizona, nine stores in New Mexico and 24 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.