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United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934



For the period Ended March 31, 2004 Commission File Number 1-878
- -----------------------------------------------------------------------------



BLAIR CORPORATION
(Exact name of registrant as specified in its charter)
- -----------------------------------------------------------------------------



DELAWARE 25-0691670
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)



220 HICKORY STREET, WARREN, PENNSYLVANIA 16366-0001
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)




(814) 723-3600
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(Registrant's telephone number, including area code)



Not applicable
- -----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since lastreport)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act.) YES X NO
----- --

As of May 6, 2004 the registrant had outstanding 8,131,318 shares of its common
stock without nominal or par value.







PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS (UNAUDITED)

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004



-2-







Blair Corporation and Subsidiaries

Consolidated Balance Sheets


March 31 December 31
2004 2003
-------------------------------
Assets
Current assets:

Cash and cash equivalents $ 34,820,520 $ 36,380,049
Customer accounts receivable, less allowances
for doubtful accounts and returns of
$48,018,188 in 2004 and $47,473,108 in 2003 148,761,547 154,660,076
Inventories: (Note H)
Merchandise 64,317,877 65,990,631
Advertising and shipping supplies 15,509,618 19,610,207
-------------------------------
79,827,495 85,600,838
Deferred income taxes (Note G) 13,764,000 12,211,000
Prepaid and refundable federal and state
taxes 995,091 -0-
Prepaid expenses 2,585,343 2,200,191
Assets held for sale (Note L) 1,368,526 1,368,526
-------------------------------
Total current assets 282,122,522 292,420,680


Property, plant, and equipment:
Land 692,144 692,144
Buildings and leasehold improvements 65,577,406 65,559,992
Equipment 72,818,311 72,979,845
Construction in progress 1,911,276 1,386,067
-------------------------------
140,999,137 140,618,048
Less allowances for depreciation 89,303,307 88,107,320
-------------------------------
51,695,830 52,510,728

Trademarks 470,103 488,164
Other long-term assets 488,704 556,231
-------------------------------
Total assets $334,777,159 $345,975,803
===============================


See accompanying notes



-3-







Blair Corporation and Subsidiaries

Consolidated Balance Sheets - continued

March 31 December 31
2004 2003
--------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable (Note J) $ 15,000,000 $ 15,000,000
Trade accounts payable 30,060,201 35,129,055
Advance payments from customers 3,676,633 2,286,055
Accrued expenses (Note E) 14,429,489 17,732,395
Accrued federal and state taxes -0- 3,997,935
Current portion of capital lease
obligations(Note F) 387,679 378,632
--------------------------------
Total current liabilities 63,554,002 74,524,072

Capital lease obligations, less current portion
(Note F) 1,315 101,622

Deferred income taxes (Note G) 2,436,000 2,549,000

Stockholders' equity:
Common stock without par value:
Authorized 12,000,000 shares
issued 10,075,440 shares (including shares
held in treasury) -- stated value 419,810 419,810
Additional paid-in capital 13,955,055 14,134,983
Retained earnings 295,797,115 296,397,999
Accumulated other comprehensive (loss) income (70,741) (20,016)
------------------------------
310,101,239 310,932,776
Less 1,945,722 shares in 2004 and 1,962,439
shares in 2003 of common stock
in treasury -- at cost 38,987,570 39,514,841
Less receivable and deferred compensation
from stock plans 2,327,827 2,616,826
------------------------------
268,785,842 268,801,109
------------------------------
Total liabilities and stockholders' equity $334,777,159 $345,975,803
==============================


See accompanying notes.



-4-







Blair Corporation and Subsidiaries

Consolidated Statements of Income


Three Months Ended
March 31
2004 2003
--------------------------------

Net sales $128,642,079 $137,013,544
Other income (Note I) 12,567,997 9,788,345
--------------------------------
141,210,076 146,801,889

Cost and expenses:
Cost of goods sold 63,504,461 67,861,612
Advertising 35,359,624 38,583,609
General and administrative 33,800,842 31,580,760
Provision for doubtful accounts 7,539,859 7,892,259
Interest 85,237 89,460
--------------------------------
140,290,023 146,007,700
--------------------------------
Income before income taxes 920,053 794,189

Income taxes (Note G) 349,000 294,000
--------------------------------

Net income $ 571,053 $500,189
================================


Basic and diluted earnings per share based on
weighted average shares outstanding (Note D) $.07 $.06
================================


See accompanying notes.



-5-







Blair Corporation and Subsidiaries

Consolidated Statements of Stockholders' Equity

Three Months Ended
March 31
2004 2003
------------------------------

Common Stock $ 419,810 $ 419,810

Additional Paid-in Capital:
Balance at beginning of period 14,134,983 14,428,903
Issuance of 300 shares in 2004 and 2003 of
common stock to non-employee director (14,591) (3,544)
Forfeitures of 2,150 shares in 2004 and 1,750
shares in 2003 of common stock under Omnibus
Stock and Employee Stock Purchase Plans (25,902) (11,039)
Exercise of 18,567 shares in 2004 and 10,668
shares in 2003 of non- qualified stock options
under Omnibus Stock Plan (176,435) (104,817)
Tax benefit on exercise of non-qualified stock
options 37,000 24,000
------------------------------
Balance at end of period 13,955,055 14,333,503

Retained Earnings:
Balance at beginning of period 296,397,999 286,511,847
Net income 571,053 500,189
Cash dividends (Note B) (1,171,937) (1,157,432)
------------------------------
Balance at end of period 295,797,115 285,854,604

Accumulated Other Comprehensive Loss:
Balance at beginning of period (20,016) 12,686
Foreign currency translation (50,725) (15,179)
------------------------------
Balance at end of period (70,741) (2,493)

Treasury Stock:
Balance at beginning of period (39,514,841) (41,264,330)
Issuance of 300 shares in 2004 and 2003 of
common stock to non-employee director 19,165 8,119
Forfeitures of 2,150 shares in 2004 and 1,750
shares in 2003 of common stock under
Omnibus Stock and Employee Stock Purchase Plans (23,373) (26,536)
Exercise of 18,567 shares in 2004 and 10,668
shares in 2003 of non-qualified stock options
under Omnibus Stock Plan 531,479 287,240
------------------------------
Balance at end of period (38,987,570) (40,995,507)

Receivable and Deferred Compensation from Stock
Plans:
Balance at beginning of period (2,616,826) (2,775,102)
Forfeitures of 2,150 shares in 2004 and 1,750
shares in 2003 of common stock under Omnibus
Stock and Employee Stock Purchase Plans 11,132 8,570
Amortization of deferred compensation, net of
forfeitures 43,039 37,677
Executive officer restricted stock awards of
27,275 shares in 2004 and 0 shares in 2003 142,994 -0-
Applications of dividends and cash repayments 91,834 51,620
------------------------------
Balance at end of period (2,327,827) (2,677,235)
------------------------------
Total stockholders' equity $268,785,842 $256,932,682
==============================

Comprehensive Income:
Net income $ 571,053 $ 500,189
Adjustment from foreign currency translation (50,725) (15,179)
------------------------------
Comprehensive income $ 520,328 $ 485,010
==============================

See accompanying notes.



-6-







Blair Corporation and Subsidiaries

Consolidated Statements of Cash Flows

Three Months Ended
March 31
2004 2003
---------------------------
Operating activities
Net income $ 571,053 $ 500,189
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation 2,168,577 2,004,245
Amortization 85,589 89,658
Provision for doubtful accounts 7,539,859 7,892,259
Provision for deferred income taxes (1,666,000) (2,814,000)
Tax benefit on exercise of non-qualified
stock options 37,000 24,000
Compensation expense (net of forfeitures)
for stock awards 200,025 62,022
Changes in operating assets and liabilities
providing (using) cash:
Customer accounts receivable (1,641,246) (4,931,447)
Inventories 5,773,343 (3,402,826)
Prepaid expenses and other assets (383,836) (350,984)
Trade accounts payable (5,069,009) 1,486,387
Advance payments from customers 1,390,578 1,008,866
Accrued expenses (3,303,309) (5,315,433)
Federal and state taxes (4,993,024) (5,288,995)
----------------------------
Net cash (used in) provided by operating
activities 709,600 (9,036,059)

Investing activities
Purchases of property, plant, and equipment (1,351,366) (2,159,376)
----------------------------
Net cash used in investing activities (1,351,366) (2,159,376)

Financing activities
Net repayments of bank borrowings
Principal repayments on capital lease
obligations (91,261) (85,391)
Dividends paid (1,171,937) (1,157,432)
Exercise of non-qualified stock options 355,043 182,423
Repayments of notes receivable from stock plans 44,276 2,845
----------------------------
Net cash used in financing activities (863,879) (1,057,555)

Effect of exchange rate changes on cash (53,884) (15,453)
----------------------------
Net (decrease) increase in cash (1,559,529) (12,268,443)
Cash and cash equivalents at beginning of year 36,380,049 49,975,503
----------------------------
Cash and cash equivalents at end of period $34,820,520 $37,707,060
============================

See accompanying notes.



-7-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Blair
Corporation and its wholly-owned subsidiaries have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended March 31, 2004 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2004. For further information refer to
the financial statements and footnotes included in the Company's annual report
on Form 10-K for the year ended December 31, 2003.

As of June 30, 2003 the Company formed a new wholly-owned subsidiary, Allegheny
Trail Corp., to launch a wholesale business targeted primarily at outdoor
sporting goods and recreational retailers. Allegheny Trail offers a core product
line of men's and women's outdoor apparel basics at entry-level price points
allowing retailers to be more competitive with major brands.

On August 20, 2003 The Company commenced operations of a new wholly-owned
subsidiary, JLB Service Bank. The establishment of JLB Service Bank enables the
Company to manage its credit portfolio in a more cost-effective and efficient
manner. The bank's products involve the extension of credit on an unsecured
basis to individuals who are customers of Blair Corporation to facilitate their
purchases of Blair's merchandise. As of March 31, 2004, JLB Service Bank's total
assets represented 1.50% of the total consolidated assets of the Company. Gross
revenue of JLB Service Bank was .98% of the Company's consolidated gross revenue
for the quarter ended March 31, 2004.

NOTE B - DIVIDENDS DECLARED
2-21-03 $.15 per share 2-13-04 $.15 per share
4-15-03 .15 4-29-04 .15
7-15-03 .15
10-21-03 .15

Blair Corporation has declared a dividend for 282 consecutive quarters.

In the first quarter of 2004 and 2003, the company declared dividends of
$1,219,495 and $1,206,207, of which $1,171,937 and $1,157,432 was paid directly
to shareholders and charged to retained earnings. The remaining dividends
declared, $47,558 in the first quarter of 2004 and $48,774 in the first quarter
of 2003, were associated with the shares of stock held by the company according
to the provisions of the restricted stock awards. These remaining dividends were
applied against the receivable from stock plans and were charged to compensation
in the financial statements.

NOTE C - STOCK COMPENSATION
In accordance with the provisions of Statement of Financial Accounting Standards
No. 123 (SFAS No. 123) the Company has elected to continue applying the
provisions of Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock-based compensation plans.
Accordingly, the Company does not recognize compensation expense for stock
options when the stock option price at the grant date is equal to or greater
than the fair market value of the stock at that date.

Stock activity in the first quarter of 2004 and 2003 generally includes
transactions pertaining to stock awarded to a non-employee director as well as
stock awarded and forfeited via the Company's Omnibus Stock and Employee Stock
Purchase Plans. Activity is accounted for by comparing the market value of the
awards, as required by the Plans, to the cost of the treasury shares used for
these transactions. The difference is booked to additional paid-in capital.



-8-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE C - STOCK COMPENSATION - continued
The following illustrates the pro forma effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No. 123:

Pro Forma
Three Months Ended
March 31
2004 2003
-----------------------------

Net income as reported $571,053 $500,189
Add: Total stock-based employee
compensation expense recorded for all
awards, net of related tax effects 151,834 56,194
Deduct: Total stock-based employee
compensation expense determined under fair
value method for all awards, net of
related tax effects 363,049 169,279
-----------------------------
Pro forma net income $359,838 $387,104
=============================
Earnings per share:
Basic - as reported $ .07 $ .06
=============================
Basic - pro forma $ .04 $ .05
=============================
Diluted - as reported $ .07 $ .06
=============================
Diluted - pro forma $ .04 $ .05
=============================

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
stock options under the fair value method of SFAS No. 123. The fair value for
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions: risk-free
interest rates of 3.49%, 4.95% and 5.20% for stock options issued 4/15/03,
4/15/02 and 4/16/01, respectively; dividend yields of 2.54%, 3.11% and 3.50% for
stock options issued 4/15/03, 4/15/02 and 4/16/01, respectively; volatility
factors of the expected market price of the Company's common stock of .540, .564
and .547 for stock options issued 4/15/03, 4/15/02 and 4/16/01, respectively;
and a weighted-average expected life of 7 years for the stock options issued
4/15/03, 4/15/02 and 4/16/01. The per share fair value of the options granted
was determined to be $10.63, $8.83 and $7.40 for stock options issued 4/15/03,
4/15/02 and 4/16/01, respectively.

NOTE D - EARNINGS PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING The
following table sets forth the computations of basic and diluted earnings per
share as required by Statement of Financial Accounting Standards No. 128:
Three Months Ended
March 31
2004 2003
------------------------------
Numerator:
Net income $ 571,053 $ 500,189
Denominator:
Denominator for basic earnings per
share - weighted average shares
outstanding 8,051,124 7,981,649
Effect of dilutive securities:
Employee stock options 61,057 31,421
------------------------------
Denominator for diluted earnings per
share - Weighted average shares
outstanding and assumed conversions 8,112,181 8,013,070
==============================
Basic earnings per share $.07 $.06
==============================
Diluted earnings per share $.07 $.06
==============================



-9-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE E - ACCRUED EXPENSES
Accrued expenses consists of:
March 31 December 31
2004 2003
---------------------------
Employee Compensation $ 9,865,899 $12,395,998
Contribution to profit sharing and
retirement plan 58,897 1,436,117
Health insurance 1,266,681 1,148,038
Voluntary Separation Program 663,289 762,106
Taxes, other than taxes on income 1,258,997 814,574
Other accrued items 1,315,726 1,175,562
---------------------------
$14,429,489 $17,732,395
===========================

NOTE F - LEASES
Capital leases
The Company leases certain data processing and telephone equipment under
agreements that expire in various years through 2005. The following is a
schedule by year of future minimum capital lease payments required under capital
leases that have initial or remaining noncancelable lease terms in excess of one
year as of March 31, 2004:
2004 $ 306,074
2005 103,474
------------
409,548
Less amount representing interest (20,554)
------------
Present value of minimum lease payments 388,994
Less current portion (387,679)
------------
Long-term portion of capital lease obligation $ 1,315
============

Operating Leases
The Company leases certain data processing, office and telephone equipment under
agreements that expire in various years through 2008. The Company has also
entered into several lease agreements for buildings, expiring in various years
through 2012.

The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of March 31, 2004:
2004 $ 2,279,196
2005 2,623,455
2006 1,971,233
2007 1,283,409
2008 885,649
Thereafter 3,011,032
------------
$12,053,974
============

NOTE G - INCOME TAXES
The liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.



-10-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE G - INCOME TAXES - continued

The components of income tax expense are as follows:

Three Months Ended
March 31
2004 2003
--------------------------
Currently payable:
Federal $ 1,782,000 $ 2,658,000
Foreign 30,000 125,000
State 203,000 325,000
--------------------------
2,015,000 3,108,000
Deferred (1,666,000) (2,814,000)
--------------------------
$ 349,000 $ 294,000
==========================

The differences between total tax expense and the amount computed by applying
the statutory federal income tax rate of 35% to income before income taxes are
as follows:

Three Months Ended
March 31
2004 2003
--------------------------

Statutory rate applied to pretax income $322,019 $277,966
State income taxes, net of federal tax
benefit (9,100) (9,100)
Other items 36,081 25,134
--------------------------
$349,000 $294,000
==========================

The Company has approximately $3.5 million of a Pennsylvania net operating loss
carry forward that can be used to offset future Pennsylvania Taxable Income. A
deferred tax asset has been established based on the $3.5 million net operating
loss available to be carried forward. The deferred tax asset is offset by a
valuation allowance because it is uncertain as to whether the Company will
generate sufficient income in the State of Pennsylvania in the future to absorb
the net operating loss before they expire in 2011.

Components of the provision for deferred income tax (benefit) expense are as
follows:

Three Months Ended
March 31
2004 2003
--------------------------
Advertising costs $(1,594,000) $(1,115,000)
Provision for doubtful accounts 25,000 (180,000)
Provision for estimated returns (649,000) (1,022,000)
Severance costs 38,000 3,000
Depreciation (113,000) (272,000)
Inventory writedown 725,000 (166,000)
Other items - net (98,000) (62,000)
--------------------------
$(1,666,000) $(2,814,000)
==========================



-11-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
continued
BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE G - INCOME TAXES - continued

Components of the deferred tax asset and liability under the liability method as
of March 31, 2004 and December 31, 2003 are as follows:

March 31 December 31
2004 2003
----------------------------
Current net deferred tax asset:

Doubtful accounts $14,097,000 $14,122,000
Returns allowance 2,955,000 2,306,000
Inventory obsolescence 649,000 1,374,000
Inventory costs (372,000) (372,000)
Vacation pay 1,798,000 1,798,000
Advertising costs (5,948,000) (7,542,000)
State net operating loss 118,000 196,000
Other items 585,000 525,000
----------------------------
Total deferred tax assets 13,882,000 12,407,000
State valuation allowance (118,000) (196,000)
----------------------------
Deferred tax assets net of valuation
allowance $13,764,000 $12,211,000
============================
Long-term deferred tax liability
Property, plant and equipment $ 2,436,000 $ 2,549,000
============================

NOTE H - INVENTORIES
Inventories are valued at the lower of cost or market. Cost of merchandise
inventories is determined principally on the last-in, first-out (LIFO) method.
If the FIFO method had been used, merchandise inventories would have increased
by approximately $4,488,000 at both March 31, 2004 and December 31, 2003. Cost
of advertising and shipping supplies is determined on the first-in, first-out
(FIFO) method. Advertising and shipping supplies include printed advertising
material and related mailing supplies for promotional mailings which are
generally scheduled to occur within two months. These direct response
advertising costs are then expensed over the period of expected future benefit,
generally nine weeks. The Company has a reserve for slow moving and obsolete
inventory amounting to $1,699,000 at March 31, 2004, $3,600,000 at December 31,
2003 and $4,435,000 at March 31, 2003. The closing of the Starbrick Outlet Store
in January 2004 resulted in $2.4 million of write-downs in the first quarter
2004. These write-downs were provided for in the December 31, 2003 obsolescence
reserve. Due to the nonrecurring nature of the write-downs related to the
closing of the Starbrick Outlet Store, the obsolescence reserve at March 31,
2004 is considerably lower than the reserve at December 31, 2003 on similar
levels of inventory.

NOTE I - OTHER INCOME
Other income consists of:

Three Months Ended
2004 2003
---------------------------

Finance charges on time payment accounts $10,712,288 $8,735,247
Commissions earned 803,853 222,651
Other items 1,051,856 830,447
---------------------------
$12,567,997 $9,788,345
===========================

Finance charges on time payment accounts are recognized on an accrual basis of
accounting. The higher finance charges primarily resulted from a slight increase
in customer accounts receivable and increased finance charge revenues associated
with the establishment of JLB Service Bank on August 20, 2003.

-12-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE J - FINANCING ARRANGEMENTS

The Company maintains two facilities that collectively provide $100 million of
credit. As of March 31, 2004 the Company was in compliance with all debt
covenants.

The syndicated revolving credit facility (the "Credit Agreement") provides $30
million of commitments and is secured by inventory and certain other assets of
the Company and its subsidiaries. The Company is required to meet certain
covenants that relate to tangible net worth, maintaining a defined leverage
ratio and fixed charge coverage ratio, and complying with certain indebtedness
restrictions. At March 31, 2004, the Company had no borrowings (loans)
outstanding on this credit facility and had letters of credit totaling $19.1
million outstanding, which reduces the amount of borrowings available, under the
Credit Agreement. Outstanding letters of credit totaled $20.9 million at
December 31, 2003, and $11.5 million at March 31, 2003. The Credit Agreement is
scheduled to expire December 20, 2004. The Company has begun discussions with
the lenders to renew or extend the facility.

The Company also maintains a securitization of up to $100 million in accounts
receivable. At the present time, $70 million of the $100 million is available to
the Company. The Company sells all right, title and interest in and to certain
of its accounts receivable to Blair Factoring Company, a wholly-owned
subsidiary. Blair Factoring Company is a separate, bankruptcy remote, special
purpose entity that entered into a Receivables Purchase Agreement with PNC Bank,
National Association, as administrator, and certain conduit purchasers. The
Company's consolidated financial statements reflect all the accounts of Blair
Factoring Company, including the receivables and secured borrowings.
Transactions entered into under the Receivables Purchase Agreement are
considered secured borrowings and collateral transactions under the provisions
of Statement of Financial Accounting Standards No. 140 Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities. The
securitization requires certain performance standards for the Company's accounts
receivable portfolio in addition to complying with the covenants in the Credit
Agreement. At March 31, 2004, December 31, 2003, and March 31, 2003, the Company
had $15 million outstanding, the minimum amount required to be outstanding,
under the Receivables Purchase Agreement, all of which was classified as
short-term. At March 31, 2004 and March 31, 2003, the weighted average interest
rate was 1.91% and 1.93%, respectively. Interest paid at March 31, 2004 and
March 31, 2003 was approximately $75,000 and $71,000, respectively. The
securitization has a scheduled termination date of April 7, 2006.

NOTE K- NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2002, the Company adopted the provisions of SFAS No.
142, Goodwill and Other Intangible Assets. Statement No. 142 requires
testing of goodwill and intangible assets with indefinite lives for
impairment rather than amortizing them. The adoption of this statement in
the first quarter of 2002 had no impact on the Company's financial results.


Effective January 1, 2002, the Company implemented SFAS No. 143, Accounting for
Asset Retirement Obligations which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the related asset retirement costs. The statement requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred and capitalized as part of the carrying amount of the
long-lived asset. When a liability is initially recorded, the entity capitalizes
the cost by increasing the carrying value of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, a gain or loss is recorded. The adoption of this
statement did not have an effect on the Company.


SFAS No. 145, Rescission of FASB No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections, and FASB Interpretation No. 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others were adopted by



-13-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE K- NEW ACCOUNTING PRONOUNCEMENTS - continued


the Company effective January 1, 2003. The adoption of these standards did not
have a material impact on the Company's results of operations or financial
condition.


In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets which supersedes SFAS No. 121 Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
Although retaining many of the provisions of SFAS No. 121, SFAS No. 144
establishes a uniform accounting model for long-lived assets to be disposed. The
Company's adoption of this statement in the first quarter of 2002 did not have
an impact on the Company's financial results for 2002. During 2003, the
provisions of this statement impacted the accounting treatment of the planned
sale of the Blair Outlet Store in Erie, Pennsylvania. (See note L)


In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities when the liability is incurred and not as a result
of an entity's commitment to an exit plan. The statement is effective for exit
or disposal activities initiated after December 31, 2002. The adoption of SFAS
No. 146 in the first quarter of 2003 did not have an impact on the Company's
financial results. During 2004 and 2003, the provisions of this statement
impacted the accounting treatment of the voluntary separation of employees due
to the closing of the Blair Outlet Stores in Warren, Pennsylvania and Erie,
Pennsylvania. (See note M)


The Company adopted SFAS No. 148, Accounting For Stock-Based Compensation
Transition and Disclosure an amendment of SFAS No. 123, Accounting For
Stock-Based Compensation effective the year ended December 31, 2002. It provides
alternative methods for a voluntary change to the fair value based method of
accounting for stock-based employee compensation and requires prominent
disclosure about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. The Company's adoption of
SFAS No. 148 in 2002 enhanced stock-based employee compensation disclosures and
had no effect on the method of accounting followed by the Company.


In April 2003, the FASB issued SFAS No. 149 Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. This statement is generally effective for contracts entered
into or modified after June 30, 2003. The Company adopted the new statement
effective July 1, 2003. The Company has historically not utilized derivative
instruments, and as a result, the adoption of this statement has had no impact
on the financial statements of the Company.


In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities and equity. This statement is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise at the beginning of
the Company's third quarter 2003. The effective dates of certain provisions of
SFAS No. 150 have been deferred. The Company believes the adoption of this
standard will not have a material impact on its results of operations or
financial condition.


As of December 31, 2003, the Company adopted FASB Interpretation No. 46 R,
Consolidation of Variable Interest Entities, revised in December 2003. The
adoption of this statement has had no impact on the financial statements of the
Company.



-14-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE L - LONG-LIVED ASSETS CLASSIFIED AS HELD FOR SALE In January 2003, the
Company made the decision to close its liquidation outlet store located in Erie,
Pennsylvania. This closure was effective at the close of business on March 28,
2003. The Company intends to sell the building and believes that the sale will
be completed in 2004. Assets Held for Sale of $1,368,526 at March 31, 2004 and
December 31, 2003 consist of the net book value of the land, land improvements
and building. The carrying value of the asset was reduced in 2003 as a result of
the level of interest in the asset.

NOTE M - VOLUNTARY SEPARATION PROGRAM
In the first quarter of 2004, the Company accrued and charged to expense $67,000
in separation costs. The costs were charged to General and Administrative
Expense in the income statement. The one-time $67,000 charge represents
severance pay, related payroll taxes and medical benefits due the 33 eligible
employees who accepted the voluntary separation program offered in connection
with closing the Company's Outlet Store located in Warren, Pennsylvania on
January 16, 2004. As of March 31, 2004, $67,000 has been paid. This liability is
considered satisfied.

In the first quarter of 2003, the Company accrued and charged to expense $75,000
in separation costs. The costs were charged to General and Administrative
Expense in the income statement. The one-time $75,000 charge represents
severance pay, related payroll taxes and medical benefits due the 32 eligible
employees who accepted the voluntary separation program offered in connection
with closing the Company's Outlet Store located in Erie, Pennsylvania on March
28, 2003. As of the end of the second quarter of 2003, $53,000 had been paid.
This liability is considered satisfied and resulted in $22,000 being taken back
to income in the second quarter of 2003.

NOTE N - CONTINGENCIES
The Company is involved in certain items of litigation, arising in the normal
course of business. While it cannot be predicted with certainty, management
believes that the outcome will not have a material effect on the Company's
financial condition or results of operations.

NOTE O - USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE P - RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified to
conform with the current year presentation.

NOTE Q - REVENUE RECOGNITION
Sales (cash, Blair Credit, or third party credit card) are recorded when the
merchandise is shipped to the customer, in accordance with the provisions of
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements.
Blair credit sales are made under Easy Payment Plan sales arrangements. Monthly,
a provision for potentially doubtful accounts is charged against income based on
management's estimate of realization. Any recoveries of bad debts previously
written-off are credited back against the allowance for doubtful accounts in the
period received. As reported in the balance sheet, the carrying amount, net of
allowances for doubtful accounts and returns, for customer accounts receivable
on Blair credit sales approximates fair value.

The Company records internally incurred shipping and handling costs in cost of
sales.

Finance charges on time payment accounts are recognized on an accrual basis of
accounting. The increase in finance charges compared to the first quarter of
2003 primarily resulted from a slight increase in customer accounts receivable
and increased finance charge revenues associated with the establishment of JLB
Service Bank on August 20, 2003.



-15-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE R - CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of available cash, money market securities,
and other investments with a maturity of three months or less when purchased.
Amounts reported in the Consolidated Balance Sheets approximate fair values.

NOTE S - RETURNS
A provision for anticipated returns is recorded monthly as a percentage of gross
sales based upon historical experience. This provision is charged directly
against gross sales to arrive at net sales as reported in the consolidated
statements of income. Actual returns are charged against the allowance for
returns, which is netted against accounts receivable in the balance sheet. The
provision for returns charged against income for the first quarter of 2004 and
2003 amounted to $20,606,557 and $20,713,738 respectively. Management believes
these provisions are adequate based upon the relevant information presently
available. However, changes in facts or circumstances could result in additional
adjustment to the Company's provisions.

NOTE T - DOUBTFUL ACCOUNTS
A provision for doubtful accounts is recorded monthly as a percentage of gross
credit sales based upon experience of delinquencies (accounts over 30 days past
due) and charge-offs (accounts removed from accounts receivable for non-payment)
and current credit market conditions. Management believes these provisions are
adequate based upon the relevant information presently available. However,
changes in facts or circumstances could result in additional adjustment to the
Company's provisions.

NOTE U - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated on the basis of cost. Depreciation has
been provided principally by the straight-line method using rates, which are
estimated to be sufficient to amortize the cost of the assets over their period
of usefulness. Amortization of assets recorded under capital lease obligations
is included with depreciation expense. Maintenance and repairs are charged to
expense as incurred.

NOTE V - TRADEMARKS
Trademarks are stated on the basis of cost. All trademarks are being amortized
by the straight-line method for a period of 15 years. Amortization expense
amounted to $18,061 in the first quarter of 2004 and 2003, respectively.

NOTE W - ASSET IMPAIRMENT
The Company analyzes its long-lived and intangible assets for events and
circumstances that might indicate that the assets may be impaired and the
undiscounted net cash flows estimated to be generated by those assets are less
than their carrying amounts. There are no indications of impairment present at
March 31, 2004.

NOTE X - EMPLOYEE BENEFITS
The Company's employee benefits include a profit sharing and retirement feature
available to all eligible employees. Contributions are dependent on net income
of the Company and recognized on an accrual basis of accounting. The
contributions to the plan charged against income in the first quarter of 2004
and 2003 amounted to $58,897 and $54,902, respectively.

As part of the same benefit plan, the Company has a contributory savings feature
whereby all eligible employees may contribute up to 25% of their annual base
salaries. The Company's matching contribution to the plan is based upon a
percentage formula as set forth in the plan agreement. The Company's matching
contributions to the plan charged against income in the first quarter of 2004
and 2003 amounted to $345,918 and $555,505, respectively.

NOTE Y - FINANCIAL INSTRUMENTS
The carrying amounts of cash, customer accounts receivable, accounts payable,
and accrued liabilities approximate fair value due to the short-term maturities
of these assets and liabilities. The interest rates on the Company's securitized
and revolving credit facilities are adjusted regularly to reflect current market
rates. Accordingly, the carrying amounts of the Company's borrowings also
approximate fair value.



-16-







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

NOTE Z - BUSINESS SEGMENT AND CONCENTRATION OF BUSINESS RISK The Company
operates as one segment in the business of selling women's and men's fashion
wearing apparel and accessories and home furnishing items. Specifically, the
segment includes the Womenswear, Menswear, Home, Crossing Pointe, Stores and
Allegheny Trail product lines. Allegheny Trail was added in the third quarter of
2003. The Stores product line was added in the first quarter of 2004 reflecting
a reclassification within the segment from the other product lines to this
product line. The Company's segment reporting is consistent with the
presentation made to the Company's chief operating decision-maker. The Company's
customer base is comprised of individuals throughout the United States and is
diverse in both geographic and demographic terms. Advertising is done mainly by
means of catalogs, direct mail letters and the internet, which offer the
Company's merchandise.

Sales of the women's and men's fashion wearing apparel and accessories accounted
for 87% of total sales through three months ended March 31, 2004 and 2003,
respectively. Home products accounted for the remaining sales volume.



-17-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Results of Operations

Comparison of First Quarter 2004 and First Quarter 2003

Net income for the first quarter ended March 31, 2004 was $571,053, or $.07 per
basic and diluted share, compared to net income of $500,189, or $.06 per basic
and diluted share, for the first quarter ended March 31, 2003. Results for the
first quarter of 2004 reflect a decrease in net sales offset primarily by a
related decrease in cost of goods sold and advertising expenses.

Net sales for the first quarter of 2004 totaled $128.6 million and were 6.1%
lower ($8.4 million) than net sales for the first quarter of 2003. Actual
response rates were higher in the first quarter of 2004 than in the first
quarter of 2003, while the number of advertising mailings and incoming orders
decreased in the first quarter 2004 as compared to the first quarter 2003. This
reflects the Company's strategic decision to focus on more targeted mailings for
greater efficiency and optimized yield. Gross sales revenue generated per
advertising dollar increased almost 3% in the first quarter of 2004 compared to
the first quarter of 2003. The total number of orders shipped decreased 6% while
the average order size increased over 1% in the first quarter of 2004 as
compared to the first quarter of 2003. The provision for returned merchandise as
a percentage of gross sales increased slightly (86 basis points) in the first
quarter of 2004 as compared to the first quarter of 2003.

Other income increased 28.4% from $9.8 million to $12.6 million in the first
quarter of 2004 over the first quarter of 2003. Increased finance charges and
commissions were primarily responsible for the higher other income. The higher
finance charges resulted primarily from a slight increase in customer accounts
receivable and increased finance charge revenues associated with the
establishment of JLB Service Bank on August 20, 2003. The higher commissions
resulted from increased continuity program activity.

Cost of goods sold decreased $4.4 million (6.4%) to $63.5 million in the first
quarter 2004 as compared to the first quarter 2003. Cost of goods sold as a
percentage of net sales decreased slightly to 49.4% in the first quarter of 2004
from 49.5% in the first quarter of 2003. The decrease can be attributed
primarily to lower outbound freight costs in the first quarter 2004 as compared
to first quarter 2003 resulting from increased use of shipping consolidators.
This practice allows the Company to disseminate customer packages deeper in the
mail stream which provides greater postal discounts.

Advertising expenses in the first quarter of 2004 decreased $3.2 million (8.4%)
to $35.4 million from the first quarter of 2003. The Company's more targeted
mailings lead to strategic increases in catalog mailings with substantially
decreased letter mailings.

The total number of catalog mailings released in the first quarter of 2004 was
3.3 million or 6.3% greater than in the first quarter of 2003. The total number
of prospect catalog mailings decreased 1.5 million (8%) in the first quarter of
2004 as compared to first quarter 2003.

The total number of letter mailings released in the first quarter of 2004
decreased by 47.4% (7.6) million as compared to the first quarter of 2003.

Total circulation of the co-op and media advertising programs decreased 3.1%
(9.4 million pieces) in the first quarter of 2004 as compared to the first
quarter of 2003.

The Company launched e-commerce sites for Blair www.blair.com, and Crossing
Pointe www.crossingpointe.com, in the third quarter of 2000. In the first
quarter of 2004, the Company generated $24 million in e-commerce sales demand as
compared to $18.9 million in the first quarter of 2003, a 27% increase.



-18-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Results of Operations - Continued

Comparison of First Quarter 2004 and First Quarter 2003 - Continued

General and administrative expense increased 7% ($2.2 million) in the first
quarter of 2004 as compared to the first quarter of 2003. The higher general and
administrative expense in the first quarter of 2004 was primarily attributable
to increased employee costs (primarily health care costs) and professional fees.
The increased professional fees reflected costs associated with the engagement
of McKinsey & Company, a national marketing and strategy consulting firm, to
assist the Company in conducting a comprehensive consumer, brand and strategy
study aimed at enhancing shareholder value, as well as other third party
services.

The provision for doubtful accounts decreased $400,000 from $7.9 million to $7.5
million or 4.5% in the first quarter 2004 as compared to first quarter 2003. The
decrease is primarily the result of a 5.6% decrease in credit sales. The
estimated bad debt rate used in first quarter 2004 was 45 basis points lower
than the bad debt rate used in first quarter 2003. The estimated bad debt rate
has decreased primarily due to reduced credit offers to both Blair and Crossing
Pointe prospects. Prospect credit offers traditionally result in higher bad
debts.

The provision for doubtful accounts is based on current expectations (consumer
credit and economic trends, etc.), sales mix (prospect/customer) and current and
prior years' experience, especially delinquencies (accounts over 30 days past
due) and actual charge-offs (accounts removed from accounts receivable for
non-payment). At March 31, 2004, the delinquency rate of open accounts
receivable was 55 basis points lower than at March 31, 2003. The charge-off rate
for the first quarter 2004 was comparable to the charge-off rate for the first
quarter 2003.

Recoveries of bad debts previously charged off have been credited back against
the allowance for doubtful accounts. The allowance for doubtful accounts as a
percentage of delinquent accounts at March 31, 2004 is comparable to March 31,
2003.

At this time, the Company feels that the allowance for doubtful accounts is
sufficient to cover the charge-offs from the current customer accounts
receivable portfolio. Also, credit granting, collection and behavior models
continue to be updated and improved, and, along with expanding database
capabilities, provide valuable credit-marketing opportunities and improve the
ability to forecast doubtful accounts.

Interest expense decreased $4,000 (4.7%) in the first quarter of 2004 as
compared to the first quarter of 2003. Interest expense results primarily from
the Company's required borrowings under the Receivables Purchase Agreement.
Interest rates have been marginally lower in the first quarter of 2004.

Income taxes as a percentage of income before income taxes were 37.9% in the
first quarter of 2004 and 37.0% in the first quarter of 2003. The federal income
tax rate was 35% in both years. The difference in the total income tax rate was
caused by a change in the Company's effective state income tax rate.



-19-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Liquidity and Sources of Capital

The Company maintains two facilities that collectively provide $100 million of
credit. As of March 31, 2004 the Company was in compliance with all debt
covenants.

The syndicated revolving credit facility (the "Credit Agreement") provides $30
million of commitments and is secured by inventory and certain other assets of
the Company and its subsidiaries. The Company is required to meet certain
covenants that relate to tangible net worth, maintaining a defined leverage
ratio and fixed charge coverage ratio, and complying with certain indebtedness
restrictions. At March 31, 2004, the Company had no borrowings (loans)
outstanding and had letters of credit totaling $19.1 million outstanding, which
reduces the amount of borrowings available, under the Credit Agreement.
Outstanding letters of credit totaled $20.9 million at December 31, 2003, and
$11.5 million at March 31, 2003. The Credit Agreement is scheduled to expire
December 20, 2004. The Company has begun discussions with the lenders to renew
or extend the facility.

The Company also maintains a securitization of up to $100 million in accounts
receivable. At the present time, $70 million of the $100 million is available to
the Company. The Company sells all right, title and interest in and to certain
of its accounts receivable to Blair Factoring Company, a wholly-owned
subsidiary. Blair Factoring Company is a separate, bankruptcy remote, special
purpose entity that entered into a Receivables Purchase Agreement with PNC Bank,
National Association, as administrator, and certain conduit purchasers. The
Company's consolidated financial statements reflect all the accounts of Blair
Factoring Company, including the receivables and secured borrowings.
Transactions entered into under the Receivables Purchase Agreement are
considered secured borrowings and collateral transactions under the provisions
of Statement of Financial Accounting Standards No. 140 Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities. The
securitization requires certain performance standards for the Company's accounts
receivable portfolio in addition to complying with the covenants in the Credit
Agreement. At March 31, 2004, December 31, 2003, and March 31, 2003, the Company
had $15 million outstanding, the minimum amount required to be outstanding,
under the Receivables Purchase Agreement, all of which was classified as
short-term. At March 31, 2004 and March 31, 2003, the weighted average interest
rate was 1.91% and 1.93%, respectively. Interest paid at March 31, 2004 and
March 31, 2003 was approximately $75,000 and $71,000, respectively. The
securitization has a scheduled termination date of April 7, 2006.

The following table and narrative highlight significant changes in cash and cash
equivalents for the three months ended March 31, 2004 and 2003.

Three Months Ended
March 31
Increase/
2004 2003 (decrease)
----------------------------------------

Net cash provided by operating
activities $ 709,600 $(9,036,059) $9,745,659
Net cash (used in) investing
activities (1,351,366) (2,159,376) 808,010
Net cash (used in) financing
activities (863,879) (1,057,555) 193,676
Effect of exchange rate changes
in cash (53,884) (15,453) (38,431)
----------------------------------------

Net (decrease) in cash and cash
equivalents $(1,559,529) $(12,268,443) $10,708,914
========================================



-20-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Liquidity and Sources of Capital - continued

Net cash provided by operating activities increased during the three months
ended March 31, 2004 as compared to the same period in fiscal 2003 as a result
of greater reductions in inventory levels ($9.2 million), smaller increases in
accounts receivable ($3.3 million), favorable changes to accrued expenses ($2.0
million), offset somewhat by timing of payments that caused larger decreases in
accounts payable ($6.5 million).

The net cash flow used in investing activities was lower by $808,010 due to
lower level of capital expenditures. In 2003, the company was in the final
stages of a modernization and expansion program of its fulfillment complex.

The $193,676 change in net cash flows used in financing activities for the three
months ended March 31, 2004 over the comparable period in 2003, is primarily due
to higher proceeds from exercised stock options, offset by increased dividends
attributable to shares outstanding.

Anticipated cash requirements during 2004 are primarily to fund capital
expenditures and pay dividends. The Company expects to fund 2004 cash
requirements with cash generated from operations.

The Company was in compliance with all debt covenants as of March 31, 2004. The
Company believes it has adequate financial resources to support anticipated
short-term and long-term capital needs and commitments.

Merchandise inventory turnover was 3.3 at March 31, 2004, 3.4 at December 31,
2003 and 3.5 at March 31, 2003. Merchandise inventory as of March 31, 2004 was
2.5% lower than at December 31, 2003 and 4.7% higher than at March 31, 2003. The
merchandise inventory levels are net of the Company's reserve for inventory
obsolescence. The reserve totaled $1.7 million at March 31, 2004, $3.6 million
at December 31, 2003 and $4.4 million at March 31, 2003. Inventory write-offs
and write-downs (reductions to below cost) charged against the reserve for
obsolescence were $3.6 million in the first quarter of 2004 and $0.6 million in
the first quarter of 2003. The closing of the Starbrick Outlet Store in January
2004, accounts for $2.4 million of the write-downs in the first quarter 2004.
These write-downs were provided for in the December 31, 2003 obsolescence
reserve. Due to the nonrecurring nature of the write-downs related to the
closing of the Starbrick Outlet Store, the obsolescence reserve at March 31,
2004 is considerably lower than the reserve at December 31, 2003 on similar
levels of inventory. However, management believes that the amount of the reserve
for obsolescence is appropriate. A monthly provision for obsolete inventory is
added to the reserve and expensed to cost of goods sold, based on the levels of
merchandise inventory and merchandise purchases.

An operating segment is identified as a component of an enterprise for which
separate financial information is available for evaluation by the chief
decision-maker, or decision-making group, in deciding on how to allocate
resources and assess performance. The Company operates as one business segment
consisting of the Womenswear, Menswear, Home, Crossing Pointe, Allegheny Trail
and Store product lines. Allegheny Trail was added in the third quarter of 2003.
The Store product line was added in the first quarter of 2004. It was previously
included in the Womenswear, Menswear, Home and Crossing Pointe product lines.
The Stores product line shows a decrease of $5 million in merchandise inventory
when comparing first quarter 2004 to first quarter 2003. This is due to the
closing of the Erie Outlet Store in March, 2003, and the Starbrick Outlet Store
in January, 2004.



-21-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Liquidity and Sources of Capital - continued

The following tables illustrate the percent of net sales and merchandise
inventory that each product line represents.

3/31/04 Percent of 3/31/03 Percent of
Net Sales Total Net Net Sales Total Net
Product line (in millions) Sales (in millions) Sales
- ------------------- -------------- ---------- ------------- ----------

Womenswear $ 82.8 64.4% $ 85.8 62.6%
Menswear 20.4 15.9% 21.4 15.6%
Home 17.2 13.4% 18.4 13.4%
Crossing Pointe 7.4 5.7% 10.5 7.7%
Stores .4 .3% .9 .7%
Allegheny Trail .4 .3% N/A N/A
-------------- ---------- ------------- ----------

Total $128.6 100.0% $137.0 100.0%
============== ========== ============= ==========


3/31/04 3/31/03
Merchandise Merchandise
Inventory Inventory
Product Line (in millions) (in millions)
- -------------------- --------------- ----------------

Womenswear $39.2 $32.5
Menswear 9.4 10.9
Home 7.6 4.5
Crossing Pointe 5.9 8.0
Stores .5 5.5
Allegheny Trail 1.7 N/A
--------------- ----------------

Total $64.3 $61.4
=============== ================

The Company looks upon its credit granting (Blair Credit) as a marketing
advantage. Blair Credit customers, on average, buy more, buy more often and are
more loyal than cash and credit card customers. The Company has determined that
the benefit from the increased sales volume achieved by offering Blair Credit is
significant and more than outweighs the cost of the credit program. The cost of
the credit program is comparable to the discount rates of third party credit
cards. The Company's gross credit sales decreased 5.6% in the first quarter 2004
as compared to first quarter 2003 in line with the strategic decision to focus
on more targeted mailings for greater efficiency and optimized yield.

On August 20, 2003 the Company commenced operations of a new wholly-owned
subsidiary, JLB Service Bank. The establishment of JLB Service Bank enables the
Company to manage its credit portfolio in a more cost-effective and efficient
manner. The bank's products involve the extension of credit on an unsecured
basis to individuals who are customers of Blair Corporation to facilitate their
purchases of Blair merchandise. As of March 31, 2004, JLB Service Bank's total
assets represented 1.5% of total consolidated assets of the Company. Gross
revenue of JLB Service Bank was .98% of the Company's consolidated gross revenue
for the quarter ended March 31, 2004.



-22-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Liquidity and Sources of Capital - continued

The Company has added new facilities, modernized its existing facilities and
acquired new cost-saving equipment during the last several years. Capital
expenditures for property, plant and equipment totaled $1.4 million during the
first quarter 2004, compared to $2.2 million during the first quarter 2003.

Upon review of the Company's inventory liquidation strategy, the Company made
the following decisions. In January 2004, the Company closed its outlet store
located in Warren, Pennsylvania. This closure was effective at the close of
business on January 16, 2004. The Company is considering alternative uses for
the building. On March 28, 2003, the Company closed its outlet store located in
Erie, Pennsylvania. The Company intends to sell the building and believes that
the sale will be completed by December 31, 2004. Evolvement of the Company's
inventory liquidation strategy into more rapid and profitable methods of
disposing obsolete and excess inventory led to these decisions. Over the past
three years, package insertions, telephone upsell promotions, sale catalogs and
the growing e-commerce channel have proven to be more successful and profitable
in moving inventory than the traditional outlet sales process. The $1,368,526
shown as Assets Held for Sale at both March 31, 2004 and December 31, 2003
consists of the net book value of the land, land improvements and building of
the Erie outlet store.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Contractual Obligations

The Company has contractual obligations consisting of capital leases for data
processing and telephone equipment, operating leases for buildings, data
processing, office and telephone equipment and a line of credit securitization
for general liquidity which requires a minimum borrowing level.

Payments Due By Period
Contractual Less than 1 - 3 4 - 5 More than
Obligations Total 1 year years years 5 years
- ----------------- ----------- ----------- ----------- ---------- ----------
Capital Lease
Obligations $ 409,548 $ 306,074 $ 103,474 $ -0- $ -0-
Operating leases 12,053,975 2,279,196 5,878,096 1,754,648 2,142,035
Unconditional
Purchase
Obligations -
Outstanding
Letters of Credit 19,100,000 19,100,000 -0- -0- -0-
Line of Credit -
Securitization 15,000,000 15,000,000 -0-
-0- -0-
----------- ----------- ----------- ---------- ----------

Total $46,563,523 $36,685,270 $ 5,981,570 $1,754,648 $2,142,035
=========== =========== =========== ========== ==========



-23-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Contractual Obligations - continued

The Company has commercial commitments consisting of a revolving credit facility
of up to $30 million and a securitization of up to $70 million in accounts
receivable.

Amount of Commitment
Expiration Per Period
Total
Other Commercial Amounts Less than 1 - 3 4 - 5 After 5
Commitments Committed 1 year years years years
- ------------------- ----------- ----------- ---------- ------- -------
Line of Credit -
Revolving
effective 7/25/03 $30,000,000 $30,000,000 $ -0- $ -0- $ -0-
Line of Credit -
Securitization
effective 4/9/03 70,000,000 -0- 70,000,000 -0- -0-
----------- ----------- ----------- ------- -------

Total $100,000,000 $30,000,000 $70,000,000 $ -0- $ -0-
============ =========== =========== ======= =======

If an event of default should occur, payments and/or maturity of the lines of
credit could be accelerated. The Company is not in default and does not expect
to be in default of any of the provisions of the credit facilities. (See
"Liquidity and Sources of Capital" for details of the Company's credit
facilities).

The Company recently declared a quarterly dividend of $.15 per share payable on
June 15, 2004. The Company has declared dividends for 282 consecutive quarters.
It is the Company's intent to continue paying dividends; however, the Company
will evaluate its dividend practice on an ongoing basis. (See "Future
Considerations").

Critical Accounting Policies

Preparation of the Company's financial statements requires the application of a
number of accounting policies which are described in "Note 1, Significant
Accounting Policies" in the "Notes to Consolidated Financial Statements" in the
Company's 2003 10-K. The critical accounting policies, which if interpreted
differently under different conditions or circumstances could result in material
changes to the reported results, deal with properly valuing accounts receivable
and inventory. Properly valuing accounts receivable and inventory requires
establishing proper reserve and allowance levels, specifically the allowances
for doubtful accounts and returns and the reserve for inventory obsolescence.
The Company's senior financial management and the Company's auditors (Ernst &
Young) review the critical accounting policies and estimates with the Audit
Committee of the Board of Directors.

The Company's revenue recognition policy is as follows: Sales (cash, Blair
Credit, or third party credit card) are recorded when the merchandise is shipped
to the customer in accordance with the provisions of Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements.

Finance charges on time payment accounts are recognized on an accrual basis of
accounting.

The allowance for doubtful accounts and related items, provision for doubtful
accounts and Blair Credit, are discussed in "Results of Operations," "Liquidity
and Sources of Capital" and "Future Considerations." A change in the bad debt
rate would cause changes in the provision for doubtful accounts and the
allowance for doubtful accounts. Based on the Company's 2003 level of credit
sales and finance charges, net income would change by approximately $2.5
million, or $.32 per share, from a one percentage point change in the bad debt
rate.

The allowance for returns is a deduction from customer accounts receivable. A
monthly provision for anticipated returns is recorded as a percentage of gross
sales, based upon historical experience. The provision is charged against gross
sales to arrive at net sales, and actual returns are charged against the



-24-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Critical Accounting Policies - continued

allowance for returns. Returns are generally more predictable as they settle
within two-to three months, but are impacted by season, new products and/or
product lines, type of sale (cash, credit card, Blair Credit) and sales mix
(prospect/customer). The Company feels that the allowance for returns is
sufficient to cover the returns that will occur after March 31, 2004 from sales
prior to April 1, 2004. A change in the returns rate would cause changes in the
provision for returns and the allowance for returns. Based on the Company's 2003
level of sales, net income would change by approximately $2.0 million, or $.26
per share, from a one percentage point change in the returns rate.

The reserve for inventory obsolescence and related items, inventory levels and
write-downs, are discussed in "Liquidity and Sources of Capital" and "Future
Considerations". The Company feels that the reserve for inventory obsolescence
is sufficient to cover the write-offs that will occur in future years on
merchandise in inventory as of March 31, 2004. A change in the obsolescence rate
would cause changes in cost of goods sold and the reserve for inventory
obsolescence . Based on the Company's 2003 level of merchandise subject to
obsolescence, net income would change by approximately $1.9 million, or $.24 per
share, from a one percentage point change in the obsolescence rate.

The Company's advertising expense policy is as follows: Advertising and shipping
supply inventories include printed advertising material and related mailing
supplies for promotional mailings, which are generally scheduled to occur within
two months. These direct-response advertising costs are then expensed over the
period of expected future benefit, generally nine weeks.

At March 31, 2004, the Company had total gross deferred tax assets of $13.8
million. These assets relate principally to asset valuation reserves including
bad debts, returns and inventory obsolescence. Based on recent historical
earnings performance and current projections, management believes that a
valuation allowance is not required against these deferred tax assets, except
for the valuation allowance against state net operating losses, which was
provided due to its uncertainty of realization based upon the state's net
operating loss carryforward rules.

Impact of Inflation and Changing Prices

Although inflation has moderated in our economy, the Company is continually
seeking ways to cope with its impact. To the extent permitted by competition,
increased costs are passed on to customers by selectively increasing selling
prices over a period of time. Historically, profit margins have been pressured
by postal and paper rate increases. Paper rates have moderated over the
reporting period. Postal rates increased on January 10, 1999, on January 7,
2001, on July 1, 2001 and again on June 30, 2002. Based on recent public
communications by the United States Postal Service, it is anticipated that
postal rates will not increase again until 2006. The Company spent approximately
$103.8 million for postage and delivery services in 2003.

The Company principally uses the LIFO method of accounting for its merchandise
inventories. Under this method, the cost of products sold reported in the
financial statements approximates current costs and thus reduces distortion in
reported income due to increasing costs. However, the Company has been
experiencing consistent to declining merchandise costs and the LIFO reserve has
fallen to $4.5 million at March 31, 2004 and at December 31, 2003 from $5.7
million at March 31, 2003.

Property, plant and equipment are continuously being expanded and updated. Major
projects are discussed under "Liquidity and Sources of Capital". Assets acquired
in prior years will be replaced at higher costs but this will take place over
many years. New assets, when acquired, will result in higher depreciation
charges, but in many cases, due to technological improvements, savings in
operating costs should result. The charges to operations for depreciation
represent the allocation of historical costs incurred over past years and are
significantly less than if they were based on the current cost of productive
capacity being used.



-25-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Accounting Pronouncements

Effective January 1, 2002, the Company adopted the provisions of SFAS No.
142, Goodwill and Other Intangible Assets. Statement No. 142 requires
testing of goodwill and intangible assets with indefinite lives for
impairment rather than amortizing them. The adoption of this statement in
the first quarter of 2002 had no impact on the Company's financial results.

Effective January 1, 2002, the Company implemented SFAS No. 143, Accounting for
Asset Retirement Obligations which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the related asset retirement costs. The statement requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred and capitalized as part of the carrying amount of the
long-lived asset. When a liability is initially recorded, the entity capitalizes
the cost by increasing the carrying value of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, a gain or loss is recorded. The adoption of this
statement did not have an effect on the Company.

SFAS No. 145, Rescission of FASB No. 4, 44 and 64, Amendment of FASB Statement
No. 13, and Technical Corrections, and FASB Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others were adopted by the Company effective
January 1, 2003. The adoption of these standards did not have a material impact
on the Company's results of operations or financial condition.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets which supersedes SFAS No. 121 Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of. Although retaining many of the provisions of SFAS No. 121,
SFAS No. 144 establishes a uniform accounting model for long-lived assets to
be disposed. The Company's adoption of this statement in the first quarter
of 2002 did not have an impact on the Company's financial results for 2002.
During 2003, the provisions of this statement impacted the accounting
treatment of the planned sale of the Blair Outlet Store in Erie,
Pennsylvania. (See Note L)

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities when the liability is incurred and not as a result
of an entity's commitment to an exit plan. The statement is effective for exit
or disposal activities initiated after December 31, 2002. The adoption of SFAS
No. 146 in the first quarter of 2003 did not have an impact on the Company's
financial results. During 2004 and 2003, the provisions of this statement
impacted the accounting treatment of the voluntary separation of employees due
to the closing of the Blair Outlet Stores in Warren, Pennsylvania and Erie,
Pennsylvania. (See Note M)

The Company adopted SFAS No. 148, Accounting For Stock-Based Compensation
Transition and Disclosure an amendment of SFAS No. 123, Accounting For
Stock-Based Compensation effective the year ended December 31, 2002. It provides
alternative methods for a voluntary change to the fair value based method of
accounting for stock-based employee compensation and requires prominent
disclosure about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. The Company's adoption of
SFAS No. 148 in 2002 enhanced stock-based employee compensation disclosures and
had no effect on the method of accounting followed by the Company.

In April 2003, the FASB issued SFAS No. 149 Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. This statement is generally effective for contracts entered
into or modified after June 30, 2003. The Company adopted the new statement
effective July 1, 2003. The Company has historically not utilized derivative
instruments and, as a result, the adoption of this statement has had no impact
on the financial statements of the Company.



-26-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Accounting Pronouncements - continued

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities and equity. This statement is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise at the beginning of
the Company's third quarter. The effective dates of certain provisions of SFAS
No. 150 have been deferred. The Company believes the adoption of this standard
will not have a material impact on its results of operations or financial
condition.

As of December 31, 2003, the Company adopted FASB Interpretation No. 46 R,
Consolidation of Variable Interest Entities, revised in December 2003. The
adoption of this statement has had no impact on the financial statements of the
Company.

Future Considerations

The Company is faced with the ever-present challenge of maintaining and
expanding its customer file. This involves the acquisition of new customers
(prospects), the conversion of new customers to established customers (active
repeat buyers) and the retention and/or reactivation of established customers.

These actions are vital in growing the business but are being negatively
impacted by increased operating costs, a declining labor pool, increased
competition in the retail sector, high levels of consumer debt, varying consumer
response rates and an uncertain economy. The preceding factors can also
negatively impact the Company's ability to properly value accounts receivable
and inventories by making it more difficult to establish proper reserve and
allowance levels, specifically, the allowances for doubtful accounts and returns
and the reserve for inventory obsolescence.

The Company's marketing strategy includes targeting customers in the "40 to 75,
low-to-moderate income" market. Success of the Company's marketing strategy
requires investment in database management, digital asset management, campaign
management, financial and operating systems, prospecting programs, catalog
marketing, new product lines, telephone call centers, e-commerce, fulfillment
operations and credit management. Management believes that these investments
should improve Blair Corporation's position in new and existing markets and
provide opportunities for future earnings growth.

The Company announced on May 3, 2004, that they will discontinue circulation of
its four year-old Crossing Pointe Catalog title beginning in 2005 and is
presently evaluating the opportunity for maintaining a web based Crossing Pointe
business. The Company's intention is to more fully focus new business
development efforts on the core Blair brand and its proven appeal to significant
market segments. The decision to focus on core operations is based in part on
the historical success of the Blair brand and an extensive consumer and brand
strategy study undertaken by the Company as part of its efforts to enhance
profitability and shareholder value. The Company does not anticipate that this
decision will have a negative effect on 2004 profitability, but does expect it
to benefit 2005 performance.



-27-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995

Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Words such as "believes", "anticipates", "plans", "expects", and similar
expressions are intended to identify forward-looking statements. Any statements
contained in this report that are not statements of historical fact may be
deemed to be forward-looking statements. Such forward-looking statements are
included in, but not limited to, the following sections of the report:

- The paragraph on the provision for doubtful accounts in the Results
of Operations, Comparison of First Quarter 2004 and First Quarter
2003.

- - Liquidity and Sources of Capital.

- - Critical Accounting Policies.

- - The Impact of Inflation and Changing Prices.

- - Future Considerations.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties which could cause actual results to differ materially from those
in the forward-looking statements, including without limitation the following:
(i) the Company's plans, strategies, objectives, expectations and intentions are
subject to change at any time at the discretion of the Company; (ii) the
Company's plans and results of operations will be affected by the Company's
ability to manage its growth, accounts receivable and inventory; (iii) external
factors such as, but not limited to, changes in consumer response rates, changes
in consumer credit trends, success of new business lines and increases in
postal, paper and printing costs; and (iv) other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The carrying amounts of cash, customer accounts receivable, accounts payable,
and accrued liabilities approximate fair value due to the short-term maturities
of these assets and liabilities. The interest rates on the Company's securitized
and revolving credit facilities are adjusted regularly to reflect current market
rates. Accordingly, the carrying amounts of the Company's borrowings also
approximate fair value.

The Company is subject to market interest rate risk from exposure to changes in
interest rates based upon its financing, investing and cash management
activities. The Company utilizes variable-rate debt to manage its exposure to
changes in interest rates. The Company does not expect changes in interest rates
to have a material adverse effect on its income or cash flow in 2004. A change
of one percentage point in the interest rate would cause a change in interest
expense, based on the Company's levels of debt for the years 2003 and 2004, of
approximately $150,000 in each year.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, based on an evaluation of
the Company's disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934), each of the Chief
Executive Officer and the Chief Financial Officer of the Company has concluded
that the Company's disclosure controls and procedures are effective to ensure
that information required to be disclosed by the Company in its Exchange Act
reports is recorded, processed, summarized and reported within the applicable
time periods specified by the SEC's rules and forms.

There were no significant changes in the Company's internal controls or in any
other factors that could significantly affect those controls subsequent to the
date of the most recent evaluation of the Company's internal controls by the
Company, including any corrective actions with regard to any significant
deficiencies or material weaknesses.



-28-







PART II. OTHER INFORMATION

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004

Item 1. Legal Proceedings

The Company is from time to time a party to ordinary routine litigation
incidental to various aspects of its operations. Management is not currently
aware of any litigation that will have a material adverse impact on the
Company's financial condition or results of operations.

Item 2. Changes in Securities and Use of Proceeds

Not Applicable.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits
3.1 Restated Certificate of Incorporation(1)
3.2 Amended and Restated Bylaws of Blair Corporation
4 Specimen Common Stock Certificate(2)
10.1 Stock Accumulation and Deferred Compensation Plan for Directors(3)
10.2 Blair Corporation 2000 Omnibus Stock Plan(4)
10.3 Blair Credit Agreement(5)
10.4 Amendment No. 2 to Credit Agreement(6)
11 Statement regarding computation of per share earnings(7)
31.1 Section 302 Certification-CEO
31.2 Section 302 Certification-CFO
32.1 Section 906 Certification-CEO
32.2 Section 906 Certification-CFO

(b) Reports on Form 8-K

The following Forms 8-K were furnished pursuant to Item 12 of Form
8-K and are therefore not deemed to be, nor intended by the Company
to be, "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liability of that
section:

On January 27, 2004 the Company furnished a Form 8-K announcing the
date, time and location of its annual meeting.

On February 13, 2004 the Company furnished a Form 8-K announcing its
earnings for the year ended December 31, 2003.

On April 23, 2004 the Company furnished a Form 8-K announcing its
earnings for the three months ended March 31, 2004.

On May 4, 2004 the Company furnished a Form 8-K announcing its
intention to more fully focus new business development efforts on
the core Blair brand and its proven appeal to significant market
segments. As part of this effort, the Company will discontinue
circulation of its 4 year-old Crossing Pointe catalog title in early
2005.



-29-







PART II. OTHER INFORMATION - Continued

BLAIR CORPORATION AND SUBSIDIARIES

March 31, 2004


(1) Incorporated by reference to Exhibit A to the Quarterly Report on Form 10-Q
of the Company filed with the SEC on August 10, 1995 (SEC File No. 1-878).

(2) Incorporated by reference to Exhibit 4.1 to the Form S-8 Registration
Statement filed with the SEC on July 19, 2000 (SEC File No. 333-41770).

(3) Incorporated herein by reference to Exhibit A to the Company's Proxy
Statement filed with the SEC on March 20, 1998 (SEC File No. 1-878).

(4) Incorporated herein by reference to Exhibit A to the Company's Proxy
Statement filed with the SEC on March 17, 2000 (SEC File No. 1-878).

(5) Incorporated herein by reference to Exhibit 99.1 to the Company's Form 8-K
filed with the SEC on January 9, 2002 (SEC File No. 1-878).

(6) Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form
10-Q of the Company filed with the SEC on August 8, 2003 (SEC File No. 1-878).
Certain schedules to the agreement have been omitted.

(7) Incorporated by reference to Note D of the financial statements included
herein.



-30-







SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



BLAIR CORPORATION
---------------------------------
(Registrant)



Date May 7, 2004 By JOHN E. ZAWACKI
- --------------------------- ---------------------------------
JOHN E. ZAWACKI
President and Chief Executive Officer


By BRYAN J. FLANAGAN
---------------------------------
BRYAN J. FLANAGAN
Senior Vice President and Chief
Financial Officer


By MICHAEL R. DELPRINCE
---------------------------------
MICHAEL R. DELPRINCE
Controller



[Certifications to follow]



-31-







Exhibit 31.1
CERTIFICATION

I, John E. Zawacki, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Blair Corporation;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly
report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:

a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's board
of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.



Date: May 7, 2004 JOHN E. ZAWACKI
------------------------
JOHN E. ZAWACKI
President and
Chief Executive Officer



-32-







Exhibit 31.2

CERTIFICATION

I, Bryan J. Flanagan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Blair Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.



Date: May 7, 2004 BRYAN J. FLANAGAN
----------------------------
BRYAN J. FLANAGAN
Senior Vice President and
Chief Financial Officer







-33-







Exhibit 32.1



CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Blair Corporation (the "Company") on
Form 10-Q for the period ended March 31, 2004 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, John E. Zawacki, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.




May 7, 2004 JOHN E. ZAWACKI
----------- --------------------------
JOHN E. ZAWACKI
President and
Chief Executive Officer



A signed original of this written statement required by Section 906, or other
document authentication, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by section 906, has been provided to Blair Corporation and will be
retained by Blair Corporation and furnished to the Securities and Exchange
Commission or its staff upon request.



-34-







Exhibit 32.2



CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Blair Corporation (the "Company") on
Form 10-Q for the period ended March 31, 2004 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Bryan J. Flanagan,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.



May 7, 2004 BRYAN J. FLANAGAN
----------- ----------------------------
BRYAN J. FLANAGAN
Senior Vice President and
Chief Financial Officer



A signed original of this written statement required by Section 906, or other
document authentication, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by section 906, has been provided to Blair Corporation and will be
retained by Blair Corporation and furnished to the Securities and Exchange
Commission or its staff upon request.



-35-