ONE PRICE CLOTHING STORES INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|x| Annual Report Pursuant To Section 13 or 15(d) Of The Securities Exchange Act
of 1934 (Fee Required)
For the fiscal year ended December 30, 1995
OR
| |Transition Report Pursuant To Section 13 or 15(d) Of The Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from

Commission file number 0-15385
ONE PRICE CLOTHING STORES, INC.
(Exact name of registrant as specified in its charter)

Delaware 57-0779028
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)

1875 East Main Street
Highway 290, Commerce Park
Duncan, South Carolina 29334
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (864) 433-8888

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 Par Value
(Title of Class)

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 period 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 22, 1996:
Common Stock, $0.01 Par Value - $26,811,231

The number of shares outstanding of the issuer's classes of common stock as of
March 22, 1996: Common Stock, $0.01 Par Value - 10,335,031 shares

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual shareholders meeting to be held
May 20, 1996 are incorporated by reference into Part III.

PART I

ITEM 1. BUSINESS

General

One Price Clothing Stores, Inc. (the "Registrant" or the "Company") operates a
chain of off-price retail women's and children's specialty stores offering a
wide variety of first quality, contemporary, in-season apparel and accessories
for the uniform retail price of $7. The Company purchases merchandise at heavily
discounted prices in large quantities from a broad mix of manufacturers,
jobbers, importers and other suppliers. Items offered in the Company's stores
typically sell in department and specialty stores for $15 and up. The Company is
able to acquire such merchandise at heavily discounted prices because of its
willingness to purchase large quantities and odd lots and to buy goods later in
the season than most other retailers. The Company's buyers are able to take
advantage of situations such as over-production, order cancellations, excess
foreign factory capacity or quota and manufacturers' needs to liquidate stock.
This purchasing strategy allows the Company to obtain a price advantage and to
react quickly to seasonal fashion preferences and weather conditions affecting
consumer spending. It is the Company's policy to offer only first quality
apparel; the Company does not purchase "seconds" or irregular merchandise from
its suppliers. The Company increased its retail price from $6 to $7 on August 5,
1990, the only price increase since the Company began operations in 1984. At
this time, management does not anticipate increasing the retail price in the
near future.

Company History and Organization

The Company opened its first store in August 1984. The Company changed its
corporate domicile from South Carolina to Delaware on April 9, 1987 and
completed the initial public offering of its Common Stock on May 27, 1987. All
information contained herein has been adjusted to reflect the issuance of
10.120811 shares of the Company's Common Stock, $.01 par value, (the "Common
Stock") in exchange for each share of Common Stock then outstanding in
connection with the Company's re-incorporation in Delaware, a 3-for-2 stock
split effected in the form of a stock dividend paid on October 15, 1987, and a
3-for-2 stock split effected in the form of a stock dividend paid on April 29,
1994. On February 9, 1994, a wholly-owned subsidiary of the Company, One Price
Clothing of Puerto Rico, Inc., was incorporated in Puerto Rico. It commenced
operations on May 28, 1994. As used herein, unless the context otherwise
indicates, the "Company" refers to One Price Clothing Stores, Inc., a Delaware
corporation, to its immediate predecessor, a South Carolina corporation of the
same name, to the South Carolina corporation's predecessor, a North Carolina
corporation organized in 1984 under the name J. K. Apparel, Inc. and to One
Price Clothing of Puerto Rico, Inc.

Industry Segments

The Company operates in only one industry segment. All of the Company's assets
and significant revenues and pre-tax earnings relate to retail sales of women's
and children's apparel and accessories to the general public through
Company-operated stores. At the end of 1995, 1994 and 1993, the Company's total
assets were $79,364,000, $67,930,000 and $64,201,000, respectively. Net sales
were $294,692,000 in 1995, $283,326,000 in 1994 and $234,698,000 in 1993. The
Company had a net loss of $1,304,000 in 1995, net income of $4,389,000 in 1994
and net income of $8,724,000 in 1993. Other than operations in Puerto Rico, the
Company had no operations outside the continental United States at the end of
fiscal 1995 and no export sales. Reference is hereby made to the financial
statements included in Part II for more detailed information about the Company's
assets.

Operations

The Company operates a chain of off-price retail women's and children's
specialty stores offering a wide variety of first quality, contemporary,
in-season apparel and accessories for the uniform retail price of $7. The
Company registered the trademark "One Price" with the United States Patent and
Trademark Office in June, 1990 for a ten-year period with the option to renew
upon expiration. The Company intends to apply for renewal for this trademark.
The Company registered the trademark "Every Day Every Item" in June, 1989 for a
twenty-year period with the United States Patent and Trademark Office. The
trademark expires in June, 2009 with the option to renew. The Company considers
these trademarks to be valuable and significant to the conduct of its business.
The Company registered "Every Day Every Item", "Todos Los Dias Todos Los
Articulos," "One Price" and "Un Solo Precio" in Mexico in June, 1993. Management
has decided to forego use of this mark at this time in Mexico which may result
in the lapsing of such registrations in Mexico.

The One Price Store. The Company's typical store has approximately 3,300 square
feet, of which approximately 2,400 square feet is devoted to selling space. All
of the Company's stores are located in leased facilities with convenient access
to adequate parking or public transportation. At December 30, 1995,
approximately 92% of the Company's stores were located in strip shopping centers
and the remaining stores were located in central business districts or malls.
The Company does not franchise its stores.

The Company's stores are primarily located in or near communities with a
population of at least 40,000 - 50,000 and above, as well as in large
metropolitan areas. Most of the Company's stores are open seven days a week and
typical hours of operation are from 10:00 a.m. until 7:00 p.m. or 9:00 p.m.,
Monday through Saturday, with shorter hours on Sunday. A typical store employs a
full-time manager, one or two full-time assistant managers and up to ten
additional part-time sales associates.

The Company's stores are designed for customer convenience and for attractive
presentation of merchandise. All apparel is displayed on hangers and is
organized by classification, style and color, promoting a pleasant shopping
environment and customer convenience.

The Company's store operations department is headed by a Senior Vice President
of Stores who is assisted by two Directors of Store Operations and Regional and
District Sales Managers. Each Regional Sales Manager is responsible for
approximately 9 districts. Each District Sales Manager is responsible for
approximately 10 to 12 stores and visits each store in his or her district on a
regular or as-needed basis to provide assistance in promoting sales, training,
store layout and merchandise presentation, and to monitor adherence to the
Company's operational and management policies.

Store Locations and Expansion. At December 30, 1995, the Company operated 701
stores in 28 states and Puerto Rico.

The Company opened a net of 83 stores and closed 23 underperforming stores in
fiscal 1995. The Company's expansion plans in 1996 include opening approximately
20 new stores primarily in existing markets, closing approximately 60 stores
(compared to an average of 30 stores over the last several years), and
relocating approximately 10 stores.

Purchasing. The Company's practice is to offer value to its customers by selling
desirable women's and children's apparel and accessories at considerably lower
prices than generally would be available from department stores and other
specialty retailers. The Company purchases its merchandise at heavily discounted
prices and on favorable terms from manufacturers, jobbers, importers and other
vendors.

The Company typically is able to purchase merchandise from vendors at
substantially discounted prices as a result of the following circumstances: the
inability of a manufacturer or importer to dispose of merchandise through
regular channels, the discontinuance of merchandise because of changes in color
or style, over-production by manufacturers, cancellation of orders by
conventional retail stores, the need of

catalog retailers to dispose of inventories of unordered catalog merchandise,
and manufacturers' need to utilize excess capacity or import quota or need for
liquidity. The Company's ability and willingness to purchase in large quantities
and in odd-lot or broken-size assortments and its reputation for reliability in
the industry provide the Company with purchasing advantages. Typically, the
Company buys the majority of its merchandise close to and during each selling
season, later than department stores and other specialty retailers. This
purchasing strategy permits the Company to react to fashion trends and
opportunistic developments during a selling season. The Company may also
purchase selected merchandise in advance of a selling season.

During fiscal 1995, the Company purchased merchandise from approximately 940
vendors, including manufacturers, jobbers, importers and other vendors. No
vendor accounted for more than 10% of the Company's total purchases for the
year.

Although there can be no assurance that the Company will be able to continue to
acquire sufficient quantities of first quality merchandise at such low prices on
favorable terms, the Company continues to add new vendors and believes that
adequate sources of first quality merchandise are available at appropriate price
levels. The Company does not maintain long-term or exclusive purchase
commitments or arrangements with any vendor.

Corporate Offices and Distribution Center. The Company's Corporate Offices and
Distribution Center are located in Duncan, South Carolina. With the exception of
functions performed by certain merchandise buyers, regional directors of real
estate, district and regional sales managers, and certain administrative
functions performed in Puerto Rico, substantially all purchasing, accounting and
other administrative functions are centralized at the Corporate Offices.

Substantially all merchandise is shipped directly from vendors to the Company's
Distribution Center where the goods are processed and sent to the Company's
stores. The majority of shipments to stores are made by common carriers.

Merchandising. The Company's merchandising strategy emphasizes contemporary and
in-season apparel for juniors, misses, large-sized women and children. The
Company's target customers are value- and fashion-conscious women, primarily in
lower and middle income brackets. The Company offers only first quality
merchandise at the retail price of $7 per item and emphasizes the value of its
merchandise compared to similar merchandise sold elsewhere at higher prices.
Women's apparel sold by the Company includes contemporary sportswear such as
knit tops, pants, blouses, shirts, skirts, sweaters, jackets and shorts. In
addition, the Company occasionally sells other types of merchandise such as
dresses, swimsuits, jumpsuits, raincoats, lingerie and other related items. The
Company also offers selected accessories such as scarves, socks, belts,
handbags, jewelry and fragrances, in addition to apparel. Accessory sales as a
percentage of net sales were 10.9% in fiscal 1995, 10.7% in fiscal 1994 and
11.6% in fiscal 1993. Sales of children's clothing comprised less than 10% of
net sales in each of the last three fiscal years.

Management Information System. The Company's management information system,
featuring point-of-sale cash registers and a computerized inventory management
system, permits management to review each store's inventory on a daily and a
weekly basis thereby enabling the Company to tailor its purchasing strategies
and merchandise shipments to stores based on customer demand.

During fiscal 1995, the Company implemented a new warehouse management system to
improve the management of the location and flow of merchandise within the
Distribution Center.

Seasonality

The Company's sales and operating results are seasonal, as is typical in the
women's retail apparel

industry. The Company's sales historically have been lowest during the first
quarter (January-March) and the third quarter (July-September) and highest
during the second quarter (April-June) and the fourth quarter
(October-December). Reduced sales volumes in first and third quarters coincide
with the transition of seasonal merchandise. Therefore, increased levels of
markdowns generally occur during these transitional periods and operating
expenses, when expressed as a percentage of net sales, are typically higher.

Working Capital Requirements

Historically, the Company's primary needs for liquidity and capital have been to
fund the cost of its new store expansion, the related growth in merchandise
inventories, and the expansion of the Corporate Offices and Distribution Center.
These needs have been met through cash provided by operations, the Company's
available line of credit, long-term debt and operating leases. The Company had
an agreement with its banks for a $25,000,000 unsecured line of credit and a
$15,000,000 letter of credit facility expiring May 31, 1996. Effective June 30,
1995, the Company's credit agreement was amended to convert the $25,000,000 line
of credit facility to a $19,000,000 line of credit and a $6,000,000 term loan
facility, collateralized by land, building and improvements at the Corporate
Office and Distribution Center.

In March 1996, the Company replaced its existing credit facilities with an
agreement with a new lender which provides for a revolving loan facility of up
to $37,500,000 (including a letter of credit sub-facility of up to $25,000,000)
and a $7,500,000 term loan facility . Borrowings under the new credit agreement,
based upon a borrowing base formula, are collateralized by all assets owned by
the Company during the term of the agreement which expires in March 1998. The
agreement contains certain covenants and terms described in Item 7 of this
report.

Merchandise inventories are typically purchased on credit, including the use of
letters of credit. Letters of credit are used to purchase merchandise
inventories from foreign suppliers. All such purchases are paid in United States
dollars; thus, the Company is not subject to foreign currency risks. As a result
of the Company's opportunistic buying strategy and to ensure that an adequate
supply of merchandise is available for shipment to its stores, the Company may,
at times, invest a significant amount of its working capital in merchandise
inventories.

Revenues from retail sales are recognized at the time of the sale. The Company
accepts cash, checks, and, in selected stores, certain major credit cards. All
stores offer a liberal exchange and return policy. An estimate for merchandise
returns is recorded in the period the merchandise was purchased.

Customers

No material part of the business of the Company is dependent upon a single
customer or a few customers.

Competition

The women's retail apparel industry is highly competitive. In order to compete
effectively, the Company is dependent upon its ability to purchase merchandise
at substantial discounts. The Company does not know of any direct competition
from other specialty apparel retailers having a $7 one-price concept, though
other competitors do employ a similar ceiling price concept of $10. However, the
Company does compete with department stores, specialty stores, discount stores,
other off-price retailers and manufacturer-owned outlet stores, many of which
are owned by large national or regional chains with substantially greater
resources than the Company. There can be no assurance that other retailers with
substantially greater financial resources than the Company will not adopt a
purchasing and marketing concept similar to that of the Company. Management
believes that the primary competitive factors in the retail apparel industry are
price, quality, variety of merchandise, good site selection and low cost of
operation. The Company believes that it is well positioned in all of these areas
to compete in its markets.

Environmental Factors

The Company is not aware of any federal, state or local environmental
regulations which will materially affect its operations or competitive position
or require material capital expenditures. The Company cannot predict, however,
the impact of possible future legislation or regulation on its operations.

Employees

At December 30, 1995, the Company had approximately 4,800 employees, of which
approximately 48 percent were full-time employees. The Company, like other
retailers, experiences a high turnover rate of full-time and part-time store
employees but has generally not experienced difficulties in hiring qualified
personnel. None of the Company's employees are covered by a collective
bargaining agreement, and management believes that the Company's relationship
with its employees is good.

Change in Fiscal Year

In March 1996, the Company elected to change its fiscal year from the Saturday
nearest December 31 to the Saturday nearest January 31, beginning in fiscal
1996. This change was made to conform the Company's fiscal calendar to the
seasonal patterns it experiences, as well as to enhance comparability of its
fiscal quarterly and annual results with other retail companies.

Private Securities Litigation Reform Act of 1995

The statements contained in this Item 1 (Description of Business) and Item 6
(Management's Discussion and Analysis of Financial Condition and Results of
Operations) that are not historical facts may be forward-looking statements
subject to the safe harbor created by the Private Securities Litigation Reform
Act of 1995. The Company cautions readers of this Annual Report on Form 10-K
that a number of important factors could cause the Company's actual results in
1996 and beyond to differ materially from those expressed in any such
forward-looking statements. These factors include, without limitation, the
general economic and business conditions affecting women's apparel retailers,
competition from other existing or new women's apparel retailers, the Company's
ability to meet debt service obligations and other liquidity needs, the
seasonality of the Company's sales, the availability of both domestic and
foreign sources of merchandise inventories at substantially discounted prices,
Acts of God, and unusual seasonal weather patterns.

ITEM 2. PROPERTIES

The Company leases all of its store locations. At December 30, 1995, the Company
had 701 stores operating in 28 states and Puerto Rico. The Company leases its
stores under operating leases generally with initial terms of five to ten years
and with one to two renewal option periods of five years each. The leases
typically contain kickout provisions based on that store's annual sales volume
or the shopping center's occupancy. The leases generally provide for increased
rents resulting from increases in operating costs and property taxes. Certain of
the leases provide contingent or percentage rentals based upon sales volume, and
other stores are leased on a month-to-month basis. To date, the Company has not
experienced difficulty in obtaining leases for suitable locations for its stores
on satisfactory terms. Approximately 60 existing store leases expire or have
initial lease terms containing lessee renewal options which may be exercised
during fiscal 1996. Management believes that the Company will not experience a
significant increase in lease expense as a result of exercising renewal options
or negotiating additional lease terms for such locations. The following is a
list of store locations by state as of December 30, 1995 (25 of these stores
have closed since year end):

NUMBER OF
STATE STORES
Alabama................................................................................. ..16
Arizona.....................................................................................9
Arkansas....................................................................................5
California.................................................................................56
Florida....................................................................................68
Georgia....................................................................................45
Illinois...................................................................................35
Indiana....................................................................................16
Kansas......................................................................................4
Kentucky...................................................................................12
Louisiana..................................................................................17
Maryland...................................................................................14
Michigan...................................................................................19
Mississippi................................................................................11
Missouri...................................................................................17
North Carolina.............................................................................44
New Jersey..................................................................................8
New Mexico..................................................................................8
New York...................................................................................17
Ohio.......................................................................................32
Oklahoma....................................................................................9
Pennsylvania...............................................................................30
Puerto Rico................................................................................21
South Carolina.............................................................................37
Tennessee..................................................................................29
Texas......................................................................................88
Virginia...................................................................................25
West Virginia...............................................................................2
Wisconsin...................................................................................7
TOTAL STORES..............................................................................701

The Company's Corporate Offices and Distribution Center are located in Duncan,
South Carolina on approximately 82 acres which are owned by the Company. In
fiscal 1993, the Company completed a 28,000 square foot expansion of its
Corporate Offices. During fiscal 1995, the Company expanded the Distribution
Center by approximately 90,000 square feet. These expansions increased the total
size of the Corporate Offices and Distribution Center to approximately 500,000
square feet at December 30, 1995. With the addition of certain equipment and
systems in fiscal 1995, the expanded Distribution Center should be able to
support the Company's growth over the next several years. The Company's
borrowings under its new credit facility are secured by all assets owned by the
Company during the term of the agreement.

ITEM 3. LEGAL PROCEEDINGS

On September 22, 1994, two separate lawsuits making certain securities and
common law allegations and seeking unspecified damages were filed in the United
States District Court for the District of South Carolina, Columbia Division
against the Company and its Chairman and Chief Executive Officer Henry D.
Jacobs, Jr. A motion to consolidate these cases was filed. The lawsuits, which
sought certification as class actions, alleged that the Chairman and Chief
Executive Officer and the Company made materially false, misleading and untimely
projections and statements on earnings. The plaintiffs in these cases, which
were sought to be consolidated, were Leonard Pitten, Katherine Hogan and Anthony
J. Mallozzi. The Company moved to dismiss the lawsuits, and on July 10, 1995,
such lawsuits were dismissed by the Court. On August 7, 1995, the deadline
expired for the plaintiffs to appeal the dismissal, and these lawsuits are
permanently ended.

From time to time the Company is a defendant in legal actions involving claims
arising in the normal course of its business. The Company believes that, as a
result of its legal defenses and insurance arrangements, none of these other
actions presently pending, if decided adversely, would have a material adverse
effect on its financial position and results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS

The Company's common stock is traded under the symbol ONPR in the National
Market System of NASDAQ. As of March 22, 1996, there were approximately 420
shareholders of record.

The Company has never paid cash dividends since its inception. The Company's
credit agreement contains covenants which, among other things, restricts the
Company from paying dividends. Currently, the Board of Directors intends to
continue its policy of retaining earnings for operations and expansion of the
business.

The quarterly high and low sales prices of the Company's Common Stock as quoted
by NASDAQ are shown below. Prices have been adjusted to reflect a 3-for-2 stock
split effected in the form of a stock dividend to shareholders of record on
April 15, 1994.

1995 1994
-----------------------------------------------------------------
High Low High Low

First .................................8 3/8 6 1/8 17 2/3 11 1/2
Second ................................7 1/2 3 3/4 20 14 7/8
Third .................................6 1/8 3 3/4 18 8 1/2
Fourth ................................5 1/2 2 3/4 11 1/4 6 7/8

The closing price on December 29, 1995 was $3.00 per share compared to $7.88 per
share at December 30, 1994.

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected financial data for the Company for each of
the five fiscal years ended December 28, 1991 through December 30, 1995. All of
the selected financial data are extracted from the Company's audited financial
statements and should be read in conjunction with the financial statements and
the notes thereto included under Item 8 of this Form 10-K and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included under Item 7 of this Form 10-K

Fiscal Year Ended
Dec. 30, Dec. 31, Jan. 1 Jan. 2 Dec. 28
1995 1994 1994 1993(a) 1991
Dollars in thousands except per share amounts

1 Net sales $ 294,692 283,326 234,698 184,149 130,213
2 (Loss) income before taxes and cumulative effect
of a change in accounting principle $ (2,595) 7,138 13,959 10,913 7,180
3 (Loss) income before cumulative effect of a change
in accounting principle $ (1,304) 4,389 8,724 6,846 4,487
4 Cumulative effect on prior years of a change
in accounting principle $ -- -- -- -- 186
5 Net (loss) income $ (1,304) 4,389 8,724 6,846 4,673
6 Current assets $ 35,990 31,252 35,336 27,253 22,081
7 Long-term assets $ 43,374 36,678 28,865 23,465 17,626
8 Total assets $ 79,364 67,930 64,201 50,718 39,707
9 Current liabilities $ 18,594 13,035 14,798 10,861 8,668
10 Long term debt and note payable to be refinanced $ 6,579 -- -- -- --
11 Deferred income taxes $ 1,482 1,449 1,166 1,061 1,052
12 Other noncurrent liabilities $ 828 372 411 447 --
13 Shareholders' equity $ 51,881 53,074 47,826 38,349 29,987
14 Total investment $ 59,554 `53,226 48,158 39,228 30,636
15 Stores opened during the year, net # 60 101 94 81 70
16 Stores operating at year-end # 701 641 540 446 365
17 Number of employees # 4,841 4,907 4,199 3,723 2,829
18 Weighted average common shares (000) # 10,314 10,525 10,404 10,304 9,996
19 Common shares outstanding at year-end (000) # 10,335 10,305 10,221 10,123 9,918
20 (Loss) income per share before cumulative effect
of a change in accounting principle $ (0.13) 0.42 0.84 0.66 0.45
21 Cumulative effect on prior years per share
of a change in accounting principle $ -- -- -- -- 0.02
22 Net (loss) income per common share $ (0.13) 0.42 0.84 0.66 0.47
23 Book value per common share $ 5.02 5.15 4.68 3.79 3.02
24 Cash dividends declared per common share $ 0 0 0 0 0

Notes to Summary of Selected Financial Data

a. Fiscal year 1992 was a 53 week year, while all other years presented
consisted of 52 weeks.

Line Definitions
14 Total investment -- Total of all interest-bearing debt,
capitalized leases, net deferred taxes, and shareholders'
equity.
17 Number of employees -- Number of full and part-time employees at
year-end.
23 Book value per common share -- Book value of shareholders' equity
per outstanding common share line 13 divided by line 19).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

FINANCIAL SUMMARY

The following table sets forth, for the three most recent fiscal years,
certain financial statement elements as a percentage of net sales:

Fiscal Year Ended

Dec. 30, Dec. 31, Jan.1,
1995 1994 1994
PERCENT OF NET SALES:
Net sales 100.0% 100.0% 100.0%
Cost of sales 59.6% 60.0% 58.3%
-------- ------ ------
Gross margin 40.4% 40.0% 41.7%
-------- ------ ------
Selling, general and administrative expenses 30.9% 29.0% 27.7%
Store rent and related expenses 8.4% 7.1% 6.6%
Depreciation and amortization expense 1.5% 1.3% 1.4%
Interest expense 0.4% 0.1% 0.1%
------- ----- -----
41.2% 37.5% 35.8%
Interest income 0.0% 0.0% 0.0%
------- ----- -----
Net expenses 41.2% 37.5% 35.8%
------- ----- -----

(Loss) income before income taxes (0.8)% 2.5% 5.9%
(Benefit from) provision for income taxes (0.4)% 1.0% 2.2%
------ ----- -----
Net (loss) income (0.4)% 1.5% 3.7%
====== ===== =====
Stores in operation at year-end 701 641 540
====== ===== =====

1995 COMPARED TO 1994

Net sales in 1995 increased 4% to $294.7 million compared to $283.3 million in
1994. This increase in sales is due to the net addition of 60 stores during the
year. Comparable store sales, those stores in operation at least eighteen
months, decreased 13% during 1995. Management believes the decline in comparable
store sales in 1995 compared to 1994 is due to the continued softness in the
women's apparel market. Sales results in January 1996, impacted by severe
weather conditions, were also disappointing; however, sales trends since that
time have shown some encouraging signs.

The Company opened 83 stores and closed 23 underperforming stores in 1995
compared to opening 128 stores and closing 27 underperforming stores in 1994.
Fourteen stores were relocated in 1995 compared to 6 relocations in 1994. In
light of recent results and the near-term outlook for the industry, the
Company's present plan for 1996 is to open approximately 20 stores, primarily in
existing markets, and to relocate approximately 10 stores. Additionally,
approximately 60 stores will be closed in 1996. Management has decided to slow
its previously announced plans to grow to 1,000 stores over the next several
years in order to focus on improving the profitability of the Company's existing
stores.

The Company's sales and operating results are seasonal, as is typical in the
women's retail apparel industry. The Company's sales historically have been
lowest during the first quarter (January - March) and the third quarter (July -
September) and highest during the second quarter (April - June) and the fourth
quarter (October - December). Reduced sales volumes in the first and third
quarters coincide with the transition of seasonal merchandise. Therefore,
increased levels of markdowns occur during these transitional periods and
operating expenses, when expressed as a percentage of net sales, are typically
higher. After the end of 1995, the Company elected to change its year from the
Saturday nearest December 31 to the Saturday nearest January 31, beginning in
1996. This change was made to conform the Company's calendar to the seasonal
patterns it experiences, as well as to enhance comparability of its quarterly
and annual results with other retail companies.

Gross margins as a percentage of net sales increased to 40.4% in 1995 compared
to 40.0% in 1994. The improvement in gross margin was primarily the result of
management's efforts to control inventory levels and flow which resulted in
fewer markdowns when expressed as a percentage of net sales. Net sales of
apparel and of accessories represented approximately 89% and 11%, respectively,
of annual net sales in both 1995 and 1994.

Selling, general and administrative expenses increased as a percentage of net
sales to 30.9% in 1995 compared to 29.0% in 1994. This increase in selling,
general and administrative expenses, when expressed as a percentage of net
sales, is principally due to the 10% reduction in average store sales volumes
during 1995 compared to 1994. When expressed as a percentage of net sales, store
operations expenses and home office expenses increased while distribution costs
decreased. Selling, general and administrative expenses in dollars on an average
store basis decreased 4% for the Company as a whole during 1995 compared to 1994
primarily as a result of management's stringent efforts to control costs, the
completion of the distribution center conversion from hanging merchandise to a
flat pack operation and expansion of the facility and the implementation of a
new warehouse management system. Store operations expenses, distribution costs
and expenses at the corporate offices in dollars on an average store basis
decreased 1%, 11% and 7%, respectively.

Store rent expense as a percentage of net sales increased to 8.4% in 1995
compared to 7.1% in 1994. This increase is principally due to the lower sales
volumes during 1995 compared to last year. Average store rent expense increased
6% in 1995 compared to the same period last year, primarily due to the Company's
store expansion strategy of entering into larger, more costly urban and
metropolitan markets with higher base rent and common area charge structures,
and the closing of older, underperforming stores which had lower average rent
costs. Management anticipates that this trend of increasing average store rents
may continue. The Company has approximately 60 existing leases that expire or
have initial lease terms containing lessee renewal options which may be
exercised during 1996. Management believes that the Company will not experience
a material increase in aggregate store rents as a result of renewal options or
negotiating new lease terms for such locations.

Depreciation and amortization expense increased to 1.5% of net sales in 1995
from 1.3% of net sales in 1994. This increase resulted primarily from the
completion of the distribution center expansion.

The effective income tax rate for 1995 was 49.7% compared to 38.5% in 1994. This
increase was primarily due to the tax benefit arising in 1995 from the carryback
of the Federal Targeted Jobs Tax Credits and the recognition in 1995 of the
deferred income tax asset associated with the remaining net operating loss
carryforward generated by the Company's Puerto Rico subsidiary in 1994.
Management expects the Company's effective tax rate to decrease in 1996 because
the items creating the 1995 increase (tax benefit arising from carryback of the
Targeted Jobs Tax Credits and recognition of the tax benefit relating to future
benefit of prior year Puerto Rico net operating loss) will not be repeated.

1994 COMPARED TO 1993

In 1994, average store sales increased 19% in the first quarter, increased 5% in
the second quarter, were flat in the third quarter and declined 9% in the fourth
quarter compared to 1993. Management believes sales for 1994 were negatively
impacted by an industry-wide decline in consumer spending on women's apparel
throughout the latter part of the year, coupled with unseasonably warm fall
temperatures. Intense promotional pricing in the fall season by competitors in
the women's retail apparel industry, in response to the above factors, was also
believed to have further negatively impacted the Company's sales and margins. In
the latter part of the third quarter of 1994, the Company changed its method of
processing merchandise within its Distribution Center which temporarily caused a
disruption in its ability to sufficiently restock the Company's stores, thus
further negatively impacting sales.

Net sales in 1994 were $283.3 million, an increase of 21% over 1993 net sales of
$234.7 million. The increase resulted from a net addition of 101 new stores
during 1994. The Company opened 128 stores and closed 27 underperforming stores
in 1994 compared to opening 125 stores and closing 31 underperforming stores in
1993. In 1994, comparable store sales, those stores in operation at least 18
months, increased 14% in the first quarter, were flat in the second quarter and
declined 5% and 13% in the third and fourth quarters, respectively.
Comparable store sales decreased 3% for the 1994 year.

Gross margin as a percentage of net sales decreased to 40.0% in 1994 compared to
41.7% in 1993. The reduction in the gross margin percentage resulted primarily
from increased markdowns on slow-moving segments of the Company's inventories.
The increase in the rate of markdowns in 1994 primarily resulted from: (1)
stocking stores that opened late in the summer season with warm weather type
merchandise that subsequently was found predominantly to have too short a
remaining selling season; and (2) the sluggish sell-through of merchandise as a
result of the industry-wide decline in consumer spending on women's apparel
during the latter part of the year.

Selling, general and administrative expenses increased as a percentage of net
sales to 29.0% in 1994 compared to 27.7% in 1993. Generally, net sales were
substantially below expectations for the second half of 1994, which resulted in
increased selling, general and administrative expenses when expressed as a
percentage of net sales. This increase in selling, general and administrative
expenses was primarily attributable to increased transportation costs and
increased costs in the Company's stores as well as a slight increase in expenses
at the Corporate Offices.

Transportation costs increased approximately 0.5 percentage points when
expressed as a percentage of net sales compared to 1993 due to a change in
transportation from the use of a leased fleet to the use of common carriers for
the delivery of merchandise to the majority of the Company's stores.

During the second half of 1994, the Company converted the Distribution Center's
production process from a hanging operation to a flatpack operation. In
conjunction with this change in the production process, the Company began the
expansion of the Distribution Center by approximately 90,000 square feet. These
changes were made to facilitate distribution to the increasing number of stores
and to reduce processing and transportation costs.

The increased costs in the Company's stores primarily resulted from additional
store labor and increases in other store operating expenses. The increase in
store labor resulted in a 0.4 percentage points increase in selling, general and
administrative expenses compared to last year. Other store operating expenses
increased 0.2 percentage points when expressed as a percentage of net sales.

Expenses at the Company's Corporate Offices increased 0.2 percentage points when
expressed as a percentage of net sales partially due to investments made in
personnel and management training during the latter part of the year. As noted
above, net sales were below expectations for the year which resulted in
increased selling, general and administrative expenses when expressed as a
percentage of net sales.

Store rent expense as a percentage of net sales increased to 7.1% in 1994
compared to 6.6% in 1993. This increase resulted primarily from the Company's
store expansion strategy of entering larger, metropolitan markets with higher
base rent and common area maintenance charge structures. As previously noted,
net sales were significantly below expectations for the second half of 1994,
which resulted in increased store rent expense when expressed as a percentage of
net sales.

Depreciation and amortization expense decreased to 1.3% of net sales in 1994
from 1.4% of net sales in 1993.

The effective income tax rate for 1994 was 38.5% compared to 37.5% in 1993. This
increase was primarily due to the start-up net operating loss in Puerto Rico for
which no tax benefit was recognized. This increase and the effect of slightly
higher state and local statutory income tax rates were minimized by the tax
benefit from charitable contributions of inventory and utilization of state and
Federal tax credits.

INFLATION

During its three most recent years, the Company believes that the impact of
inflation has not been material to its financial condition or results of
operations. Occasionally, the Company may experience increases in the average
purchase price per unit of merchandise; however, such increases generally
reflect the impact of an increase in the quality of goods purchased rather than
inflationary factors.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's primary needs for liquidity and capital have been to
fund its new store expansion, the related growth in merchandise inventories and
the expansion of the Corporate Offices and Distribution Center. Until 1995,
these needs were met principally through cash provided by operations and the
Company's available line of credit. During 1995, the Company amended its credit
agreement to include a term loan facility to provide a source of capital and in
1996 replaced this facility with a new agreement described below.

At December 30, 1995, inventory increased by 10% compared to last year, while
average store inventories increased 1% compared to last year. This includes
inventory in the stores, in the Distribution Center and in- transit at year end.
The average inventories in the Company's stores decreased 13% to approximately
$25,000 per store compared to last year's $28,800 per store, reflecting
management's efforts to control inventories and minimize the effect of
markdowns. Inventories in-transit from foreign suppliers increased by $5,700 to
$8,500 per store compared to last year, primarily due to the timing of overseas
buying trips and due to the opportunistic purchases of Spring merchandise made
available by foreign suppliers. In 1995, import purchases were 16% of total
purchases compared to 10% in 1994. The level of merchandise inventories is
subject to fluctuations because of the Company's opportunistic buying strategy
and prevailing business conditions. In 1996, the Company intends to continue
this strategy and to opportunistically purchase merchandise in advance of the
selling seasons when it is to the Company's advantage. This strategy may impact
the level of total merchandise inventories at the end of each quarter in 1996
and the Company's liquidity and working capital needs.

The Company previously had an agreement with its banks that provided for a
$19,000,000 line of credit facility, a $15,000,000 letter of credit facility and
a $6,000,000 term loan facility scheduled to expire May 31, 1996. Borrowings
against the line of credit accrued interest at the Company's option of a Base
Rate (defined as the higher of the Agent Bank's prime interest rate or the
Federal Funds rate plus 0.50%) or the adjusted LIBOR rate plus 1.50%. The term
loan accrued interest, payable quarterly, at the Company's option of the Base
Rate, as defined above, plus 1.0% or the adjusted LIBOR rate plus 2.50%.

At December 30, 1995, the Company had $5,500,000 outstanding under the term loan
and $2,412,000 outstanding under the line of credit compared to no amounts
outstanding at December 31, 1994. The maximum amounts outstanding under the
credit facilities during 1995 and 1994, respectively were $24,540,000 and
$16,421,000. The average amounts outstanding under the credit facilities were
$16,264,000 during 1995 and $3,165,000 during 1994. The change in average
amounts outstanding principally resulted from the decrease in cash from the
beginning of 1994 to the end of 1994. The weighted average interest rates were
8.2% and 7.6% during 1995 and 1994, respectively.

Letters of credit are used primarily to purchase merchandise from foreign
suppliers. All such purchases are paid in United States dollars; thus, the
Company is not subject to foreign currency risks. Approximately 9% of the
Company's purchases in 1995 were paid by letters of credit compared to 6% in
1994. This increase in purchases paid by letters of credit is due to the
Company's opportunistic buying strategy and taking advantage of the increase in
the quota made available to the Company by foreign suppliers, particularly for
purchases made late in the year for Spring 1996 merchandise. The proportion of
merchandise purchased with letters of credit may vary in 1996.

On March 25, 1996, the Company replaced its existing credit facilities with an
agreement with a new lender which provides for a revolving loan facility of up
to $37,500,000 (including a letter of credit sub-facility of up to $25,000,000)
and a $7,500,000 term loan facility. The new credit facilities expire in March
1998 and may be extended at the lender's option for an additional year.
Borrowings under the credit agreement are collateralized by all assets owned by
the Company during the term of the agreement and bear interest, at the Company's
option (subject to certain limitations in the agreement), at the prime rate plus
0.5% or the Adjusted Eurodollar Rate, as defined, plus 2.5%. Maximum borrowings
under the revolving credit facility and utilization of

the letter of credit facility are based on a borrowing base formula determined
with respect to eligible inventory (as defined in the agreement). At December
30, 1995, when the Company's inventories were at the seasonally lowest levels
and outstanding letters of credit were at the seasonally highest levels, the
Company would have had approximately $8.8 million of excess availability under
the borrowing base formula on a pro forma basis. Availability under the
revolving facility will fluctuate in accordance with the Company's seasonal
variations in inventory levels. The lending formula may be revised from time to
time by the lender in response to changes in the composition of the Company's
inventory or other business conditions. The term loan is payable in 57
consecutive equal monthly installments plus interest commencing July 1996. If
the new credit facility is not renewed in March 1998, the outstanding balance
under the term loan would be due and payable at that time. Current obligations
totaling $3,079,000 outstanding at December 30, 1995 under the former credit
agreement were classified as long term, as the Company had the intent and
ability to refinance such obligations on a long-term basis. Certain fees may be
payable by the Company for early termination of the credit agreement.

The new credit agreement contains certain covenants which, among other things,
restricts the ability of the Company to incur indebtedness, or encumber or
dispose of assets, and prohibits the Company from repurchasing its Common Stock
or paying dividends. Additionally, the Company must maintain a minimum adjusted
net worth (as defined in the agreement) of $34,000,000 and maintain minimum
working capital, exclusive of amounts outstanding under the credit facilities,
of $5,000,000.

Net cash provided by operating activities for 1995, 1994, and 1993 were
$3,694,000, $3,627,000 and $9,121,000, respectively. The slight increase in cash
provided by operating activities in 1995 was primarily the result of an increase
in accounts payable and other liabilities offset by an increase in the
merchandise inventories associated with the growth in the number of stores, an
increase in prepaid Federal and state income taxes and the Company's net loss.

Net cash used in investing activities for 1995, 1994, and 1993 was
$11,277,000, $12,625,000 and $9,388,000, respectively. The Company made capital
expenditures of $10,865,000, $12,294,000 and $8,932,000, respectively, in each
of the years presented. Capital expenditures were primarily for leasehold
improvements and equipment for new stores opened and for expansions to the
Distribution Center in each year, as well as the expansion of the Corporate
Offices during 1994 and 1993.

Net cash provided by financing activities was $7,889,000 for 1995 due, in large
part, to the issuance of $6,000,000 of long term debt and $2,412,000 of net
borrowings under the Company's line of credit. Net cash provided by financing
activities was $820,000 and $717,000 in 1994 and 1993, respectively, and
resulted primarily from the exercise of the Company's Common Stock options.

In 1996, the Company plans to spend approximately $2.5 million on capital
expenditures in part to open approximately 20 new stores and relocate
approximately 10 stores. The Company's liquidity requirements in 1996 will be
met principally through cash provided by operations and its credit facilities.
If deemed by management to be in the best interest of the Company, additional
long-term debt, capital leases or other permanent financing may be explored.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") has issued Statement No. 121
(SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." This statement essentially requires that
when the Company commits to closing specific stores and for other stores which
may be impaired, the fixed assets for such stores must be written down to fair
market value. The Company anticipates that the adoption of SFAS 121, required
for years beginning after December 15, 1995, will result in a decrease in net
fixed assets of approximately $1,630,000 and a charge of approximately
$1,395,000 (net of income taxes) which will be shown as the cumulative effect of
a change in accounting principle in the 1996 Statement of Operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
One Price Clothing Stores, Inc.
Duncan, South Carolina

We have audited the accompanying consolidated balance sheets of One Price
Clothing Stores, Inc. and subsidiary (the "Company") as of December 30, 1995 and
December 31, 1994, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the three years in the period
ended December 30, 1995. Our audits also included the financial statement
schedule listed in the Index at Item 14 (d). These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 30, 1995
and December 31, 1994, and the results of its operations and its cash flows for
each of the three years in the period ended December 30, 1995 in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

DELOITTE & TOUCHE LLP
Greenville, South Carolina

February 15, 1996
(March 25, 1996 as to Note B and Note H)

ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

December 30, December 31,
1995 1994
Assets -- Note B
CURRENT ASSETS
Cash and cash equivalents $ 668,000 $ 362,000
Miscellaneous receivables, net of allowance for
doubtful accounts of $275,000 (1995) and
$189,000 (1994) 1,017,000 907,000
Merchandise inventories 28,961,000 26,337,000
Prepaid Federal and state income taxes 1,363,000 71,000
Prepaid expenses 1,888,000 1,866,000
Deferred income taxes -- Note C 2,093,000 1,709,000
----------- -----------
TOTAL CURRENT ASSETS 35,990,000 31,252,000
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land 914,000 914,000
Land improvements 494,000 475,000
Building 16,005,000 11,855,000
Leasehold improvements 11,277,000 10,055,000
Fixtures and equipment 30,069,000 25,697,000
----------- -----------
58,759,000 48,996,000
Less accumulated depreciation 17,575,000 13,606,000
----------- -----------
41,184,000 35,390,000
----------- -----------
OTHER ASSETS 2,190,000 1,288,000
----------- -----------
$79,364,000 $67,930,000
=========== ===========
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $10,298,000 $ 6,470,000
Current portion of long term debt and note payable
-- Note B 1,333,000 --
Accrued salaries and wages 1,453,000 1,571,000
Accrued employee benefits 2,307,000 2,191,000
Sales tax payable 1,904,000 1,610,000
Other accrued and sundry liabilities 1,299,000 1,193,000
----------- -----------
TOTAL CURRENT LIABILITIES 18,594,000 13,035,000
----------- -----------
LONG TERM DEBT AND NOTE PAYABLE
TO BE REFINANCED -- Note B 6,579,000 --
----------- -----------
DEFERRED INCOME TAXES -- Note C 1,482,000 1,449,000
----------- -----------
OTHER NONCURRENT LIABILITIES -- Note F 828,000 372,000
----------- -----------
COMMITMENTS AND CONTINGENCIES -- Note D
SHAREHOLDERS' EQUITY -- Notes B, E and G
Preferred Stock, par value $0.01 - authorized
and unissued 500,000 shares
Common Stock, par value $0.01 - authorized 35,000,000
shares, issued and outstanding 10,335,031 (1995)
and 10,305,256 (1994) shares 103,000 103,000
Additional paid-in capital 11,002,000 10,891,000
Retained earnings 40,776,000 42,080,000
----------- -----------
51,881,000 53,074,000
----------- -----------
$79,364,000 $67,930,000
=========== ===========

See notes to consolidated financial statements

ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

Period Ended
December 30, December 31, January 1,
1995 1994 1994

NET SALES $294,692,000 $283,326,000 $234,698,000
Cost of sales 175,754,000 170,066,000 136,727,000
-------------- ------------ -------------
GROSS MARGIN 118,938,000 113,260,000 97,971,000
-------------- ------------ --------------
Selling, general and administrative
expenses 91,048,000 82,118,000 65,124,000
Store rent and related expenses 24,810,000 20,210,000 15,599,000
Depreciation and amortization expense 4,394,000 3,612,000 3,184,000
Interest expense 1,326,000 271,000 166,000
-------------- ------------ --------------
121,578,000 106,211,000 84,073,000
Interest income 45,000 89,000 61,000
-------------- ------------ --------------
NET EXPENSES 121,533,000 106,122,000 84,012,000
-------------- ------------ --------------
(LOSS) INCOME BEFORE INCOME TAXES (2,595,000) 7,138,000 13,959,000
(Benefit from) provision for income taxes -- Note C (1,291,000) 2,749,000 5,235,000
--------------- ------------ --------------

NET (LOSS) INCOME $ (1,304,000) $ 4,389,000 $ 8,724,000
============== ============ ==============
Net (loss) income per common share $ (0.13) $ 0.42 $ 0.84
============== ============ =================

Weighted average shares outstanding 10,313,860 10,524,978 10,403,850
============= ============ ==============

See notes to consolidated financial statements

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Addditional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total

Balance at January 2, 1993 10,123,173 $102,000 $ 9,280,000 $28,967,000 $38,349,000
Stock options exercised 98,325 753,000 753,000
Net income 8,724,000 8,724,000
---------- -------- ----------- ----------- -----------
Balance at January 1, 1994 10,221,498 102,000 10,033,000 37,691,000 47,826,000
Stock options exercised 83,758 1,000 858,000 859,000
Net income 4,389,000 4,389,000
---------- ---------- ----------- ----------- -----------
Balance at December 31, 1994 10,305,256 103,000 10,891,000 42,080,000 53,074,000
Stock options exercised 29,775 -- 111,000 111,000
Net loss (1,304,000) (1,304,000)
---------- ---------- ----------- ------------ ----------
Balance at December 30, 1995 10,335,031 $103,000 $11,002,000 $40,776,000 $ 51,881,000
========== ========== =========== ============ ============

See notes to consolidated financial statements

ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

Period Ended
December 30, December 31, January 1,
1995 1994 1994
OPERATING ACTIVITIES
Net (loss) income $ (1,304,000) $ 4,389,000 $ 8,724,000
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization 4,394,000 3,612,000 3,184,000
Deferred income taxes (351,000) (145,000) (514,000)
Loss on disposal of property and equipment 789,000 947,000 460,000
(Increase) decrease in other noncurrent assets (522,000) 253,000 344,000
Changes in operating assets and liabilities:
(Increase) in miscellaneous receivables
and prepaid expenses (42,000) (644,000) (638,000)
(Increase) in merchandise inventories (2,624,000) (3,022,000) (6,376,000)
(Increase) decrease in prepaid Federal and
state income taxes (1,292,000) (2,661,000) 1,562,000
Increase in accounts payable and other liabilities 4,646,000 898,000 2,375,000
------------ -------------- -----------

NET CASH PROVIDED BY OPERATING
ACTIVITIES 3,694,000 3,627,000 9,121,000
------------ -------------- -----------

INVESTING ACTIVITIES
Purchases of property and equipment (10,865,000) (12,294,000) (8,932,000)
Purchases of other noncurrent assets (412,000) ( 331,000) (456,000)
------------- -------------- ------------
NET CASH USED IN INVESTING ACTIVITIES (11,277,000) (12,625,000) (9,388,000)
------------- -------------- ------------

FINANCING ACTIVITIES
Net borrowings from line of credit 2,412,000 -- --
Proceeds from issuance of long term debt 6,000,000 -- --
Repayment of long term debt (500,000) -- --
Debt financing costs incurred (90,000) -- --
Decrease in other noncurrent liabilities (44,000) (39,000) (36,000)
Proceeds from exercise of Common Stock options 111,000 859,000 753,000
------------- ------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,889,000 820,000 717,000
------------- ------------- ------------

INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 306,000 (8,178,000) 450,000

CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 362,000 8,540,000 8,090,000
------------- ------------- ------------

CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 668,000 $ 362,000 $ 8,540,000
============= ============= ============

SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 477,000 $ 5,330,000 $ 3,953,000
Interest paid 1,117,000 298,000 166,000

See notes to consolidated financial statements

ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 30, 1995

NOTE A - Operations and Summary of Significant Accounting Policies

Business: One Price Clothing Stores, Inc. and subsidiary (the "Company")
operates a chain of off-price retail women's and children's specialty stores
offering a wide variety of first quality, contemporary, in- season apparel and
accessories for the uniform retail price of $7. At December 30, 1995, the
Company operated 701 stores in 28 states and Puerto Rico.

Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary. All significant
intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents: The Company considers all highly liquid investments
with an original maturity of three months or less when purchased to be cash
equivalents.

Merchandise Inventories: Merchandise inventories are stated at the lower of
average unit cost or market. Average unit cost is determined by the first-in,
first-out (FIFO) method.

Depreciation: Depreciation is computed by the straight-line method, based on
estimated useful lives of 10 years for land improvements, 33 to 40 years for
buildings, 5 to 10 years for leasehold improvements and 3 to 15 years for
fixtures and equipment.

Income Taxes: The Company accounts for income taxes using the principles of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes." Under SFAS No. 109, deferred income taxes represent the future
income tax effect of temporary differences between the book and tax bases of the
Company's assets and liabilities, assuming they will be realized and settled at
the amount reported in the Company's financial statements.

Trademarks: The cost of trademarks is being amortized over their expected useful
lives of 10 years using the straight-line method.

Purchased Software: Purchased software is included in other assets and is
amortized over its estimated useful life of 5 years using the straight-line
method.

Revenue Recognition: Revenues from retail sales are recognized at the time of
the sale. An estimate for merchandise returns is recorded in the period the
merchandise was purchased.

Store Preopening Costs: Costs associated with the opening of new stores are
expensed as incurred.

Store Closing Costs: At the time management commits to close a store, a
provision is made and operations are charged for any remaining store lease
obligation after closing or penalty to cancel the lease obligation.

Advertising and Promotional Costs: Advertising and promotional costs are
expensed when incurred. Such expenses were $324,000, $347,000 and $141,000 in
1995, 1994 and 1993, respectively.

Income Per Common Share: Net income per common share is computed by dividing net
income by the weighted average number of shares of Common Stock and dilutive
common stock equivalent shares for stock options (Note E) outstanding during the
period.

Fiscal Year: The Company's year ends on the Saturday nearest December 31.

Reclassifications: Certain amounts included in prior years' financial statements
have been reclassified to conform to the 1995 presentation.

NOTE B - Credit Facilities

The Company previously had an agreement with its banks that provided for a
$19,000,000 line of credit facility, a $15,000,000 letter of credit facility and
a $6,000,000 term loan facility scheduled to expire May 31, 1996. Borrowings
against the line of credit accrued interest at the Company's option of a Base
Rate (defined as the higher of the Agent Bank's prime interest rate or the
Federal Funds rate plus 0.50%) or the adjusted LIBOR rate plus 1.50%. The term
loan accrued interest, payable quarterly, at the Company's option of the Base
Rate, as defined above, plus 1.0% or the adjusted LIBOR rate plus 2.50%.

The maximum amounts outstanding under the credit facilities during 1995 and
1994 were approximately $24,540,000 and $16,421,000, respectively. The
average amounts outstanding under the credit facilities were $16,264,000
during 1995 and $3,165,000 during 1994. The weighted average interest rate
was 8.2% in 1995 and 7.6% in 1994. At December 30, 1995, the Company had
$5,500,000 outstanding under the term loan and $2,412,000 outstanding under
the line of credit compared to no amounts outstanding at December 31, 1994.
The Company had outstanding letters of credit for the purchase of
merchandise inventories totaling approximately $11,923,000 at December 30,
1995 compared to $7,656,000 at December 31, 1994.

The fair value of the Company's outstanding debt at December 30, 1995
approximates the carrying value.

On March 25, 1996, the Company replaced its existing credit facilities with
an agreement with a new lender which provides for a revolving loan facility
of up to $37,500,000 (including a letter of credit sub-facility of up to
$25,000,000) and a $7,500,000 term loan facility. The new credit facilities
expire in March 1998 and may be extended at the lender's option for an
additional year. Borrowings under the credit agreement are
collateralized by all assets owned by the Company during the term of the
agreement and bear interest, at the Company's option (subject to certain
limitations in the agreement), at the prime rate plus 0.5% or the Adjusted
Eurodollar Rate, as defined, plus 2.5%. Maximum borrowings under the
revolving credit facility and utilization of the letter of credit facility
are based on a borrowing base formula determined with respect to eligible
inventory (as defined in the agreement). At December 30, 1995, when the
Company's inventories were at the seasonally lowest levels and outstanding
letters of credit were at the seasonally highest levels, the Company would
have had approximately $8.8 million of excess availability under the
borrowing base formula on a pro forma basis. Availability under the
revolving facility will fluctuate in accordance with the Company's seasonal
variations in inventory levels. The lending formula may be revised from
time to time by the lender in response to changes in the composition of the
Company's inventory or other business conditions. The term loan is payable
in 57 consecutive equal monthly installments plus interest commencing July
1996. If the new credit facility is not renewed in March 1998, the
outstanding balance under the term loan would be due and payable at that
time. Current obligations totaling $3,079,000 outstanding at December 30,
1995 under the former credit agreement were classified as long term, as the
Company had the intent and ability to refinance such obligations on a
long-term basis. Certain fees may be payable by the Company for early
termination of the credit agreement.

The new credit agreement contains certain covenants which, among other
things, restricts the ability of the Company to incur indebtedness, or
encumber or dispose of assets, and prohibits the Company from repurchasing
its Common Stock or paying dividends. Additionally, the Company must
maintain a minimum adjusted net worth (as defined in the agreement) of
$34,000,000 and maintain minimum working capital, exclusive of amounts
outstanding under the credit facilities, of $5,000,000.

NOTE C - Income Taxes

The (benefit from) provision for income taxes consists of the following:

Period Ended
December 30, December 31, January 1,
1995 1994 1994
Current:
Federal $(1,001,000) $2,400,000 $4,809,000
State and local 62,000 494,000 940,000
Deferred:
Federal (5,000) (116,000) (428,000)
State and local (145,000) (29,000) (86,000)
Puerto Rico (202,000) -- --
------------ ----------- ----------

Total (benefit from) provision for income taxes $(1,291,000) $2,749,000 $5,235,000
============ =========== ==========

Presented below are the elements which comprise deferred income tax assets
and liabilities:

December 30, December 31,
1995 1994
Gross deferred income tax assets:
Accrued employee benefits deductible
for tax purposes when paid $ 739,000 $ 568,000
Excess of tax over financial statement
basis of inventory 1,111,000 1,062,000
Accrued retirement benefits deductible
for tax purposes when paid 145,000 162,000
State and local net operating loss carryforwards 113,000 --
Puerto Rico net operating loss carryforward 202,000 292,000
Valuation allowance for Puerto Rico
loss carryforward -- (292,000)
Miscellaneous 186,000 185,000
------------ ------------
Gross deferred income tax assets 2,496,000 1,977,000
----------- ------------

Gross deferred income tax liabilities:
Excess of financial statement over tax basis
of property and equipment (1,794,000) (1,592,000)
Excess of financial statement over
tax basis of supplies (91,000) (125,000)
----------- ------------
Gross deferred income tax liabilities (1,885,000) (1,717,000)
----------- ------------
Net deferred income tax asset $ 611,000 $ 260,000
=========== ============

The net deferred income tax asset is recognized in the accompanying balance
sheets as follows:

December 30, December 31,
1995 1994

Current assets $ 2,093,000 $ 1,709,000
Noncurrent liabilities (1,482,000) (1,449,000)
------------ ------------
Net deferred income tax asset $ 611,000 $ 260,000
============= ============

In 1994, the Company's Puerto Rico subsidiary generated a net
operating loss of approximately $696,000 which is available to offset
future taxable income in Puerto Rico through 2001. Due to the
subsidiary's short operating history (operations commenced in 1994),
management was not assured that the deferred income tax asset related
to the operating loss carryforward would be realized at the end of
1994. Accordingly, a valuation allowance for 100% of the deferred
income tax asset was established. In 1995, the subsidiary realized
taxable income of $212,000. Management believes that the operating loss in
1994 was attributable to the start-up of the Puerto Rico operations. Manage-
ment now believes that it is more likely than not that the remaining
deferred tax asset will be realized. Accordingly, the Company reversed
the valuation allowance that was previously provided and the deferred tax asset
related to the Puerto Rico subsidiary's net operating loss carryforward is
recognized at December 30, 1995. Management believes that scheduled
reversals of other temporary differences and anticipated future taxable
income are sufficient to realize the remaining net deferred income tax assets
at December 30, 1995.

A reconciliation of the statutory Federal income tax rate to the annual
effective income tax rate follows:

Period Ended
December 30, December 31, January 1,
1995 1994 1994
------------------ ------------------ --------

Federal income tax at statutory rate (35.0)% 35.0% 35.0%
State and local income tax, net of Federal
tax benefit (3.2) 4.5 4.0
Puerto Rico net operating loss (7.8) 3.4 --
Tax benefit from carryback of Federal Targeted
Jobs Tax Credits (5.9) -- --
Tax benefit from contributions of inventory -- (2.7) (0.6)
Other, net 2.2 (1.7) (0.9)
------- ------- ------
(49.7)% 38.5% 37.5%
======= ======= ======

NOTE D - Operating Leases

The Company generally leases its stores under operating leases with initial
terms of five to ten years with one to two renewal option periods of five
years each. The leases generally provide for increased rents resulting from
increases in operating costs and property taxes. Certain of the leases
provide for contingent or percentage rentals based upon sales volume and
others are leased on a month-to-month basis.

In addition, the Company has operating leases for automobiles, trucks,
trailers and certain other equipment with one to ten year terms. The leases
for trucks and trailers also provide for contingent rentals based upon
miles driven.

Future minimum rental commitments as of December 30, 1995 for
noncancelable leases, are approximately as follows:

1996............................................... $21,266,000
1997.............................................. 18,183,000
1998.............................................. 13,758,000
1999.............................................. 10,122,000
2000............................................. 5,764,000
Later............................................. 11,435,000
Total.............................................. $80,528,000

Total rental expense for operating leases was as follows:

Period Ended
December 30, December 31, January 1,
1995 1995 1994
------------ ------------ ----------

Minimum rentals ...................... $21,686,000 $16,962,000 $13,782,000
Contingent rentals .................. 4,739,000 3,836,000 2,837,000
------------ ------------- -------------
$26,425,000 $20,798,000 $16,619,000
=========== ============= ============

NOTE E - Employee Benefits

Stock Option Plans: The Company has three stock option plans (the 1991,
1988 and 1987 plans) which provide for grants to certain officers,
directors, and key employees of stock options to purchase shares of Common
Stock of the Company. Options granted under the plans expire ten years from
the date of grant and, to date, have been granted at prices not less than
the fair market value at the date of grant. Effective October 27, 1988, the
Board of Directors retired all unissued options under the Company's 1987
Plan. Options cancelled subsequent to October 27, 1988 under the 1987 Plan
are retired. Options cancelled under the 1991 and 1988 Plans are available
for reissuance.

Information with respect to the stock option plans is as follows:

Year
1995 1994
-------------------------------------------------------------------------------
Number of Shares Price Per Share Number of Shares Price per Share
Outstanding at beginning of year 551,000 $2.67--$19.00 602,000 $2.67--$12.59
Options granted 108,000 $2.94--$ 7.87 77,000 $9.06--$19.00
Options exercised (30,000) $2.67--$ 5.08 (84,000) $2.67--$11.17
Options cancelled (68,000) $5.08--$14.81 (44,000) $5.33--$16.38
-------- ------------- -------- --------
Outstanding at end of year 561,000 $2.94--$19.00 551,000 $2.67--$19.00
======== ============== =========
Exercisable at end of year 247,000 222,000
======== =========
Available for future grants 301,000 341,000
======== =========

At December 30, 1995, a total of 862,000 shares of Common Stock were
reserved for issuance under the Company's option plans.

Effective April, 1995, the Company adopted the 1995 Director Stock Option
Plan which provides for annual grants to non-employee members of the Board
of Directors. Such grants are immediately exercisable on the date of grant
and expire ten years from the date of grant. There was no activity under
this plan during 1995. At December 30, 1995, 105,000 shares of common stock
were reserved for issuance under the Director Stock Option Plan.

Retirement Plan: The Company has a 401(k) and profit-sharing plan, the One
Price Clothing Stores, Inc. Retirement Plan (the "Plan"). All employees in
the United States who are 21 years of age or older with at least one year
of service are eligible to participate in the Plan. Effective January 1995,
the Company's contribution obligation increased to 50% of each
participant's contribution with a maximum contribution of 2.5% of the
participant's base compensation. In 1994, the Company was obligated under
the Plan to make a matching contribution of 25% of each participant's
contribution with a maximum matching contribution of 1.25% of the
participant's base compensation. In addition, the Company may make an
annual discretionary contribution on behalf of the participants; no such
discretionary contributions have been made by the Company. Employer
contributions (approximately $292,000, $132,000, and $101,000 in 1995,
1994, and 1993, respectively) vest ratably over five years.

Stock Purchase Plan: The Company adopted a Stock Purchase Plan, effective
March 1995, that allows

participating employees to purchase, through payroll deductions, shares of
the Company's Common Stock at prevailing market prices. All full-time
associates who are 18 years of age or older with at least six months of
service are eligible to participate in the Stock Purchase Plan. The Stock
Purchase Plan provides that participants may authorize the Company to
withhold from net earnings and deposit such amounts with an independent
custodian. The custodian purchases Common Stock of the Company at
prevailing market prices and distributes the shares purchased to the
participants upon request. The Company pays expenses associated with the
purchases of the Common Stock and administration of the Stock Purchase
Plan.

NOTE F - Related Party Transactions

The Company has a deferred compensation agreement with a former executive
officer who is currently a member of the Company's Board of Directors. The
agreement provides for monthly payments aggregating $75,000 annually
(including interest) through July 2002.

The Company paid approximately $171,000, $32,000 and $33,000 in 1995, 1994
and 1993, respectively, for legal services provided by the law firm of
which a Company Director is a member.

NOTE G - Shareholders' Equity

In March 1994, the Company declared a 3-for-2 stock split effected in the
form of a stock dividend payable April 29, 1994 to shareholders of record
as of the close of business on April 15, 1994. Accordingly, Common Stock
outstanding, the weighted average number of common and common equivalent
shares and per share amounts were retroactively adjusted to give effect to
the stock split.

The Company adopted a Shareholder Rights Plan in November 1994. Each
shareholder of record on November 15, 1994 is entitled to one Right for
each share of Common Stock held on such date. Each Right entitles the
registered holder to purchase from the Company one half share of Common
Stock at a specified price. The Rights become exercisable only upon the
occurrence of certain conditions set forth in the Shareholder Rights Plan
relating to the acquisition of 20% or more of the outstanding shares of
Common Stock.

NOTE H - Subsequent Events

On March 14, 1996, the Company's Board of Directors adopted a resolution to
change the Company's year end from the Saturday nearest December 31 to the
Saturday nearest January 31, beginning in 1996. This change was made to
conform the Company's calendar to the seasonal patterns it experiences, as
well as to enhance comparability of its quarter and annual results with
other retail companies.

On March 14, 1996, the Company's Board of Directors also approved changes
in the methods of accounting for merchandise inventories. The Company is
changing from the lower of average first-in, first-out (FIFO) cost or
market method of accounting to the FIFO retail method. The Company believes
that the retail method will provide improved information for the operation
of its business in a manner consistent with the method used widely in the
retail industry. The Company is also capitalizing into inventory certain
merchandise acquisition and distribution costs to provide a better matching
of revenues and expenses, particularly in interim periods. The effect of
these changes in accounting for merchandise inventories, effective
beginning in January 1996, will result in a net increase in merchandise
inventories of approximately $1,031,000 and a benefit of approximately
$629,000 (net of income taxes) which will be shown as the cumulative effect
of a change in accounting principle in the 1996 Statement of Operations.

NOTE I - Effect of New Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") has issued Statement No.
121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." This statement essentially requires
that when the Company commits to closing specific stores and for other
stores which may be impaired, the fixed assets for such stores must be
written down to fair market value. The Company anticipates that the
adoption of SFAS 121, required for years beginning after December 15, 1995,
will result in

a decrease in net fixed assets of approximately $1,630,000 and a charge of
approximately $1,395,000 (net of income taxes) which will be shown as the
cumulative effect of a change in accounting principle in the 1996 Statement
of Operations.

NOTE J - Quarterly Results (Unaudited)

The following is a summary of quarterly (13 weeks) operations for the years
ended December 30, 1995 and December 31, 1994 (in thousands except per
share data).

1995 Quarters Ended
April 1, July 1 September 30, December 30,
1995 1995 1995 1995
-------------------------------------------------------
Net sales $54,639 $86,647 $74,307 $79,099
Gross margin 19,330 37,925 29,641 32,042
Net (loss) income (5,084) 4,314 (1,135) 601
Net (loss) income per common share $ (0.49) $ 0.42 $(0.11) $ 0.06

1994 Quarters Ended
April 2, July 2 October 1, December 31,
1994 1994 1994 1994
------------ --------- -------- -----------
Net sales $56,007 $82,566 $65,877 $78,876
Gross margin 21,119 36,508 23,736 31,897
Net (loss) income (872) 5,992 (1,835) 1,104
Net (loss) income per common share $ (0.08) $ 0.57 $ (0.17) $ 0.11

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required under this item is incorporated herein by
reference to the sections entitled "Election of Directors" and "Executive
Officers of the Company and Security Ownership of Management" of the
Company's definitive Proxy Statement (the "Proxy Statement") filed with the
Securities and Exchange Commission in connection with the Annual Meeting of
Shareholders to be held May 20, 1996.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this item is incorporated herein by
reference to the sections entitled "Compensation Committee Interlocks and
Insider Participation," "Compensation of Executive Officers," "Employment
Contracts and Deferred Compensation Arrangements," "Compensation Committee
Report on Executive Compensation," "Performance Graph" and "Election of
Directors - Directors' Fees" of the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required under this item is incorporated herein by
reference to the sections entitled "Security Ownership of Certain
Beneficial Owners and Management," "Election of Directors" and "Executive
Officers of the Company and Security Ownership of Management" of the Proxy
Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required in this item is incorporated herein by reference
to the sections entitled "Compensation Committee Interlocks and Insider
Participation" and "Employment Contracts and Deferred Compensation
Arrangements" of the Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K

(a) 1. Financial Statements

The following financial statements of One Price Clothing Stores, Inc are
included in Part II, Item 8:

o Independent Auditors' Report

o Consolidated Balance Sheets as of December 30, 1995 and December 31, 1994

o Consolidated Statements of Operations for the years ended December 30, 1995, December 31,
1994 and January 1, 1994

o Consolidated Statements of Shareholders' Equity for the years ended December 30, 1995,
December 31, 1994 and January 1, 1994

o Consolidated Statements of Cash Flows for the years ended December 30, 1995, December 31,

1994 and January 1, 1994

o Notes to Consolidated Financial Statements

(a) 2. Financial Statement Schedule

The following financial statement schedule of One Price Clothing Stores, Inc. is included in Item 14
(d):

o Schedule II -- Valuation and Qualifying Accounts.

Schedules not listed above have been omitted because they are
not applicable or the information is included in the financial
statements or notes thereto.

(a) 3. Exhibits including those incorporated by reference:

Exhibit
Number Description

3(a) Certificate of Incorporation of the Registrant, as amended
through April 1987: Incorporated by reference to exhibit of the
same number in Registrant's Registration Statement on Form S-1,
filed April 10, 1987, (File No. 33-13321) ("the S-1").

3(a)(1) Certificate of Amendment of Certificate of Incorporation of the
Registrant: Incorporated by reference to exhibit of the same
number in Registrant's Annual Report on Form 10-K for the year
ended January 1, 1994, (File No. 0-15385)("the 1993 Form 10-K").

3(b) Restated By-Laws of the Registrant, as of July 22, 1992 and
amended as of July 20, 1994 and March 14, 1996.

4(a) See Exhibits 3(a), 3(a)(1), and 3(b).

4(b) Specimen of Certificate of the Registrant's Common Stock:
Incorporated by reference to Exhibit 1 of the Registrant's
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 23, 1987, (File No. 0-15385).

4(c) Shareholder Rights Agreement by and between the Registrant and
Wachovia Bank of North Carolina, N. A. as Rights Agent dated
November 3, 1994: Incorporated by reference to Exhibit 2
to the Registrant's Form 8-K filed November 10, 1994
(File No. 0-15385).

4(d) Loan and Security Agreement by and between Congress Financial
Corporation (Southern) as Lender and the Registrant and One
Price Clothing of Puerto Rico, Inc., as Borrowers dated
March 25, 1996.

4(e) The Company hereby agrees to furnish to the Commission upon
request of the Commission a copy of any instrument with respect
to long-term debt not being registered in a principal amount
less than 10% of the total assets of the Company and its
subsidiary on a consolidated basis.

Material Contracts -- Executive Compensation Plans and Arrangements:

10(a)* Stock Option Plan of the Registrant dated February 20, 1987 and
related forms of Incentive and Non-qualified Stock Option
Agreements: Incorporated by reference to Exhibit 10(d) of the
S-1.

10(b)* Stock Option Plan of the Registrant dated December 12, 1988 and
related forms of Incentive and

Non-qualified Stock Option Agreements: Incorporated by reference
to Exhibit 10(a) in the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1988, (File No. 0-15385)
("the 1988 Form 10-K").

10(c)* One Price Clothing Stores, Inc. 1991 Stock Option Plan:
Incorporated by reference to Exhibit 10(b) in the Registrant's
Annual Report on Form 10-K for the year ended December 28, 1991,
(File No. 0-15385) ("the 1991 Form 10-K").

10(d)* Summary of Officer Bonus Plan: Incorporated by reference to
exhibit of the same number in Registrant's Annual Report on Form
10-K for the year ended January 2, 1993, (File No. 0-15385)
("the 1992 Form 10-K").

10(e)* Form of Employment Agreement between Registrant and Henry D.
Jacobs, Jr.: Incorporated by reference to Exhibit 10(j) in the
1988 Form 10-K.

10(f)* Employment Agreement dated February 1, 1991 between the
Registrant and Ethan S. Shapiro: Incorporated by reference to
Exhibit 10(m) in the Registrant's Annual Report on Form 10-K for
the year ended December 29, 1990, (File No. 0-15385) ("the 1990
Form 10-K").

10(g)* Key man term insurance policy, issued February 20, 1993, on the
life of Henry D. Jacobs, Jr.: Incorporated by reference to
exhibit of the same number in the 1992 Form 10-K.

10(h)* Employment Agreement dated January 16, 1995 between the
Registrant and Stephen A. Feldman: Incorporated by reference to
exhibit of the same number in Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994,
(File No. 0-15385)("the 1994 Form 10-K").

10(i)* Disability Income Policy for the benefit of Henry D. Jacobs, Jr.
: Incorporated by reference to exhibit of the same number in the
1992 Form 10-K.

10(j)* Disability Income Policy for the benefit of Ethan S. Shapiro:
Incorporated by reference to exhibit of the same number in the
1992 Form 10-K.

10(k)* Agreement between the Registrant and Jane R. Shapiro, Trustee of
the Ethan S. Shapiro Life Insurance Trust: Incorporated by
reference to exhibit of the same number in the 1992 Form 10-K.

10(l)* Agreement dated June 24, 1992 between the Registrant and Raymond
S. Waters: Incorporated by reference to exhibit of the same
number in the 1992 Form 10-K.

10(m)* Directors' Stock Option Plan effective April 19, 1995:
Incorporated by reference to exhibit of the same number in the
1994 Form 10-K.

10(n)* Employment Agreement dated March 30, 1992 between the Registrant
and Ronald Swedin.

10(o)* Employment Agreement dated December 12, 1995 between the
Registrant and Thomas Unrine.

Material Contracts -- Other:

10(p) Credit Agreement dated March 16, 1995 by and between the
Registrant and NationsBank (as agent) for an unsecured
$25,000,000 line of credit facility and a $15,000,000 letter of
credit facility: Incorporated by reference to Exhibit 10(q) in
the 1994 Form 10-K.

10(q) Assignment and Acceptance (dated April 24, 1995) of an interest
in the Credit Agreement (dated

March 17, 1995) to CoreStates Bank and Promissory Notes dated
April 13, 1995 by and between the Registrant and CoreStates Bank
and NationsBank, N.A.: Incorporated by reference to Exhibit
10(a) in the Registrant's quarterly report on Form 10-Q for the
quarter ended July 1, 1995, (File No. 0-15385) ("the July 1995
Form 10-Q").

10(r) Amendment Number 1 to Credit Agreement (dated as of June 30,
1995) by and between the Registrant, various banks and lending
institutions, and NationsBank, N.A. (as agent), and Promissory
Notes and Mortgage and Security Agreement: Incorporated by
reference to Exhibit 10(b) in the July 1995 Form 10-Q.

11 Statement regarding computation of per share earnings.

21 Subsidiary of the Registrant.

23 Consent of Deloitte & Touche LLP.

27 Financial Data Schedule (electronic filing only).

---------------------------------------

* Denotes a management contract or compensatory plan or agreement.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the last quarter of the
period covered by this report.

(c) Exhibits.

The response to this portion of Item 14 is submitted as a separate
section of this report.

(d) Financial Statement Schedules.

The response to this portion of Item 14 is submitted as a separate
section of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

ONE PRICE CLOTHING STORES, INC.

Date: March 29, 1996 /s/ Henry D. Jacobs, Jr.
------------------------
Henry D. Jacobs, Jr.
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Date: March 29, 1996 /s/ Henry D. Jacobs, Jr.
------------------------
Henry D. Jacobs, Jr.
Chairman of the Board,
Chief Executive Officer and Director
(principal executive officer)

Date: March 29, 1996 /s/ Ethan S. Shapiro
--------------------
Ethan S. Shapiro
President, Chief Operating Officer and
Director

Date: March 29, 1996 /s/ Raymond S. Waters
---------------------
Raymond S. Waters
Secretary and Director

Date: March 29, 1996 /s/ Stephen A. Feldman
----------------------
Stephen A. Feldman
Executive Vice President and
Chief Financial Officer
(principal financial officer)

Date: March 29, 1996 /s/ David F. Bellet
-------------------
David F. Bellet
Director

Date: March 29, 1996 /s/ Charles D. Moseley, Jr.
---------------------------
Charles D. Moseley, Jr.
Director

Date: March 29, 1996 /s/ Laurie M. Shahon
--------------------
Laurie M. Shahon
Director

Date: March 29, 1996 /s/ Malcolm L. Sherman
----------------------
Malcolm L. Sherman
Director

Date: March 29, 1996 /s/ James M. Shoemaker, Jr.
---------------------------
James M. Shoemaker, Jr.
Director

Date: March 29, 1996 /s/ Cynthia C. Turk
-------------------
Cynthia C. Turk
Director

ONE PRICE CLOTHING STORES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

COL. A COL. B COL. C COL. D COL. E
DESCRIPTION ADDITIONS
Balance at Charged to Charged Deduction - Balance
Beginning of Cost & to Other- Describe (1) at End of
Period Expenses Describe Period

YEAR ENDED
DECEMBER 30, 1995

Allowance for
doubtful accounts $189,000 $607,000 $521,000 $275,000
======== ======== ======== ========

YEAR ENDED
DECEMBER 31, 1994

Allowance for
doubtful accounts $135,000 $822,000 $768,000 $189,000
======== ======== ======== ========

YEAR ENDED
JANUARY 1, 1994

Allowance for
doubtful accounts $100,000 $723,000 $ 688,000 $135,000
======== ======== ========= ========

(1) Write-offs charged against the allowance for returned customer checks

ONE PRICE CLOTHING STORES, INC.
EXHIBIT INDEX

Exhibit
Number Description

3(a) Certificate of Incorporation of the Registrant, as amended through
April 1987: Incorporated by reference to exhibit of the same number
in Registrant's Registration Statement on Form S-1, filed April 10,
1987, (File No. 33-13321) ("the S-1").

3(a)(1) Certificate of Amendment of Certificate of Incorporation of the
Registrant: Incorporated by reference to exhibit of same number in
Registrant's Annual Report on Form 10-K for the year ended January 1,
1994, (File No. 0-15385) ("the 1993 Form 10-K").

3(b) Restated By-Laws of the Registrant, as of July 22, 1992 and amended
as of July 20, 1994 and March 14, 1996.

4(a) See Exhibits 3(a), 3(a)(1), and 3(b).

4(b) Specimen of Certificate of the Registrant's Common Stock:
Incorporated by reference to Exhibit 1 of the Registrant's
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 23, 1987, (File No. 0-15385).

4(c) Shareholder Rights Agreement by and between the Registrant and
Wachovia Bank of North Carolina, N.A. as Rights Agent dated November
3, 1994: Incorporated by reference to Exhibit 2 to the Registrant's
Form 8-K filed November 10, 1994 (File No. 0-15385).

4(d) Loan and Security Agreement by and between Congress Financial
Corporation (Southern) as Lender and the Registrant and One Price
Clothing of Puerto Rico, Inc., as Borrowers dated March 25, 1996.

4(e) The Company hereby agrees to furnish to the Commission upon request
of the Commission a copy of any instrument with respect to long-term
debt not being registered in a principal amount less than 10% of the
total assets of the Company and its subsidiary on a consolidated
basis.

Material Contracts -- Executive Compensation Plans and Arrangements:

10(a)* Stock Option Plan of the Registrant dated February 20, 1987 and
related forms of Incentive and Non- qualified Stock Option
Agreements: Incorporated by reference to Exhibit 10(d) of the S-1.

10(b)* Stock Option Plan of the Registrant dated December 12, 1988 and
related forms of Incentive and Non- qualified Stock Option
Agreements: Incorporated by reference to Exhibit 10(a) in the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1988, (File No. 0-15385) ("the 1988 Form 10-K").

10(c)* One Price Clothing Stores, Inc. 1991 Stock Option Plan: Incorporated
by reference to Exhibit 10(b) in the Registrant's Annual Report on
Form 10-K for the year ended December 28, 1991, (File No. 0-15385)
("the 1991 Form 10-K").

10(d)* Summary of Officer Bonus Plan: Incorporated by reference to exhibit
of the same number in Registrant's Annual Report on Form 10-K for the
year ended January 2, 1993, (File No. 0-15385) ("the 1992 Form 10-
K").

10(e)* Form of Employment Agreement between Registrant and Henry D. Jacobs,
Jr.:Incorporated by reference to Exhibit 10(j) in the 1988 Form 10-K.

10(f)* Employment Agreement dated February 1, 1991 between the Registrant
and Ethan S. Shapiro: Incorporated by reference to Exhibit 10(m) in
the Registrant's Annual Report on Form 10-K for the year
ended December 29, 1990, (File No. 0-15385) ("the 1990 Form 10-K").

10(g)* Key man term insurance policy, issued February 20, 1993, on the life
of Henry D. Jacobs, Jr.: Incorporated by reference to exhibit of the
same number in the 1992 Form 10-K.

10(h)* Employment Agreement dated January 16, 1995 between the Registrant
and Stephen A. Feldman: Incorporated by reference to exhibit of the
same number in Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, (File No. 0-15385)(the "1994 Form 10-K").

10(i)* Disability Income Policy for the benefit of Henry D. Jacobs, Jr.:
Incorporated by reference to exhibit of
the same number in the 1992 Form 10-K.

10(j)* Disability Income Policy for the benefit of Ethan S. Shapiro:
Incorporated by reference to exhibit of the same number in the 1992
Form 10-K.

10(k)* Agreement between the Registrant and Jane R. Shapiro, Trustee of the
Ethan S. Shapiro Life Insurance Trust: Incorporated by reference to
exhibit of the same number in the 1992 Form 10-K.

10(l)* Agreement dated June 24, 1992 between the Registrant and Raymond S.
Waters: Incorporated by reference to exhibit of the same number in
the 1992 Form 10-K.

10(m* Directors' Stock Option Plan effective April 19, 1995: Incorporated
by reference to exhibit of the same number in the 1994 Form 10-K.

10(n)* Employment Agreement dated March 30, 1992 between the Registrant and
Ronald Swedin.

10(o)* Employment Agreement dated December 12, 1995 between the Registrant
and Thomas Unrine.

Material Contracts -- Other:

10(p) Credit Agreement dated March 16, 1995 by and between the Registrant
and NationsBank (as agent) for an unsecured $25,000,000 line of
credit facility and a $15,000,000 letter of credit facility:
Incorporated by reference to Exhibit 10(q) in the 1994 Form 10-K.

10(q) Assignment and Acceptance (dated April 24, 1995) of an interest in
the Credit Agreement (dated March 17, 1995) to CoreStates Bank and
Promissory Notes dated April 13, 1995 by and between the Registrant
and CoreStates Bank and NationsBank, N.A.: Incorporated by reference
to Exhibit 10(a) in the Registrant's quarterly report on Form 10-Q
for the quarter ended July 1, 1995, (File No. 0-15385) ("the July
1995 Form 10-Q").

10(r) Amendment Number 1 to Credit Agreement (dated as of June 30, 1995) by
and between the Registrant, various banks and lending institutions,
and NationsBank, N.A. (as agent), and Promissory Notes and Mortgage
and Security Agreement: Incorporated by reference to Exhibit 10(b) in
the July 1995 Form 10- Q.

11 Statement regarding computation of per share earnings.

21 Subsidiary of the Registrant.

23 Consent of Deloitte & Touche LLP.

27 Financial Data Schedule (electronic filing only).

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* Denotes a management contract or compensatory plan or agreement.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the last quarter of the period
covered by this report.

(c) Exhibits.

The response to this portion of Item 14 is submitted as a separate
section of this report.

(d) Financial Statement Schedules.

The response to this portion of Item 14 is submitted as a separate
section of this report.