Exhibit 99.1

HANCOCK FABRICS REPORTS OPERATING INCOME OF $4.0 MILLION FOR THE 2013 FISCAL YEAR, AN INCREASE OF $5.2 MILLION OVER LAST YEAR - FIRST POSITIVE OPERATING INCOME SINCE 2009

BALDWYN, MS, April 25, 2014 – Hancock Fabrics, Inc. (OTC symbol: HKFI) today announced financial results for its fourth quarter and 2013 fiscal year ended January 25, 2014.

Financial results for the fourth quarter include:

Fiscal 2013 financial results include:

The board of directors of the Company has approved submitting a proposal to the Company stockholders at its 2014 annual meeting to approve an amendment to its certificate of incorporation for the purpose of effecting a thousand for one reverse stock split. In lieu of issuing any fractional post-reverse stock split shares that would result from the reverse stock split, the Company would make a cash payment for any fractional share interest based on $1.20 per pre-reverse split share. If approved, the Company expects the reverse stock split to reduce the number of holders of its common stock in order to permit the Company to go private by terminating the registration of its common stock under the Exchange Act and its requirement to file periodic and other reports with the SEC. The stockholder vote will take place at the Company’s regularly scheduled annual meeting, currently anticipated to take place August 15, 2014.

Steve Morgan, President and Chief Executive Officer commented, “We are encouraged with the results of the operating income for the fourth quarter and the improvement for the fiscal year. Operating income for the fourth quarter of 2013 increased over 11% from 2012’s fourth quarter, which had already improved 171% over the fourth quarter of 2011. We are especially pleased to have improved in the fourth quarter despite the unusually severe weather experienced in the majority of our retail footprint. The improvements we are achieving continue to be driven by improvements to gross profit and mitigating increases in SG&A expenses. In addition to operational improvements, our focus on cash management is showing results as we have reduced cash used in operations by $5.6 million in fiscal 2013 compared to last year.”

Morgan continued, “As disclosed in this release, our board of directors has approved proposing a going private transaction via a reverse split to our stockholders. We believe that the proposed transaction would significantly reduce the expenses associated with being a public company, and allow our management team to focus more on maintaining and growing our operational improvements as well as providing liquidity to our smaller stockholders.”

Store Openings, Closings and Remodels

During the fourth quarter of 2013, the Company opened one new store and relocated two stores. For the 2013 fiscal year, three new stores opened, two closed, six stores were relocated and nine remodeled ending the year with 262 stores.

Hancock Fabrics, Inc. is committed to being the inspirational authority in fabric and sewing, serving creative enthusiasts with a complete selection of fashion and home decorating textiles, sewing accessories, needlecraft supplies and sewing machines. The Company currently operates 262 retail stores in 37 states and an Internet store at www.hancockfabrics.com.

Contact:

James B. Brown

Executive Vice President and

Chief Financial Officer

662.365.6112

Forward-looking Statements

Statements in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward looking statements. These risks and uncertainties include, but are not limited to the following: our business and operating results may be adversely affected by the general economic conditions and the ongoing slow economic recovery; intense competition and adverse discounting actions taken by competitors, which could have a material effect on our operations; our merchandising initiatives and marketing emphasis may not provide expected results; changes in customer demands and failure to manage inventory effectively could adversely affect our operating results; our inability to effectively implement our growth strategy and access funds for future growth may have an adverse effect on sales growth; our ability to attract and retain skilled people is important to our success; we have significant indebtedness and interest rate increases could negatively impact profitability; our business is dependent on the ability to successfully access funds through capital markets and financial institutions and any inability to access funds may limit our ability to execute our business plan and restrict operations we rely on for future growth; significant changes in discount rates, mortality rates, actual investment return on pension assets, changes in consumer demand or purchase patterns and other factors could affect our earnings, equity, and pension contributions in future periods; business matters encountered by our suppliers may adversely impact our ability to meet our customers’ needs; tightening of purchase terms by suppliers and their factories may have a negative impact on our business; we are vulnerable to risks associated with obtaining merchandise from foreign suppliers; transportation industry challenges and rising fuel costs may negatively impact our operating results; delays or interruptions in the flow of merchandise between our suppliers and/or our distribution center and our stores could adversely impact our operating results; changes in the labor market and in federal, state, or local regulations could have a negative impact on our business; taxing authorities could disagree with our tax treatment of certain deductions or transactions, resulting in unexpected tax assessments; our current cash resources might not be sufficient to meet our expected near-term cash needs; a disruption in our information systems would negatively impact our business; a failure to adequately maintain the security of confidential information could have an adverse effect on our business; failure to comply with various laws and regulations as well as litigation developments could adversely affect our business operations and financial performance; we may not be able to maintain or negotiate favorable lease terms for our retail stores; changes in accounting principles may have a negative impact on our reported results; our results may be adversely affected by serious disruptions or catastrophic events, including geo-political events and weather; changes in newspaper subscription rates may result in reduced exposure to our circular advertisement; the proposed going private transaction may not necessarily result in the anticipated cost savings and benefits; unexpected or unfavorable consumer responses to our promotional or merchandising programs could materially adversely affect our sales, results of operations, cash flow and financial condition; new regulations related to “conflict minerals” may force us to incur additional expenses, may make our supply chain more complex and may result in damage to our reputation with customers; there are risks associated with our common stock trading on the OTC Markets, formerly known as the “Pink Sheets”; our stock price has been volatile and could decrease in value; future sales of our common stock could adversely affect the market price and our future capital-raising activities could involve the issuance of equity securities, which could result in a decline in the trading price of shares of our common stock; we do not expect to pay cash dividends on shares of our common stock for the foreseeable future and other risks and uncertainties discussed in the Company’s Securities and Exchange Commission (“SEC”) filings, including the risk factors set forth in Item 1A of the Company's Annual Report on Form 10-K for the year ended January 25, 2014 and the Company’s other reports with the SEC. The Company undertakes no obligation to revise these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events.

HANCOCK FABRICS, INC.

CONSOLIDATED BALANCE SHEETS 

HANCOCK FABRICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Supplemental Disclosures Regarding Non-GAAP Financial Information

The Company has presented Earnings (Loss) before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in this press release to provide investors with additional information to evaluate our operating performance and our ability to service our debt.  The Company defines EBITDA as earnings (loss) before interest, income taxes, depreciation and amortization. The Company uses EBITDA, among other things, to evaluate operating performance, to plan and forecast future periods’ operating performance, and as an incentive compensation target for certain management personnel.

As EBITDA is not a measure of operating performance or liquidity calculated in accordance with U.S. GAAP, this measure should not be considered in isolation of, or as a substitute for, net income (loss), as an indicator of operating performance, or net cash provided by (used in) operating activities as an indicator of liquidity.  Our computation of EBITDA may differ from similarly titled measures used by other companies. As EBITDA excludes certain financial information compared with net income (loss) and net cash provided by (used in) operating activities, the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded. The table below shows a reconciliation of EBITDA to net income (loss) and net cash provided by (used in) operating activities.

Hancock Fabrics, Inc.

Reconciliation of EBITDA

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