HKF Hancock Fabrics

Hancock Fabrics, Inc. (NYSE: HKF), today reported that sales in the five-week period ended July 2, 2005 totaled $31.4 million compared with $33.7 million in the same period of the prior year. Sales in comparable stores decreased 8.0% in June. In the first two months of the second quarter, total sales were $57.3 million versus $61.7 million in the same period of fiscal 2004, and comparable store sales declined 8.2%. Year-to-date, total sales were $155.1 million in 2005 and $166.8 million in 2004. Comparable store sales, for the five months to date, declined 7.4%. Jane Aggers, Chief Executive Officer, commented, "The previously announced makeover process has now begun in our stores. Our current plans include the re-merchandising of all stores throughout the balance of the second quarter. This will enable us to expand the merchandise offerings in certain core businesses and present those offerings with more clarity and customer focus. The re-merchandising program is expected to require a fixture investment of approximately $1 million and will be substantially completed in advance of the fall selling season." Hancock also announced that it has finalized its new $110 million secured credit facility with Wachovia Bank, N.A. Hancock Fabrics, Inc. is a specialty retailer of fabric and related home sewing and decorating accessories. The Company operates 446 retail fabric stores in 43 states and operates an internet store under the domain name, www.hancockfabrics.com.