Exhibit 99.1


        FACTORY 2-U STORES, INC. TO FOCUS ON Portfolio of 195 Stores With
                     Strong Potential For Profitable Growth

      Files Motion With Bankruptcy Court to Close 44 Unprofitable Locations

      Liquidation Sales at Closing Stores Expected to Begin by Mid-February

           Store Closings Expected to Have Significant Positive Impact
                       On Company's Financial Performance

SAN DIEGO, CA, January 22, 2004 - FACTORY 2-U STORES, INC. today announced that,
following a  comprehensive  review of the  performance  and  positioning  of its
entire store base, it has filed a motion with the United States Bankruptcy Court
in Wilmington,  Delaware seeking  authorization to close 44 stores.  The Company
intends to focus on its  remaining  portfolio of 195 stores that it believes are
well positioned to achieve  sustained  profitable  growth over the long term. (A
list of the closing stores follows this  announcement.)  Factory 2-U voluntarily
filed a petition to reorganize  under Chapter 11 of the U.S.  Bankruptcy Code on
January 13, 2004 in order to implement a comprehensive operational and financial
restructuring of its business.

Norman G.  Plotkin,  Chief  Executive  Officer of Factory 2-U,  said:  "Our core
objectives in the Chapter 11 process are to enhance liquidity,  reduce costs and
focus on generating  profitable  growth.  The decision to close these stores was
difficult,  but  it is an  important  step  in  addressing  our  challenges  and
ultimately improving our financial and operational  performance.  We believe the
195  stores  we  will  operate  going   forward  are  situated  in   convenient,
high-traffic  locations with attractive local demographics.  We will continually
monitor the performance of these stores very closely to ensure that each is well
positioned  to execute our  strategy of  providing  our  customers  with quality
apparel and housewares at a great value."

He  continued,  "We believe  there are many reasons to be excited  about Factory
2-U's potential for future success.  Customer loyalty and support remain strong,
as demonstrated by the nearly five percent  increase in total  transactions on a
year-to-year  basis.  During the same  period,  the average  number of items per
transaction  increased by more than 10 percent.  Our  objective is to refine our
merchandise mix so that we enhance the profitability of these  transactions.  We
believe we now have the right  merchandising  plans and marketing  initiatives -
and the right team to implement them - to drive profitable  growth and achieve a
substantial improvement in the Company's financial performance."

Liquidation  sales at the closing stores are expected to begin by  mid-February.
Affected  associates will be paid as normal until their locations  close. In its
motion filed today, Factory 2-U is seeking  authorization to identify and retain
an agent to assist with the inventory clearance sales at the closing locations.

Dennis  I.  Simon,   Managing  Principal  of  Crossroads,   LLC,  the  Company's
restructuring  and financial  advisor,  said: "One of the principal reasons that
Factory 2-U chose to file for Chapter 11 was its need to  rationalize  its store
base.  All of these 44 stores are  unprofitable  and,  in some  cases,  they are
located in outlying  regions,  which has made it  difficult  to manage and stock
them  efficiently.  By closing these stores,  the Company expects to improve its
cash flow  significantly  and  receive a  stronger  return  from its  continuing
stores. In addition,  the Company expects to achieve substantial cost savings by
disposing of the leases for certain of these stores, as well for nine previously
closed stores and two distribution centers."

He  continued,  "It has  been  gratifying  to be able  to work  with a  seasoned
leadership team at Factory 2-U that not only understands the Company's problems,
but knows how to fix them. I am confident  in their  ability to greatly  enhance
the Company's performance."

Store Closing List

The following is a list of stores that Factory 2-U intends to close:

Arkansas

3901 South University Avenue, Little Rock

Arizona

10745 E. Apache Trail, Apache Junction
2250 E. U.S. Hwy 60, Globe
6912 East Hampton Avenue, Mesa
1841 E Highway 69, Prescott

California

8031 Watt Ave., Antelope
801 East Avenue, Chico
5479 Philadelphia Street, Chino
3975 Grand Avenue, Chino
1480-B Azusa Avenue, Covina
5229 Hazel Avenue, Fair Oaks
1955 West Texas Street, Fairfield
39203 Fremont Hub, Fremont
31660 Grape Street, Lake Elsinore
605 North H Street, Lompoc
5422 West Sunset Blvd., Los Angeles
10835 Olson Drive, Rancho Cordova
3309-A Rosecrans Street, San Diego
380 S. Mountain Avenue, Upland
2523 South Mooney Blvd., Visalia
57220 Twenty-Nine Palms, Yucca Valley

Indiana

101 East Appleway, Coeur D'Alene
New Mexico

1511 Goff Boulevard SW, Albuquerque
9311 Coors Blvd., Albuquerque

Nevada

862 S. Boulder Highway, Henderson

Oklahoma

3364 East 51st Street, Tulsa

Oregon

320 N.E. Agness Avenue, Grants Pass
10890 S.E. Oak Street, Milwaukie
2787 Lancaster Drive Northeast, Salem
9009 SW Hall Blvd., Tigard

Texas

5655 Eastex Freeway, Beaumont
2200 North Yarbrough, El Paso
5567 Alameda Avenue, El Paso
9813 Dyer Street, El Paso
300 Greenspoint Mall, Houston
12790 Willowchase Dr., Houston
1011 Wall Street, Longview
324 Pasadena Town Square, Pasadena
945 S. W. W. White Road, San Antonio
1428 Wooded Acres Drive, Waco

Washington

1161 E. Wishkah Street, Aberdeen
4215 Wheaton Way, Bremerton
2200 S. 314th Street, Federal Way
2905 N. Kennewick Ave, Kennewick

About Factory 2-U Stores, Inc.

Factory 2-U Stores,  Inc.  currently operates 243 "Factory 2-U" off-price retail
stores which sell  branded  casual  apparel for the family,  as well as selected
domestics and household  merchandise at prices which generally are significantly
lower than the prices offered by its discount competitors.  The Company operates
32 stores in Arizona, 2 stores in Arkansas, 65 stores in southern California, 63
stores in northern California, 1 store in Idaho, 8 stores in Nevada, 9 stores in
New Mexico, 1 store in Oklahoma, 14 stores in Oregon, 34 stores in Texas, and 14
stores in Washington.



Except for the historical information contained herein, the matters discussed in
this  news  release  are  forward-looking  statements  that  involve  risks  and
uncertainties,  and actual  results could differ  materially  from the Company's
present  expectations.  Among the  important  factors  that could  cause  actual
results  to  differ  materially  from  those  indicated  in the  forward-looking
statements are:  customer demand and trends in the off-price  apparel  industry,
the effect of  economic  conditions,  the  impact of  competitive  openings  and
pricing,  supply  constraints or  difficulties,  the inherent  uncertainties  of
proceedings  under  Chapter  11 of  the  Bankruptcy  Code,  the  effects  of the
delisting  of our  common  stock by  Nasdaq,  and other  risks  detailed  in the
Company's Securities and Exchange Commission filings.

                                      # # #

Contacts:

MEDIA ONLY

         Michael Freitag or Joseph Kuo
         Kekst and Company
         (212) 521-4800

INVESTORS

         Factory 2-U Investor Information
         (888) 201-9603

         or

         James K. White
         Kehoe, White & Co., Inc.
         (562) 437-0655