Exhibit 99.1

             FACTORY 2-U STORES, INC. RECEIVES FINAL COURT APPROVAL
                    FOR $45 MILLION DIP FINANCING COMMITMENT

            DIP Financing To Supplement Cash Flow From Ongoing Stores
          And Proceeds From Inventory Clearance Sales At Closing Stores

SAN  DIEGO,  February  2, 2004 -  Factory  2-U  Stores,  Inc.  (FTUSQ.PK)  today
announced that the U.S. Bankruptcy Court in Wilmington,  Delaware has entered an
order  granting final approval for the Company to use the full amount of the $45
million  debtor-in-possession  (DIP)  financing  commitment  provided by The CIT
Group/Business Credit, Inc. and GB Retail Funding, LLC.

The Company intends to utilize the DIP financing  commitment to help fulfill its
business  obligations  during the  Chapter 11 process and ensure that its stores
are well stocked with quality  merchandise  that appeals to its customers.  This
financing  will be  available to  supplement  the  Company's  cash flow from its
ongoing 195 stores and the expected  proceeds from inventory  clearance sales at
44 stores slated for closure as well as the Company's cash reserves.

Factory 2-U Chief  Executive  Officer Norman G. Plotkin said, "We are pleased to
have received final Court  approval to use the $45 million DIP credit  facility.
This  commitment  provides  added  assurance  to our vendors and other  business
partners  that we expect to have ample  liquidity  to meet all of the  Company's
post-filing trade obligations in full and under normal conditions."

"Equally  important,  today's  Court  approval  underscores  the  fact  that our
reorganization  proceedings  are moving forward  productively  and smoothly.  We
remain committed to working closely with our creditors,  improving our financial
and operational  performance  across our continuing store base and emerging from
the Chapter 11 process well-positioned for future success."

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.  The  Company  is
continuing normal operations.

About Factory 2-U Stores, Inc.

Factory 2-U Stores,  Inc.  operates 239 "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 currently operates
32 stores in Arizona, 1 store in Arkansas, 64 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, 33 stores in Texas, and 13
stores in  Washington.  As previously  announced,  the Company plans to close 44
stores in early 2004.

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
         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