SC TO-T/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE TO

Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
(Amendment No. 1)

RAG SHOPS, INC.

(Name of Subject Company (issuer))

CRAFTS RETAIL ACQUISITION CORP.
CRAFTS RETAIL HOLDING CORP.
SUN CRAFTS RETAIL, LLC
SUN CAPITAL PARTNERS III, LP
SUN CAPITAL PARTNERS III QP, LP
SUN CAPITAL ADVISORS III, LP
SUN CAPITAL PARTNERS III, LLC

(Names of Filing Persons (identifying status as offeror, issuer or other person))

Common Stock, par value $0.01 per Share

(Title of Class of Securities)

750624108

(CUSIP Number of Class of Securities)

Marc J. Leder
Rodger R. Krouse
Sun Capital Partners III, LP
Sun Capital Partners III QP, LP
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486
Telephone: (561) 394-0550

with a copy to:

Michael Weinsier
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
Telephone: (212) 837-6690

(Name, address, and telephone numbers of persons authorized
to receive notices and communications on behalf of filing persons)

Calculation of Filing Fee:

Transaction valuation(1)				Amount of filing fee(2)
$9,775,981				$1,239

(1)

The transaction valuation is estimated solely for purposes of calculating the filing fee pursuant to Rule 0-11(d). The calculation assumes the purchase of all outstanding common shares of Rag Shops, Inc., par value $0.01 (the "Shares"), not beneficially owned by Crafts Retail Acquisition Corp. ("Crafts Acquisition") or its affiliates, at a purchase price of $4.30 Share, net to the seller in cash. As of September 22, 2004, there were 2,273,484 Shares on a fully diluted basis not beneficially owned by Crafts Acquisition.

(2)	Previously paid. See below.

	Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	Amount Previously Paid:   1,238.62
	Form or Registration No.:   Schedule TO-T
	Filing Parties:				Crafts Retail Acquisition Corp.
					Crafts Retail Holding Corp. Sun Crafts Retail, LLC Sun Capital Partners III, LP Sun Capital Partners III QP, LP Sun Capital Advisors III, LP Sun Capital Partners III, LLC
	Date Filed:   September 22, 2004

	Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

	third party tender offer subject to Rule 14d-1.

	issuer tender offer subject to Rule 13e-4.

	going-private transaction subject to Rule 13e-3.

	amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:    

This Tender Offer Statement and Rule 13e-3 Transaction Statement filed under cover of Amendment No. 1 to Schedule TO relates to the offer by Crafts Retail Acquisition Corp., a Delaware corporation ("Crafts Acquisition"), to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Rag Shops, Inc., a Delaware corporation (the "Company"), not owned by Crafts Acquisition, at a purchase price of $4.30 per Share net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated September 22, 2004, a copy of which was previously filed as Exhibit (a)(1)(i), as amended and supplemented by the Supplement to the Offer to Purchase dated October 7, 2004 (collectively, the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1)(viii), and in the related Letter of Transmittal (which, together with the Offer to Purchase, constitute the "Offer"), a copy of which was previously filed as Exhibit (a)(1)(ii).

Item 1.    Summary Term Sheet

Item 1001 of Regulation MA:

Reference is made to the information set forth under Summary Term Sheet and Questions and Answers About the Tender Offer in the Offer to Purchase, which is incorporated herein by reference.

Item 2.    Subject Company Information

Item 1002(a), (b) and (c) of Regulation MA

(a)    Name and Address.    Reference is made to the information set forth under The Tender Offer—Section 8 ("Certain Information Concerning the Company") in the Offer to Purchase, which is incorporated herein by reference.

(b)    Securities.    Reference is made to the information set forth under Introduction in the Offer to Purchase, which is incorporated herein by reference.

(c)    Trading and Market Price.    Reference is made to the information set forth under The Tender Offer—Section 6 ("Price Range of the Shares; Dividends on the Shares") in the Offer to Purchase, which is incorporated herein by reference.

Item 3.    Identity and Background of Filing Person

Item 1003(a), (b) and (c) of Regulation MA:

(a)    Name and Address.    Reference is made to the information set forth under The Tender Offer—Section 9 ("Certain Information Concerning the Purchaser Group") and Schedule A ("Information Concerning the Directors and Executive Officers of the Purchaser Group") in the Offer to Purchase, which is incorporated herein by reference.

(b)    Business and Background of Entities.    Reference is made to the information set forth under The Tender Offer—Section 9 ("Certain Information Concerning the Purchaser Group") and Schedule A ("Information Concerning the Directors and Executive Officers of the Purchaser Group") in the Offer to Purchase, which is incorporated herein by reference.

(c)    Business and Background of Natural Persons.    Reference is made to the information set forth under The Tender Offer—Section 9 ("Certain Information Concerning the Purchaser Group") and Schedule A ("Information Concerning the Directors and Executive Officers of the Purchaser Group") in the Offer to Purchase, which is incorporated herein by reference.

Item 4.    Terms of the Transaction

Item 1004(a) of Regulation MA:

(a)    Material Terms.    Reference is made to the information set forth under Summary Term Sheet; Questions and Answers About the Tender Offer; Introduction; Special Factors—Sections 1

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("Background of the Offer; Purpose of the Offer and the Merger"), 2 ("Plans for the Company") and 3 ("Effect of the Offer and the Merger"); The Tender Offer—Sections 1 ("Terms of the Offer"), 2 ("Acceptance for Payment and Payment"), 3 ("Procedure for Tendering Shares"), 4 ("Withdrawal Rights") and 5 ("Certain United States Federal Income Tax Consequences") in the Offer to Purchase, which is incorporated herein by reference.

Item 5.    Past Contacts, Transactions, Negotiations and Agreements.

Item 1005(a) and (b) of Regulation MA:

(a)    Transactions.    Reference is made to the information set forth under The Tender Offer— Section 11 ("The Merger Agreement and Certain Other Agreements") in subsection "Management Services Agreement", which is incorporated herein by reference.

(b)    Significant Corporate Events.    Reference is made to the information set forth under Special Factors—Sections 1 ("Background of the Offer; Purpose of the Offer and the Merger"), and 2 ("Plans for the Company"), and The Tender Offer—Sections 9 ("Certain Information Concerning the Purchaser Group"), and 11 ("The Merger Agreement and Certain Other Agreements") in the Offer to Purchase, which is incorporated herein by reference.

Item 6.    Purpose of the Transaction and Plans or Proposals

Item 1006(a) and (c)(1) through (7) of Regulation MA:

(a) and (c)(1)–(7) Reference is made to the information set forth under Introduction; Questions and Answers About the Tender Offer; Special Factors—Sections 1 ("Background of the Offer; Purpose of the Offer and the Merger"), 2 ("Plans for the Company") and 3 ("Effect of the Offer and the Merger") and The Tender Offer—Sections 11 ("The Merger Agreement and Certain Other Agreements") and 12 ("Merger and Appraisal Rights; "Going Private" Rules") in the Offer to Purchase, which is incorporated herein by reference.

Item 7.    Source and Amount of Funds or Other Consideration

Item 1007(a), (b) and (d) of Regulation MA:

(a), (b) and (d) Reference is made to the information set forth under The Tender Offer—
Section 10 ("Source and Amount of Funds") in the Offer to Purchase, which is incorporated herein by reference.

Item 8.    Interest in Securities of Subject Company

Item 1008 of Regulation MA:

(a) and (b) Reference is made to the information set forth under Special Factors—Section 1 ("Background of the Offer; Purpose of the Offer and the Merger"); Schedule A ("Information Concerning the Directors and Executive Officers of the Purchaser Group"); The Tender Offer—Section 11 ("The Merger Agreement and Certain Other Agreements") and Schedule B ("Security Ownership of Certain Beneficial Owners and Management") in the Offer to Purchase, which is incorporated herein by reference.

Item 9.    Persons / Assets, Retained, Employed, Compensated or Used

Item 1009(a) of Regulation MA:

(a)    Solicitations or Recommendations.    Reference is made to the information set forth under Introduction and The Tender Offer—Section 16 ("Fees and Expenses") in the Offer to Purchase, which is incorporated herein by reference.

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Item 10.    Financial Statements

Item 1010(a) and (b) of Regulation MA:

(a)    Financial Information.    Reference is made to the information set forth under Summary Term Sheet, Questions and Answers about the Tender Offer and The Tender Offer—Section 10 ("Source and Amount of Funds") in the Offer to Purchase, which is incorporated herein by reference.

(b)    Pro Forma Information.    The pro forma financial statements of Crafts Acquisition are not material to the Offer.

Item 11.    Additional Information

Item 1011 of Regulation MA:

(a)         Agreements, Regulatory Requirements and Legal Proceedings.

(a)(1)   None.

(a)(2)    Reference is made to the information set forth under Introduction; and The Tender Offer—Sections 2 ("Acceptance for Payment and Payment"), 3 ("Procedure for Tendering Shares"), 12 ("Merger and Appraisal Rights; "Going Private" Rules") and 15 ("Certain Legal Matters") in the Offer to Purchase, which is incorporated herein by reference.

(a)(3)    Reference is made to the information set forth under The Tender Offer—Section 15 ("Certain Legal Matters") in the Offer to Purchase, which is incorporated herein by reference.

(a)(4)    Reference is made to the information set forth under Special Factors—Section 3 ("Effect of the Offer and the Merger") in the Offer to Purchase, which is incorporated herein by reference.

(a)(5)    None.

(b)          Other Material Information.    Reference is made to the Letter of Transmittal and the entirety of the Offer to Purchase which are incorporated herein by reference.

Item 12.    Exhibits

*(a)(1)(i)				Offer to Purchase dated September 22, 2004.
*(a)(1)(ii)				Letter of Transmittal.
*(a)(1)(iii)				Notice of Guaranteed Delivery.
*(a)(1)(iv)				Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
*(a)(1)(v)				Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
*(a)(1)(vi)				Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
*(a)(1)(vii)				Text of Press Release issued by the Company on September 13, 2004 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of the Company filed with the Securities Exchange Commission on September 13, 2004)
(a)(1)(viii)				Supplement to Offer to Purchase dated October 7, 2004.
(b)				None.
(d)(i)				Agreement and Plan of Merger, dated as of September 13, 2004, by and among Crafts Retail Acquisition Corp., Crafts Retail Holding Corp. and the Company (incorporated by reference to Ex. 2.1 to the Current Report on Form 8-K/A of the Company filed with the Securities and Exchange Commission on September 22, 2004)

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(d)(ii)				Stock Purchase Agreement dated September 13, 2004 by and among Crafts Retail Holding Corp., Crafts Retail Acquisition Corp. and certain stockholders of Rag Shops, Inc. (incorporated by reference to Exhibit 10.1 to Rag Shop's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 13, 2004).
(d)(iii)				Management Services Agreement dated September 13, 2004 between Rag Shops and Sun Capital Partners Management III, LLC (incorporated by reference to Exhibit 10.2 to Rag Shop's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 13, 2004).
(d)(iv)				Confidentiality Agreement, dated May 13, 2004, between Sun and SunTrust (incorporated by reference to Exhibit (e)(4) to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).
(d)(v)				Letter of Intent, dated August 3, 2004, between Rag Shops and Sun (incorporated by reference to Exhibit (e)(5) to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).
(d)(vi)				Extension of Letter of Intent, dated August 17, 2004, between Rag Shops and Sun (incorporated by reference to Exhibit (e)(6) to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).
(g)				None.
(h)				None.

*	Previously filed under the same Exhibit number to the Schedule TO filed by the filing persons on September 22, 2004 and incorporated herein by reference.

Item 13.    Information Required by Schedule 13E-3

Item 2.    Subject Company Information

Item 1002(d), (e) and (f) of Regulation MA:

(d)    Dividends.    Reference is made to the information set forth under The Tender Offer—Section 6 ("Price Range of the Shares; Dividends on the Shares") in the Offer to Purchase, which is incorporated herein by reference.

(e)    Prior Public Offerings.    The Company has not made any underwritten public offerings of its common stock for cash during the past three years that were registered under the Securities Act of 1933 or that were exempt from registration under Regulation A under the Securities Act of 1933.

(f)    Prior Stock Purchases.    Reference is made to the information set forth under Summary Term Sheet, Questions and Answers about the Tender Offer, The Tender Offer—Section 11 ("The Merger Agreement and Certain Other Agreements") in the subsection "Stock Purchase Agreement" and under Schedule B ("Security Ownership of Certain Beneficial Owners and Management") in the Offer to Purchase, which are incorporated herein by reference.

Item 4.    Terms of the Transaction

Item 1004(c) through (f) of Regulation MA:

(c)    Different Terms.    None.

(d)    Appraisal Rights.    Reference is made to the information set forth under The Tender Offer—Section 12 ("Merger and Appraisal Rights; "Going Private" Rules") and Schedule C ("Section 262 of the Delaware General Corporation Law") in the Offer to Purchase, which is incorporated herein by reference.

(e)    Provisions for Unaffiliated Securityholders.    None.

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(f)    Eligibility for Listing or Trading.    Not applicable.

Item 5.    Past Contacts, Transactions, Negotiations and Agreements

Item 1005(c) and (e) of Regulation MA:

(c)    Negotiation or Contacts.    Reference is made to the information set forth under Special Factors—Section 1 ("Background of the Offer; Purpose of the Offer and the Merger") in the Offer to Purchase, which is incorporated herein by reference.

(e)    Agreements Involving the Subject Company's Securities.    Reference is made to the information set forth under The Tender Offer—Sections 1 ("Terms of the Offer"), 2 ("Acceptance for Payment and Payment"), 3 ("Procedure for Tendering Shares"), 4 ("Withdrawal Rights"), 10 ("Source and Amount of Funds"), 11 ("The Merger Agreement and Certain Other Agreements") and 14 ("Certain Conditions to the Offer") in the Offer to Purchase, which is incorporated herein by reference. As of the date of this Statement, none of the Company's executive officers has received, or has any arrangement or agreement to receive, any equity or other similar interest in Rag Shops following the consummation of the transactions contemplated by the merger agreement and the stock purchase agreement described in the attached Offer to Purchase.

Item 6.    Purposes of the Transaction and Plans or Proposals

Item 1006(b) and (c)(8) of Regulation MA:

(b)    Use of Securities Acquired.    Reference is made to the information set forth under Special Factors—Sections 1 ("Background of the Offer; Purpose of the Offer and the Merger") and 2 ("Plans for the Company") in the Offer to Purchase, which is incorporated by reference.

(c)(8)    Plans.    Reference is made to the information set forth under Special Factors—Section 3 ("Effect of the Offer and the Merger") in the Offer to Purchase, which is incorporated herein by reference.

Item 7.    Purposes, Alternatives, Reasons and Effects

Item 1013 of Regulation MA:

(a), (b) and (c) Purposes; Alternatives; Reasons.    Reference is made to the information set forth under Introduction; Questions and Answers About the Tender Offer; and Special Factors—Sections 1 ("Background of the Tender Offer; Purpose of the Offer and the Merger"), 2 ("Plans for the Company"), 3 ("Effect of the Offer and the Merger") and 4 ("Purchaser's Position Regarding the Fairness of the Offer") in the Offer to Purchase, which is incorporated herein by reference.

(d)    Effects.    Reference is made to the information set forth under Introduction; Questions and Answers About the Tender Offers; Special Factors—Section 3 ("Effect of the Offer and the Merger"); and The Tender Offer—Sections 5 ("Certain United States Federal Income Tax Consequences") and 12 ("Merger and Appraisal Rights; "Going Private" Rules") in the Offer to Purchase, which is incorporated herein by reference.

Item 8.    Fairness of the Transaction

Item 1014 of Regulation MA:

(a), (b), (c), (d), (e) and (f) Reference is made to the information set forth under Special Factors—Sections 1 ("Background of the Offer; Purpose of the Offer and the Merger"), 2 ("Plans for the Company") and 4 ("Purchaser's Position Regarding the Fairness of the Offer") in the Offer to Purchase, which is incorporated herein by reference.

Item 9.    Reports, Opinions, Appraisals and Negotiations

Item 1015 of Regulation MA:

(a)    Report, Opinion or Appraisal.    Reference is made to the information set forth under Special Factors—Section 4 ("Purchaser's Position Regarding the Fairness of the Offer") in the Offer to Purchase, which is incorporated herein by reference.

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(b)    Preparer and Summary of the Report, Opinion or Appraisal.    Not applicable.

(c)    Availability of Documents.    Not applicable.

Item 10.    Source and Amount of Funds or Other Consideration

Item 1007(c) of Regulation MA:

(c)    Expenses.    Reference is made to the information set forth under The Tender Offer—Section 16 ("Fees and Expenses") in the Offer to Purchase, which is incorporated herein by reference.

Item 12.    The Solicitation or Recommendation

Item 1012(d) and (e) of Regulation MA:

(d)    Intent to Tender or Vote in a Going Private Transaction.    Reference is made to the information set forth under The Tender Offer—Sections 8 ("Certain Information Concerning the Company") and 11 ("The Merger Agreement and Certain Other Agreements") of the Offer to Purchase, which is incorporated herein by reference.

(e)    Recommendations of Others.    The filing persons are not aware of any officer, director or affiliate of the Company or any person listed on Schedule A ("Information Concerning the Directors and Executive Officers of the Purchaser Group") to the Offer to Purchase who has made a recommendation either in support of or against the Offer.

Item 13.    Financial Statements

Item 1010(a) through (b) of Regulation MA:

(a)    Financial Information.    Reference is made to the information set forth under The Tender Offer—Section 8 ("Certain Information Concerning the Company") in the Offer to Purchase which is incorporated herein by reference.

(b)    Pro Forma Information.    The pro forma financial statements of the Company are not material to the Offer.

Item 14.    Persons/Assets Retained, Employed, Compensated or Used

Item 1009(b) of Regulation MA:

(b)    Employees and Corporate Assets.    None.

Item 16.    Exhibits.

Item 1016(c) and (f) of Regulation MA:

(c)(i)    Opinion of SunTrust addressed to the board of directors of the Company, dated September 13, 2004 (incorporated by reference to Exhibit (a)(6) and included as Annex A to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).

(c)(ii)    Fairness Presentation of SunTrust given to the board of directors of the Company on September 7, 2004 (incorporated by reference to Exhibit (a)(7) Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).

*(f)    Section 262 of the Delaware General Corporation Law (included as Schedule C of the Offer to Purchase previously filed as Exhibit (a)(1)(i)).

*	Previously filed under the same Exhibit number to the Schedule TO filed by the filing persons on September 22, 2004 and incorporated herein by reference.

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SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

	CRAFTS RETAIL ACQUISITION CORP.
	By:   /s/ Marc J. Leder
	Name: Marc J. Leder
	Its: Vice President
	CRAFTS RETAIL HOLDING CORP.
	By:   /s/ Marc J. Leder
	Name: Marc J. Leder
	Its: Vice President
	SUN CRAFTS RETAIL, LLC
	By:   /s/ Marc J. Leder
	Name: Marc J. Leder
	Its: Co-CEO
	SUN CAPITAL PARTNERS III, LP
	By: Sun Capital Advisors III, LP
	Its: General Partner
	By: Sun Capital Partners III, LLC
	Its: General Partner
	By:   /s/ Marc J. Leder
	Name: Marc J. Leder
	Its: Co-CEO
	SUN CAPITAL PARTNERS III QP, LP
	By: Sun Capital Advisors III, LP
	Its: General Partner
	By: Sun Capital Partners III, LLC
	Its: General Partner
	By:   /s/ Marc J. Leder
	Name: Marc J. Leder
	Its: Co-CEO
	SUN CAPITAL ADVISORS III, LP
	By: Sun Capital Partners III, LLC
	Its: General Partner
	By:   /s/ Marc J. Leder
	Name: Marc J. Leder
	Its: Co-CEO
	SUN CAPITAL PARTNERS III, LLC
	By:   /s/ Marc J. Leder
	Name: Marc J. Leder
	Its: Co-CEO

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EXHIBIT INDEX

EXHIBIT				DESCRIPTION
*(a)(1)(i)				Offer to Purchase dated September 22, 2004.
*(a)(1)(ii)				Letter of Transmittal.
*(a)(1)(iii)				Notice of Guaranteed Delivery.
*(a)(1)(iv)				Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
*(a)(1)(v)				Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
*(a)(1)(vi)				Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
*(a)(1)(vii)				Text of Press Release issued by the Company on September 13, 2004 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of the Company filed with the Securities Exchange Commission on September 13, 2004)
(a)(1)(viii)				Supplement to Offer to Purchase dated October 7, 2004.
(b)				None.
(c)(i)				Opinion of SunTrust addressed to the board of directors of the Company, dated September 13, 2004 (incorporated by reference to Exhibit (a)(6) and included as Annex A to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).
(c)(ii)				Fairness Presentation of SunTrust given to the board of directors of the Company on September 7, 2004 (incorporated by reference to Exhibit (a)(7) Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).
(d)(i)				Agreement and Plan of Merger, dated as of September 13, 2004, by and among Crafts Retail acquisition Corp., Crafts Retail Holding Corp. and the Company (incorporated by reference to Ex. 2.1 to the current Report on Form 8-K/A of the Company filed with the Securities Exchange Commission on September 22, 2004).
(d)(ii)				Stock Purchase Agreement dated September 13, 2004 by and among Crafts Retail Holding Corp., Crafts Retail Acquisition Corp. and certain stockholders of Rag Shops, Inc. (incorporated by reference to Exhibit 10.1 to Rag Shop's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 13, 2004).
(d)(iii)				Management Services Agreement dated September 13, 2004 between Rag Shops and Sun Capital Partners Management III, LLC (incorporated by reference to Exhibit 10.2 to Rag Shop's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 13, 2004).
(d)(iv)				Confidentiality Agreement, dated May 13, 2004, between Sun and SunTrust (incorporated by reference to Exhibit (e)(4) to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).

EXHIBIT				DESCRIPTION
(d)(v)				Letter of Intent, dated August 3, 2004, between Rag Shops and Sun (incorporated by reference to Exhibit (e)(5) to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).
(d)(vi)				Extension of Letter of Intent, dated August 17, 2004, between Rag Shops and Sun (incorporated by reference to Exhibit (e)(6) to Rag Shop's Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on September 22, 2004).
*(f)				Section 262 of the Delaware General Corporation Law (included as Schedule C of the Offer to Purchase previously filed as Exhibit (a)(1)(i)).
(g)				None.
(h)				None.

*	Previously filed under the same Exhibit number to the Schedule TO filed by the filing persons on September 22, 2004 and incorporated herein by reference.

EX-99.(A)(1)(VIII)

Supplement to
Offer to Purchase for Cash
All Outstanding Shares of Common Stock

of

Rag Shops, Inc.
not owned by Crafts Retail Acquisition Corp.

at

$4.30 Net Per Share In Cash

by

Crafts Retail Acquisition Corp.

an affiliate of

Sun Capital Partners III, LP

and

Sun Capital Partners III QP, LP

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY
TIME, ON WEDNESDAY, OCTOBER 20, 2004 UNLESS THE OFFER IS EXTENDED.
SHARES WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.

We are offering to purchase all of the outstanding shares of the common stock of Rag Shops, Inc. that are not owned by us. The terms of our offer are described in the offer to purchase dated September 22, 2004 and the letter of transmittal that accompanied the offer to purchase previously sent to holders of Rag Shops' common stock, as amended and supplemented by this supplement to the offer to purchase and any other amendments or supplements hereto or thereto. We are making the offer pursuant to an agreement and plan of merger dated as of September 13, 2004 among Crafts Retail Holding Corp., Crafts Retail Acquisition Corp. and Rag Shops, Inc. The board of directors of Rag Shops has approved the offer, the merger agreement and the merger described in the offer to purchase, as supplemented by this supplement to the offer to purchase and has determined that the terms of the offer and the merger are advisable, fair to, and in the best interests of, the stockholders of Rag Shops and recommends that stockholders accept the offer and tender their shares pursuant to the offer.

The offer is subject to a number of conditions set forth in the offer to purchase. See "The Tender Offer — Section 14 — Conditions to the Offer."

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the offer or the merger, passed upon the merits or fairness of the offer or the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

IMPORTANT

If you desire to tender some or all of your shares of Rag Shops' common stock, you should either:

•

complete and sign the letter of transmittal (or a copy thereof) previously sent to you in accordance with the instructions in the letter of transmittal, mail or deliver it, together with any other required documents, to the depositary and either deliver the certificates representing your shares to the depositary or tender your shares pursuant to the procedures for book-entry transfer set forth under the heading "The Tender Offer — Section 3 — Procedure for Tendering Shares" in the offer to purchase; or

•	request your broker, dealer, commercial bank, trust company or other nominee to tender your shares for you.

If your shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact your broker, dealer, commercial bank, trust company or other nominee.

If you want to tender your shares and the certificates representing your shares are not immediately available, or you cannot comply with the procedures for book-entry transfer on a timely basis, you may tender your shares by following the procedures for guaranteed delivery set forth under the heading "The Tender Offer — Section 3 — Procedure for Tendering Shares" in the offer to purchase.

You may direct questions and requests for assistance to the information agent named below at the address and telephone numbers set forth on the back cover of this supplement to the offer to purchase. You should direct requests for additional copies of this supplement to the offer to purchase, the offer to purchase, the letter of transmittal, the notice of guaranteed delivery and the guidelines for certification of taxpayer identification number on Substitute Form W-9 to the information agent. You may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the offer.

The Information Agent for the Offer is:

D.F. King & Co., Inc.

October 7, 2004

This supplement to the offer to purchase dated September 22, 2004 contains additional information important to holders of common stock of Rag Shops, Inc. who are making a decision whether to accept the offer and tender their shares pursuant to the offer. We urge you to carefully read the remainder of this supplement to the offer to purchase as well as the offer to purchase, any documents incorporated by reference or otherwise referred to elsewhere in the offer to purchase, and the letter of transmittal. In this supplement to the offer to purchase, we sometimes refer to ourselves as "Purchaser" and to Rag Shops, Inc. as the "Company" or "Rag Shops."

Section 2 "Plans for the Company" under the heading "Special Factors" in the offer to purchase is amended and restated in its entirety to read as follows:

2.    Plans for the Company

Purchaser and Crafts Retail Holding intend to conduct a detailed review of the Company and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel and to consider and determine what, if any, changes would be desirable in light of the circumstances which exist. Such changes could include, among others things, changes in the Company's business, corporate structure, certificate of incorporation, by-laws, capitalization, management or dividend policy.

Pursuant to the merger agreement, Crafts Retail Holding has nominated four individuals, Rodger R. Krouse, Marc J. Leder, T. Scott King and Clarence E. Terry, to serve as directors of the Company as soon as permitted by applicable rules of the Commission. Effective October 4, 2004, these individuals became directors of the Company. This enables us to control the Company's board of directors subject to the limitations set forth in the merger agreement. See "The Tender Offer — Section 11 — The Merger Agreement and Certain Other Agreements — Merger Agreement — The Company's Board of Directors." The merger agreement also provides that the directors and officers of Purchaser at the effective time of the merger will, from and after such time, be the initial directors and officers of the surviving corporation and that the charter and bylaws of Purchaser at the effective time of the merger will, from and after such time, be the initial charter and bylaws of the surviving corporation.

In connection with the merger agreement, Stanley Berenzweig resigned immediately prior to execution as the Chairman and Chief Executive Officer of the Company effective September 13, 2004. Purchaser intends to hire a new Chief Executive Officer and will be evaluating potential candidates to serve in that role over the near term.

In connection with our negotiations for financing as described under "The Tender Offer — Section 10 — Source and Amount of Funds," the Company may incur additional indebtedness upon or following the consummation of the offer. No such plans have been finalized at this time.

We or our affiliates may, following the consummation or termination of the offer, seek to acquire additional shares through open market purchases, privately negotiated transactions, a tender offer or exchange offer or otherwise, upon such terms and at such prices as we shall determine, which may be more or less than the price to be paid pursuant to the offer. We, together with our affiliates, also reserve the right to dispose of any or all shares acquired by us, subject to the terms of the merger agreement.

Except as disclosed in this offer to purchase and any amendments or supplements hereto, and except as may be effected in connection with the evaluation of operations referred to above, neither Crafts Retail Holding nor Purchaser has any present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, relocation of operations or sale or transfer of a material amount of assets, involving the Company or its subsidiaries, or any material changes in the Company's capitalization, corporate structure, business or composition of its management or the Company's board of directors.

1

Section 3 "Effect of the Offer and the Merger" under the heading "Special Factors" in the offer to purchase is amended and restated in its entirety to read as follows:

3.    Effect of the Offer and the Merger

Net Book Value.    As of the date of this offer to purchase, based on the Company's unaudited financial statements at and for the nine months ended May 29, 2004, the interest of Purchaser in the Company's net book value and net loss was approximately 55.7%, or approximately $12,866,700 and $169,885, respectively. After giving effect to the transactions contemplated in connection with the consummation of the offer and the merger, the interest of Purchaser in the surviving corporation's net book value and net loss, on a consolidated basis, will be 100% due to their holding all of the outstanding capital stock. Thus, based on the Company's unaudited financial statements at and for the nine months ended May 29, 2004, Purchaser will have an interest of approximately $23,100,000 in the surviving corporation's net book value, and an interest of $305,000 in the surviving corporation's net loss. For a description of the percentage holdings of Purchaser and its affiliates, see Schedule B entitled "Security Ownership of Certain Beneficial Owners and Management."

Market for the Shares.    The purchase of shares by Purchaser pursuant to the offer will reduce the number of shares that might otherwise trade publicly and will reduce the number of holders of shares, which, depending upon the number of shares so purchased, could adversely affect the liquidity and market value of the remaining shares held by the public. Purchaser cannot predict whether the reduction in the number of shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the shares or whether it would cause future market prices to be greater or lesser than the offer price. Upon consummation of the merger, the Company will become a privately held corporation. Accordingly, former stockholders will not have the opportunity to participate in the earnings and growth of the Company after the offer and merger and will not have any right to vote on corporate matters. Similarly, former stockholders will not face the risk of losses generated by the Company's operations or decline in the value of the Company after the offer and merger.

Nasdaq Quotation.    Depending upon the number of Shares purchased pursuant to the offer, the shares may no longer meet the requirements for continued inclusion in the Nasdaq SmallCap Market, which requires, for continued listing, that there be at least 500,000 shares publicly held by at least 300 round lot holders, with a market value of at least $1,000,000. Shares held directly or indirectly by directors, officers or beneficial owners of more than 10% of the shares are not considered as being publicly held for this purpose. If the Nasdaq SmallCap Market were to cease to publish quotations for the shares, it is possible that the shares would continue to trade in the over-the-counter market and that prices or other quotations would be reported by other sources. The extent of the public market for such shares and the availability of such quotations would depend upon such factors as the number of stockholders and/or the aggregate market value of such securities remaining at such time, the interest in maintaining a market in the shares on the part of securities firms, the possible termination of registration under the Securities Exchange Act of 1934 and other factors.

Exchange Act Registration.    The shares are currently registered under the Exchange Act. Registration of the shares under the Exchange Act may be terminated upon application of the Company to the Commission if the shares are not held by 300 or more holders of record. Termination of registration of the shares under the Exchange Act, assuming there are no other securities of the Company subject to registration, would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement pursuant to Section 14(a) in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders, and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Company. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933 may be impaired or eliminated.

2

The Company has estimated its current Exchange Act reporting and compliance costs to be approximately $200,000 annually. This amount does not include an additional approximately $100,000-$120,000 that the Company estimates will be required to ensure its compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The Company will also incur additional costs to obtain the annual report of its independent auditor required in connection with Section 404 of the Sarbanes-Oxley Act, which additional cost is not yet estimable by the Company. To the extent that the shares are no longer registered under the Exchange Act, the Company will avoid these costs in the future.

Purchaser may seek delisting of the shares from the Nasdaq SmallCap Market and the termination of the registration of the shares under the Exchange Act as soon after the completion of the offer as the requirements for such delisting and termination are met. If the Nasdaq SmallCap Market listing and the Exchange Act registration of the shares are not terminated prior to the merger, then the shares will be delisted from the Nasdaq SmallCap Market and the registration of the shares under the Exchange Act will be terminated following the consummation of the merger.

Margin Regulations.    The shares presently are "margin securities" under the regulations of the Board of Governors of the Federal Reserve System, which status has the effect, among other things, of allowing brokers to extend a limited amount of credit on the collateral of such securities. Depending upon factors similar to those described above regarding stock exchange listing and market quotations, it is possible that, following the offer, the shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. In addition, if registration of the shares under the Exchange Act were terminated, as would be the case following the merger, the shares would no longer constitute "margin securities."

Employee Matters.    In connection with the merger agreement, the Company has caused the existing stock options used under the Company's plans (each described in the Company's annual report, dated as of August 30, 2003, as amended, and on file with the SEC as exhibits thereto) to vest and, if not exercised, terminate upon the consummation of the merger. See The Tender Offer — Section 11 — The Merger Agreement and Certain Other Agreements — Merger Agreement — Treatment of Options. In addition, pursuant to the merger agreement Crafts Retail Holding has agreed that for a period of three months following the effective time of the merger it will, or it will cause the surviving corporation to, provide each employee of the Company prior to the merger that remains an employee of the Company following the effective time of the merger with employee benefits that are substantially similar in the aggregate to the benefits provided to employees of the Company at the time of the signing of the merger agreement. See The Tender Offer — Section 11 — The Merger Agreement and Certain Other Agreements — Merger Agreement — Employee Benefits.

Tax Consequences.    The receipt of cash pursuant to the offer or the merger will be a taxable transaction for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended, and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Generally, for U.S. federal income tax purposes, a tendering stockholder will recognize gain or loss equal to the difference between the amount of cash received by the stockholder pursuant to the offer or the merger and the stockholder's aggregate adjusted tax basis in the shares tendered by the stockholder and purchased pursuant to the offer or converted into cash in the merger, as the case may be. See The Tender Offer — Section 5 — Certain United States Federal Income Tax Consequences.

Net Operating Losses.    As of the tax period ended August 30, 2003, the Company and its subsidiaries had incurred state tax net operating losses ("NOLs") of approximately $13 million. Purchaser's acquisition of approximately 55.7% of the Company's stock on September 13, 2004 resulted in an ownership change of the Company for purposes of the tax laws of several states in which the Company and its subsidiaries had NOLs. As a consequence of such ownership change, the Company and its subsidiaries may be limited in their ability to utilize approximately $7.7 million of these state NOLs, and may further be precluded entirely from using approximately $5.3 million of these state NOLs. Purchaser also anticipates that the Company and its subsidiaries may have additional state NOLs as of the tax period ended August 28, 2004, and may further have a

3

consolidated NOL for United States federal income tax purposes for the same period (however, the Company is not yet able to calculate the amount of such NOLs and does not expect to be able to do so for at least 30 days). If the Company has such a federal consolidated NOL, section 382 of the Internal Revenue Code may impose an annual limitation upon the future utilization of such consolidated NOL.

Advantages and Disadvantages of the Offer and the Merger.    The offer and the merger will present potential advantages and disadvantages to Purchaser, its affiliated stockholders and our stockholders other than Purchaser and its affiliated stockholders.

Purchaser and its Affiliated Stockholders.    If the offer and the merger are completed, the possible advantages to Purchaser and its affiliated stockholders include the following:

•	Management will be able to focus on operations of the Company and will not be required to spend considerable time and resources preparing the information regarding financial results and other matters that is required to be reported to the public and the Securities and Exchange Commission under federal securities laws.

•

The administrative, legal, accounting and other costs and fees, as well as the potential liability, associated with being a public company will be eliminated. The Company estimates that it will save in excess of $200,000 in annual expenses related to compliance with public company disclosure requirements. The Company has estimated its current Exchange Act reporting and compliance costs to be approximately $200,000 annually. This amount does not include an additional approximately $100,000-$120,000 that the Company estimates will be required to ensure its compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The Company will also incur additional costs to obtain the annual report of its independent auditor required in connection with Section 404 of the Sarbanes-Oxley Act, which additional cost is not yet estimable by the Company. To the extent that the shares are no longer registered under the Exchange Act, the Company will avoid these costs in the future.

•	Purchaser and its affiliated stockholders will be the sole beneficiaries of any future earnings or increase in enterprise value of the Company.

•	Any negative perception regarding the Company's products based on the performance of the Company's stock price will be eliminated.

•	Management will be able to focus on long-term growth as opposed to short-term earnings per share.

If the offer and the merger are completed, the possible disadvantages to Purchaser and its affiliated stockholders include the following:

•	There will be no public market for shares of the Company's common stock and Purchaser and its affiliated stockholders will be unable to dispose of their shares at a readily ascertainable price.

•	Purchaser and its affiliated stockholders will bear the sole burden of any future losses or decrease in enterprise value of the Company.

•	The Company may have reduced access to capital to finance growth, meet working capital requirements or acquire other businesses, since the public equity markets will not be available to the Company.

•

Purchaser's acquisition of approximately 55.7% of Rag Shops' common stock pursuant to the stock purchase agreement resulted in an ownership change of the Company for purposes of tax laws applicable to the Company and its subsidiaries. Accordingly, the Company and its subsidiaries may be limited or precluded from utilizing net operating losses in the future. See Special Factors — Section 3 — Effect of the Offer and the Merger.

•	The Company may have additional indebtedness that would need to be serviced before Purchaser and Crafts Retail Holdings could begin to share in the Company's future profits, if any.

4

Stockholders other than Purchaser and its Affiliated Stockholders.    If the offer and the merger are completed, the possible advantages to our stockholders other than Purchaser and its affiliated stockholders include the following:

•	The consideration of $4.30 per share represents a premium of approximately 23% over the market closing price of $3.49, on September 10, 2004, the last trading day prior to public announcement of the merger agreement.

•	The consideration consists entirely of cash, which provides greater assurance of stockholder value and eliminates any uncertainties in valuing the consideration to be received by stockholders.

•	The offer will enable the stockholders to dispose of their shares of our stock at a fair price, in spite of the fact that our stock has generally experienced low trading volumes and limited liquidity.

•	The stockholders will be able to sell their shares without paying the usual transaction costs associated with open market sales.

•	The stockholders will not have to bear the risk of any future losses or decrease in enterprise value of the Company.

If the offer and the merger are completed, the possible disadvantages to stockholders other than Purchaser and its affiliated stockholders include the following:

•	The stockholders will not participate in any future earnings or increase in enterprise value of the Company.

•	Receipt of the cash consideration will be a taxable transaction for federal income tax purposes.

•	The stockholders will not have the opportunity to benefit from any potential future sale, merger or other significant transaction.

Section 10 "Source and Amount of Funds" under the heading "The Tender Offer" in the offer to purchase is amended and restated in its entirety to read as follows:

10.    Source and Amount of Funds.

The offer is not conditioned upon any financing arrangements. The total amount of funds required by us to purchase all of the shares is estimated to be approximately $9.3 million (which amount includes shares issuable upon exercise of options). Sun Capital Partners III, LP and Sun Capital Partners III QP, LP are prepared to fund this entire amount through equity contributions to Purchaser. It is anticipated, however, that the source of funds for the offer and merger will be a combination of equity contributions from our affiliates Sun Capital Partners III, LP and Sun Capital Partners III QP, LP and loans from one or more banks or other institutional lenders. The exact form of any additional financing from banks or institutional lenders, to the extent available on commercially reasonable terms, has not been determined. In the event this additional financing cannot be obtained on terms that are satisfactory to us, in our sole discretion, we will obtain all the funds necessary to complete the offer and the merger out of equity contributions from our affiliates Sun Capital Partners III, LP and Sun Capital Partners III QP, LP. However, neither Sun Capital Partners III, LP nor Sun Capital Partners III QP, LP has entered into any written commitment to provide either all or any portion of the funds required by us to purchase the shares as described in this paragraph.

Because the form of payment consists solely of cash and because the offer is for all outstanding shares and is not subject to any financing condition, we do not think our financial condition is relevant to your decision as to whether to tender in the offer.

Crafts Retail Acquisition Corp.,
a wholly owned subsidiary of Crafts Retail Holding Corp., and an affiliate of each of Sun Capital Partners III, LP
and Sun Capital Partners III QP, LP

October 7, 2004

5

The letter of transmittal, certificates for shares and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the depositary, at the applicable address set forth below:

The Depositary for the Offer is:

The Colbent Corporation

By Mail:
The Colbent Corporation
P.O. Box 859208
Braintree, Massachusetts 02185-9208

By Hand or Overnight Delivery:

The Colbent Corporation
161 Bay State Dr.
Braintree, Massachusetts 02184

For Notice of Guaranteed
Delivery:
(for Eligible Institutions only)

By Facsimile Transmission:
(781) 380-3388

To Confirm Facsimile
Transmission Only:
(781) 843-1833 x200

Any questions or requests for assistance or additional copies of this supplement to the offer to purchase, the offer to purchase, the letter of transmittal, the notice of guaranteed delivery and the other tender offer materials may be directed to the information agent at the address and telephone number set forth below. Stockholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the offer.

The Information Agent for the Offer is:

D.F. King & Co., Inc.

48 Wall Street
22nd Floor
New York, New York 10005

Banks & Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 769-4414

CORRESP

                 [HUGHES HUBBARD & REED LLP LETTERHEAD]


                                                     October 7, 2004




BY EDGAR AND TELECOPIER AT (202) 942-9638
- -----------------------------------------

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C.  20549
Attention:  Celeste M. Murphy, Esq.

       Re:  Rag Shops, Inc.
            Schedule TO-T; File No.:  005-42322
            Filed:  September 22, 2004 by Crafts Retail Acquisition Corp. et al.

Ladies and Gentlemen:

         Enclosed for filing on behalf of Crafts Retail Acquisition Corp. et al.
pursuant to the Securities Exchange Act of 1934, as amended, is Amendment No. 1
to the Schedule TO-T Tender Offer Statement under Section 14(d)(1) of the
Exchange Act initially filed with the Commission by Crafts Retail Acquisition
Corp. et al. on September 22, 2004.

         Set forth below is the Company's response to the comment letter dated
October 1, 2004 from Celeste M. Murphy, Esq. of the staff of the Commission to
Michael Weinsier regarding the initial filing of the Schedule TO. The
consecutively numbered paragraphs and headings below correspond to the headings
and numbers in the comment letter. For your reference, following each numbered
paragraph we have reproduced the comment that corresponds to that numbered
paragraph.

General
- -------

     1.  Edgar does not, at present, reflect the receipt of a Schedule 13E-3 for
         the instant transaction. The checking of the going-private transaction
         box on Schedule TO-T by the filing persons does not obviate the need to
         properly identify the filing with appropriate header tags. The filing
         persons must either jointly file the original Schedule TO-T and
         Schedule 13E-3 with appropriate header tags and request a date
         adjustment to the original September 22 filing date or file an
         exclusive Schedule 13E-3 and Schedule TO-T without such a date
         adjustment request as soon as possible. Date adjustment requests





                 [HUGHES HUBBARD & REED LLP LETTERHEAD]

                                                                        Page 2


         are not automatically granted. Contact Sylvia J. Pilkerton in the
         Office of Edgar and Information Analysis by facsimile at (202) 942-9542
         to request guidance on resubmitting the filing with appropriate header
         tags or to ask for a date adjustment. When you are prepared to make the
         corrected filing, you may contact by telephone Edgar filer support at
         (202) 942-8900 or the Office of Edgar Information and Analysis at (202)
         942-2930 for additional guidance.

         Based on a telephone conversation on October 6, 2004 with Celeste M.
Murphy, Esq. of the staff of the Commission, Crafts Retail Acquisition Corp. et
al. filed with the Commission on October 6, 2004, a Rule 13e-3 Transaction
Statement under cover of Schedule TO, which statement was identical to the
Tender Offer Statement and Rule 13e-3 Transaction Statement filed under cover of
Schedule TO on September 22, 2004. The sole purpose of the Rule 13e-3
Transaction Statement filing was to correct the Edgar submission header to
reference the Schedule 13E-3 filing. In accordance with our discussion with Ms.
Murphy, no date adjustment request will be made by the filing persons. Also
based on the October 6, 2004 telephone conversation with Ms. Murphy, the filing
persons have filed Amendment No. 1 to the Schedule TO-T referencing both the
Schedule TO-T and the Schedule 13E-3 in the Edgar submission header.

Background of the Offer; Purpose of the Offer and the Merger
- ------------------------------------------------------------

Purchaser's Position Regarding Fairness of the Offer
- ----------------------------------------------------

     2.  Please include a description of the detriments to the Rule 13e-3
         transaction to the subject company, its affiliates and unaffiliated
         security holders. The benefits and detriments of the Rule 13e-3
         transaction must be quantified to the extent practicable.

         Page nos. 4 and 5 of the supplement to the offer to purchase reflect
the above comment. Please note that the additional disclosure is included under
the caption "Special Factors - Effect of the Offer and the Merger" as the filing
persons believe this is responsive to the requirements of Item 1013 of
Regulation M-A.

Source and Amount of Funds
- --------------------------

     3.  We note that Sun Capital Partners III, LP and Sun Capital Partners III
         QP, LP are prepared to fund the entire amount estimated to be
         approximately $9.3 million to purchase all of the shares. Please state
         whether or not you have a commitment letter from these Sun Capital
         Partners for both their share of the source of funds for the offer and
         merger that will be a combination of equity contributions from these
         affiliates and loans from one or more banks, and for the alternative to
         the additional financing from banks, being the entire amount from these
         Sun Capital Partners affiliates. In addition, certain information
         required by Item 1007(d), such as the term of any loan and plans to
         repay once received, has not been mentioned in the existing description
         of the source of funds. Please revise or advise.




                 [HUGHES HUBBARD & REED LLP LETTERHEAD]

                                                                        Page 3


         No written commitment to fund either a portion of, or the entirety of,
the amount required to consummate the offer and the merger has been given by Sun
Capital Partners III, LP and Sun Capital Partners III QP, LP at this time. Page
no 5 of the supplement to the offer to purchase has been revised to reflect the
absence of any such written commitment.

         As stated in the original offer to purchase, under the caption "The
Tender Offer - Source and Amount of Funds": "The exact form of any additional
financing from banks or institutional lenders, to the extent available on
commercially reasonable terms, has not been determined." Accordingly, as
discussed with Celeste M. Murphy, Esq. of the staff of the Commission on October
4, 2004, the filing persons do not believe that they can at this time provide
any additional information as to the term of any loan and plans to repay once
received. However, in accordance with our discussion with Ms. Murphy, Crafts
Retail Acquisition Corp. will disclose the material terms of any such loan in
its press release announcing the closing of the offer and will amend the
Schedule TO to include a summary of the loan terms and file any required
exhibits to the extent that any such loan is obtained prior to the closing of
the offer.

Effect of the Offer and Merger
- ------------------------------

     4.  We note your reference to the Company's net loss. Advise security
         holders whether or not the filing persons will be able to enlist
         operating loss carryforwards that have accrued and are available for
         use by Rag Shops. Quantify the amount of such carryforwards in a manner
         that enables the unaffiliated security holders to appreciate the
         benefit being conferred upon the filing persons. See Instruction 2 to
         Item 1013 of Regulation M-A.

         Page nos. 3 and 4 of the supplement to the offer to purchase reflect
the above comment.

     5.  Quantify the cost savings expected to be received for no longer being a
         reporting company. See Instruction 2 to Item 1013 of Regulation M-A.

         Page nos. 3 and 4 of the supplement to the offer to purchase reflect
the above comment.

                             * * * * *





                 [HUGHES HUBBARD & REED LLP LETTERHEAD]

                                                                        Page 4


         Please see Exhibit A to this letter for the acknowledgment that you
requested from the filers and contact Michael Weinsier at (212) 837-6690 or the
undersigned at (212) 837-6347 with any questions.

         Thank you for your consideration.

                                Very truly yours,


                                /s/ Paul Sheridan
                                Paul Sheridan

Enclosures
cc:      Crafts Retail Acquisition Corp.
         Rag Shops, Inc.
         Michael Weinsier
         Steven Kamen











                                    EXHIBIT A

         Reference is made to the Schedule TO-T Tender Offer Statement under
Section 14(d)(1) of the Exchange Act initially filed with the Securities and
Exchange Commission by Crafts Retail Acquisition Corp. et al. on September 22,
2004 and the related Rule 13e-3 Transaction Statement under Section 13(e) of the
Exchange Act. Each of the undersigned acknowledges that:

         o        it is responsible for the adequacy and accuracy of the
                  disclosure in the filing referred to above;

         o        staff comments or changes to disclosure in response to staff
                  comments in the filings reviewed by the staff do not foreclose
                  the Commission from taking any action with respect to such
                  filing; and

         o        the undersigned may not assert staff comments as a defense in
                  any proceeding initiated by the Commission or any person under
                  the federal securities laws of the United States.

October 7, 2004

                      [The next page is the signature page]




                         [Signature page to "Exhibit A"]


                                 CRAFTS RETAIL ACQUISITION CORP.

                                 By:    /s/ Marc J. Leder
                                     -----------------------------------------
                                 Name: Marc J. Leder
                                 Its: Vice President


                                 CRAFTS RETAIL HOLDING CORP.

                                 By:    /s/ Marc J. Leder
                                     -----------------------------------------
                                 Name: Marc J. Leder
                                 Its: Vice President


                                 SUN CRAFTS RETAIL, LLC

                                 By:    /s/ Marc J. Leder
                                    -----------------------------------------
                                 Name: Marc J. Leder
                                 Its: Co-CEO


                                 SUN CAPITAL PARTNERS III, LP
                                 By: Sun Capital Advisors III, LP
                                 Its: General Partner
                                 By: Sun Capital Partners III, LLC
                                 Its: General Partner

                                 By:    /s/ Marc J. Leder
                                    -----------------------------------------
                                 Name: Marc J. Leder
                                 Its: Co-CEO


                                 SUN CAPITAL PARTNERS III QP, LP
                                 By: Sun Capital Advisors III, LP
                                 Its: General Partner
                                 By: Sun Capital Partners III, LLC
                                 Its: General Partner

                                 By:    /s/ Marc J. Leder
                                    -----------------------------------------
                                 Name: Marc J. Leder
                                 Its: Co-CEO


                                 SUN CAPITAL ADVISORS III, LP
                                 By: Sun Capital Partners III, LLC
                                 Its:  General Partner

                                 By: /s/ Marc J. Leder
                                    -----------------------------------------
                                 Name:  Marc J. Leder
                                 Its:  Co-CEO


                                 SUN CAPITAL PARTNERS III, LLC

                                 By:    /s/ Marc J. Leder
                                    -----------------------------------------
                                 Name: Marc J. Leder
                                 Its:  Co-CEO