8-K

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): August 28, 2001

                                 Rag Shops, Inc.
             (Exact name of registrant as specified in its charter)

Delaware                                0-19194              51-0333503
(State or other jurisdiction          (Commission            IRS Employer
of incorporation or organization)     File Number)           Identification No.)

                                111 Wagaraw Road
                           Hawthorne, New Jersey 07506
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (973) 423-1303

          (Former name or former address, if changed since last report)



Item 5 - Other Events

      A press release, issued as of August 28, 2001, is attached as Exhibit
99.1.



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereto duly authorized.

Dated: August 30, 2001

                                      RAG SHOPS, INC


                                      By: /s/ Stanley Berenzweig
                                          ----------------------
                                          Stanley Berenzweig
                                          Chief Executive Officer

EX-99.1

                                                                  EXHIBIT 99.1

                                  PRESS RELEASE

FOR IMMEDIATE RELEASE                         Contact:  Steven B. Barnett
                                                        Executive Vice President
                                                        Telephone: 973-423-1303

                        RAG SHOPS APPOINTS NEW PRESIDENT

Hawthorne, New Jersey, (Business Wire) August 28, 2001-- Stanley Berenzweig,
Chairman of the Board of Rag Shops, Inc. (NASDAQ:RAGS), is pleased to announce
that Jeffrey C. Gerstel has joined the Company as President and Chief Operating
Officer effective September 17, 2001. Mr. Berenzweig will actively continue as
Chairman and Chief Executive Officer.

Mr. Gerstel, "Age" 37, was most recently Executive Vice President - Chief
Operating Officer for The Parts Plus Group, Inc., which markets automotive
products via wholesale distribution and through its 48 stores. Before Parts
Plus, Mr. Gerstel served as Executive Vice President of Family Bargain
Corporation, a chain of off-price retail apparel and housewares stores, which
subsequently changed its name to Factory 2-U Stores, Inc.

Mr. Berenzweig said, "I am thrilled that Jeff has joined Rag Shops. Through an
extensive search, we found an individual who brings us the energy, excitement
and diversity of experience we need to lead our Company as we execute our growth
and expansion plans for the future."

Rag Shops, Inc. operates sixty-six retail stores that offer a broad range of
specialty crafts and fabric merchandise. The Company operates stores in New
Jersey, Florida, New York, Pennsylvania and Connecticut. For more information
about the Company, visit our Web site at www.ragshop.com.

The Company's common stock is traded on the NASDAQ SmallCap System under the
symbol "RAGS".

This news release contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
safe harbors created hereby. Such forward-looking statements include those
regarding the Company's future results in light of current management
activities, and involve known and unknown risks, including competition within
the craft retail industry, weather-related changes in the selling cycle, and
other uncertainties (including those risk factors referenced in Company's
filings with the Securities and Exchange Commission).