Jim Famalette, chairman and chief executive officer of Gottschalks said,"Our sales results for September reflect the persistent challenges in themacroeconomic environment, which intensified due to unprecedented and mountingevents in the financial markets. In light of these events, we are seeing theconsumer continue to be cautious and, like most retailers, this has furtherimpacted our customers' spending levels. However, we continue to prudentlymanage the areas of our business within our control as we remain focused oneffectively managing our capital spending, inventory, gross margin andexpenses appropriately to correspond with current sales trends. As a resultof our efforts, we ended the month with comparable store inventory down 6.1%versus the same period last year. Our best performing categories for themonth were cosmetics, young mens and intimate apparel while textiles andhousewares were the most challenging."

About Gottschalks

Gottschalks is a regional department store chain, currently operating 58department stores and three specialty apparel stores in six western states,including California (38), Washington (7), Alaska (5), Oregon (4), Nevada (2)and Idaho (2). Gottschalks offers better to moderate brand-name fashionapparel, cosmetics, shoes, accessories and home merchandise. Gottschalksoffers corporate information and selected merchandise on its website locatedat http://www.gottschalks.com.

Business Risks and Forward Looking Statements

This release contains forward-looking statements (within the meaning ofthe "safe harbor" provisions of the Private Securities Litigation Reform Actof 1995) that involve risks and uncertainties. In some instances, suchstatements may be identified by the use of forward-looking terminology such as"may," "will," "expects," "believes," "intends," "projects," "forecasts,""plans," "estimates," "anticipates," "continues," "targets," or similar terms,variations of such terms or the negative of such terms. Such statements arebased on management's current expectations and are subject to a number offactors and uncertainties which could cause actual results to differmaterially from those described in the forward-looking statements, including,without limitation, the Company's ability to meet debt obligations and adhereto the restrictions and covenants imposed under its various debt agreements;the timely receipt of merchandise and the Company's ability to obtain adequatetrade credit from its key factors and vendors; risks arising from generaleconomic and market conditions (including uncertainties arising from acts ofterrorism or war); the ability to improve the profitability and cash flows ofits stores or to sell, sublease or close underperforming stores; the abilityto modify operations in order to minimize the adverse impact of rising costs,including but not limited to health care, workers' compensation, property andcasualty insurance and utilities costs; the effects of seasonality and weatherconditions, changing consumer trends and preferences, competition, consumercredit, the Company's dependence on its key personnel and general laborconditions, all of which are described in more detail in Gottschalks' AnnualReport on Form 10-K and other reports filed by Gottschalks with the Securitiesand Exchange Commission. GOTTSCHALKS PRESENTLY DOES NOT INTEND TO UPDATETHESE STATEMENTS AND UNDERTAKES NO DUTY TO ANY PERSON TO EFFECT ANY SUCHUPDATE UNDER ANY CIRCUMSTANCES.

SOURCE Gottschalks Inc.