6% this
quarter as compared to 38.

insider franchisees

Mullins continued, "We altered our merchandise delivery schedules
during the first half of 2005 following changes made in the second half of
2004, whereby we receive heavier quantities of merchandise earlier in the
season in order to improve our rates of selling at full price.
Direct (internet and catalog) sales contributed over $900,000, well ahead of
the Company's plans for the period and over $600,000 more than last year.04 $0.

exhibitor requiring

"
Further, Mr.

purchased exhibitor

The prior year restatement increased net income by $14 ,000 as a result of
certain lease accounting adjustments set forth in the Company's previous
public filings., wishes to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 with
respect to statements that may be deemed to be forward looking. PITTSFIELD , Ma.

franinfo exhibitor

Bankruptcy Court granted its motion to approve certain bidding
procedures with respect to the proposed auction for the right to fund the
Company's Plan of Reorganization.

whereby franchising

Net sales for the quarter came to $24.8% despite the
loss of $400,000 from a warehouse sale in 2004 that was not repeated in 2005
and $450,000 in sales from an outlet location that was closed in March 2004.

Franchises requiring a physical address or location and which have a product or service that can not be solely purchased, engaged, excecuted, conducted, or built without meeting with people in some way.

waterstreet trademark

franchisees exhibitor

substantially engage

0%.

franchising requiring

This sales trend has continued into May.0 million compared to $24.

newswire franchising

DALLAS, Harold's Stores, Inc.04 per diluted and basic share in the previous year."
Mr.
Under the Bankruptcy Court hearing schedule, the Company expects that it
will emerge from Chapter 11 before the 2005 holiday season .kbtinfo.

purchased substantial

07 per basic share), compared to a restated net
income of $791,000, or $0.

Founded in 1948 and headquartered in Dallas, Texas, Harold's Stores, Inc. The Company's agreement with PKBT is subject to the Company's
receipt of higher or better offers, pursuant to the auction process, for the
right to acquire either substantially all of the Company's assets, including
assuming substantially all of the Company's leases for its retail stores, or
the equity interests in the reorganized Company.

franchises franinfo

"This increase was the result
of greater selling at full price and less promotional activity throughout the
quarter. The increase to gross margin
offset increased marketing and interest expenses.1% for the quarter, with full-price retail
store sales rising 0. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)

13 Weeks Ended
April 30, 2005 May 1, 2004
Restated

Sales $23,965 $24,169

Costs and expenses:
Costs of goods sold (including occupancy
and central buying expenses,
exclusive of items shown separately below ) 14,469 14,873

Selling, general and administrative expenses 7,401 7,258

Depreciation and amortization 974 1,032

Interest expense 339 215

23,183 23,378

Income before income taxes 782 791

Provision for income taxes --- ---

Net income $782 $791

NET INCOME APPLICABLE TO COMMON STOCKHOLDERS:

Net income $782 $791

Less: Preferred stock dividends and accretion
of preferred stock issuance costs 377 540

Net income applicable to common stockholders $405 $251

Net income per common share:
Basic $0.04

is the nation's largest mall-based specialty toy retailer.

A method of doing business whereby a franchise is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by the franchisor and which is substantially associated with the franchisor's trademark, name, logo or advertising.

newswire franchise

Continuing with our strategies, we will be delivering fall merchandise earlier
than last year which will result in merchandise inventory levels being higher
than last year at the end of second quarter.
The Company's Houston locations are known as "Harold Powell.

KB Toys Inc. Gains Court Approval for Auction Bidding Procedures

franinfo exhibitor

In light of
these changes to the flow of merchandise, we have greater quantities of
forward inventory at the end of first quarter than we did last year. Mullins said, "Additionally, our first quarter sales were
lower than anticipated in light of the early Easter and cooler weather
patterns .,
currently operates 41 upscale ladies' and men's specialty stores in 19 states. announced today that
the U.

substantial agreements

Harold's Stores Inc. Releases Profits for First Quarter Ended April 30 2005; Net Income of $782 000 Recorded

(Amex: HLD)
(the "Company"), a chain of upscale ladies' and men's specialty apparel
stores, today announced results of its first fiscal quarter ended
April 30, 2005.
(Logo: http://www.

whereby granted

The Company's
proposed Plan of Reorganization is available on the Company 's Web site,
http://www.

franchisor franchises

"We were pleased that reported gross margin increased to 39.
Comparable store sales increased 0."

Harold's Stores, Inc.07 $0.com/cgi-bin/prnh/19991102/KBTOYSLOGO )
As previously announced on May 13, 2005, the Company entered into a Plan
Funding Agreement with PKBT Funding LLC, an affiliate of Prentice Capital
Management, LP.

franchising requiring

Mullins. These risks could cause the Company's actual results for 2005 to
differ materially from those expressed in any forward -looking statements made
by, or on behalf of, Harold's Stores, Inc., KB Toys, Inc.
KB Toys , Inc.

waterstreet whereby

The portion of our sales that came from full-price selling grew from
53% in first quarter last year to 64% this year.S.
It is a privately-held company headquartered in Pittsfield, Massachusetts .

applicable prescribed

For the first quarter, the Company reported net income of $782,000 or
$0.2 million
for the same period in the previous year, a decrease of only 0.04
Diluted $0. Under the approved procedures, qualified
bids must be submitted by July 6, 2005. The Bankruptcy Court
authorized the Company to conduct the auction, approved certain procedures for
the auction and approved a termination fee and certain expense reimbursement
provisions negotiated with Prentice.

requiring engage

Due to these sales
results, we will be taking additional clearance markdowns during the second
quarter in order to ensure timely liquidation of spring and summer
merchandise," continued Mr. This release
contains forward-looking statements that are subject to risks and
uncertainties , including, but not limited to, the impact of competition,
pricing pressure, product demand and market acceptance risks, mergers and
acquisitions, reliance on key strategic alliances, the ability to attract and
retain key employees, the availability of cash for growth, fluctuations in
operating results , ability to fund operating losses and other risks detailed
from time to time in Harold's filings with the Securities and Exchange
Commission. If any qualified bids are received,
an auction will be conducted on July 11, 2005.com.

granted trademark

5% in first quarter of last year," said Hugh
Mullins, President and Chief Executive Officer.newscom.

granted insider

3% and outlet store sales declining 6.

purchased trademark

04 per diluted share ($0.

HAROLD'S STORES, INC.

purchased franchisors

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- - kjjkjk

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