/raid1/www/Hosts/bankrupt/TCR_Public/960524.MBX BANKRUPTCY CREDITORS' SERVICE, INC.


Bankruptcy News For - May 24, 1996



  1. Hills Stores announces first quarter results...
  2. Clothestime announces first-quarter financial results
  3. BRADLEES, INC. REPORTS 1996 FIRST QUARTER RESULTS
  4. COURT APPROVES HOUSE OF FABRICS' DISCLOSURE STATEMENT




Hills Stores announces first quarter results and redemption of bonds



            CANTON, Mass. -- May 24, 1996 -- Hills Stores
        Company (NYSE: HDS) today released its first quarter financial
        results.  Hills also announced a call for redemption of its
        remaining outstanding 10.25% Senior Notes due 2003.  
        


            The Company reported a net loss for its first fiscal quarter
        ended May 4, 1996 of $14.7 million, compared with a net loss of $4.3
        million in the first quarter last year.  The net loss was $1.45 per
        share in this year's quarter compared with a $0.42 loss per share in
        the first quarter last year.  This year's quarter included a pre-
        tax, non-cash charge of $11.7 million ($6.8 million after tax, or
        $0.67 per share) for the impairment of long-lived assets.  Earnings
        before interest, taxes, depreciation, amortization, and other non-
        cash charges (EBITDA) decreased to $5.4 million in the most recent
        quarter compared with $10.7 million in the same period last year.  
        


            Total sales for the current year's first quarter increased by
        2.0% from the previous year to $370.2 million, while comparable
        store sales decreased by 1.7% for the quarter.  Gross profit margin
        decreased to $99.3 million from $101.3 million and declined as a
        percentage of sales to 26.8% from 27.9%.  The margin rate decrease
        resulted primarily from competitive pricing pressures across all
        lines of business, and also from soft sales of apparel which shifted
        the sales mix more towards lower margin hardlines.  Selling and
        administrative expenses increased as a percentage of sales to 25.4%
        from 25.0%.  This rate increase reflected the relatively flat sales
        in existing stores and additional operating expenses from new stores
        opened during mid-1995, which together more than offset the positive
        effects of other expense control programs.  Net interest expense in
        the most recent quarter increased to $13.3 million from $9.5 million
        last year primarily due to the net effect of lower interest income
        and increased borrowings under the Company's revolving credit line.
        


            Gregory K. Raven, President and Chief Executive Officer of
        Hills, stated, "We knew entering this year that the first quarter
        was going to be our toughest from a prior year comparison
        standpoint.  We could not predict, however, the significant impact
        of the weather patterns in our geographic area.  This had a negative
        impact on the Company's sales, particularly in the spring and summer
        apparel categories.  In addition, certain of the Company's new
        stores opened in fiscal 1995 continue to underperform initial
        expectations.  
        


            "There was good news in the quarter.  We successfully marketed
        $195 million of new Senior Notes to refinance our existing Senior
        Notes.  This saved the Company a payment of $7.5 million to the old
        noteholders.  We also began the rebuilding of the Hills' management
        team with the addition of Scott Litten as Chief Financial Officer.
        However, we still have a lot of work to do to position this Company
        to compete effectively in the future.  Much of that work will take
        place this year with the bulk of the positive impact to be achieved
        in future years.  I continue to be optimistic about fiscal 1996."  
        


            The Company's charge for impairment of long-lived assets
        resulted from the required adoption of the new Statement of
        Financial Accounting Standards No.  121: "Accounting for the
        Impairment of Long-Lived Assets."  This non-cash charge reduced the
        current tangible and intangible book value of certain
        underperforming stores to an estimate of those assets' fair market
        value pursuant to the provisions of the Standard.  It will also
        result in reduced depreciation and amortization in future periods
        related to those stores.  
        


            The Company also announced that in May it had completed the
        required offer to redeem its 10.25% Senior Notes.  In connection
        with the offer, Senior Notes totaling $155.0 million principal
        amount, or over 98% of the outstanding notes, were redeemed.  As
        previously announced, the Company used a portion of the proceeds
        from the sale of its new Senior Notes to redeem the 10.25% Senior
        Notes.  
        


            In addition, the Company announced that it has now decided to
        call for mandatory redemption all remaining 10.25% Senior Notes at
        the indenture-specified price of 104% of principal, plus accrued
        interest.  Scott Litten, Executive Vice President-Chief Financial
        Officer, stated, "Given the relatively small amount of 10.25% Senior
        Notes remaining, the Company is now able to clean up its capital
        structure and eliminate certain restrictive covenants at a
        reasonable cost by means of this mandatory redemption."  
        


            As a result, in its second fiscal quarter the Company will
        recognize an after-tax extraordinary loss of $1.5 million on the
        extinguishment of this debt.  The amount includes the premiums paid
        on the Senior Notes redeemed and the write-off of existing deferred
        financing costs.  
        


            Hills Stores Company is a leading regional discount retailer
        operating 164 stores in 12 Mid-Western and Mid-Atlantic states.




                            1996 Summary of Operations
      (unaudited)
                 (dollars in thousands, except per share amounts)
        
        First quarter                             1996        1995
        
        Sales                                   $370,248    $362,862
        EBITDA (A)                                 5,385      10,662
        Operating earnings (loss)                (16,674)  (C) 1,476
        Net loss                                 (14,738)  (C)(4,337)
        Loss per share                            ($1.45)     ($0.42)
        Fully-diluted shares outstanding (B)      10,166      10,399
        
        (A) Represents earnings before interest, taxes, depreciation,
        amortization, and other non-cash items on a first-in, first-out,
        inventory basis
        
        (B) Fully-diluted average shares outstanding for the quarters ended
        May 4, 1996 and April 29, 1995 do not include 1,074,883 and
        1,374,082
        shares of preferred stock, respectively, as their effect would be
        anti-dilutive.  
        
        (C) Includes an $11.7 million pre-tax charge related to the
        Company's adoption of Statement of Financial Accounting Standards
        No.
        121 "Accounting for the Impairment of Long-Lived Assets and for
        Long-Lived Assets to Be Disposed Of."  

        
                     HILLS STORES COMPANY AND SUBSIDIARIES
                                   
                    Consolidated Statements of Operations
      (unaudited)
                 (dollars in thousands, except per share amounts)
        
                                                 Quarter Ended          
         
                                              May 4,      April 29,
                                               1996          1995        
         
        
        Net sales                             $  370,248     $ 362,862
        Cost of sales                            270,985       261,552
        Selling and administrative expenses       94,118        90,734
        Depreciation and amortization             10,113         9,100
        Impairment of long-lived assets           11,706             -
        
        Operating earnings (loss)                (16,674)        1,476
        
        Interest expense, net                     13,266         9,492
        
        Loss before income taxes                 (29,940)       (8,016)
        
        Income tax benefit                        15,202         3,679
        
        Net loss                               $ (14,738)    $  (4,337)
        
        Net loss per share:
           Primary                             $   (1.45)    $   (0.45)
           Fully-diluted                       $   (1.45)    $   (0.42)
        
        Shares outstanding:
           Primary                                 10,166        9,666
           Fully-diluted (a)                       10,166       10,399
        
        Earnings before interest, taxes,
          depreciation, amortization and other
          non-cash charges on a first-in,
          first-out, inventory basis            $   5,385    $  10,662
        
        (a) Does not include 1,074,883 and 1,374,082 shares of preferred
        stock for the quarters ended May 4, 1996 and April 29, 1995,
        respectively, as their effect would be anti-dilutive.  

        
                    HILLS STORES COMPANY AND SUBSIDIARIES
                          Consolidated Balance Sheets

        
                                            Proforma      
                                             May 4,     May 4,   April 29,
        (in thousands)                            1996      1996       1995
        
        ASSETS
        Current assets:
          Cash and cash equivalents           $  7,885   $ 12,665    $ 6,360
          Cash restricted to redemption
        of senior notes                          -    153,762          -
          Accounts receivable, net              28,203     28,203     28,782
          Inventories                          410,330    410,330    400,328
          Deferred tax asset                    34,011     34,011     20,923
          Other current assets                   5,735      5,735      5,002
          Total current assets                 486,164    644,706    461,395
        
        Property and equipment, net            182,096    182,096    166,741
        Property under capital leases, net     109,610    109,610    121,524
        Beneficial lease rights, net             7,782      7,782      8,868
        Other assets, net                       20,530     22,223      5,176
        Deferred tax asset                       8,233      8,233     10,061
        Reorganization value in excess of
          amounts allocable to identifiable
          assets, net                          105,158    105,158    142,826
                                        $  919,573 $1,079,808  $ 916,591
        
        LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
        Current liabilities:
          Senior notes subject to redemption $       - $  154,725  $       -
          Current portion of capital leases      5,732      5,732      6,121
          Borrowings under revolving credit
        facility                            43,000     43,000          -
          Accounts payable, trade              108,984    108,984    126,353
          Other accounts payable and accrued
        expenses                           153,799    157,844    174,192
          Total current liabilities            311,515    470,285    306,666
        
        Long-term senior notes                 195,000    195,000    160,000
        Long-term obligations under capital
          leases                               117,148    117,148    123,037
        Financing obligation - sale/leaseback   25,169     25,169     25,169
        Other liabilities                        7,536      7,536     10,098
        
        Commitments and contingencies                -          -          -
        
        Preferred stock, at mandatory
          redemption value                      21,498     21,498     27,482
        
        Common shareholders' equity:
           Common stock                            103        103         96
           Additional paid-in capital          213,908    213,908    206,714
           Unearned compensation                (1,101)    (1,101)         -
           Retained earnings                    28,797     30,262     57,329
        
         Total common shareholders'
           equity                          241,707    243,172    264,139
                                         $ 919,573 $1,079,808  $ 916,591
        
        NOTE: The proforma Balance Sheet reflects the assumed redemption of
        that portion of the 10.25% Senior Notes still outstanding at May 4,
        1996 plus redemption premiums and accrued interest.  
        

        CONTACT:  Hills Stores Company
                  C. Scott Litten
                  Executive Vice President/
                  Chief Financial Officer
                  617/821-1000 ext. 1690
                            or
                  The Bromley Group
                  Alan Bromley
                  212-807-0878
        



Clothestime announces first-quarter financial results



            ANAHEIM, Calif. -- May 24, 1996 -- The Clothestime
        Inc.
(NASDAQ:CTMEQ) Friday announced results for the first quarter
        ended April 27, 1996.
        


            Sales for the quarter were $43.7 million, compared with $72.3
        million last year.  A significant portion of the total sales
        reduction was due to the lower number of stores this year as
        compared with last year.  Currently, there are 397 stores as
        compared with 575 stores last year.  Comparable store sales for the
        quarter decreased by 23 percent.

        
            Operating loss for the quarter before reorganization charges was
        $4.5 million, as compared with $7.2 million for the same period last
        year.  Net loss for the quarter was $5.9 million, compared with a
        net loss of $4.3 million for the same period last year.  There was
        no income tax benefit this year, compared with an income tax benefit
        of $2.8 million last year.  
   

     
            The loss for the first quarter this year includes reorganization
        charges which increased the net loss by $1.4 million.  The charges
        related primarily to the professional fees pertaining to the
        company's Chapter 11 filing.  Loss per share was $0.41, compared
        with a $0.31 loss per share for the same period last year.  
      

  
            Clothestime Stores currently operates 397 women's apparel stores
        in 20 states and Puerto Rico, offering primarily in-season,
        moderately priced sportswear, dresses and accessories, emphasizing
        fashion at a discount from department and specialty stores.


        
                            The Clothestime Inc.
                        Summary Results of Operations

        (Unaudited)
                    (000s Omitted, Except Per-Share Amounts)
        
                                             Period Ending
                                April 27, 1996          April 29, 1995
        
        Net sales                      $ 43,667                $ 72,347
        Loss before reorganization
         costs and income tax benefit  $  4,461                $  7,154
        Net loss                       $  5,852                $  4,350
        Loss per share                 $   0.41                $   0.31
        Average shares outstanding       14,198                  14,182
        
        On Dec. 8, 1995, The Clothestime Stores Inc. and five of its
        subsidiaries filed for protection under Chapter 11 of the U.S.
        Bankruptcy Code.
        

        CONTACT:  The Clothestime Inc., Anaheim
                  Andrew G. Tepper, 714/779-5881 (ext. 2260)
      

BRADLEES, INC. REPORTS 1996 FIRST QUARTER RESULTS


        


            BRAINTREE, Mass., May 24, 1996 - Bradlees, Inc. (NYSE:
        BLE) today reported results for the first quarter of fiscal 1996.
        Total sales for the thirteen weeks ended May 4, 1996 were $349.9
        million versus total sales of $392.4 million for the first quarter
        of last year. Comparable store sales declined 12.6% for the quarter.
        


            The loss before interest, reorganization items and income taxes
        for the first quarter of fiscal 1996 was $43.7 million compared with
        a loss before interest, reorganization items and income taxes of
        $45.1 million for the first quarter of fiscal 1995.  The net loss
        for the first quarter of fiscal 1996 was $53.7 million or $4.71 per
        share versus a net loss of $32.4 million, after an income tax
        benefit of $22.5 million, or $2.84 per share for the prior year.
        


            During the quarter, the Company opened three new stores (Peabody
        and Worcester, MA and Providence, RI) and announced that it would
        close 12 underperforming locations in the second-quarter of fiscal
        1996.  The Company also introduced a major new marketing campaign in
        February, which included the return of "Mrs. B", the popular and
        widely-recognized Bradlees' television spokesperson throughout the
        late 1970's and early 1980's.
        


            Reorganization items for the first quarter included a write-down
        of assets for a previously planned store location, bankruptcy
        expenses (primarily professional fees) and employee severance
        charges associated with the closing stores and the reorganization of
        the Company's store management structure.
        


            Commenting on today's announcement, Mark A. Cohen, Bradlees'
        Chairman and Chief Executive said, "Despite lower than anticipated
        sales resulting from difficulties in promptly offsetting
        discontinued merchandise categories, unfavorable weather conditions
        and delayed implementation of store closing sales, our gross margin
        rate was well above last year and plan for the quarter.  This
        increase was primarily due to improvements in the assortment and
        quality of our merchandise in apparel and decorative home that are a
        primary focus of Bradlees' merchandising strategy."
        


            Bradlees, Inc., which currently operates 124 discount department
        stores in Maine, New Hampshire, Massachusetts, Connecticut, New
        York, New Jersey, Pennsylvania and Rhode Island, emphasizes a unique
        blend of fashionable, high quality apparel and home furnishings at
        outstanding value to its customers.  Bradlees' common stock is
        listed and traded on the New York Stock Exchange under the symbol
        "BLE".
        



                     BRADLEES, INC. AND SUBSIDIARIES
                      (Operating as Debtor-In-Possession)
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                (Dollars in thousands except per share amounts)
        
                                                       13 Weeks Ended
                                                      May 4,     April 29,
                                                       1996         1995
        Total sales                                 $349,891     $392,389
        Leased department sales                       12,188       12,783
        Net sales                                    337,703      379,606
        Cost of goods sold                           235,189      280,099
        Gross margin                                 102,514       99,507
        Leased department and
         other operating income                        2,757        3,355
        Total                                        105,271      102,862
        
        Selling, store operating, administrative
         and distribution expenses                   137,947      134,689
        Depreciation and amortization                 11,017       13,296
        
        Loss before interest, reorganization
         items, and income taxes                     (43,693)     (45,123)
        Interest and debt expense                      2,515        9,793
        Reorganization items                           7,538          ---
        
        Loss before income taxes                     (53,746)     (54,916)
        Income tax benefit                               ---       22,517
        
        Net Loss                                    ($53,746)    ($32,399)
        Net loss per share:                           ($4.71)      ($2.84)
        
                     BRADLEES, INC. AND SUBSIDIARIES
                      (Operating as Debtor-In-Possession)
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                             (Dollars in thousands)
        
        ASSETS                             5/4/96     2/3/96       4/29/95
        Current assets:
         Unrestricted cash and
          cash equivalents                 $4,947     $63,012       $3,200
         Restricted cash and
          cash equivalents                  7,194       1,194          ---
          Total cash and cash equivalents  12,141      64,206        3,200
         Accounts receivable               10,055      10,536       22,595
         Refundable income taxes              214      24,576          ---
         Inventories                      300,414     282,270      357,266
         Prepaid expenses                   9,778      10,008        4,571
         Deferred income taxes                ---         ---       15,736
         Assets held for sale               8,954       8,954          ---
         Total current assets             341,556     400,550      403,368
        
        Property excluding capital
         leases, net                      158,444     170,247      217,670
        Property under capital
         leases, net                       35,277      37,249       63,541
        Total property, plant
         and equipment, net               193,721     207,496      281,211
        
        Lease interests at fair value and
         lease acquisition costs, net     184,213     186,626      246,340
        Other, net                          4,009       3,990        7,907
        Total other assets                193,336     190,616      254,247
        Total Assets                     $728,613    $798,662     $938,826
        
                     BRADLEES, INC. AND SUBSIDIARIES
                      (Operating as Debtor-In-Possession)
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                             (Dollars in thousands)
        
        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
                                               5/4/96    2/3/96    4/29/95
         Current liabilities:
         Accounts payable                    $137,268    $148,870  $240,633
         Accrued expenses                      60,294      63,735    56,536
         Short-term debt                          ---         ---    93,000
         Current portion of long-term debt      2,524       2,602     6,096
         Total current liabilities            200,086     215,207   396,265
         Long-term liabilities:
         Other notes                              ---         ---     5,150
         Subordinated debt                        ---         ---   225,000
         Obligations under capital leases      52,816      53,396    67,952
         Deferred income taxes                  8,581       8,581    85,552
         Other long-term liabilities           26,360      26,723    29,191
         Total long-term liabilities           87,757      88,700   412,845
         Liabilities subject to settlement
          under the reorganization case       539,422     539,765       ---
        
         Stockholders' equity (deficiency):
         Common stock -- 11,413,554 shares
          outstanding (11,416,656 and
          11,410,048 shares outstanding at
          2/3/96 and 4/29/95, respectively)
         Par value                                115         115       115
         Additional paid-in capital           137,951     137,951   138,346
        
         Unearned compensation                  (551)       (793)   (1,547)
         Accumulated deficit                (235,512)   (181,766)   (6,751)
         Treasury stock, at cost                (655)       (517)     (447)
         Total stockholders' equity
          (deficiency)                       (98,652)    (45,010)   129,716
        
         Total Liabilities and
          Stockholders' Equity (deficiency)  $728,613    $798,662  $938,826


        CONTACT: Coleman Nee of Bradlees, 617-380-8354


COURT APPROVES HOUSE OF FABRICS' DISCLOSURE STATEMENT



             SHERMAN OAKS, Calif., May 24, 1996 - House of Fabrics,
        Inc.
(NYSE: HF) announced that the Bankruptcy Court late yesterday
        approved the company's disclosure statement, which permits the
        company to begin soliciting approval from creditors and equity
        holders on the company's plan of reorganization.  Solicitation of
        creditors and shareholders will begin May 29 and conclude June 28.
        The hearing to confirm the plan of reorganization could occur as
        early as July 10.
        


            "We are pleased that the Court has approved the disclosure
        statement, and that the Company will begin the final stages of its
        financial reorganization," said Gary L. Larkins, president and chief
        executive officer of House of Fabrics.  "We have made great progress
        during the Chapter 11 period, so that House of Fabrics today is a
        smaller, but considerably stronger company with debt at a level that
        the company will be able to support.
        


             "We have improved internal controls and continue to roll out a
        new point-of-sale (POS) system in our stores to improve sales
        reporting and inventory tracking.  We are also installing a new
        integrated management information system that will improve sales,
        profit margins and customer service, while it also permits
        additional overhead reductions.  And we have installed manager work
        stations chain wide, so that every store can communicate directly
        with the corporate office on a daily basis."
        


        Mr. Larkins noted the major results of the reorganization, including:



            The disclosure statement and plan of reorganization describe the
        company's operating and financial history and indicate the manner in
        which creditors' claims will be satisfied.  The disclosure statement
        approved today calls for satisfaction of the bank group's secured
        claims through payment of $75.5 million in cash plus 5 percent of the
   common stock in the reorganized company.
        


            Approved general unsecured creditors, with claims that are
        expected to total between $100 million and $120 million, will
        receive 93 percent of the common stock in the reorganized company.
        Equity holders will receive two percent of the stock in the
        reorganized company, along with warrants to purchase up to an
        additional 15 percent of the common shares.
        


            Lawrence A. Diamant, of the law firm of Robinson, Diamant, Brill
        & Klausner, counsel for the official committee representing the
        unsecured creditors, indicated that in his view the plan provides
        the most favorable recovery of any available plan.  Mr. Diamant
        expressed his confidence that the committee will unanimously support
        the plan and encourage the holders of all general unsecured claims
        to vote in favor of acceptance.
        


            Creditors and equity holders are entitled to vote, and they will
        receive copies of the disclosure statement and plan of
        reorganization and ballots by mail.  To be considered valid, ballots
        must be returned no later than June 28.
        


            House of Fabrics operates 269 company-owned House of Fabrics,
        Sofro Fabrics, Fabricland and Fabric King retail fabric and craft
        stores in 34 states and employs approximately 7,000 people.  The
        company and its subsidiaries filed to restructure under Chapter 11
        on November 2, 1994.     


        CONTACT:  Sandra Sternberg or Ann Julsen of Sitrick and Company,
        310-788-2850