HKF Hancock Fabrics

Hancock Fabrics, Inc. (NYSE:HKF), today reported that sales in the four-week period ended August 26, 2006 totaled $25.8 million compared with $29.3 million in the same period of the prior year. Sales in comparable stores decreased 7.7% in August. In the first seven months of fiscal 2006, total sales were $205.4 million versus $210.4 million in the same period of fiscal 2005, and comparable store sales declined 1.3%, including a 4.9% benefit from 40 stores that have now been liquidated in connection with store closing sale events. "Comparable store sales were lower in August due to the combination of an overall reduction in promotional activity, continued weakness in the home decorating sector, and a slow start to the fleece season. We are pleased with our merchandise assortments and marketing strategy and are cautiously optimistic as we enter the important Fall selling season," said Jane Aggers, Chief Executive Officer. Hancock Fabrics, Inc. - America's Fabric Store - is committed to serving creative enthusiasts with a complete selection of fashion and home decorating fabrics, sewing accessories, needlecraft supplies and sewing machines. The Company operates 404 retail stores in 40 states and an Internet store at www.hancockfabrics.com.