NAPERVILLE, Ill., July 21 /PRNewswire/ -- Factory Card Outlet Corp.
(Nasdaq: FCPY) announced today that it expects to report a loss for the second
quarter ending August 1, 1998 of between $0.07 and $0.12 per share, before a
non-recurring charge of approximately $0.05 per share.  Separately, the
Company has also entered into an agreement for an additional $10 million
credit facility.
    Stewart M. Kasen, the Company's Chairman, President and Chief Executive
Officer, said, "In late May we announced that system conversion issues related
to the start-up of our new distribution facility in Naperville would adversely
affect our second quarter results.  Although the negative impact of the uneven
flow of merchandise to our stores earlier in the quarter was greater than we
initially expected, we believe we now have corrected these issues and our
comparable store sales have improved in the second half of this quarter."
    "Since I became President and Chief Executive Officer on May 21st, our
management team has undertaken a thorough review of the Company's business and
operations and has taken several actions based on this review.  As a result of
some of the actions, we will take a non-recurring charge of approximately
$0.05 per share in the second quarter which is excluded from the revised
earnings range expectations.  These charges are related to certain store
design and severance expenses.  We believe this review and the action steps
that have followed will position the Company for a return to profitable, long-
term growth.
    "First, to improve our top line growth, we have introduced a store
readiness program, a basic in-stock program, and are implementing a more
aggressive value pricing program in our stores.  These initiatives, together
with the improvement in inventory levels at our stores, have already improved
our comparable store sales from the earlier part of the second quarter.  Since
mid June, comparable store sales have trended at a mid single-digit increase.
    "Second, since our focus will be on strengthening the core business, we
are slowing down new store openings.  The Company expects to open 14 stores in
fiscal 1999, down from the 50 or more that had been previously planned.
Included in the 14 planned openings is the deferral of seven stores which were
previously scheduled to open this fiscal year.  We've already opened 19 new
superstores this year and we now plan to open 14 additional superstores during
the remainder of this fiscal year.
    "Third, recognizing the change in our growth plans, we have reduced
general and administrative expenses accordingly.  We have repositioned our
resources to focus on fundamental execution.
    "Finally, we have amended our existing credit facility and have entered
into an agreement for an additional $10 million credit facility with BackBay
Capital, a subsidiary of BankBoston.  We believe that the funds available from
these facilities, together with internally generated funds, will be sufficient
to meet our operating needs for the remainder of this fiscal year while we
continue to implement our initiatives to improve the Company's financial
results.  We are exploring additional or new sources of financing to give us
more flexibility for growth in the future."
    Factory Card Outlet is a rapidly growing chain of company-owned
superstores offering a vast assortment of party supplies, greeting cards, gift
wrap and other special occasion merchandise at everyday value prices.  The
Company currently operates 199 stores in 22 states.
    This press release regarding the quarterly results of Factory Card Outlet
Corp. includes forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995.  Forward-looking statements do not constitute
historical facts and involve risks and uncertainties, including, but not
limited to, the possibility that adverse economic or other factors may cause
actual results to be materially different than current estimates and
projections.  Additional detailed information concerning a number of factors
that could cause actual results to differ materially from the information
contained in this press release is readily available in the Company's
Transition Report on Form 10-K.  Copies of this Transition Report are
available on request directed to the President of the Company.

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