Registration No. 333

================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                            FACTORY 2-U STORES, INC.
             (Exact name of registrant as specified in its charter)

                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   50-0299573
                      (I.R.S. Employer Identification No.)

                                4000 Ruffin Road
                           San Diego, California 92123
               (Address of Principal Executive Offices) (Zip Code)

               THE AMENDED AND RESTATED FAMILY BARGAIN CORPORATION
                             1997 STOCK OPTION PLAN
                              (Full Title of Plan)

                                   ----------

                                 MICHAEL SEARLES
                            Factory 2-U Stores, Inc.
                                4000 Ruffin Road
                           San Diego, California 92123
                     (Name and address of agent for service)

   Telephone number, including area code, of agent for service: (619) 627-1800

                                   Copies to:
                            DAVID W. BERNSTEIN, ESQ.
                               Rogers & Wells LLP
                                 200 Park Avenue
                            New York, New York 10166

<TABLE>
<CAPTION>
                                      CALCULATION OF REGISTRATION FEE
===============================================================================================================
      Title of Securities          Amount to be          Proposed              Proposed           Amount of
       to be Registered             Registered            Maximum               Maximum         Registration
                                                      Offering Price           Aggregate             Fee
                                                       Per Share(1)        Offering Price(1)
===============================================================================================================
<S>                               <C>                      <C>                   <C>                <C> 
Common Stock, par
value $0.01 per share             1,807,980 shs.           $11.94                $21,587,281        $6002.00
===============================================================================================================
</TABLE>

(1)  Estimated  solely for the  purpose of  calculating  the  registration  fee,
     pursuant  to Rule  457(c),  on the basis of the average of the high and low
     prices of Registrant's Common Stock reported on the Nasdaq Small Cap Market
     on April 1, 1999.

<PAGE>


                                     PART 1

              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

     Pursuant  to the  requirements  of the  Note to Part I of Form S-8 and Rule
428(b)(1)  of the Rules  under  the  Securities  Act of 1933,  as  amended,  the
information  required by Part I of Form S-8 is included in a Booklet dated March
1999  distributed to the employees of Factory 2-U Stores,  Inc. who hold options
granted  under The Amended and  Restated  Factory  2-U Stores,  Inc.  1997 Stock
Option Plan. This Booklet, together with the documents incorporated by reference
as described in Item 3 of Part II of this Registration Statement,  constitutes a
Section 10(a) Prospectus.


                                       1

<PAGE>


                             PROSPECTUS FOR RESALES

     The material which follows, up to but not including the page beginning Part
II of this Registration  Statement,  constitutes a prospectus,  prepared on Form
S-3,  in  accordance  with  General  Instruction  C to Form  S-8,  to be used in
connection  with resales of securities  acquired  under The Amended and Restated
Factory 2-U Stores, Inc. 1997 Stock Option Plan.


                                       2

<PAGE>


PROSPECTUS


                                1,807,980 shares

                            FACTORY 2-U STORES, INC.

                                  COMMON STOCK

                           (Par value $0.01 per share)


     The shares of our  Common  Stock to which this  Prospectus  relates  may be
offered  from  time to time by the  people  described  under  "Selling  Security
Holders" on the Nasdaq  SmallCap  Market,  where our Common  Stock  currently is
traded,  on any  securities  exchanges or other  quotation  systems on which our
Common  Stock may be traded,  in the  over-the-counter  market or in  negotiated
transactions,  at prices and on terms then  available.  The  respective  Selling
Security Holders will pay any brokerage fees or commissions relating to sales by
them.  See "Method of Sale." We will not receive any part of the proceeds of any
such sales.  Our principal  executive office is located at 4000 Ruffin Road, San
Diego, California 92123 (Telephone No. (619) 627-1800).

     Neither the  Securities and Exchange  Commission  nor any state  securities
commission has approved or disapproved  of these  securities or determined  that
this Prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.


     We are paying  the  expenses  of  preparing  and  filing  the  Registration
Statement of which this Prospectus is a part.


                                   ----------


                  The date of this Prospectus is April 9, 1999

<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
Incorporation by Reference .................................................. 2

Information We File.......................................................... 2

Selling Security Holders .................................................... 2

Method of Sale............................................................... 3

SEC Position Regarding Indemnification....................................... 3


                           INCORPORATION BY REFERENCE

     We incorporate  by reference into this  Prospectus (a) our Annual Report on
Form 10-K for the year ended  January 31, 1998,  (b) all other  reports we filed
pursuant to Section  13(a) or 15(d) of the  Securities  Exchange Act of 1934, as
amended,  since  January 31, 1998 and (c) the  description  of our Common  Stock
contained  in our  registration  statement  under  Section 12 of the  Securities
Exchange Act relating to our Common Stock,  in a proxy  statement  dated October
19, 1998 and in any  amendment or report filed for the purpose of updating  that
description.  We also  incorporate  by reference  into this  Prospectus  all the
documents  we file  pursuant  to  Sections  13, 14 and  15(d) of the  Securities
Exchange  Act of  1934  after  the  date  of  Prospectus  and  before  we file a
post-effective  amendment  which indicates that all the securities to which this
Prospectus  relates  have been sold or which  deregisters  all those  securities
which have not been sold.  We will  provide  copies of all  documents  which are
incorporated  by  reference  without  charge to anyone to whom we  deliver  this
Prospectus,  who makes a written or oral request for them to Factory 2-U Stores,
Inc., 4000 Ruffin Road, San Diego, California 92123, Attention:  Chief Financial
Officer, telephone number (619) 627-1800.

                               INFORMATION WE FILE

     We file annual,  quarterly and current reports,  proxy statements and other
materials  with the SEC. The public may read and copy any materials we file with
the  SEC  at  the  SEC's  Public  Reference  Room  at 450  Fifth  Street,  N.W.,
Washington,  D.C. 20549.  The public may obtain  information on the operation of
the  Public  Reference  Room  by  calling  the  SEC at  1-800-SEC-0330.  The SEC
maintains  an  Internet  site  that  contains  reports,  proxy  and  information
statements  and other  information  regarding  issuers  (including us) that file
electronically with the SEC. The address of that site is http:\\www.sec.gov.

                            SELLING SECURITY HOLDERS

     This Prospectus  relates to possible sales by our officers and directors of
shares of our  Common  Stock  which they  acquire  through  exercise  of options
granted under our Amended and Restated 1997 Stock Option Plan. We do not know at
this time who may be Selling Security Holders from time to time. We will provide
the names of those  people,  along  with the  number  of shares of Common  Stock
owned,  and the number of shares which may be sold, by each of those people from
time to time in  supplements  to this  Prospectus,  which we will  file with the
Securities  and Exchange  Commission  in  accordance  with Rule 424(b) under the
Securities Act of 1933, as amended.


                                       2

<PAGE>


                                 METHOD OF SALE

     The shares offered by this  Prospectus  may be sold on the Nasdaq  SmallCap
Market,  where our Common Stock  currently is traded,  or in other markets where
our Common  Stock is traded,  or in  negotiated  transactions.  Sales will be at
prices which are current when the sales take place. Selling Security Holders may
pay  brokers'  commissions.  Shares  which are sold may include  shares in which
Selling  Security  Holders have granted  security  interests and which are being
sold because of  foreclosure of those  security  interests.  There is no present
plan of distribution.

                     SEC POSITION REGARDING INDEMNIFICATION

     Our certificate of incorporation  provides for  indemnification of officers
and  directors,  among other  things,  in  instances in which they acted in good
faith and in a manner they reasonably  believed to be in, or not opposed to, our
best interests and in which, with respect to criminal  proceedings,  they had no
reasonable cause to believe their conduct was unlawful.

     We have been informed  that, in the opinion of the  Securities and Exchange
Commission,  insofar as directors,  officers or other persons who control us may
become  entitled under the provisions of our  certificate  of  incorporation  to
indemnification  for liabilities  arising under the Securities Act of 1933, that
indemnification  is  against  public  policy  as  expressed  in that  Act and is
therefore unenforceable.


                                       3

<PAGE>


                                     PART II


Item 3. Incorporation of Documents by Reference

     The following documents are incorporated by reference in this
Registration Statement:

     (a) The Company's Annual Report on Form 10-K for the year ended January 31,
1998.

     (b) All other  reports  filed by the Company  pursuant to Section  13(a) or
15(d) of the  Securities  Exchange Act of 1934,  as amended,  since  January 31,
1998.

     (c)  The  descriptions  of the  Company's  Common  Stock  contained  in the
Company's registration statement under Section 12 of the Securities Exchange Act
relating to the Company's  Common Stock,  in a proxy statement dated October 19,
1998,  and in any  amendment  or report  filed for the purpose of updating  that
description.

     All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to
the filing of a  post-effective  amendment  which  indicates that all securities
offered  have been  sold or which  deregisters  all  securities  then  remaining
unsold, will be deemed incorporated by reference in this Registration  Statement
and to be part of it from the date of filing of those documents.

Item 4. Description of Securities.

     Not Applicable.

Item 5. Interests of Named Experts and Counsel.

     Not Applicable.

Item 6. Indemnification of Directors and Officers.

     The registrant's  certificate of incorporation provides for indemnification
of directors and officers,  among other things, in instances in which they acted
in good faith and in a manner they reasonably  believed to be in, or not opposed
to, the best  interests of the Company,  and in which,  with respect to criminal
proceedings, they had no reason to believe that conduct was unlawful.

     Directors and officers may also be entitled to  additional  indemnification
under Section 145 of the General Corporation Law of Delaware.

Item 7. Exemption from Registration Claimed.

     Not Applicable.

Item 8. Exhibits.

     The following documents are filed with or incorporated by reference in this
Registration Statement:

     Exhibit 5.     Opinion of Rogers & Wells LLP.

     Exhibit 24.    Consents of Experts and Counsel.

                    (i)  Rogers & Wells, LLP (attorneys) - included in Exhibit 5

                    (ii) Arthur Andersen LLP (accountants)

                    (iii) KPMG Peat Marwick LLP (accountants)


                                      II-1

<PAGE>


     Exhibit 25.    Power of Attorney - on signature pages.

Item 9. Undertakings.

     (a) The undersigned registrant hereby undertakes:

          (1) To file,  during  any  period  in which  offers or sales are being
     made, a post-effective  amendment to this Registration Statement to include
     any  material  information  with  respect to the plan of  distribution  not
     previously  disclosed in the Registration  Statement or any material change
     to such information in the Registration Statement.

          (2) That,  for the  purpose of  determining  any  liability  under the
     Securities Act of 1933, each such post-effective  amendment shall be deemed
     to be a new  Registration  Statement  relating  to the  securities  offered
     therein,  and the offering of such  securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any  of  the  securities  being  registered  which  remain  unsold  at  the
     termination of the offering.

     (b) The  undersigned  registrant  hereby  undertakes  that, for purposes of
determining  liability  under the  Securities  Act of 1933,  each  filing of the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of 1934  that is  incorporated  by  reference  in this
Registration  Statement  shall  be  deemed  to be a new  Registration  Statement
relating to the securities  offered herein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the registrant  pursuant to the  provisions  described in Item 15, or otherwise,
the  registrant  has been  advised  that in the  opinion of the  Securities  and
Exchange  Commission such  indemnification is against public policy as expressed
in the Act and is,  therefore,  unenforceable.  In the  event  that a claim  for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.


                                      II-2

<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of San Diego and State of California on this 24th day of
March, 1999.

                                        FACTORY 2-U STORES, INC.

                                        By:  /s/ Michael Searles
                                             -----------------------------
                                        Michael Searles
                                        Chairman of  the Board


                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Michael Searles, Jonathan W. Spatz and Wm. Robert
Wright II, and each of them, as his or her true and lawful  attorney-in-fact and
agent, with full power of substitution, to sign for him or her and in his or her
name,  in any and  all  capacities,  all  amendments  (including  post-effective
amendments)  to the  Registration  Statement  to which this power of attorney is
attached.

                                   ----------

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.


              Name                            Title                    Date
              ----                            -----                    ----
           
           
 /s/ Michael Searles               Principal Executive Officer    March 24, 1999
-------------------------------    and Director
         Michael Searles
           
           
/s/ Jonathan W. Spatz              Principal Financial Officer    March 24, 1999
-------------------------------
        Jonathan W. Spatz


/s/ James Baker                    Principal Accounting Officer   March 24, 1999
-------------------------------
           James Baker
           
           
/s/ John J. Borer III              Director                       March 24, 1999
-------------------------------
        John J. Borer III
           
           
/s/ Peter V. Handal                Director                       March 24, 1999
-------------------------------
         Peter V. Handal
           
           
/s/ Ira Neimark                    Director                       March 24, 1999
-------------------------------
           Ira Neimark
           
           
/s/ Ronald Rashkow                 Director                       March 24, 1999
-------------------------------
         Ronald Rashkow


                                      S-1

<PAGE>


/s/ James D. Somerville            Director                       March 24, 1999
-------------------------------
       James D. Somerville
           

/s/ H. Whitney Wagner              Director                       March 24, 1999
-------------------------------
        H. Whitney Wagner
           

/s/ Wm. Robert Wright II           Director                       March 24, 1999
-------------------------------
      Wm. Robert Wright II


                                      S-2

<PAGE>


                                  EXHIBIT INDEX


                                                              Page in Sequential
Exhibit                                                        Numbering System
-------                                                        ----------------

Exhibit 5         Opinion of Rogers & Wells LLP

Exhibit 24(i)   Consent of Rogers & Wells LLP 
                (attorneys) included in Exhibit 5
          (ii)  Consent of Arthur Andersen LLP (accountants)
          (iii) Consent of KPMG Peat Marwick LLP (accountants)

Exhibit 25      Powers of Attorney -- on signature pages
[{"type": "S-8", "sequence": "1", "description": "FORM S-8", "secsgml_size_bytes": 20447}]
{"company-data": {"conformed-name": "FACTORY 2 U STORES INC", "cik": "0000813775", "assigned-sic": "5651", "irs-number": "510299573", "state-of-incorporation": "DE", "fiscal-year-end": "0131"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-76011", "film-number": "99590779"}, "business-address": {"street1": "4000 RUFFIN ROAD", "street2": "6TH FLR", "city": "SAN DIEGO", "state": "CA", "zip": "92123-1866", "phone": "6196271800"}, "mail-address": {"street1": "4000 RUFFIN ROAD", "city": "SAN DIEG", "state": "CA", "zip": "92123-1866"}, "former-company": [{"former-conformed-name": "FAMILY BARGAIN CORP", "date-changed": "19940202"}, {"former-conformed-name": "DRS INDUSTRIES INC", "date-changed": "19920703"}, {"former-conformed-name": "LONGWOOD GROUP LTD", "date-changed": "19920527"}]}
Registration No. 333

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                            FACTORY 2-U STORES, INC.
             (Exact name of registrant as specified in its charter)

                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   50-0299573
                      (I.R.S. Employer Identification No.)

                                4000 Ruffin Road
                           San Diego, California 92123
               (Address of Principal Executive Offices) (Zip Code)

               THE AMENDED AND RESTATED FAMILY BARGAIN CORPORATION
                             1997 STOCK OPTION PLAN
                              (Full Title of Plan)

                                   ----------

                                 MICHAEL SEARLES
                            Factory 2-U Stores, Inc.
                                4000 Ruffin Road
                           San Diego, California 92123
                     (Name and address of agent for service)

   Telephone number, including area code, of agent for service: (619) 627-1800

                                   Copies to:
                            DAVID W. BERNSTEIN, ESQ.
                               Rogers & Wells LLP
                                 200 Park Avenue
                            New York, New York 10166
CALCULATION OF REGISTRATION FEE
===============================================================================================================
      Title of Securities          Amount to be          Proposed              Proposed           Amount of
       to be Registered             Registered            Maximum               Maximum         Registration
                                                      Offering Price           Aggregate             Fee
                                                       Per Share(1)        Offering Price(1)
===============================================================================================================
Common Stock, par
value $0.01 per share             1,807,980 shs.           $11.94                $21,587,281        $6002.00
===============================================================================================================
(1)  Estimated  solely for the  purpose of  calculating  the  registration  fee,
     pursuant  to Rule  457(c),  on the basis of the average of the high and low
     prices of Registrant's Common Stock reported on the Nasdaq Small Cap Market
     on April 1, 1999.
PART 1

              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

     Pursuant  to the  requirements  of the  Note to Part I of Form S-8 and Rule
428(b)(1)  of the Rules  under  the  Securities  Act of 1933,  as  amended,  the
information  required by Part I of Form S-8 is included in a Booklet dated March
1999  distributed to the employees of Factory 2-U Stores,  Inc. who hold options
granted  under The Amended and  Restated  Factory  2-U Stores,  Inc.  1997 Stock
Option Plan. This Booklet, together with the documents incorporated by reference
as described in Item 3 of Part II of this Registration Statement,  constitutes a
Section 10(a) Prospectus.

                                       1
PROSPECTUS FOR RESALES

     The material which follows, up to but not including the page beginning Part
II of this Registration  Statement,  constitutes a prospectus,  prepared on Form
S-3,  in  accordance  with  General  Instruction  C to Form  S-8,  to be used in
connection  with resales of securities  acquired  under The Amended and Restated
Factory 2-U Stores, Inc. 1997 Stock Option Plan.

                                       2
PROSPECTUS

                                1,807,980 shares

                            FACTORY 2-U STORES, INC.

                                  COMMON STOCK

                           (Par value $0.01 per share)

     The shares of our  Common  Stock to which this  Prospectus  relates  may be
offered  from  time to time by the  people  described  under  "Selling  Security
Holders" on the Nasdaq  SmallCap  Market,  where our Common  Stock  currently is
traded,  on any  securities  exchanges or other  quotation  systems on which our
Common  Stock may be traded,  in the  over-the-counter  market or in  negotiated
transactions,  at prices and on terms then  available.  The  respective  Selling
Security Holders will pay any brokerage fees or commissions relating to sales by
them.  See "Method of Sale." We will not receive any part of the proceeds of any
such sales.  Our principal  executive office is located at 4000 Ruffin Road, San
Diego, California 92123 (Telephone No. (619) 627-1800).

     Neither the  Securities and Exchange  Commission  nor any state  securities
commission has approved or disapproved  of these  securities or determined  that
this Prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.

     We are paying  the  expenses  of  preparing  and  filing  the  Registration
Statement of which this Prospectus is a part.

                                   ----------

                  The date of this Prospectus is April 9, 1999
TABLE OF CONTENTS

                                                                            Page
                                                                            ----
Incorporation by Reference .................................................. 2

Information We File.......................................................... 2

Selling Security Holders .................................................... 2

Method of Sale............................................................... 3

SEC Position Regarding Indemnification....................................... 3

                           INCORPORATION BY REFERENCE

     We incorporate  by reference into this  Prospectus (a) our Annual Report on
Form 10-K for the year ended  January 31, 1998,  (b) all other  reports we filed
pursuant to Section  13(a) or 15(d) of the  Securities  Exchange Act of 1934, as
amended,  since  January 31, 1998 and (c) the  description  of our Common  Stock
contained  in our  registration  statement  under  Section 12 of the  Securities
Exchange Act relating to our Common Stock,  in a proxy  statement  dated October
19, 1998 and in any  amendment or report filed for the purpose of updating  that
description.  We also  incorporate  by reference  into this  Prospectus  all the
documents  we file  pursuant  to  Sections  13, 14 and  15(d) of the  Securities
Exchange  Act of  1934  after  the  date  of  Prospectus  and  before  we file a
post-effective  amendment  which indicates that all the securities to which this
Prospectus  relates  have been sold or which  deregisters  all those  securities
which have not been sold.  We will  provide  copies of all  documents  which are
incorporated  by  reference  without  charge to anyone to whom we  deliver  this
Prospectus,  who makes a written or oral request for them to Factory 2-U Stores,
Inc., 4000 Ruffin Road, San Diego, California 92123, Attention:  Chief Financial
Officer, telephone number (619) 627-1800.

                               INFORMATION WE FILE

     We file annual,  quarterly and current reports,  proxy statements and other
materials  with the SEC. The public may read and copy any materials we file with
the  SEC  at  the  SEC's  Public  Reference  Room  at 450  Fifth  Street,  N.W.,
Washington,  D.C. 20549.  The public may obtain  information on the operation of
the  Public  Reference  Room  by  calling  the  SEC at  1-800-SEC-0330.  The SEC
maintains  an  Internet  site  that  contains  reports,  proxy  and  information
statements  and other  information  regarding  issuers  (including us) that file
electronically with the SEC. The address of that site is http:\\www.sec.gov.

                            SELLING SECURITY HOLDERS

     This Prospectus  relates to possible sales by our officers and directors of
shares of our  Common  Stock  which they  acquire  through  exercise  of options
granted under our Amended and Restated 1997 Stock Option Plan. We do not know at
this time who may be Selling Security Holders from time to time. We will provide
the names of those  people,  along  with the  number  of shares of Common  Stock
owned,  and the number of shares which may be sold, by each of those people from
time to time in  supplements  to this  Prospectus,  which we will  file with the
Securities  and Exchange  Commission  in  accordance  with Rule 424(b) under the
Securities Act of 1933, as amended.

                                       2
METHOD OF SALE

     The shares offered by this  Prospectus  may be sold on the Nasdaq  SmallCap
Market,  where our Common Stock  currently is traded,  or in other markets where
our Common  Stock is traded,  or in  negotiated  transactions.  Sales will be at
prices which are current when the sales take place. Selling Security Holders may
pay  brokers'  commissions.  Shares  which are sold may include  shares in which
Selling  Security  Holders have granted  security  interests and which are being
sold because of  foreclosure of those  security  interests.  There is no present
plan of distribution.

                     SEC POSITION REGARDING INDEMNIFICATION

     Our certificate of incorporation  provides for  indemnification of officers
and  directors,  among other  things,  in  instances in which they acted in good
faith and in a manner they reasonably  believed to be in, or not opposed to, our
best interests and in which, with respect to criminal  proceedings,  they had no
reasonable cause to believe their conduct was unlawful.

     We have been informed  that, in the opinion of the  Securities and Exchange
Commission,  insofar as directors,  officers or other persons who control us may
become  entitled under the provisions of our  certificate  of  incorporation  to
indemnification  for liabilities  arising under the Securities Act of 1933, that
indemnification  is  against  public  policy  as  expressed  in that  Act and is
therefore unenforceable.

                                       3
PART II

Item 3. Incorporation of Documents by Reference

     The following documents are incorporated by reference in this
Registration Statement:

     (a) The Company's Annual Report on Form 10-K for the year ended January 31,
1998.

     (b) All other  reports  filed by the Company  pursuant to Section  13(a) or
15(d) of the  Securities  Exchange Act of 1934,  as amended,  since  January 31,
1998.

     (c)  The  descriptions  of the  Company's  Common  Stock  contained  in the
Company's registration statement under Section 12 of the Securities Exchange Act
relating to the Company's  Common Stock,  in a proxy statement dated October 19,
1998,  and in any  amendment  or report  filed for the purpose of updating  that
description.

     All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to
the filing of a  post-effective  amendment  which  indicates that all securities
offered  have been  sold or which  deregisters  all  securities  then  remaining
unsold, will be deemed incorporated by reference in this Registration  Statement
and to be part of it from the date of filing of those documents.

Item 4. Description of Securities.

     Not Applicable.

Item 5. Interests of Named Experts and Counsel.

     Not Applicable.

Item 6. Indemnification of Directors and Officers.

     The registrant's  certificate of incorporation provides for indemnification
of directors and officers,  among other things, in instances in which they acted
in good faith and in a manner they reasonably  believed to be in, or not opposed
to, the best  interests of the Company,  and in which,  with respect to criminal
proceedings, they had no reason to believe that conduct was unlawful.

     Directors and officers may also be entitled to  additional  indemnification
under Section 145 of the General Corporation Law of Delaware.

Item 7. Exemption from Registration Claimed.

     Not Applicable.

Item 8. Exhibits.

     The following documents are filed with or incorporated by reference in this
Registration Statement:

     Exhibit 5.     Opinion of Rogers & Wells LLP.

     Exhibit 24.    Consents of Experts and Counsel.

                    (i)  Rogers & Wells, LLP (attorneys) - included in Exhibit 5

                    (ii) Arthur Andersen LLP (accountants)

                    (iii) KPMG Peat Marwick LLP (accountants)

                                      II-1
Exhibit 25.    Power of Attorney - on signature pages.

Item 9. Undertakings.

     (a) The undersigned registrant hereby undertakes:

          (1) To file,  during  any  period  in which  offers or sales are being
     made, a post-effective  amendment to this Registration Statement to include
     any  material  information  with  respect to the plan of  distribution  not
     previously  disclosed in the Registration  Statement or any material change
     to such information in the Registration Statement.

          (2) That,  for the  purpose of  determining  any  liability  under the
     Securities Act of 1933, each such post-effective  amendment shall be deemed
     to be a new  Registration  Statement  relating  to the  securities  offered
     therein,  and the offering of such  securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any  of  the  securities  being  registered  which  remain  unsold  at  the
     termination of the offering.

     (b) The  undersigned  registrant  hereby  undertakes  that, for purposes of
determining  liability  under the  Securities  Act of 1933,  each  filing of the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of 1934  that is  incorporated  by  reference  in this
Registration  Statement  shall  be  deemed  to be a new  Registration  Statement
relating to the securities  offered herein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the registrant  pursuant to the  provisions  described in Item 15, or otherwise,
the  registrant  has been  advised  that in the  opinion of the  Securities  and
Exchange  Commission such  indemnification is against public policy as expressed
in the Act and is,  therefore,  unenforceable.  In the  event  that a claim  for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

                                      II-2
SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of San Diego and State of California on this 24th day of
March, 1999.

                                        FACTORY 2-U STORES, INC.

                                        By:  /s/ Michael Searles
                                             -----------------------------
                                        Michael Searles
                                        Chairman of  the Board

                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Michael Searles, Jonathan W. Spatz and Wm. Robert
Wright II, and each of them, as his or her true and lawful  attorney-in-fact and
agent, with full power of substitution, to sign for him or her and in his or her
name,  in any and  all  capacities,  all  amendments  (including  post-effective
amendments)  to the  Registration  Statement  to which this power of attorney is
attached.

                                   ----------

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.

              Name                            Title                    Date
              ----                            -----                    ----
           
           
 /s/ Michael Searles               Principal Executive Officer    March 24, 1999
-------------------------------    and Director
         Michael Searles
           
           
/s/ Jonathan W. Spatz              Principal Financial Officer    March 24, 1999
-------------------------------
        Jonathan W. Spatz

/s/ James Baker                    Principal Accounting Officer   March 24, 1999
-------------------------------
           James Baker
           
           
/s/ John J. Borer III              Director                       March 24, 1999
-------------------------------
        John J. Borer III
           
           
/s/ Peter V. Handal                Director                       March 24, 1999
-------------------------------
         Peter V. Handal
           
           
/s/ Ira Neimark                    Director                       March 24, 1999
-------------------------------
           Ira Neimark
           
           
/s/ Ronald Rashkow                 Director                       March 24, 1999
-------------------------------
         Ronald Rashkow

                                      S-1
/s/ James D. Somerville            Director                       March 24, 1999
-------------------------------
       James D. Somerville
           

/s/ H. Whitney Wagner              Director                       March 24, 1999
-------------------------------
        H. Whitney Wagner
           

/s/ Wm. Robert Wright II           Director                       March 24, 1999
-------------------------------
      Wm. Robert Wright II

                                      S-2
EXHIBIT INDEX

                                                              Page in Sequential
Exhibit                                                        Numbering System
-------                                                        ----------------

Exhibit 5         Opinion of Rogers & Wells LLP

Exhibit 24(i)   Consent of Rogers & Wells LLP 
                (attorneys) included in Exhibit 5
          (ii)  Consent of Arthur Andersen LLP (accountants)
          (iii) Consent of KPMG Peat Marwick LLP (accountants)

Exhibit 25      Powers of Attorney -- on signature pages