SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Sec 240.14a-11(c) or Sec 240.14a-12

REEDS JEWELERS, INC.
(Name of Registrant as Specified in its Charter)

James R. Rouse
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (1)

(4) Proposed maximum aggregate value of transactions:

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration No:

(3) Filing Party:

(4) Date Filed:

- -----------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.

REEDS JEWELERS, INC.
2525 SOUTH SEVENTEENTH STREET
WILMINGTON, NORTH CAROLINA 28401

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

--------------------------------

To Our Shareholders:

The Annual Meeting of Shareholders of Reeds Jewelers, Inc. (the
"Company") will be held at the Hilton Hotel, 301 North Water Street, Wilmington,
North Carolina, on Wednesday, July 26, 2000, at 10:00 a.m., local time, for the
following purposes:

1. To elect nine (9) Directors to serve until the 2001 Annual Meeting
of Shareholders or until their successors are elected and qualified;

2. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending February 28, 2001;

3. To transact such other business as may properly come before the
meeting or any adjournments thereof.

Shareholders of record at the close of business on May 26, 2000 are
entitled to notice of and to vote at the meeting and any adjournments thereof.

By Order of the Board of Directors,

/s/ Roberta G. Zimmer

ROBERTA G. ZIMMER
Secretary

Wilmington, North Carolina
May 28, 2000

SHAREHOLDERS ARE URGED TO VOTE BY SIGNING, DATING, AND RETURNING THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.

REEDS JEWELERS, INC.
2525 SOUTH SEVENTEENTH STREET
WILMINGTON, NORTH CAROLINA 28401

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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 26, 2000

--------------------------------

This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Reeds Jewelers, Inc. (the
"Company") to be voted at the Annual Meeting of Shareholders of the Company to
be held at the Hilton Hotel, 301 North Water Street, Wilmington, North Carolina,
on Wednesday, July 26, 2000, at 10:00 a.m., local time, and at any adjournments
thereof. In addition to solicitation by mail, proxies may be solicited by
telephone or in person by officers, directors, and by other agents of the
Company without compensation therefor, except for reimbursement of actual
expenses. All costs of solicitation of proxies will be borne by the Company. The
Company expects to mail this proxy statement and enclosed form of proxy to its
shareholders on or about Tuesday, June 15, 2000.

All shares represented by proxies received and not revoked will be
voted in accordance with the instructions therein. A proxy may be revoked prior
to the voting of the proxy by: (1) giving written notice to the Secretary of the
Company at the Company's executive office at 2525 South Seventeenth Street,
Wilmington, North Carolina 28401; (2) submitting a duly executed, later-dated
proxy to the Secretary of the Company; or (3) submitting notice to the Company,
prior to the exercise of the proxy, of the death or incapacity of the maker of
the proxy. A proxy is suspended if the person executing the proxy votes in
person at the meeting. Proxies duly executed and returned by shareholders which
specify no choice will be voted FOR election of the nominees for director as
proposed by the Board of Directors, and FOR ratification of the appointment of
Ernst & Young LLP as independent auditors. Although the Board of Directors is
not aware of any other matters to be presented at the meeting, if other matters
are properly presented at the meeting for action, the persons named in the
enclosed form of proxy and acting thereunder will have the discretion to vote on
such matters in accordance with their best judgment.

The Board has fixed the close of business on May 26, 2000 as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournments thereof. As of the record date, there were
outstanding 8,476,372 shares of Common Stock, which number represents all of the
voting securities of the Company. Each holder of Common Stock on the record date
is entitled to cast one vote per share, in person or by properly executed proxy,
with respect to each matter to be considered at the meeting. Directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present. The proposals to approve the
appointment of independent auditors is approved if the votes in favor of the
proposal exceed the votes opposed to the proposal. Shares which are withheld as
to voting with respect to one or more of the nominees for Director and
abstentions will be counted in determining the existence of a quorum, but shares
held by a broker, as a nominee, that are not voted on any matter will not be
counted for such purposes. Abstentions, shares which are withheld as to voting
with respect to nominees for Director and shares held of record by a broker, as
a nominee, that are not voted with respect to any of the proposals will not be
counted as a vote in favor of or against such proposal, and, therefore, will
have no effect on the proposal to elect the Directors and the proposals to
ratify the appointment of independent auditors.

Other than certain directors and officers of the Company, the Company
is aware of no person who beneficially owns more than five percent of the
Company's outstanding Common Stock. See "Election of Directors" below.

ELECTION OF DIRECTORS

Nine Directors are to be elected at the meeting and shall hold office
until the next Annual Meeting of Shareholders or until their respective
successors have been duly elected and qualified. All nominees have indicated
that they are willing and able to serve as Directors if elected. However, if any
nominee for Director shall withdraw his candidacy or otherwise be unable to
serve, it is intended that votes will be cast, pursuant to the discretionary
power granted in the enclosed form of proxy, for such substitute nominee or
nominees as may be nominated by the Board of Directors. Each director will be
elected by a plurality vote of the votes cast, in person or by proxy, at the
meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW:

COMMON STOCK OF THE COMPANY
BENEFICIALLY OWNED ON MAY 26, 2000
----------------------------------
YEAR FIRST PERCENT OF
NAME, AGE, PRINCIPAL OCCUPATION, BECAME NUMBER OF COMMON STOCK
AND BUSINESS EXPERIENCE DIRECTOR (1) SHARES (2) OUTSTANDING
- -------------------------------------- ------------ ---------- ------------

ALAN M. ZIMMER, age 41; President and 1981 1,937,960 (4,5,9,10) 22.86%
Chief Executive Officer for more than the past
five years (3)

WILLIAM R. ZIMMER, age 81; Chairman of 1946 23,352 0.27%
the Board for more than the past five years (3)

FENTON N. HORD, age 53; President & CEO 1997 4,000 (4) 0.05%
of Carolina Holdings, Inc. for more than the
past five years; Director of Wachovia Bank of
North Carolina, N.A. (Central Region)

ROBERTA G. ZIMMER, age 75; Secretary for 1952 8,724 0.10%
more than the past five years (3)

G. WADDY GARRETT, age 59; Director 1994 10,000 (4) 0.12%
of Ag-Chem Equipment Co., Inc.
and Cadmus Communications, Inc.; previously,
Chairman and Chief Executive Officer of
Alliance Agronomics, Inc. for more than the
past five years

ARLENE Z. SCHREIBER, age 49; Member of 1986 1,751,956 (4,6,9,10) 20.67%
Zimmer Development Company LLC and
affiliates; previously, Vice President and
Secretary, Schreiber's Inc., a ladies specialty
store for more than the past five years (3)

RICHARD F. SHERMAN, age 56; Private 1991 8,470 (4) 0.10%
Investor for more than the past five years;
Chairman of P.J. America, Inc., Director of
Taco Cabana, Inc., and Papa John's
International, Inc.

HERBERT J. ZIMMER, age 54; Partner in the 1986 1,837,622 (4,7,9,10) 21.68%
law firm of Zimmer and Zimmer LLP, which
serves as general counsel to the Company, for
more than the past five years (3)

JEFFREY L. ZIMMER, age 43; Partner in the 1986 1,783,318 (4,8,9,10) 21.04%
law firm of Zimmer and Zimmer LLP, which
serves as general counsel to the Company, for
more than the past five years (3)

All directors and executive officers as a group 7,379,449 (4) 87.04%
(fourteen persons)

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(1) Year first became director of the Company or its predecessors.

(2) Unless otherwise indicated, each person has sole voting and investment
power over the shares beneficially owned by such person.

(3) William R. Zimmer and Roberta G. Zimmer are the father and mother of Alan
M. Zimmer, Herbert J. Zimmer, Jeffrey L. Zimmer, and Arlene Z. Schreiber.

(4) Does not include shares which may be acquired by the exercise of options
within 60 days of May 26, 2000 by the following persons pursuant to the
Company's various stock option plans (G. Waddy Garrett, 12,840 shares;
Fenton N. Hord, 6,000 shares; Richard F. Sherman, 10,420 shares; Alan M.
Zimmer, 8,000 shares; Herbert J. Zimmer, 6,000 shares; Jeffrey L. Zimmer,
6,000 shares; Arlene Z. Schreiber, 6,000 shares) and all directors and
executive officers as a group, 375,396 shares.

(5) Rose W. Zimmer, wife of Alan M. Zimmer, is the voting trustee of 154,676
shares held in trust for their minor children; she also owns 3,900 shares
in her name. Such shares are included in the beneficial ownership of Alan
M. Zimmer.

(6) Ronald L. Schreiber, husband of Arlene Z. Schreiber, owns 3,900 shares in
his name. Their sons, Andrew Michael Schreiber and Mark Harrison
Schreiber, own 99,322 and 99,322 shares, respectively. Such shares are
included in the beneficial ownership of Arlene Z. Schreiber.

(7) Ronna T. Zimmer, wife of Herbert J. Zimmer, owns 3,900 shares in her name.
Their son, Bradley Trent Zimmer and Landon Garrett Zimmer, own 104,162 and
104,162 shares, respectively. Such shares are included in the beneficial
ownership of Herbert J. Zimmer.

(8) Jeffrey L. Zimmer, is the voting trustee of 160,858 shares held in trust
for his minor children. Such shares are included in the beneficial
ownership of Jeffrey L. Zimmer.

(9) A partnership comprised of Alan M. Zimmer, Herbert J. Zimmer, Jeffrey L.
Zimmer, and Arlene Z. Schreiber owns 93,854 shares of Company stock.
Beneficial ownership for each of the above persons includes 23,463 1/2
shares over which each such person has the power to vote or dispose of
such shares.

(10) The address of each person who beneficially owns more than 5% of the
Company's Common Stock is 2525 South Seventeenth Street, Wilmington, North
Carolina 28401

COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS AND COMPENSATION OF DIRECTORS

In accordance with the By-Laws of the Company, the Board of Directors
has established an Audit Committee and a Compensation Committee.

The Audit Committee, which is composed of outside Directors, G. Waddy
Garrett (chairman), Richard F. Sherman, and Fenton N. Hord, recommends to the
Board of Directors the engagement of the independent auditors of the Company and
reviews with the independent auditors the scope and results of the Company's
audits, the Company's internal accounting controls, and the professional
services furnished by the independent auditors to the Company. The Audit
Committee met three times in the fiscal year ended February 29, 2000.

The Compensation Committee, which is composed of outside Directors,
Richard F. Sherman (chairman), G. Waddy Garrett, and Fenton N. Hord, reviews and
approves all salary arrangements and other remuneration for officers of the
Company. It also is responsible for review of certain benefit plans and for
administration of the stock option plans. The Compensation Committee met one
time in the fiscal year ended February 29, 2000.

In the fiscal year ended February 29, 2000, the Board of Directors held
four meetings and Committees of the Board of Directors held a total of four
meetings. All Directors attended 100% of the total number of meetings of the
Board of Directors and the Committees on which he or she served during the
fiscal year ended February 29, 2000.

Officers of the Company who are also Directors do not receive any fee
or remuneration for services as members of the Board of Directors or of any
Committee of the Board of Directors. Non-management Directors received an annual
retainer fee of $5,000, $1,250 for each Board meeting attended, $500 for each
Committee meeting attended, and options for 1,000 shares of stock for their
services during the fiscal year ended February 29, 2000. Effective with the
Annual Meeting of Shareholders on July 26, 2000, non-management Directors will
receive an annual retainer fee of $7,500, $1,250 for each Board meeting
attended, $1,000 for each Committee meeting attended, and options for 1,000
shares of stock for their services during the year.

COMPENSATION OF EXECUTIVE OFFICERS

The following tables and narrative text set forth the compensation paid
in fiscal year ended February 29, 2000 and the two prior fiscal years to the
Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers.

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- --------------
SECURITIES ALL OTHER
UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) OPTIONS (#)(2) SATION (3)
- --------------------------- ---- ------ --------- -------------- ----------

Alan M. Zimmer 2000 $281,690 $180,282 2,000 $10,746
President & Chief Executive Officer 1999 264,880 157,000 2,000 12,550
1998 254,808 0 4,000 16,892

William R. Zimmer 2000 154,627 50,000 0 6,338
Chairman of the Board 1999 149,925 45,000 0 4,692
1998 147,773 30,000 0 5,206

James R. Rouse 2000 186,420 63,718 2,000 24,077
Treasurer & Chief Financial Officer 1999 174,018 50,260 2,000 30,430
1998 168,923 0 4,000 35,479

Orville R. Westmoreland 2000 176,562 60,252 2,000 12,395
Vice President of Financial Services 1999 162,672 63,343 2,000 12,449
1998 156,171 0 4,000 17,939

Allan E. Metzner 2000 169,288 60,049 4,000 12,601
Vice President of Merchandising 1999 151,551 57,725 2,000 12,730
1998 145,529 0 4,000 17,520

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(1) Under the Company's Annual Bonus Plan, cash awards are made to
participants based upon achieving pre-determined profit goals. Key
management individuals in the corporate office are covered under this plan
and are paid based on corporate profitability. The plan also awards cash
bonuses to store managers and district supervisors based on the
profitability of their individual stores and districts. Awards are paid to
participants annually, normally during the year following the Annual Bonus
Plan year. In 1999 and 1998, a portion of each executives salary was paid
in the form of a guaranteed bonus as follows: Alan M. Zimmer, $55,000;
William R. Zimmer, $75,000; James R. Rouse, $25,000; and all other
executives, $12,500 each. Beginning March 1, 1999, the annual bonus plan
has been changed and the above amounts are included in the bi-weekly pay
for each executive. Accordingly the amounts are included above as salary.

(2) Adjusted for 100% stock dividend issued on February 20, 1998.

(3) During each of the fiscal years ended February 29, 2000, February 28, 1999
and 1998, respectively, the Company paid premiums for insurance to fund
the supplemental executive retirement plan for each named executive as
follows: Alan M. Zimmer, $6,428, $6,428, and $6,428; William R. Zimmer,
$0, $0, and $0; James R. Rouse, $19,337, $25,337, and $25,337; Orville R.
Westmoreland, $7,500, $7,500, and $7,500; and Allan E. Metzner, $7,905,
$7,905, and $7,905. The Company also made contributions to the
profit-sharing and 401(k) savings plan accounts of each named executive as
follows: for the fiscal year ended February 29, 2000 for Alan M. Zimmer,
$4,318, William R. Zimmer, $6,338, James R. Rouse, $4,740, Orville R.
Westmoreland, $4,895, Allan E. Metzner, $4,696; for the fiscal year ended
February 28, 1999 for Alan M. Zimmer, $6,122, William R. Zimmer, $4,692,
James R. Rouse, $5,093, Orville R. Westmoreland, $4,949, and Allan E.
Metzner, $4,825; and for the fiscal year ended February 28, 1998 for Alan
M. Zimmer, $5,890, William R. Zimmer, $4,666, James R. Rouse, $5,567,
Orville R. Westmoreland, $5,550, and Allan E. Metzner, $5,041.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF STOCK PRICE APPRECIATION
----------------------------------------------- FOR OPTION TERM (10 YEARS) (1)
% OF TOTAL -----------------------------------------
OPTIONS 5% 10%
NUMBER OF GRANTED TO EXERCISE ----------------- -------------------
SECURITIES EMPLOYEES OR BASE PRICE PRICE
UNDERLYING IN FISCAL PRICE EXPIRATION PER AGGREGATE PER AGGREGATE
NAME OPTIONS(2) YEAR ($/SHARE) DATE SHARE VALUE SHARE VALUE
- ---- ---------- ---------- --------- ---------- ----- --------- ----- ---------

Alan M. Zimmer (3) 2,000 9.13 $3.575 5/31/2004 $4.56 $1,976 $5.76 $ 4,370

James R. Rouse 2,000 9.13 3.250 5/31/2009 5.29 4,080 8.43 10,360

O. R. Westmoreland 2,000 9.13 3.250 5/31/2009 5.29 4,080 8.43 10,360

Allan E. Metzner 4,000 18.26 3.250 5/31/2009 5.29 8,160 8.43 20,720

- ---------------------

(1) The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates over an option period of ten years (except as
otherwise noted) and are not intended to forecast future price
appreciation of the Common Stock of the Company. The gains reflect a
future value based upon growth at these prescribed rates. The Company did
not use an alternative formula for a grant date valuation, an approach
which would state gains at present, and therefore lower, value. Options
have value to the listed executives and to all option recipients only if
the stock price advances beyond the grant date price shown in the table
during the effective option period.

(2) These awards were made pursuant to the 1994 Stock Option Plan. Under this
plan, the option price must not be less than 100% of the fair market value
of the Company's Common Stock on the date the option is granted. The fair
market value of a share of the Company's Common Stock is the closing price
as reported on the date of grant.

(3) Options for Alan M. Zimmer expire after five years. The calculations for
potential realizable value for the options of Alan M. Zimmer are therefore
for a period of only five years, rather than ten years.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES VALUE FEBRUARY 29, 2000 OPTIONS
ACQUIRED ON REALIZED EXERCISABLE EXERCISABLE AT
NAME EXERCISE (#) ($) UNEXERCISABLE (#) FEBRUARY 29, 2000 ($)(1)
- ---- ------------ -------- ----------------- ------------------------

Alan M. Zimmer 0 $ 0 8,000 / 0 0
James R. Rouse 0 0 74,550 / 0 2,178
Orville R. Westmoreland 0 0 74,550 / 0 2,178
Allen E. Metzner 0 0 51,460 / 0 436

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(1) Based on $ 2.9375 per share at February 29, 2000.

PERFORMANCE GRAPH

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
REEDS JEWELERS, INC.,
CRSP TOTAL RETURN INDEX FOR THE S & P SMALL-CAP 600, AND
THE COMPANY'S PEER GROUP

[Performance Graph Chart]

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1995 1996 1997 1998 1999 2000

- --------------------------------------------------------------------------------
Reeds Jewelers, Inc. 100.00 78.57 65.47 86.42 68.09 61.55
- --------------------------------------------------------------------------------
S & P Small-Cap 600 100.00 131.03 152.92 206.36 171.04 235.13
- --------------------------------------------------------------------------------
Peer Group 100.00 115.69 120.79 173.61 179.49 214.64
- --------------------------------------------------------------------------------

The above graph assumes $100 invested on February 28, 1995 in the
Company's Common Stock, the S & P Small-Cap 600, and the Company's Peer Group.
The Peer Group Index consists of the following publicly-traded retail jewelry
chains: Friedman's, Inc. (FRDM), Samuels Jewelers (SMJW), Signet Group PLC
(SIGYY), Whitehall Jewellers, Inc. (JWL), and Zale Corporation (ZLC). The S & P
Small Cap 600 Index and the Peer Group Index are calculated based on indexes
prepared for Reeds Jewelers, Inc. by Zacks Investment Research, Inc.

RELATIONSHIPS AND RELATED TRANSACTIONS

The Company leases its corporate headquarters, consisting of 20,731
square feet of office space and 155 parking spaces, from a partnership comprised
of Alan M. Zimmer, Herbert J. Zimmer, Jeffrey L. Zimmer, and Arlene Z.
Schreiber. Alan M. Zimmer is President and Chief Executive Officer of the
Company and Herbert J. Zimmer, Jeffrey L. Zimmer, and Arlene Z. Schreiber are
all Directors. Monthly rental payments under the leases are $26,484, and
increase to $26,927 on January 1, 2003. The Company also pays the related
insurance, property taxes, maintenance fees, and utilities for this location.
The leases for these facilities expire December 31, 2006. Based on rentals
charged for comparable properties in Wilmington, the Company believes the terms
of the leases are no less favorable to the Company than those that could be
obtained from unaffiliated parties.

Herbert J. Zimmer and Jeffrey L. Zimmer are partners in the law firm of
Zimmer and Zimmer, which serves as general counsel to the Company. During the
fiscal year ended February 29, 2000, Zimmer and Zimmer received from the Company
legal fees and reimbursement of costs advanced in the amount of $201,000. Zimmer
and Zimmer has advised the Board of Directors that legal fees paid to Zimmer and
Zimmer are based on the firm's customary fees for similar services.

Between June 30, 1989 and February 6, 1990, the Company borrowed a
total of $1,370,000 from three of its principal shareholders, of which $470,000
was repaid as of May 28, 1991, $21,000 was repaid in June 1996, and $34,000 was
repaid in July 1998. The amounts borrowed accumulate interest at the prime rate
as quoted monthly in the Wall Street Journal. The amounts remaining outstanding
under the notes are $560,000 to Alan M. Zimmer, $185,000 to Arlene Z. Schreiber,
and $100,000 to Ronna T. Zimmer (the wife of Herbert J. Zimmer). These amounts
are evidenced by various subordinated notes and are due and payable upon full
payment of all senior obligations or with approval of all senior lenders.

REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF REEDS JEWELERS, INC.
ON EXECUTIVE COMPENSATION

The Compensation Committee, which is composed of outside Directors,
Richard F. Sherman (chairman), G. Waddy Garrett, and Fenton N. Hord reviews and
approves all salary arrangements and other remuneration for officers of the
Company. It also is responsible for review of certain benefit plans and for
administration of the stock option plans. The Compensation Committee met one
time in the fiscal year ended February 29, 2000.

The primary responsibility of the Company's management is to maximize
shareholder value over time. To accomplish this objective, the Company's
business strategy and operating plans are derived from its goal to increase the
net earnings of the Company at a compound annual growth rate of 20% over any
five-year period. The overall goal of the Compensation Committee is to pay
executive officers in a manner that is consistent with and linked to this
strategic objective.

The Committee believes that the compensation package of executive
officers must be structured to enable the Company to attract, retain, and
encourage the continued development of its executive officers. Accordingly, the
Company's executive officers are compensated as follows:

BASE COMPENSATION: An executive of Reeds Jewelers, Inc. is
compensated for the required general management and specific technical
skills demanded by his position. The value of such skills are
determined by evaluation of the executive's demonstrated knowledge,
experience, productivity, and effectiveness, as well as the value
placed upon such qualities as reflected by compensation for similar
positions within the retail jewelry industry. Such guaranteed
compensation for each executive is in the form of a base salary and
certain benefits designed to relieve financial concerns of the
executive regarding illness, disability, retirement, or death. The base
salary of each executive is reviewed annually in light of the
aforementioned criteria and typically is increased, as appropriate for
each executive, within the general guidelines for all salary increases
within the Company. Alan M. Zimmer received a 3% increase in base
salary during the fiscal year ended February 29, 2000 because of the
sales and earnings performance of the Company during the fiscal year
ended February 28, 1999 and has been granted a 6% increase in base
salary for the current fiscal year.

PAY FOR PERFORMANCE: An executive of the Company is challenged
to perform and manage so that the Company's net income goal is achieved
or exceeded. Upon achievement of the budget for corporate net income,
an amount equal to 60% of base salary is placed in a bonus pool for the
President and Chief Executive Officer. An amount equal to 30% of base
salary for each other executive is placed in bonus pools for each of
them. In addition, for each 1% that net income exceeds budget, an
amount equal to 1% of the excess would be added to the executives'
bonus pools in the ratio of 1.67 shares for the President and Chief
Executive Officer and 1 share for each of the other executives. The
pools are capped at 40% of all excess over the budget. If the net
income budget is not achieved, the executives receive no bonus. If the
net income budget is achieved, then the executives earn a portion or
all of their bonus pools based on achieving certain performance goals.

EQUITY PARTICIPATION: An executive of the Company makes
numerous tactical decisions about the short-term operations of the
Company, and also provides consistent input and influence regarding
longer-term strategic issues. In addition, because the Company believes
that its shareholders are attracted primarily by consistent and
increasing profitability, the executive's daily application and
interpretation of the Company's policies and procedures must be couched
within a longer-term perspective. Stock ownership aligns the interests
of executives with those of shareholders. Accordingly, the final
component of executive compensation provides for the periodic granting
of stock options as a longer-term incentive designed to reward
executives for managing the Company over a period of several years in a
manner that is more likely to increase shareholder value through higher
market valuations of the Company's share price as the result of
consistent and sustainable increases in profitability. Factors
considered regarding the timing and number of stock options granted
include the executive's scope of responsibility and time in the
position, as well as corporate performance. Alan M. Zimmer received
options for 2,000 shares of stock during the fiscal year ended February
29, 2000.

SUMMARY. The Committee believes that the executive compensation
policies and programs described in this report serve the interests of the
shareholders and the Company. Compensation of executive officers is intended to
be linked to, and commensurate with, Company performance and with shareholder
expectations. The Committee believes that the practice and the performance
results of the compensation philosophy described herein should be measured over
a period sufficiently long to determine whether strategy development and
implementation are in line with, and responsive to, shareholder expectations.

Richard F. Sherman, Chairman
G. Waddy Garrett
Fenton N. Hord

APPOINTMENT OF INDEPENDENT AUDITORS

Ernst & Young LLP, Certified Public Accountants, has been recommended
by the Board of Directors to serve as independent auditors of the Company for
the fiscal year ending February 28, 2001. Ernst & Young LLP is the present
independent auditor of the Company and has served in this capacity for the past
eight years. The Company knows of no direct or material indirect financial or
other interest of Ernst & Young in the Company.

Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
FEBRUARY 28, 2001.

SHAREHOLDER PROPOSALS

Proposals of shareholders for the 2001 Annual Meeting of Shareholders
of the Company must be received at the Company's corporate office, P.O. Box
2229, 2525 South Seventeenth Street, Wilmington NC 28401, Attention:
Corporate Secretary, no later than February 28, 2001.

ANNUAL REPORT

The Company's Annual Report to Shareholders and Annual Report on Form
10-K for the year ended February 29, 2000 are included in this mailing to all
shareholders.

By Order of the Board of Directors,

/s/ Roberta G. Zimmer

ROBERTA G. ZIMMER
Secretary

Wilmington, North Carolina
May 28, 2000

PROXY REEDS JEWELERS, INC.
2525 SOUTH SEVENTEENTH STREET
WILMINGTON, NORTH CAROLINA 28401

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

The undersigned hereby appoints Alan M. Zimmer and Roberta G. Zimmer, or
either of them, as agents, each with the power to appoint his or her substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock of Reeds Jewelers, Inc. (the "Company") held of
record by the undersigned on May 26, 2000 at the Annual Meeting of Shareholders
to be held at the Hilton Hotel, 301 North Water Street, Wilmington, North
Carolina, on Wednesday, July 26, 2000, at 10:00 a.m., local time, and at any
adjournments thereof.

1. ELECTION OF DIRECTORS

[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed below

G. Waddy Garrett; Fenton N. Hord; Arlene Z. Schreiber; Richard F. Sherman;
Alan M. Zimmer; Herbert J. Zimmer; Jeffrey L. Zimmer; Roberta G. Zimmer;
William R. Zimmer

(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)

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2. TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR
THE YEAR ENDING FEBRUARY 28, 2001.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In their discretion, the proxy agents are authorized to vote upon such other
business as may properly come before the meeting.

This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted for all the nominees for Director and for independent auditors.

DATED: , 2000
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Signature

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Signature if held jointly

Please sign exactly as name
appears below. When shares are
held as joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by the
president or other authorized
officer. If a partnership,
please sign in partnership
name by an authorized person.

PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.