PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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 Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

Mac Frugal's Bargains Close-outs Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

Dan Zuckerman
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

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2

[MacFrugal's Logo]

May 15, 1995

Dear Stockholder:

You are cordially invited to attend our 1995 Annual Meeting of Stockholders
to be held at 9:00 a.m. on Wednesday, June 14, 1995 at the Long Beach Airport
Marriott Hotel, 4700 Airport Plaza Drive, Long Beach, California 90815. Enclosed
are the Notice of Annual Meeting, Proxy Statement and Proxy Card relating to the
Annual Meeting which we urge you to read carefully. The Company's 1994 Annual
Report to Stockholders is also enclosed. Whether or not you expect to attend the
Annual Meeting, please sign and date the enclosed Proxy Card and return it as
promptly as possible to ensure that your shares will be voted. Because mail
delays occur frequently, it is important that the enclosed Proxy Card be
returned well in advance of the meeting.

ON BEHALF OF YOUR BOARD OF DIRECTORS

PETER S. WILLMOTT
Chairman of the Board
3

[MacFrugal's Logo]

NOTICE OF ANNUAL MEETING
TO BE HELD JUNE 14, 1995

TO THE STOCKHOLDERS OF
MAC FRUGAL' S BARGAINS - CLOSE-OUTS INC.:

Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Mac Frugal's Bargains - Close-outs Inc., a Delaware corporation
(the "Company"), will be held at the Long Beach Airport Marriott Hotel, 4700
Airport Plaza Drive, Long Beach, California 90815, on Wednesday, June 14, 1995,
beginning at 9:00 a.m., local time. The Annual Meeting will be held for the
following purposes:

1. To elect nine (9) directors of the Company to serve during the ensuing
year or until their successors have been duly elected and qualified.

2. To approve an amendment to the Company's Stock Option Plan for
Non-Employee Directors to increase the number of shares of Common Stock
reserved for issuance thereunder from 200,000 shares to an aggregate of
400,000 shares.

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

The Board of Directors has fixed April 21, 1995 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof, and only stockholders of record at the
close of business on that date are entitled to such notice and to vote at the
Annual Meeting. A list of stockholders entitled to vote at the meeting will be
available at the offices of the Company for 10 days prior to the meeting.

We hope that you will use this opportunity to take an active part in the
affairs of the Company by voting on the business to come before the meeting
either by executing and returning the enclosed Proxy Card or by casting your
vote in person at the meeting.

STOCKHOLDERS UNABLE TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO DATE
AND SIGN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. A STAMPED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. IF A STOCKHOLDER RECEIVES MORE THAN ONE PROXY
CARD BECAUSE HE OR SHE OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES,
EACH PROXY CARD SHOULD BE COMPLETED AND RETURNED.

By Order of the Board of Directors

PHILIP L. CARTER
President and Chief Executive Officer
Dominguez, California
May 15, 1995
4

[MacFrugal's Logo]

2430 EAST DEL AMO BOULEVARD
DOMINGUEZ, CALIFORNIA 90220-6306

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 1995
------------------------

PROXY STATEMENT

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

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Mac Frugal's Bargains - Close-outs Inc.
(the "Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 9:00 a.m., local time, on June 14, 1995, at the Long
Beach Airport Marriott Hotel, 4700 Airport Plaza Drive, Long Beach, California
90815, and any postponements or adjournments thereof for the purposes set forth
in the accompanying Notice of Annual Meeting. This Proxy Statement and the
accompanying Form of Proxy were first mailed to stockholders on or about May 15,
1995.

RECORD DATE AND VOTING

April 21, 1995 has been fixed as the record date (the "Record Date") for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting, and any postponements or adjournments thereof. As of April 21,
1995, there were 25,540,843 shares of the Company's Common Stock, par value
$.02778 per share (the "Common Stock"), issued and outstanding. No shares of the
Company's preferred stock, par value $1.00 per share, were outstanding as of
that date. A majority of the shares entitled to vote, present in person or
represented by proxy, will constitute a quorum at the meeting.

Each share of Common Stock issued and outstanding on the Record Date is
entitled to one vote on any matter presented for consideration and action by the
stockholders at the Annual Meeting. With respect to all matters other than the
election of directors, including the approval of the proposal to increase the
number of shares of Common Stock reserved for issuance pursuant to the Company's
Stock Option Plan for Non-Employee Directors (the "Non-Employee Directors
Plan"), the affirmative vote of a majority of shares of the Common Stock present
in person or represented by proxy at the meeting and entitled to vote on the
subject matter will be the act of the stockholders. Directors will be elected by
a plurality of the votes of the shares of the Common Stock present in person or
represented by proxy and entitled to vote on the election of directors.
Abstentions will be treated as the equivalent of a negative vote for the purpose
of determining whether a proposal has been adopted and will have no effect for
the purpose of determining whether a director has been elected. Unless otherwise
instructed, proxies solicited by the Company will be voted "FOR" the nominees
named herein for election as directors and "FOR" the proposal to amend the
Non-Employee Directors Plan.

New York Stock Exchange rules generally require that when shares are
registered in street or nominee name, its member brokers must receive specific
instructions from the beneficial owners in order to vote on certain proposals,
such as the proposal to amend the Non-Employee Directors Plan. If a member
broker indicates on the proxy that such broker does not have discretionary
authority as to certain shares to vote on the proposal to amend the Non-Employee
Directors Plan, those shares will not be considered as present and entitled to
vote with respect to that matter. Pursuant to Delaware law, a broker non-vote
will not be treated as
present or voting in person or by proxy on the proposal. A broker non-vote will
have no effect for the purpose of determining whether a director has been
elected.

A stockholder giving a proxy has the power to revoke it at any time before
it is exercised by giving written notice of revocation to the Secretary of the
Company, by executing a subsequent proxy, or by attending the Annual Meeting and
voting in person. Subject to any such revocation, all shares represented by
properly executed proxies will be voted in accordance with the specifications on
the enclosed proxy card.
5

ELECTION OF DIRECTORS

The Company's by-laws state that the Board of Directors shall consist of
not less than five nor more than nine members. The specific number of Board
members within this range is established by the Board of Directors and is
currently set at nine. The Board of Directors is proposing for election seven of
the eight persons now serving on the Board for election to the Board at the
Annual Meeting and Messrs. Carter and Miller, who have not previously served on
the Board. Each of the nine directors elected at the Annual Meeting will serve
until the next annual meeting of stockholders or until his successor is duly
elected and qualified. Should any nominee become unavailable to serve as a
director or should any vacancy occur before the election (which events are not
anticipated), the proxies may be voted for a substitute nominee selected by the
Board of Directors or the authorized number of directors may be reduced. If for
any reason the authorized number of directors is reduced, the proxies will be
voted, in the absence of instructions to the contrary, for the election of the
remaining nominees named in this Proxy Statement. To the Company's knowledge,
all nominees are and will be available to serve. The nominees are listed below
and have supplied the following background information to the Company:

PRINCIPAL OCCUPATION
DURING THE LAST 5 YEARS, OTHER DIRECTOR
NAME AGE BUSINESS EXPERIENCE AND DIRECTORSHIPS SINCE
- - ------------------------- --- ----------------------------------------------- --------

Peter S. Willmott 57 Chairman of the Board of the Company since 1990
October 1990; Chairman of the Board since 1989,
Willmott Services, Inc. (retail); Chairman of
the Board, President and Chief Executive
Officer 1983 to 1989, Carson Pirie Scott &
Company (retail and food services); Director,
Browning-Ferris Industries, Federal Express
Corporation, International Multifoods
Corporation, Maytag Corporation, Morgan Keegan
& Co., Inc., and Zenith Electronics
Corporation.
Philip L. Carter 46 President and Chief Executive Officer of the NA
Company since March 1995; Executive Vice
President, Chief Financial Officer since August
1993; Senior Vice President, Chief Financial
Officer since October 1991; Vice President
Finance and Distribution since 1991; Chief
Executive Officer, San Remo (Australia), 1987-
1990.
Mark J. Miller 43 Executive Vice President of Merchandise and NA
Stores of the Company since March 1995;
Executive Vice President, General Merchandise
Manager since September 1992; Vice President of
Merchandising/ General Merchandise Manager
1991-1992, The Disney Store, Inc.; Vice
President, Merchandise Manager, Hardlines
1988-1991, Pic 'N' Save Corporation.
David H. Batchelder 45 President, Secretary and sole Director since 1990
1988, Batchelder & Partners, Inc. (financial
advisory and consulting firm); President,
Secretary and sole Director since 1988,
Batchelder Co. (general partner of DHB
Partners, L.P., investor in acquisition
partnerships); Director, Allwaste, Inc., Kasler
Holding Company.
Bruce E. Karatz 49 Director since April 1989, Chairman since 1989
August 1993, President, Chief Executive Officer
and Director since 1986, Kaufman and Broad Home
Corporation (residential and commercial real
estate development); Director, Honeywell Inc.,
National Golf Properties, Inc.

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Anthony Luiso 51 Chairman, President and Chief Executive Officer 1992
since 1989, and Director, President and Chief
Operating Officer 1988 to 1989, International
Multifoods (food service distributor and food
processor); Director, The Black & Decker
Corporation.
Ronald P. Spogli 47 General Partner since 1983, Freeman Spogli & 1989
Co. (merchant banking); Director, Buttrey Food
and Drug Stores Company, Envirosource, Inc.,
Orchard Supply Hardware Stores, Inc.
Bill M. Thomas 60 Private Investor since 1989; Consultant 1987 to 1990
1989; and Chief Financial Officer of the
Company 1980 to 1987.
James J. Zehentbauer 33 Investment Banking Partner since 1990 and 1990
Principal Accountant 1989 to 1990, Batchelder &
Partners, Inc. (financial advisory and
consulting firm); Certified Public Accountant
1984 to 1989, Arthur Andersen & Co. (accounting
firm).

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION OF
ALL OF THE ABOVE NOMINEES.

For information concerning beneficial ownership of Common Stock by
directors, see "Security Ownership of Certain Beneficial Owners and
Management -- Security Ownership of Management" below. The Board of Directors
met a total of four times during the fiscal year ended January 29, 1995 ("fiscal
1994"). All directors attended 75% or more of the meetings of the Board of
Directors and the committees of which they were a member.

INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD OF DIRECTORS

COMMITTEES OF THE BOARD

Audit Committee -- The Board has a standing Audit Committee which reviews
the audit and control functions of the Company, the Company's accounting
principles, policies and practices and financial reporting, the scope of the
audit conducted by the Company's auditors, the fees and all non-audit services
of the independent auditors and the independent auditors' opinion and letter of
comment to management and management's response thereto. The Audit Committee
also recommends to the Board the selection of the Company's independent
auditors. The Audit Committee met four times in fiscal 1994. At the date of this
Proxy Statement the Audit Committee was comprised of Messrs. Zehentbauer
(Chairman), Batchelder, Luiso and Spogli.

Compensation and Organization Committee -- The Board has a Compensation and
Organization Committee (the "Compensation Committee") whose members at the date
of this Proxy Statement were Messrs. Luiso (Chairman), Batchelder, Karatz,
Spogli and Willmott. The Compensation Committee is authorized to review and
recommend to the Board the salaries, bonuses and perquisites of the Company's
executive officers. The Compensation Committee also reviews and recommends to
the Board any new compensation or retirement plans and administers the Company's
1990 Employee Stock Incentive Plan (the "1990 Plan"). The Compensation Committee
met two times in fiscal 1994.

Nominating Committee -- The Board of Directors also has a standing
Nominating Committee whose members at the date of this proxy statement were
Messrs. Willmott (Chairman), Batchelder, Karatz and Thomas. The Nominating
Committee is authorized to review matters regarding the structure of the
Company's Board of Directors and the qualifications of proposed nominees to
serve on the Board. The

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Nominating Committee will consider nominees for director whose names are timely
submitted in writing by holders of the Company's Common Stock addressed to the
Chairperson of the Nominating Committee accompanied by such information
regarding the nominee as would be required under the rules of the Securities and
Exchange Commission were the stockholders soliciting proxies with regard to the
election of such nominee. The Nominating Committee met two times in fiscal 1994.

On August 9, 1990, the Company entered into a Settlement Agreement with
Girard Partners, Mr. Batchelder and certain other related parties in connection
with a consent solicitation of other stockholders by Girard Partners (then a 6%
stockholder of the Company) to reconstitute the Board of Directors of the
Company. The Settlement Agreement provides that so long as Mr. Batchelder serves
on the Board of Directors of the Company, he will be a member of each of the
Board's committees.

DIRECTOR COMPENSATION

Standard Compensation -- Directors who are not employees of the Company or
its subsidiaries receive $15,000 per year (the "Retainer Fee") or, in lieu
thereof, a director may elect to receive an option to purchase shares of Common
Stock pursuant to the Non-Employee Directors Plan discussed below. Other than
Mr. Thomas, each of the current non-employee directors of the Company elected to
receive such an option, in lieu of the Retainer Fee, in fiscal 1994.
Additionally, non-employee directors receive $1,000 for each meeting of the
Board or committee meeting which they attend plus reimbursement of any expenses
they may incur with respect to such meeting, and up to $1,000 per diem for time
expended on matters on the Company's behalf. Chairmen of the Audit, Compensation
and Nominating Committees receive additional annual retainer fees of $10,000,
$8,000 and $5,000, respectively; the Chairman of the Board receives a $15,000
additional annual retainer fee. Directors who are employees of the Company or
its subsidiaries serve as directors without compensation.

Stock Option Plan for Non-Employee Directors -- In 1992, the Company
adopted the Non-Employee Directors Plan. The purpose of the Non-Employee
Directors Plan is to provide present and prospective directors who are not
employed by the Company with the opportunity to obtain equity ownership
interests in the Company through the exercise of stock options. The Non-Employee
Directors Plan is designed to link the non-employee directors' compensation more
closely with the Company's performance.

Only directors of the Company who are not employees of the Company or one
of its subsidiaries are eligible to participate in the Non-Employee Directors
Plan. The Non-Employee Directors Plan is administered by the Board of Directors,
although, as discussed below, the grant of options is automatic. The expenses of
administering the Non-Employee Directors Plan are borne by the Company.

The Non-Employee Directors Plan provides for options to be awarded under
two different circumstances. First, each non-employee director is automatically
granted on the date of the annual meeting at which the director is elected
(including at each annual stockholder meeting at which the director is
re-elected), an option to purchase shares of Common Stock at an exercise price
equal to the fair market value of the Common Stock at the close of business on
the day before such annual meeting. Pursuant to the Non-Employee Directors Plan
as originally adopted, the number of shares covered by this option was 2,500.
However, on March 15, 1995, the Board of Directors approved an amendment to the
Non-Employee Directors Plan that reduced the number of shares covered by these
options to 2,250. These options are not exercisable until the annual meeting of
stockholders following the date of grant.

The second feature of the Non-Employee Directors Plan permits each
non-employee director to elect, on the date of each annual meeting at which he
is elected or re-elected, to receive an option to purchase shares of Common
Stock in lieu of being paid the Retainer Fee. If the non-employee director makes
such an election, on the six-month anniversary of the date of the election (the
"Date of Grant") such director will be granted an option exercisable for a
number of shares of Common Stock equal to the amount of the director's Retainer
Fee divided by 20% of the fair market value of the shares of Common Stock at the
close of business on the Date of Grant. The exercise price for any such option
will be 80% of the fair market value of the Common Stock on the Date of Grant.
These options will become exercisable on the date of the first annual meeting of
stockholders following the Date of Grant.

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Upon exercise of the options granted under the Non-Employee Directors Plan,
the exercise price must be paid to the Company in cash or by check. The options
expire on the earlier of the tenth anniversary of the date of grant or six
months after the recipient of the option ceases to be a director. The maximum
number of shares of Common Stock that may be issued pursuant to awards granted
under the Non-Employee Directors Plan is 200,000 (subject to adjustments to
prevent dilution). In March 1995, the Board of Directors adopted an amendment to
the Non-Employee Directors Plan, subject to stockholder approval, to increase
the shares reserved for issuance thereunder by 200,000 shares, bringing the
total number of shares issuable under the Non-Employee Directors Plan to
400,000. At the Annual Meeting, the stockholders are being requested to approve
such proposed amendment. See "Approval of Amendment to Stock Option Plan for
Non-Employee Directors" below.

The Non-Employee Directors Plan became effective, with stockholder
approval, upon its adoption by the Company's Board of Directors on March 18,
1992. Awards may not be granted under the Non-Employee Directors Plan after
March 18, 2002. Although any option that was duly granted on or prior to such
date may thereafter be exercised in accordance with its terms, no shares of
Common Stock may be issued pursuant to any award after March 18, 2012.

As of May 1, 1995, options have been granted under the Non-Employee
Directors Plan to purchase an aggregate of 129,086 shares of Common Stock. Set
forth below is information concerning options granted under the Non-Employee
Directors Plan during fiscal 1994.

POTENTIAL
REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SHARES OF STOCK PRICE
COMMON STOCK APPRECIATION
UNDERLYING FOR OPTION TERM
OPTIONS EXERCISE OR BASE --------------------
NAME GRANTED (#) PRICE ($/SHARE) EXPIRATION DATE 5% ($) 10% ($)
- - ------------------------ ------------ ---------------- ----------------- ------- --------

Peter S. Willmott....... 2,500 $ 16.875 June 22, 2004 $26,531 $ 67,236
3,726 16.10 December 22, 2004 62,155 134,505
David H. Batchelder..... 2,500 16.875 June 22, 2004 26,531 67,236
3,726 16.10 December 22, 2004 62,155 134,505
Bruce E. Karatz......... 2,500 16.875 June 22, 2004 26,531 67,236
3,726 16.10 December 22, 2004 62,155 134,505
Anthony Luiso........... 2,500 16.875 June 22, 2004 26,531 67,236
3,726 16.10 December 22, 2004 62,155 134,505
Ronald P. Spogli........ 2,500 16.875 June 22, 2004 26,531 67,236
3,726 16.10 December 22, 2004 62,155 134,505
Bill M. Thomas.......... 2,500 16.875 June 22, 2004 26,531 67,236
James J. Zehentbauer.... 2,500 16.875 June 22, 2004 26,531 67,236
3,726 16.10 December 22, 2004 62,155 134,505

The following is a brief description of the federal income tax treatment
which will generally apply to awards made under the Non-Employee Directors Plan,
based on federal income tax laws in effect on the date hereof. No information is
provided herein with respect to estate, inheritance, state or local tax laws,
although there may be certain tax consequences upon the receipt or exercise of
an option or the disposition of any acquired shares under those laws.
PARTICIPANTS ARE ADVISED TO CONSULT THEIR PERSONAL TAX ADVISORS WITH REGARD TO
ALL CONSEQUENCES ARISING FROM THE GRANT OR EXERCISE OF STOCK OPTIONS, AND THE
DISPOSITION OF ANY ACQUIRED SHARES. The options granted under the Non-Employee
Directors Plan do not qualify for treatment as incentive stock options under the
provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Upon exercise of an option, the optionee generally will recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares acquired upon exercise (determined as of the date of exercise) over the
exercise price of such option. The Company may be required to withhold federal
income taxes with respect to such income and, to the extent that the optionee
has ordinary income, the Company will be entitled to a deduction. The amount
included in the optionee's taxable income on the exercise of the option will be
added to the exercise price in determining the optionee's basis in the acquired
shares. Any gain or loss

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on the subsequent sale or disposition of the shares generally will be treated as
long-term or short-term capital gain or loss, as the case may be. If an optionee
is subject to Section 16 of the Securities Exchange Act of 1934 (an "Insider")
and exercises an option within six months of the date of grant, the timing of
the recognition of any ordinary income should be deferred until (and the amount
of ordinary income should be determined based on the fair market value (or sales
price in the case of a disposition) of the acquired shares upon) the earlier of
the following two dates: (i) six months after the date of grant or (ii) a
disposition of the acquired shares, unless the Insider makes an election under
Section 83(b) of the Code (an "83(b) Election") within 30 days after exercise to
recognize ordinary income based on the value of the acquired shares on the date
of exercise. With certain exceptions, an individual may not deduct
investment-related interest to the extent such interest exceeds the individual's
net investment income for the year. Investment interest generally includes
interest paid on indebtedness incurred to purchase shares pursuant to options.

Mr. Willmott's Option Agreement -- In fiscal 1990, the Chairman of the
Board, Mr. Willmott, was granted an option to purchase 25,000 shares of Common
Stock exercisable on the date of grant at the fair market value on such date, as
additional compensation for his services to the Company. Mr. Willmott's Stock
Option Agreement provides that the option will terminate upon the earlier of the
tenth anniversary of the date of grant or 90 days after termination of Mr.
Willmott's relationship with the Company, except that if termination is caused
by total disability or death, the option terminates upon the earlier of the
tenth anniversary of the date of grant or the first anniversary of the date of
termination of Mr. Willmott's position.

COMPENSATION OF EXECUTIVE OFFICERS

The table below sets forth the compensation paid to or accrued for the
current and former Chief Executive Officers of the Company and the other
executive officers of the Company (collectively, the "Named Executive
Officers"), for the fiscal years ended January 29, 1995, January 30, 1994 and
January 31, 1993:

SUMMARY COMPENSATION TABLE

LONG TERM
ANNUAL COMPENSATION(3) COMPENSATION
------------------------------------------------ AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL FISCAL BONUS COMPENSATION OPTIONS/SARS COMPENSATION
POSITION(1) YEAR SALARY($) ($)(4) ($)(5) (#)(6) ($)(7)
- - -------------------------- ------ --------- -------- ------------- ------------ ------------

Leonard S. Williams(2) 1994 $ 536,539 $242,573 $ 4,050 16,853 $ 5,926
Former President and 1993 520,000 -- -- 70,000 9,689
Chief Executive Officer 1992 520,000 -- -- 17,500 12,823
Philip L. Carter(2) 1994 274,000 106,586 780 8,426 5,223
Current President and 1993 254,000 -- -- 75,000 11,280
Chief Executive Officer 1992 232,442 -- -- 8,750 19,455
Mark J. Miller 1994 308,270 119,942 530 8,426 5,318
Executive Vice President 1993 300,000 -- -- 35,000 9,082
of Merchandise and 1992 103,846 100,000 -- 100,000 276
Stores
Richard N. Lodwick(2) 1994 260,000 26,650 -- -- 686
Senior Vice 1993 260,000 -- -- 35,000 8,972
President--Stores 1992 258,269 -- -- 8,750 7,533
Patricia J. Wehner 1994 186,000 57,195 277 6,019 4,991
Senior Vice President 1993 171,000 -- -- 33,000 6,431
Real Estate & Construction 1992 154,962 -- -- 8,000 4,531

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

(1) The Company maintains written employment agreements with each of its
executive officers. See "Employment Agreements" below.

(2) Mr. Williams resigned as an officer of the Company in March 1995. Prior to
March 15, 1995, Mr. Carter was Executive Vice President and Chief Financial
Officer of the Company. Mr. Lodwick resigned from the Company in May 1994.

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(3) In addition to the annual salary and bonus compensation shown in the table,
the executive officers of the Company received other annual compensation in
the form of other personal benefits. The amount of such other annual
compensation paid to each executive officer did not exceed the lesser of
$50,000 or ten percent of the total of annual salary and bonus reported for
such executive officer for each respective fiscal year.

(4) Represents bonuses paid pursuant to employment agreements. Bonuses shown for
any fiscal year were accrued during the fiscal year shown and paid in the
following fiscal year.

(5) Represents reimbursement for taxes incurred in connection with the group
term life insurance paid for by the Company.

(6) Represents options granted pursuant to the 1990 Plan. See "1990 Employee
Stock Incentive Plan" below.

(7) Includes fiscal 1994 contributions of $4,500 to the Company's defined
contribution profit sharing plan (the "Profit Sharing Plan") for each of Mr.
Williams, Mr. Carter, Mr. Miller and Ms. Wehner; fiscal 1993 contributions
of $8,254, $8,254, $8,254, $8,254 and $5,918 to the Profit Sharing Plan for
Mr. Williams, Mr. Carter, Mr. Miller, Mr. Lodwick and Ms. Wehner,
respectively; fiscal 1992 contributions of $11,443, $6,815 and $4,066 to the
Profit Sharing Plan for Mr. Williams, Mr. Lodwick and Ms. Wehner,
respectively; and fiscal 1993 moving expenses of $2,270 and fiscal 1992
moving expenses of $18,809 for Mr. Carter. The balance of the amounts shown
represents premiums for the group term life insurance paid for by the
Company on behalf of the Named Executive Officers.

The following table shows information with respect to stock options granted
under the 1990 Plan to the Named Executive Officers.

OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)

INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL
% OF TOTAL REALIZABLE VALUE AT
NUMBER OF OPTIONS/ ASSUMED ANNUAL
SHARES SARS RATES OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION
OPTIONS/ EMPLOYEES EXERCISE FOR OPTION TERM
SARS IN FISCAL PRICE -------------------
NAME GRANTED(2) YEAR ($/SH)(3) EXPIRATION DATE 5% 10%
- - ---------------------------- ---------- ---------- ---------- --------------- -------- --------

Leonard S. Williams......... 16,853 15.05% $ 14.875 March 15, 2005 $157,657 $399,533
Philip L. Carter............ 8,426 7.53 14.875 March 15, 2005 78,824 199,755
Mark J. Miller.............. 8,426 7.53 14.875 March 15, 2005 78,824 199,755
Richard N. Lodwick.......... -- -- -- -- -- --
Patricia J. Wehner.......... 6,019 5.38 14.875 March 15, 2005 56,307 142,692

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

(1) Reflects stock options granted on March 15, 1995 under the 1990 Plan taking
into account performance during fiscal 1994.

(2) The amounts in this column are options to purchase shares of Common Stock
granted under the 1990 Plan which become exercisable at the rate of 20% per
year beginning in the year following the year in which the grant was made.

(3) The stock options were granted with an exercise price equal to the fair
market value per share of the Common Stock on March 15, 1995.

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11

The following table shows information with respect to fiscal 1994 option
exercises and year-end option values for each of the Named Executive Officers.

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

NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/ OPTIONS/
SARS AT FISCAL SARS AT FISCAL
YEAR-END(#) YEAR-END($)
----------------- ------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(2)
- - ------------------------ ---------------- ----------------- ----------------- ------------------

Leonard S. Williams..... -- -- 396,000/66,500 $2,770,250/$56,000
Philip L. Carter........ -- -- 53,500/65,250 20,750/83,000
Mark J. Miller.......... 27,000 $ 179,375 0/88,000 --/373,000
Richard N. Lodwick...... 57,000 332,750 0/0 --/--
Patricia J. Wehner...... -- -- 14,100/26,400 54,725/61,400

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

(1) The amounts in this column are options to purchase shares of Common Stock
granted under the 1990 Plan and do not include stock options granted on
March 15, 1995 taking into account performance during fiscal 1994. See table
above entitled "Option/SAR Grants in Last Fiscal Year."

(2) The amounts in this column are based upon the closing price of the Common
Stock on January 27, 1995 of $17.00 per share.

EMPLOYMENT AGREEMENTS

Each of the Company's Named Executive Officers served during fiscal 1994
pursuant to a written employment agreement. The Company entered into a new
agreement with Mr. Carter as of March 15, 1995 pursuant to which Mr. Carter is
employed as the Company's President and Chief Executive Officer at an annual
base salary of $450,000. The Company also entered into a new agreement with Mr.
Miller as of March 15, 1995 pursuant to which Mr. Miller is employed as the
Company's Executive Vice President of Merchandise and Stores at an annual base
salary of $375,000. None of the employment agreements currently in effect
provide for any fixed term of employment and are subject to cancellation by the
Board of Directors upon 30 days' notice.

Base Salaries -- The base salaries payable under these agreements are
subject to increase annually at the discretion of the Board of Directors.
Effective April 1, 1995 Ms. Wehner's annual salary was increased to $192,000.

Performance Stock Options -- Pursuant to their employment agreements, the
Company's Named Executive Officers are entitled to participate in any
performance stock option program approved annually by the Compensation Committee
of the Board of Directors. The performance stock option program approved by the
Compensation Committee for fiscal 1994 provided that options would be granted in
fiscal 1995 based upon fiscal 1994 performance. The program further provided
that the maximum number of options that could be granted would be 17,500 in the
case of Mr. Williams, 8,750 in the case of Messrs. Carter and Miller, and 6,250
in the case of Mr. Lodwick and Ms. Wehner. On March 15, 1995, the Board of
Directors approved the grant to Messrs. Williams, Carter and Miller and Ms.
Wehner of options pursuant to the 1990 Plan to purchase 16,853, 8,426, 8,426 and
6,019 shares, respectively. Mr. Lodwick received no options because he resigned
from the Company in May 1994.

Performance Bonus -- Pursuant to their employment agreements, the Company's
Named Executive Officers are entitled to participate in any performance bonus
plan approved annually by the Compensation Committee of the Board of Directors.
The performance bonus plan approved by the Compensation Committee for fiscal
1994 provided that bonuses would be granted in fiscal 1995 based upon a
combination of the fiscal

8
12

1994 financial performance of the Company and the individual executive's
performance during fiscal 1994. The plan further provided that the maximum bonus
that could be paid would not exceed 50% of the executive officer's base salary
for fiscal 1994 in the case of the Senior Vice Presidents, 60% in the case of
the Executive Vice Presidents and 70% in the case of Mr. Williams. On March 15,
1995, the Board of Directors approved the award to Messrs. Williams, Carter,
Lodwick and Miller and Ms. Wehner of performance bonuses in the amount of
$242,573, $106,586, $26,650, $119,942 and $57,195, respectively.

Termination of Employment; Change of Control -- Each of the employment
agreements provides that, in the event the Named Executive Officer's employment
is terminated, the Company will continue to make the base salary payments at the
rate then being paid for eighteen months after termination of the agreement
except that Mr. Carter's agreement also provides that in the event his
employment is terminated at any time subsequent to March 15, 1998, the Company
will continue to pay his base salary at the rate then being paid for twenty-four
months after such termination. The employment agreements further provide that
if, within two months after a Change of Control (as defined in the agreements),
the Named Executive Officer terminates his or her employment, then the Company
will pay him or her the following benefits: (i) a lump sum severance payment
equal to 2 (2.9 in the case of Mr. Carter) multiplied by the sum of his or her
annual base salary in effect during the year immediately preceding termination
and (ii) the greater of the amount of any incentive, bonus or other cash
compensation that was paid to him or her during either the 12 months immediately
preceding the date of termination or the 12 months immediately preceding the
Change of Control. In addition, the Named Executive Officer would be entitled to
receive a cash payment equal to the amount by which the greater of (i) the
closing price of the Common Stock on the day before termination or (ii) the
highest price per share actually paid in connection with the Change of Control
exceeds the per share exercise price of each then vested and exercisable stock
option held by such Named Executive Officer on the day before the date his or
her employment terminates, multiplied by the number of shares covered by each
such option, in exchange for which payment the Named Executive Officer is
required to surrender all options to the Company without exercising them. As
used in the employment agreements, a Change in Control is defined to mean the
acquisition by any person of beneficial ownership of more than 35% of the
combined voting power of the Company's outstanding securities, as a result of
purchases of such securities which are not expressly approved by the Company's
Board of Directors.

Promissory Notes with Mr. Miller -- Concurrently with entering into his
previous employment agreement with the Company on September 25, 1992, Mr. Miller
executed two promissory notes in favor of the Company in the amounts of $100,000
and $30,000, respectively. Each of the notes provided for interest to accrue at
the rate of 7% per annum. The principal amount of the $100,000 note was
originally due and payable in three equal annual installments on April 1, 1993,
April 1, 1994 and April 1, 1995. On May 13, 1993, the Company paid Mr. Miller
100% of his fiscal 1992 bonus and offset a portion of the $100,000 note with the
net proceeds ($69,712) after first deducting interest accrued to that date. The
remaining $30,288 principal due under the $100,000 note was paid in full by Mr.
Miller on April 1, 1994 together with interest accrued to that date. The
principal amount of the $30,000 note was due and payable in two equal
installments on April 1, 1994 and April 1, 1995. On April 1, 1994, Mr. Miller
paid the first installment due under the $30,000 note together with accrued
interest to date. On April 1, 1995, Mr. Miller paid the remaining principal
balance under the $30,000 note together with accrued interest to date. See
"Certain Transactions" below.

1990 EMPLOYEE STOCK INCENTIVE PLAN

In 1990, the Company adopted the 1990 Plan. The 1990 Plan originally
authorized the issuance of up to 1,750,000 shares of Common Stock including
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code ("Incentive Stock Options"), stock options that do not qualify as
incentive stock options, stock appreciation rights and restricted shares of
Common Stock. In 1993, the stockholders approved an amendment to the 1990 Plan
which increased the number of shares reserved for issuance thereunder by
1,450,000 shares to an aggregate of 3,200,000 shares. Officers and other
salaried employees of the Company are eligible to participate in the 1990 Plan.
As of the date of this Proxy Statement, approximately 79 persons were eligible.

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13

The 1990 Plan is administered by the Compensation Committee. The
Compensation Committee selects from the eligible participants under the 1990
Plan and determines the terms and conditions of all grants and awards to such
participants including the terms and conditions under which each option may be
exercisable and the expiration date of each option, except that each option must
expire no later than ten years from the date of grant. Grants and awards are
made in consideration of services rendered or to be rendered by the recipients
thereof.

On March 15, 1995, options to purchase shares of Common Stock were granted
to the Named Executive Officers of the Company as described above in the table
entitled "Option/SAR Grants in Last Fiscal Year." All such options (a) become
exercisable at the rate of 20% per year beginning in the year following the year
in which the grant was made, and (b) have an exercisable price equal to the fair
market value of the Common Stock on the date of grant. Payment of the exercise
price of options granted under the 1990 Plan must be made in full in cash or
cash equivalent concurrently with the exercise of such option, or as follows
subject to approval of the Compensation Committee:

(i) by delivery by the optionee of a full-recourse promissory note in
a form and amount satisfactory to the Committee; provided that the
principal amount of such promissory note shall not exceed the excess of the
exercise price of such option over and above the aggregate par value of the
option shares;

(ii) in whole or in part, with shares of Common Stock delivered
concurrently with such exercise (such shares to be valued on the basis of
the fair market value of such shares on the business day immediately
preceding the date of such exercise), provided that the Company is not then
prohibited from purchasing or acquiring such shares; and/or

(iii) in whole or in part, by reducing the number of option shares to
be delivered to the optionee upon exercise of such option (such reduction
to be valued on the basis of the aggregate fair market value of the
additional shares of Common Stock that would otherwise have been delivered
to such optionee upon exercise of such option, such fair market value to be
determined as of the business day immediately preceding the date of such
exercise), provided that the Company is not then prohibited from purchasing
or acquiring such shares.

CERTAIN TRANSACTIONS

Concurrently with entering into his previous employment agreement with the
Company on September 25, 1992, Mr. Miller executed two promissory notes in favor
of the Company in the amounts of $100,000 and $30,000, respectively. Each of the
notes provided for interest to accrue at the rate of 7% per annum. The principal
amount of the $100,000 note was originally due and payable in three equal annual
installments on April 1, 1993, April 1, 1994 and April 1, 1995. On May 13, 1993,
the Company paid Mr. Miller 100% of his fiscal 1992 bonus and offset a portion
of the $100,000 note with the net proceeds ($69,712) after first deducting
interest accrued to that date. The remaining $30,288 principal due under the
$100,000 note was paid in full by Mr. Miller on April 1, 1994 together with
interest accrued to that date. The principal amount of the $30,000 note was due
and payable in two equal installments on April 1, 1994 and April 1, 1995. On
April 1, 1994, Mr. Miller paid the first installment due under the $30,000 note
together with accrued interest to date. On April 1, 1995, Mr. Miller paid the
remaining principal balance under the $30,000 note together with accrued
interest to date.

10
14

REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
ON EXECUTIVE COMPENSATION

COMPENSATION PHILOSOPHY

The Company's Compensation and Organization Committee (the "Committee") has
established policies for the compensation of the Company's Chief Executive
Officer and the other executive officers (the "Executive Officers") set forth in
the Summary Compensation Table, based upon the responsibilities of the
individual Executive Officers and the Company's financial performance.
Compensation which may be earned by an Executive Officer in any fiscal year
consists of base salary, cash bonus and stock options. The Company enters into
employment agreements with its Executive Officers that set forth the elements of
compensation that have been approved by the Committee. In recent years, these
agreements have been amended or renewed to allow the Committee greater ability
to tie a significant portion of each Executive Officer's overall target
compensation to criteria based upon the Company's financial performance. Special
bonus and option awards may be made at the time an executive is first hired by
the Company or is promoted.

EXECUTIVE COMPENSATION PROGRAM

The Company's executive compensation consists of the following components,
which are intended to reflect the Company's compensation philosophy:

- - -- SALARY

The Committee establishes base salaries at levels determined through
the Company's overall salary structure and the Company's own experience in
attracting qualified executives. Adjustments are made to reflect an
individual's contributions to the Company and the specific job
responsibilities. (The Committee does not base salary levels on amounts
paid by other companies; nevertheless, the Committee compares its salary
levels to those reported by other companies that participate in retail
industry compensation surveys to ensure that its salaries are within the
range paid by comparably sized retail companies.) Because participation in
these surveys is on an anonymous basis, the Committee is unable to
determine the extent to which the companies that participate in the salary
survey are the same as the retail companies included in the Stockholder
Return Performance Presentation on page 13 of this Proxy Statement. The
Committee has recently retained a nationally recognized compensation
consulting firm to review the Company's compensation practices and to
assess and evaluate the competitiveness of its compensation practices. Base
salaries are reviewed annually and any changes in base salary are made at
the discretion of the Committee, subject to ratification by the Board of
Directors. Actual salary increases are based upon evaluations of a
particular officer's individual performance and contribution to the
Company.

- - -- ANNUAL BONUS

Executive Officers are eligible for an annual cash bonus only if
certain pre-tax earnings objectives for the fiscal year are met. At the
discretion of the Committee, a certain part of the bonus may be based on
the Committee's subjective evaluation of the Executive Officer's individual
performance during the fiscal year. No bonuses are paid to the Executive
Officers unless the amount of pre-tax operating income exceeds a certain
threshold. A maximum bonus level is set for each Executive Officer,
expressed as a percent of base salary, in the event that pre-tax operating
income exceeds targeted levels. Cash bonuses for Fiscal 1994 were above the
95th percentile of the target bonus award, based solely upon the Company's
Fiscal 1994 pre-tax operating income. The Committee exercised its
discretion not to consider individual performance in determining the annual
bonuses for Fiscal 1994.

- - -- STOCK OPTIONS

For Fiscal 1994, the Committee adopted a policy of issuing options
only after the end of the fiscal year, subject to a maximum award level
established by the Committee at the beginning of the year. This policy
replaced the Committee's previous practice of granting options at the
beginning of the year which vested only if certain performance goals were
satisfied. For Fiscal 1994, the actual number of options

11
15

granted was based on the extent to which the Company met or exceeded target
levels of pre-tax operating income that were established by the Committee
in the first quarter of Fiscal 1994. The Committee has not traditionally
considered the size of the previous years' grants in determining the number
of option grants. However, as a result of the number of option awards in
1993 when the Committee terminated its former policy of granting
performance-contingent options at the beginning of the year, the Committee
considered the number of options awarded in that year when determining the
target number of options to be granted for Fiscal 1994 performance. As a
result of the Company's Fiscal 1994 pre-tax operating income, the Fiscal
1994 option awards were above the 95th percentile of the maximum number of
options established for each Executive Officer.

- - -- OTHER

Legislation adopted by Congress in 1993 places a $1 million limitation
on the deduction available to public companies for compensation paid to
certain executives, unless the compensation is treated as "performance
based" (as defined under the Code) or satisfies another exception. In
December 1993 the IRS proposed regulations to implement this legislation
and in December 1994 the IRS revised those proposals. The Committee has not
developed specific policies to address this new tax provision pending final
regulations from the IRS. However, the Committee believes that amounts
recognized upon exercise of outstanding stock options will qualify as
performance-based compensation under the proposed IRS regulations.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

For Fiscal 1994 the maximum cash bonus payable to Mr. Williams was
$378,000. The actual bonus paid Mr. Williams was $242,573, based solely upon
pre-tax operating income being above the 95th percentile of target. In early
1994, the Committee determined after consideration of the number of options
granted Mr. Williams in 1993 that the maximum number of option shares issuable
to Mr. Williams for Fiscal 1994 would be 17,500. In March 1995, Mr. Williams
received an option grant for Fiscal 1994 that was above 95% of target. The
Committee considers Mr. Williams' fiscal 1994 remuneration appropriate given his
responsibilities and the performance of the Company during the year.

Submitted by the Compensation and Organization Committees:

Anthony Luiso (Chairman)
David H. Batchelder
Bruce E. Karatz
Ronald P. Spogli
Peter S. Willmott

The Report of the Compensation and Organization Committee on Executive
Compensation shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such acts.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As of the date of this Proxy Statement, the members of the Compensation
Committee of the Board of Directors were Messrs. Luiso (Chairman), Batchelder,
Karatz, Spogli and Willmott, none of whom was an officer or employee of the
Company during Fiscal 1994 or is a former officer of the Company.

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16

STOCKHOLDER RETURN PERFORMANCE PRESENTATION

Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Dow Jones Equity Composite Stock Index and
the Dow Jones Retailers-Other Specialty Composite Stock Index for the five
fiscal years commencing January 1, 1990 and ending January 29, 1995. The stock
performance graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such acts.

Retailers-
Measurement Period Dow Jones Other
(Fiscal Year Covered) Mac Frugal's Equity Specialty
--------------------- ------------ --------- ----------

1989 100.00 100.00 100.00
1990 103.91 106.45 110.22
1991 192.66 135.95 156.65
1992 161.41 151.12 205.63
1993 148.91 169.10 192.55
1994 170.16 170.18 200.25

13
17

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following security ownership information is set forth, as of May 1,
1995, with respect to certain persons or groups known to the Company to be
beneficial owners of more than 5% of the Company's outstanding Common Stock and
with respect to each director of the Company, each of the Named Executive
Officers, and all current directors, nominees and executive officers as a group
(12 persons). Other than as set forth below, the Company is not aware of any
other person who may be deemed to be a beneficial owner of more than 5% of the
Company's Common Stock.

SECURITY OWNERSHIP OF MANAGEMENT

AMOUNT
AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
------------------------------------------------- ------------- ----------

David H. Batchelder(3)........................... 71,831 *
Bruce E. Karatz.................................. 17,886 *
Anthony Luiso.................................... 25,940 *
Ronald P. Spogli................................. 21,940 *
Bill M. Thomas(4)................................ 1,088,712 4.26%
Leonard S. Williams.............................. 488,500 1.88%
Peter S. Willmott................................ 122,715 *
James J. Zehentbauer............................. 20,940 *
Philip L. Carter................................. 75,250 *
Mark J. Miller................................... 7,100 *
Richard N. Lodwick............................... 0 *
Patricia J. Wehner............................... 16,000
All Directors and Executive Officers
as a Group (12 persons) ...................... 1,956,814 7.47%

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

(*) Denotes less than 1% of the sum of the 25,540,843 shares of Common Stock
outstanding at May 1, 1995 plus shares that are subject to options that are
presently exercisable or will become exercisable within 60 days after May 1,
1995 by that person or group, as the case may be.

(1) Includes shares which may be acquired pursuant to options exercisable on or
within 60 days after May 1, 1995, as follows: Mr. Batchelder (20,940); Mr.
Karatz (16,886); Mr. Luiso (20,940); Mr. Spogli (20,940); Mr. Thomas
(7,500); Mr. Williams (413,500); Mr. Willmott (45,940); Mr. Zehentbauer
(20,940); Mr. Carter (65,250); Mr. Miller (7,000); Ms. Wehner (15,700); and
all directors and executive officers as a group (655,536). Unless otherwise
indicated, each person has sole investment and voting power as to the shares
indicated.

(2) The percentages are based upon 25,540,843 shares of Common Stock outstanding
at May 1, 1995 plus shares that are subject to options that are exercisable
or will become exercisable within 60 days after May 1, 1995 by that person
or group, as the case may be.

(3) Includes 41,155 shares of Common Stock owned directly by Mr. Batchelder
(including 20,940 shares which may be acquired pursuant to certain options)
and 30,676 shares owned by DHB Partners, L.P. (the "Partnership") which are
attributable to him through his ownership of the sole general partner of the
Partnership (which is a corporation owned by him) and all of the limited
partnership interests in the Partnership. Mr. Batchelder disclaims
beneficial ownership of the shares of Common Stock held by the Partnership.

(4) Mr. Thomas also holds an additional 10,800 shares of Common Stock for the
benefit of his children, as to which shares Mr. Thomas disclaims beneficial
ownership. Of such shares, 5,400 are held for the benefit of Mr. Thomas'
son, who resides with Mr. Thomas.

14
18

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AMOUNT
AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
-------------------------------------------------- -------------- -----------

FMR Corp.(2)...................................... 3,227,900 12.64%
82 Devonshire Street
Boston, Massachusetts 02109
NewSouth Capital Management, Inc.(3).............. 1,977,076 7.74%
755 Crossover Lane, Suite 233
Memphis, Tennessee 38117
MacKay-Shields Financial Corporation(4)........... 1,402,500 5.49%
9 West 57th Street
New York, New York 10019

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

(1) The percentages are based upon 25,540,843 shares of Common Stock outstanding
at May 1, 1995.

(2) The Company received from FMR Corp. a Schedule 13G dated December 8, 1994
reporting that it beneficially owned an aggregate of 3,051,600 shares of
Common Stock, of which it has sole dispositive power over 3,051,600 shares
and sole voting power over 56,400 shares. The Company received from FMR
Corp. an amendment dated February 13, 1995 to its Schedule 13G in which FMR
Corp. reported beneficial ownership of 3,227,900 shares of Common Stock, of
which it has sole dispositive power over 3,227,900 shares and sole voting
power over 60,600 shares. In the Schedule 13G and the amendment thereto, FMR
Corp. stated that all such shares were acquired in the ordinary course of
business and not with the purpose of influencing the control of the Company.
The Company is unaware of any change in the foregoing information.

(3) The Company received a Schedule 13G dated January 7, 1993 from NewSouth
Capital Management, Inc. ("NewSouth") reporting that it has sole dispositive
power over 1,742,494 shares of Common Stock and sole voting power over
1,657,494 of such shares. By letter dated March 28, 1995, New South advised
that as of December 31, 1994 it beneficially owned 1,977,076 shares. In the
Schedule 13G, NewSouth stated that all shares were acquired in the ordinary
course of business and not for the purpose of influencing control of the
Company. The Company is unaware of any change in the foregoing information.

(4) The Company received a Schedule 13G dated February 10, 1995 from
MacKay-Shields Financial Corporation ("MacKay-Shields") reporting beneficial
ownership of 1,504,500 shares of Common Stock. This Schedule 13G also
reported that MacKay-Shields has sole dispositive and voting power over all
such shares. MacKay-Shields advised the Company on March 29, 1995 that its
beneficial ownership as of March 28, 1995 was 1,402,500 shares of Common
Stock. In its Schedule 13G, MacKay-Shields reported that all shares were
acquired in the ordinary course of business and not for the purpose of
influencing control of the Company. The Company is unaware of any change in
the foregoing information.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own more
than 10% of the Common Stock (collectively "Insiders") to file initial reports
of ownership (Forms 3) and reports of changes in ownership of Common Stock
(Forms 4 and Forms 5) with the Securities and Exchange Commission as well as the
Company and the New York Stock Exchange.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations from each Insider
known to the Company (other than FMR Corp.) that no other reports were required,
during Fiscal 1994 all Section 16(a) filing requirements applicable to its
Insiders were complied with.

15
19

PROPOSAL TO AMEND THE STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS

The Company's Board of Directors and stockholders have previously adopted
and approved the Non-Employee Directors Plan. A total of 200,000 shares of
Common Stock were originally reserved for issuance under the Non-Employee
Directors Plan. In March 1995, the Board of Directors authorized an amendment to
the Non-Employee Directors Plan, subject to stockholder approval, to increase
the shares reserved for issuance thereunder by 200,000 shares, bringing the
total number of shares issuable under the Non-Employee Directors Plan to
400,000.

At the Annual Meeting, the stockholders are being requested to consider and
approve the proposed amendment to the Non-Employee Directors Plan to increase
the number of shares of Common Stock reserved for issuance thereunder by 200,000
shares, bringing the total number of shares issuable under the Non-Employee
Directors Plan to 400,000. The amendment will enable the Company to continue its
policy of providing present and prospective directors of the Company who are not
employed by the Company with the opportunity to obtain equity ownership
interests in the Company through the exercise of stock options.

For a description of the principal features of the Non-Employee Directors
Plan, see "Information About the Board of Directors and Committees of the Board
of Directors -- Director Compensation -- Stock Option Plan for Non-Employee
Directors."

VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS

The approval of the amendment to the Non-Employee Directors Plan requires
the affirmative vote of a majority of the shares represented, in person or by
proxy, and voting at the Annual Meeting (which shares voting affirmatively also
constitute at least a majority of the required quorum).

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AMENDMENT TO THE
NON-EMPLOYEE DIRECTORS PLAN AND RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL.

INDEPENDENT PUBLIC ACCOUNTANTS

For Fiscal 1994, Deloitte & Touche provided audit services which included
examination of the Company's annual consolidated financial statements, timely
review of unaudited quarterly financial information, assistance and consultation
in connection with the Company's annual report on Form 10-K filed with the
Commission, and the audit of the Company's profit sharing plan. Audit services
were provided with the approval of the Board of Directors which, among other
things, considered the independence of the public accountants. Arrangements for
non-audit services, if any, are made by management with the knowledge of the
Board of Directors. A meeting of the Audit Committee will be held in the near
future, at which time a recommendation will be made as to the selection of the
Company's auditors for the current fiscal year. A representative of Deloitte &
Touche is expected to attend the Annual Meeting to make any statements he or she
may desire and to respond to any stockholder questions.

DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING

Any proposal relating to a proper subject which an eligible stockholder may
intend to present for action at the Company's 1996 Annual Meeting of
Stockholders and which such stockholder may wish to have included in the proxy
materials for such meeting in accordance with the provisions of Rule 14a-8
promulgated under the Exchange Act must be received as far in advance of the
meeting as possible in proper form by the Secretary of the Company at 2430 East
Del Amo Boulevard, Dominguez, California 90220-6306, and in any event not later
than February 16, 1996. It is suggested that any such proposal be submitted by
certified mail, return receipt requested.

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20

OTHER BUSINESS OF THE ANNUAL MEETING

Management is not aware of any matters to come before the Annual Meeting or
any postponement or adjournment thereof other than the election of directors.
However, inasmuch as matters of which management is not now aware may come
before the meeting or any postponement or adjournment thereof, the proxies
confer discretionary authority with respect to acting thereon, and the persons
named in such proxies intend to vote, act and consent in accordance with their
best judgment with respect thereto, provided that, to the extent the Company
becomes aware a reasonable time before the Annual Meeting of any matter to come
before such meeting, the Company will provide an opportunity to vote by proxy
directly on such matter. Upon receipt of such proxies in time for voting, the
shares represented thereby will be voted as indicated thereon and as described
in this Proxy Statement.

MISCELLANEOUS

The solicitation of proxies is made on behalf of the Company and all the
expenses of soliciting proxies from stockholders will be borne by the Company.
In addition to the solicitation of proxies by use of the mails, officers and
regular employees may communicate with stockholders personally or by mail,
telephone, telegram or otherwise for the purpose of soliciting such proxies, but
in such event no additional compensation will be paid to any such persons for
such solicitation. The Company will reimburse banks, brokers and other nominees
for their reasonable out-of-pocket expenses in forwarding soliciting material to
beneficial owners of shares held of record by such persons.

By Order of the Board of Directors

PHILIP L. CARTER
President and Chief Executive Officer

Dominguez, California
May 15, 1995

17
21

/ /

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF EACH OF THE MATTERS SET FORTH BELOW.

1. Election of Directors FOR all nominees listed below / / WITHHOLD AUTHORITY to vote / / EXCEPTIONS / /
(except as marked to the contrary) for all nominees listed below

Nominees: Peter S. Willmott, Philip L. Carter, Mark J. Miller, David H. Batchelder, Bruce E. Karatz, Anthony Luiso,
Ronald P. Spogli, Bill M. Thomas and James J. Zehentbauer.

INSTRUCTION: IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE EXCEPTIONS BOX AND STRIKE A LINE
THROUGH THAT NOMINEE'S NAME ABOVE.

2. To approve an amendment to the Company's Stock Option Plan
for Non-Employee Directors to increase the number of shares
reserved for issuance thereunder from 200,000 shares to an
aggregate of 400,000 shares. FOR / / AGAINST / / ABSTAIN / /

3. In their discretion, upon any other matters which may properly come before the Annual Meeting or any postponements or
adjournments thereof.

Address Change and/or
Comments Mark Here / /

NOTE: Please sign exactly as shown at the left. If
stock is jointly held each owner should sign.
Executors, administrators, trustees, guardians,
attorneys and corporate officers should indicate
their fiduciary capacity or full title when signing.

Dated _____________________________________, 1995

________________________________________________
(Signature)

_________________________________________________
(Signature, if held jointly)

VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. / /

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

MAC FRUGAL'S BARGAINS - CLOSE-OUTS INC.

ANNUAL MEETING OF STOCKHOLDERS - JUNE 14, 1995

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Mac Frugal's Bargains - Close-outs Inc., a Delaware corporation, hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement and appoints Peter S. Willmott, Philip L. Carter,
or either of them, proxies with full power of substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the AnnualMeeting of Stockholders of Mac Frugal's Bargains - Close-outs Inc. to be held Wednesday, June 14, 1995
at 9:00 A.M. at the Long Beach Airport Marriott Hotel, 4700 Airport Plaza Drive, Long Beach, California 90815, and at any
postponements or adjournments thereof, and to vote all shares of Common Stock which the undersigned would be entitled to vote if
personally present, on the matters set forth on the reverse side.

THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES AS DIRECTORS, FOR THE AMENDMENT TO THE NON-EMPLOYEE DIRECTORS PLAN, AND AS SUCH PROXY HOLDERS DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE ANNUAL MEETING OR ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.

(Continued, and to be dated and signed on the reverse side.)

MAC FRUGAL'S BARGAINS - CLOSE-OUTS INC.
P.O. BOX 11343
NEW YORK, N.Y. 10203-0343