United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q
                                    ---------

                QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



  For the quarterly period ended June 30, 2005      Commission File Number 1-878
--------------------------------------------------------------------------------




                                Blair Corporation
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)




                DELAWARE                               25-0691670
--------------------------------------------------------------------------------
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
      incorporation or organization)





        220 HICKORY STREET, WARREN, 
                 PENNSYLVANIA                               16366-0001
--------------------------------------------------------------------------------
    (Address of principal executive offices)                (Zip Code)




                                 (814) 723-3600
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)




                                 Not applicable
--------------------------------------------------------------------------------
(Former name,former address and former fiscal year,if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES  X  NO
   -----  -----

Indicate by check mark whether the registrant is an accelerated filer 
(as defined in Rule 12b-2 of the Act.) YES  X  NO
                                          -----  -----

As of August 1, 2005 the registrant had outstanding 8,314,386 shares of its
common stock without nominal or par value.






                          PART I. FINANCIAL INFORMATION

                    ITEM I. FINANCIAL STATEMENTS (UNAUDITED)

                       BLAIR CORPORATION AND SUBSIDIARIES

                                  June 30, 2005


                                       -2-







                       Blair Corporation and Subsidiaries

                           Consolidated Balance Sheets




                                                           (Unaudited) 
                                                             June 30       December 31
                                                              2005            2004
                                                        --------------------------------
                                                                               

Assets
Current Assets:
  Cash and cash equivalents                               $ 82,161,487    $ 50,559,995
  Customer accounts receivable, less allowances
    for doubtful accounts and returns of
    $30,941,620 in 2005 and $38,924,914 in 2004            134,630,909     148,171,292
  Inventories: (Note I)
    Merchandise                                             61,043,025      67,597,084
    Advertising and shipping supplies                        6,728,322      16,697,349
                                                        --------------------------------
                                                            67,771,347      84,294,433

  Deferred income taxes (Note W)                            11,732,000      10,657,000
  Prepaid expenses                                           2,627,889       2,210,181
                                                        --------------------------------
Total current assets                                       298,923,632     295,892,901


Property, plant and equipment:
  Land (Note Z)                                              1,142,144       1,142,144
  Buildings and leasehold improvements (Note Z)             66,899,869      66,803,458
  Equipment                                                 73,244,783      74,793,330
  Construction in progress                                   3,631,394       1,686,408
                                                        --------------------------------
                                                           144,918,190     144,425,340

  Less allowances for depreciation                          96,594,189      95,066,355
                                                        --------------------------------
                                                            48,324,001      49,358,985


Trademark                                                      379,799         415,921
Other long-term assets                                         640,293         473,037
                                                        --------------------------------
Total assets                                              $348,267,725    $346,140,844
                                                        ================================


See accompanying notes.


                                       -3-







                       Blair Corporation and Subsidiaries

                     Consolidated Balance Sheets - Continued




                                                           (Unaudited)
                                                             June 30       December 31
                                                              2005            2004
                                                        --------------------------------
                                                                               

Liabilities and Stockholders' Equity
Current liabilities:
  Notes payable (Note S)                                  $ 15,000,000    $ 15,000,000
  Trade accounts payable                                    20,589,973      24,831,335
  Advance payments from customers                            2,181,118       1,854,086
  Accrued expenses (Note T)                                 15,212,499      15,406,631
  Accrued federal and state taxes                            4,265,498       3,689,994
  Current portion of capital lease obligations (Note U)         18,325         111,254
                                                        --------------------------------
Total current liabilities                                   57,267,413      60,893,300

Capital lease obligations, less current portion (Note U)        26,111          12,270


Deferred income taxes (Note W)                               2,104,000       2,668,000


Other long term liability                                      646,900             -0-


Stockholders' equity:
  Common stock without par value:
    Authorized 12,000,000 shares
    issued 10,075,440 shares (including shares
    held in treasury) -- stated value                          419,810         419,810
Additional paid-in capital                                  13,194,889      13,238,311
Retained earnings                                          310,866,152     306,544,284
Accumulated other comprehensive loss                          (122,951)       (118,634)
                                                        --------------------------------
                                                           324,357,900     320,083,771

Less 1,818,127 shares in 2005 and 1,846,542
  shares in 2004 of common stock
  in treasury -- at cost                                    35,126,743      35,955,582
Less receivable and deferred compensation
  from stock plans                                           1,007,856       1,560,915
                                                        --------------------------------
Total stockholders' equity                                 288,223,301     282,567,274
                                                        --------------------------------
Total liabilities and stockholders' equity                $348,267,725    $346,140,844
                                                        ================================


See accompanying notes.


                                       -4-







                       Blair Corporation and Subsidiaries

                        Consolidated Statements of Income



                                                                   (Unaudited)                    (Unaudited)           
                                                               Three Months Ended               Six Months Ended        
                                                                     June 30                         June 30            
                                                              2005            2004            2005            2004      
                                                        ----------------------------------------------------------------
                                                                                                         

Net sales                                                 $120,834,539    $126,992,907    $228,392,458    $255,634,986
Other revenue (Note X)                                      10,860,582      11,306,732      21,576,154      23,379,563
                                                        ----------------------------------------------------------------
                                                           131,695,121     138,299,639     249,968,612     279,014,549

Cost and expenses:
  Cost of goods sold (Note C )                              54,704,494      57,903,841     107,479,255     121,042,144
  Advertising                                               29,798,990      33,506,937      59,257,695      68,811,437
  General and administrative (Note C )                      34,444,325      32,693,912      66,304,143      66,494,754
  Provision for doubtful accounts                            3,414,333       6,051,437       6,906,965      13,591,296
  Interest (income) expense, net (Note D )                    (308,761)         (5,080)       (433,990)          3,920
  Other expense (income), net                                    2,666          61,266        (206,853)         63,619
                                                        ----------------------------------------------------------------
                                                           122,056,047     130,212,313     239,307,215     270,007,170
                                                        ----------------------------------------------------------------
Income before income taxes                                   9,639,074       8,087,326      10,661,397       9,007,379

Income taxes (Note W)                                        3,575,000       3,076,000       3,947,000       3,425,000
                                                        ----------------------------------------------------------------
Net income                                                $  6,064,074    $  5,011,326    $  6,714,397    $  5,582,379
                                                        ================================================================

Basic earnings per share based on
  weighted average shares outstanding (Note V)                   $0.74           $0.62           $0.82           $0.69
                                                        ================================================================

Diluted earnings per share based on
   weighted average shares outstanding
   and assumed conversions (Note V)                              $0.73           $0.61           $0.81           $0.69
                                                        ================================================================


See accompanying notes.


                                       -5-







                       Blair Corporation and Subsidiaries

                 Consolidated Statements of Stockholders' Equity



                                                                   (Unaudited)                    (Unaudited)           
                                                               Three Months Ended               Six Months Ended        
                                                                     June 30                         June 30            
                                                              2005            2004            2005            2004      
                                                        ----------------------------------------------------------------
                                                                                                         

Common Stock                                              $    419,810    $    419,810    $    419,810    $    419,810

Additional Paid-in Capital:
Balance at beginning of period                              13,178,632      13,955,055      13,238,311      14,134,983
Issuance of 5,250 and 3,750 shares for the three
  months ended June 30, 2005 and 2004 and 5,550 and
  4,050 shares for the six months ended June 30, 2005
  and 2004 of common stock to non-employee directors             9,057          (9,767)          5,044         (24,358)
Issuance of 6,985 and 0 shares for the three months 
  ended June 30, 2005 and 2004 and 14,913 and 0 shares
  for the six months ended June 30, 2005 and 2004 of
  common stock under Omnibus Stock Plan-Executive 
  Officer Stock Awards (Note V)                                 15,941             -0-         (21,257)            -0-
Forfeitures of 800 and 3,850 shares for the three 
  months ended June 30, 2005 and 2004 and 1,950 and
  6,000 shares for the six months ended June 30, 2005
  and 2004 of common stock under Omnibus Stock and 
  Employee Stock Purchase Plans (Note V)                            44           2,379          (9,100)        (23,523)
Exercise of 3,702 and 65,503 shares for the three 
  months ended June 30, 2005 and 2004 and 9,902 and
  84,070 shares for the six months ended June 30, 2005
  and 2004 of common stock under Omnibus Stock Plan-
  Non-Qualified Stock Options                                  (28,785)       (623,796)        (68,109)       (800,231)


Tax benefit on exercise of Non-Qualified Stock Options          20,000         165,000          50,000         202,000
                                                        ----------------------------------------------------------------
Balance at end of period                                    13,194,889      13,488,871      13,194,889      13,488,871


Retained Earnings:
Balance at beginning of period                             305,999,614     295,797,115     306,544,284     296,397,999
Net income                                                   6,064,074       5,011,326       6,714,397       5,582,379
Cash dividends (Note V)                                     (1,197,536)     (1,177,944)     (2,392,529)     (2,349,881)
                                                        ----------------------------------------------------------------
Balance at end of period                                   310,866,152     299,630,497     310,866,152     299,630,497


Accumulated Other Comprehensive Loss:
Balance at beginning of period                                (121,864)        (70,741)       (118,634)        (20,016)
Foreign currency translation                                    (1,087)         50,713          (4,317)            (12)
                                                        ----------------------------------------------------------------
Balance at end of period                                      (122,951)        (20,028)       (122,951)        (20,028)


Treasury Stock:
Balance at beginning of period                             (35,577,088)    (38,987,570)    (35,955,582)    (39,514,841)
Issuance of 5,250 and 3,750 shares for the three 
  months ended June 30, 2005 and 2004 and 5,550 and
  4,050 shares for the six months ended June 30, 2005
  and 2004 of common stock to non-employee directors 
  (Note V)                                                     150,280         107,344         158,868         126,509
Issuance of 6,985 and 0 shares for the three months 
  ended June 30, 2005 and 2004 and 14,913 and 0 shares
  for the six months ended June 30, 2005 and 2004 of
  common stock under Omnibus Stock Plan-Executive
  Officer Stock Awards (Note V)                                199,945             -0-         426,883             -0-
Forfeitures of 800 and 3,850  shares for the three 
  months ended June 30, 2005 and 2004 and 1,950 and
  6,000 shares for the six months ended June 30, 2005
  and 2004 of common stock under Omnibus Stock and 
  Employee Stock Purchase Plans (Note V)                       (17,650)        (92,212)        (40,356)       (115,585)
Exercise of 3,702 and 65,503 shares for the three 
  months ended June 30, 2005 and 2004 and 9,902 and
  84,070 shares for the six months ended June 30, 2005
  and 2004 of common stock under Omnibus Stock Plan-
  Non-Qualified Stock Options                                  117,770       1,875,016         283,444       2,406,495
                                                        ----------------------------------------------------------------
Balance at end of period                                   (35,126,743)    (37,097,422)    (35,126,743)    (37,097,422)


See accompanying notes.


                                       -6-







                       Blair Corporation and Subsidiaries

           Consolidated Statements of Stockholders' Equity - Continued



                                                                   (Unaudited)                    (Unaudited)
                                                               Three Months Ended               Six Months Ended
                                                                     June 30                         June 30
                                                              2005            2004            2005            2004
                                                        ----------------------------------------------------------------
                                                                                                         

Receivable and Deferred Compensation from Stock Plans:
Balance at beginning of year                                (1,336,166)     (2,327,827)     (1,560,915)     (2,616,826)
Issuance (net of forfeitures) of common stock under
  Omnibus Stock Plan - Restricted Stock Awards and
  Executive Officer Awards: (Note V)
   Receivable                                                    5,155          24,386          12,502          35,518
Amortization of deferred compensation,
  net of forfeitures                                            43,349          75,849          91,135         118,888
Amortization of Executive Officer Stock awards,
  net of vesting and forfeitures                               181,568         184,897         274,413         327,891
Applications of dividends and cash repayments                   98,238          46,880         175,009         138,714
                                                        ----------------------------------------------------------------
Balance at end of period                                    (1,007,856)     (1,995,815)     (1,007,856)     (1,995,815)
                                                        ----------------------------------------------------------------
Total stockholders' equity                                $288,223,301    $274,425,913    $288,223,301    $274,425,913
                                                        ================================================================


Comprehensive Income:
Net income                                                $  6,064,074    $  5,011,326    $  6,714,397    $  5,582,379
Adjustment from foreign currency translation                    (1,087)         50,713          (4,317)            (12)
                                                        ----------------------------------------------------------------
Comprehensive income                                      $  6,062,987    $  5,062,039    $  6,710,080    $  5,582,367
                                                        ================================================================


See accompanying notes.


                                       -7-







                       Blair Corporation and Subsidiaries

                     Consolidated Statements of Cash Flows



                                                                  (Unaudited)
                                                                Six Months Ended        
                                                                     June 30            
                                                              2005            2004      
                                                        --------------------------------
                                                                               

Operating activities
Net income                                                 $ 6,714,397     $ 5,582,379 
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
    Depreciation                                             4,115,243       4,379,150
    Amortization                                               163,671         168,335
    Gain on disposal of assets                                (206,775)            -0-
    Provision for doubtful accounts                          6,906,965      13,591,295
    Provision for deferred income taxes                     (1,639,000)     (3,422,000)
    Tax benefit on exercise of non-qualified 
      stock options                                             50,000         202,000
    Compensation expense (net of forfeitures)
      for stock awards                                         979,651         539,742
    Changes in operating assets and liabilities
      providing (using) cash:
        Customer accounts receivable                         6,632,930      (5,220,099)
        Inventories                                         16,523,086       9,464,560
        Prepaid expenses and other assets                     (712,488)       (422,204)
        Trade accounts payable                              (4,240,977)     (8,375,476)
        Advance payments from customers                        327,032        (150,867)
        Accrued expenses and other long term liability         452,537      (4,310,728)
        Accrued federal and state taxes                        575,504         849,833
                                                        --------------------------------
Net cash provided by operating activities                   36,641,776      12,875,920


Investing activities
Purchases of property, plant and equipment                  (3,379,713)     (2,254,530)
Proceeds from sale of assets                                   506,349             -0-
                                                        --------------------------------
Net cash used in investing activities                       (2,873,364)     (2,254,530)


Financing activities
Principal repayments on capital lease obligations              (79,088)       (158,642)
Dividends paid                                              (2,392,529)     (2,349,881)
Exercise of non-qualified stock options                        215,335       1,606,265
Repayments of notes receivable from stock plans                 93,490          44,310
                                                        --------------------------------
Net cash used in financing activities                       (2,162,792)       (857,948)


Effect of exchange rate changes on cash                         (4,128)         (1,396)
                                                        --------------------------------
Net increase in cash                                        31,601,492       9,762,046
Cash and cash equivalents at beginning of period            50,559,995      36,380,049
                                                        --------------------------------
Cash and cash equivalents at end of period                 $82,161,487     $46,142,095
                                                        ================================


See accompanying notes.


                                       -8-







                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Blair
Corporation and its wholly-owned subsidiaries ("the Company") have been prepared
in accordance with U.S. generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by U.S. generally accepted accounting principles for complete
financial statements. All adjustments that were considered necessary for a fair
presentation have been included. These adjustments were of a normal recurring
nature. Operating results for the six months ended June 30, 2005 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2005. For further information refer to the financial statements and
footnotes included in the Company's annual report on Form 10-K for the year
ended December 31, 2004.

On January 25, 2005, the Company decided to phase out its Allegheny Trail
wholesale business. This process was substantially completed by April 30, 2005.
The Company's intention is to more fully focus new business development efforts
on the core Blair brand and its proven appeal to significant market segments.
The decision to focus on core operations is based in part on the historical
success of the Blair brand and an extensive consumer and brand strategy study
undertaken by the company as part of its efforts to enhance profitability and
shareholder value. The Company has evaluated the impact of phasing out the
Allegheny Trail business on all assets associated with this operation. All
appropriate reserves have been recorded. This decision did not have a
significant negative effect on 2004 profitability, and is not expected to
negatively impact 2005 performance.

On August 20, 2003 the Company commenced operations of a new wholly-owned
subsidiary, JLB Service Bank. The establishment of JLB Service Bank enables the
Company to manage its credit portfolio in a more cost-effective and efficient
manner. The bank's products involve the extension of credit on an unsecured
basis to individuals who are customers of Blair Corporation to facilitate their
purchases of Blair's merchandise. As of June 30, 2005, JLB Service Bank's total
assets represented 1.38% of the total consolidated assets of the Company,
compared to 1.59% at June 30, 2004. Gross revenue of JLB Service Bank was .83%
and .85% of the Company's consolidated gross revenue for the three months and
six months ended June 30, 2005, compared to .96% and .97% of the Company's
consolidated gross revenue for the three months and six months ended June 30,
2004.

On April 27, 2005, the Company announced that the Company, Blair Factoring
Company, Blair Credit Services Corporation and JLB Service Bank, each a
wholly-owned subsidiary of the Company, entered into a Purchase, Sale and
Servicing Transfer Agreement (the "Purchase Agreement") with World Financial
Capital Bank ("World Financial"), a wholly-owned subsidiary of Alliance Data
Systems Corporation. Pursuant to the Purchase Agreement, the Company's credit
portfolio will be sold at par plus a premium. Additionally, on April 27, 2005,
the Company and World Financial entered into an agreement to form a long-term
marketing and servicing alliance under a Private Label Credit Card Program
Agreement (the "Program Agreement") having an initial term of ten (10) years.
The transaction has been approved by both parties and is expected to close by
the end of the fourth quarter of fiscal 2005, subject to regulatory review and
approval and customary closing conditions. The accounting treatment for this
transaction will result in a significant gain on the sale.

NOTE B - REVENUE RECOGNITION

Sales (cash, Blair Credit, or third-party credit card) are recorded when the
merchandise is shipped to the customer, in accordance with the provisions of
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
and Staff Accounting Bulletin No. 104, Revenue Recognition, as issued by the
Securities & Exchange Commission. Blair Credit sales are made under Easy Payment
Plan sales arrangements. Monthly, a provision for doubtful accounts is charged
against income based on management's estimate of realization. Any recoveries of
bad debts previously written-off are credited back against the allowance for
doubtful accounts in the period received. As reported in the balance sheet, the
carrying amount, net of allowances for doubtful accounts and returns, for
customer accounts receivable on Blair Credit sales approximates fair value.

Shipping and processing revenue is included in net sales.

Finance charges on time payment accounts are recognized on an accrual basis of
accounting. The decrease in finance charges compared to the second quarter of
2004 and the six months ended June 30, 2004 (see NOTE X - OTHER REVENUE)
primarily resulted from reduced finance charge revenues associated with the
previously announced discontinuance of the Crossing Pointe catalog title and
lower credit sales.


                                       -9-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE C - COSTS AND EXPENSES

The Company includes the following costs in the line items listed below in its
Consolidated Statements of Income:

Cost of Goods Sold

Cost of goods sold consists of merchandise costs, including sourcing, importing
and inbound freight costs. In addition, cost of goods sold includes writedowns,
shipping cartons, shipping supplies, and merchandise samples.

The Company records internally incurred shipping and handling costs in cost of
sales.

General and Administrative Expenses

Occupancy and warehousing costs consist of compensation, employee benefit
expenses and related building costs. Examples of building costs include
depreciation, repairs and maintenance, utilities, rent, real estate taxes and
maintenance contracts. Occupancy and warehousing costs incurred in support of
the Company's order fulfillment process were $9,656,534 and $18,674,005 for the
three months and six months ended June 30, 2005 compared to $9,118,544 and
$18,484,350 for the three months and six months ended June 30, 2004. The Company
does not separately track purchasing and related costs which are also included
in general and administrative expenses. In addition, the general and
administrative costs incurred to support the Company's product development,
circulation planning and customer file maintenance efforts are included in
general and administrative expenses.

NOTE D - INTEREST (INCOME) EXPENSE, NET

Interest (income) expense, net, consists of the following:


                                                               Three Months Ended               Six Months ended
                                                                     June 30                         June 30
                                                              2005            2004            2005            2004
                                                        ----------------------------------------------------------------
                                                                                                         

                 Interest expense                            $ 146,952       $  80,818       $ 278,274       $ 166,055
                 Interest income                              (455,713)        (85,898)       (712,264)       (162,135)
                                                        ----------------------------------------------------------------
                 Interest (income) expense, net              $(308,761)      $  (5,080)      $(433,990)      $   3,920
                                                        ================================================================


Interest income results from the Company's investment of surplus cash into money
market securities and other investments with a maturity of three months or less
when purchased. Interest expense primarily reflects the impact of $15 million of
borrowings that are required under the receivables securitization.

NOTE E - USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE F - CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of available cash, money market securities and
other investments with a maturity of three months or less when purchased.
Amounts reported in the Unaudited Consolidated Balance Sheets approximate fair
values.


                                      -10-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE G - RETURNS

A provision for anticipated returns is recorded monthly as a percentage of gross
sales based upon historical experience. This provision is charged directly
against gross sales to arrive at net sales as reported in the Unaudited
Consolidated Statements of Income. Actual returns are charged against the
allowance for returns, which is netted against accounts receivable on the
balance sheet. The provision for returns charged against income for the three
months and six months ended June 30, 2005 amounted to $17,318,185 and
$33,229,297, respectively. The provision for returns charged against income for
the three months and six months ended June 30, 2004 amounted to $17,851,044 and
$38,756,997, respectively. Management believes these provisions are adequate
based upon the relevant information presently available. However, changes in
facts or circumstances could result in an additional adjustment to the Company's
provisions.

NOTE H - ACCOUNTS RECEIVABLE AND DOUBTFUL ACCOUNTS

A provision for doubtful accounts is recorded monthly as a percentage of gross
credit sales based upon experience of delinquencies (accounts over 30 days past
due) and charge-offs (accounts removed from accounts receivable for non-payment)
and current credit market conditions. Management believes these provisions are
adequate based upon the relevant information presently available. However,
changes in facts or circumstances could result in additional adjustment to the
Company's provisions. In connection with the discontinuance of the Crossing
Pointe catalog title, on March 30, 2005, the Company sold all open Crossing
Pointe credit accounts receivable to a third party at a discount. After
comparing the proceeds of the sale to the net carrying value of this asset, the
Company realized a gain of approximately $500,000.

NOTE I - INVENTORIES

Inventories are valued at the lower of cost or market. Cost of merchandise
inventories is determined principally on the last-in, first-out (LIFO) method.
An actual valuation of inventory under the LIFO method can be made only at the
end of each year. However, an interim analysis is performed based on
management's estimates of expected year-end inventory levels and costs. Because
these are subject to many forces beyond management's control, the results of
interim estimates are subject to the final year-end LIFO inventory valuation. An
adjustment of $300,000 was recorded in the second quarter pursuant to the
interim calculation that was performed. If the FIFO method had been used,
merchandise inventories would have increased by approximately $3,477,000 at June
30, 2005 and $3,776,000 at December 31, 2004.

The Company has a reserve for slow moving and obsolete inventory amounting to
$2,500,000 at June 30, 2005, $3,600,000 at December 31, 2004, and $2,181,000 at
June 30, 2004. A monthly provision for obsolete inventory is added to the
reserve and expensed to cost of goods sold, based on the levels of merchandise
inventory and merchandise purchases. The reduction in the reserve for slow
moving inventory as compared to December 31, 2004 is related to actual
writedowns associated with the Company's decisions to discontinue its Crossing
Pointe catalog title and the Allegheny Trail wholesale business in 2005, which
resulted in writedowns of $1.8 million. These writedowns were primarily provided
for in the December 31, 2004 obsolescence reserve. The closing of the Starbrick
Outlet Store in January 2004 resulted in $2.4 million of writedowns in the first
quarter of 2004. These writedowns primarily were provided for in the December
31, 2003 obsolescence reserve.

Cost of advertising and shipping supplies is determined on the first-in,
first-out (FIFO) method. Advertising and shipping supplies include printed
advertising material and related mailing supplies for promotional mailings,
which are generally scheduled to occur within two months. These direct response
advertising costs are then expensed over the period of expected future benefit,
based on buying patterns, generally nine weeks or less.

NOTE J - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated on the basis of cost. Depreciation has
been provided principally by the straight-line method using rates which are
estimated to be sufficient to depreciate the cost of the assets over their
period of usefulness. Amortization of assets recorded under capital lease
obligations is included with depreciation expense. Estimated useful lives of
property, plant and equipment range from 3 to 39.5 years. Maintenance and
repairs are charged to expense as incurred.


                                      -11-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE K - TRADEMARK

Trademark, net of accumulated amortization of $703,850 at June 30, 2005 and
$631,607 at June 30, 2004, is stated on the basis of cost. The Company has one
trademark which is being amortized by the straight-line method for a period of
15 years. Amortization expense amounted to $18,061 and $36,122 for the three
months and six months ended June 30, 2005 and 2004.

NOTE L - ASSET IMPAIRMENT

The Company analyzes its long-lived and intangible assets for events and
circumstances that might indicate that the assets may be impaired and the
undiscounted net cash flows estimated to be generated by those assets are less
than their carrying amounts. There are no indications of impairment present at
June 30, 2005.

NOTE M - EMPLOYEE BENEFITS

The Company's employee benefits include a profit sharing and retirement feature
available to all eligible employees. Contributions are dependent on net income
of the Company and recognized on an accrual basis of accounting. The
contributions to the plan charged against income for the three months and six
months ended June 30, 2005 amounted to $631,313 and $711,953, and for the three
months and six months ended June 30, 2004 amounted to $511,340 and $570,237,
respectively. As part of the same benefit plan, the Company has a contributory
savings feature whereby all eligible employees may contribute up to 25% of their
annual base salaries. The Company's matching contribution to the plan is based
upon a percentage formula as set forth in the plan agreement. The Company's
matching contributions to the plan charged against income for the three months
and six months ended June 30, 2005 amounted to $513,014 and $1,008,986, and for
the three months and six months ended June 30, 2004 amounted to $512,461 and
$858,379, respectively.

NOTE N - FINANCIAL INSTRUMENTS

The carrying amounts of cash, customer accounts receivable, accounts payable and
accrued liabilities approximate fair value due to the short-term maturities of
these assets and liabilities. The interest rates on the Company's securitized
and revolving credit facilities are adjusted regularly to reflect current market
rates. Accordingly, the carrying amounts of the Company's borrowings also
approximate fair value.

NOTE O - NEW ACCOUNTING PRONOUNCEMENTS

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued 
Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), 
Share-Based Payment, which is a revision of SFAS No. 123, Accounting for 
Stock-Based Compensation.  SFAS No. 123(R) supersedes Accounting Principles 
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and amends
SFAS No. 95, Statement of Cash Flows.  Generally, the approach in SFAS No. 
123(R) is similar to the approach described in SFAS No. 123.  However, SFAS No.
123(R) requires all share-based payments to employees, including grants of 
employee stock options, to be recognized on the income statement based on fair 
values.  Pro forma disclosure is no longer an alternative.  SFAS No. 123(R) must
be adopted no later than January 1, 2006.


                                      -12-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE O - NEW ACCOUNTING PRONOUNCEMENTS - Continued

As permitted by SFAS No. 123, the Company currently accounts for share-based
payments to employees using Opinion 25's intrinsic value method and, as such,
generally recognizes no compensation cost for employee stock options.
Accordingly, the adoption of SFAS No. 123(R)'s fair value method will have a
significant impact on our results of operations, although it will have no impact
on our overall financial position. The impact of the adoption of SFAS No. 123(R)
cannot be predicted at this time because it will depend on levels of share-based
payments granted in the future. However, had we adopted SFAS No. 123(R) in prior
periods, the impact of that standard would have approximated the impact of SFAS
No. 123 as described in the disclosure of pro forma net income and earnings per
share in Note P to our consolidated financial statements. SFAS No. 123(R) also
requires the benefits of tax deductions in excess of recognized compensation
cost to be reported as a financing cash flow, rather than as an operating cash
flow as required under current literature. This requirement will reduce net
operating cash flows and increase net financing cash flows in periods after
adoption. While the Company cannot estimate what those amounts will be in the
future (because they depend on, among other things, when employees exercise
stock options), the amount of operating cash flows recognized in prior periods
for such excess tax deductions for the three months and six months ended June
30, 2005 amounted to $20,000 and $50,000, and for the three months and six
months ended June 30, 2004 amounted to $165,000 and $202,000, respectively.

NOTE P - STOCK COMPENSATION

In accordance with the provisions of SFAS No. 123, the Company has elected to
continue applying the provisions of Accounting Principles Board Opinion No. 25
and related interpretations in accounting for its stock-based compensation
plans. Accordingly, the Company does not recognize compensation expense for
stock options when the stock option price at the grant date is equal to or
greater than the fair market value of the stock at that date.

Stock activity in the second quarter of 2005 and 2004 generally includes
transactions pertaining to stock awarded to non-employee directors as well as
stock awarded and forfeited via the Company's Omnibus Stock and Employee Stock
Purchase Plans. Activity is accounted for by comparing the market value of the
awards, as required by the Plans, to the cost of the treasury shares used for
these transactions. The difference is recorded as additional paid-in capital.


                                      -13-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE P - STOCK COMPENSATION - Continued

The following illustrates the pro forma effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No. 123:



                                                                    Pro Forma                       Pro Forma
                                                               Three Months Ended               Six Months Ended
                                                                     June 30                         June 30
                                                        ----------------------------------------------------------------
                                                              2005            2004            2005            2004
                                                        ----------------------------------------------------------------
                                                                                                         

Net income as reported                                      $6,064,074      $5,011,326      $6,714,397      $5,582,379  

Add: Total stock-based employee compensation
expense recorded for all awards, net of related
tax effects                                                    527,486         173,488         930,884         325,322  
Deduct: Total stock-based employee
compensation expense determined under fair
value method for all awards, net of related tax
effects                                                        633,995         355,227       1,204,566         718,276  
                                                        ----------------------------------------------------------------
Pro forma net income                                        $5,957,565      $4,829,587      $6,440,715      $5,189,425
                                                        ================================================================

Earnings per share:

      Basic - as reported                                        $0.74           $0.62           $0.82           $0.69
                                                        ================================================================
      Basic - pro forma                                          $0.73           $0.60           $0.79           $0.64
                                                        ================================================================
      Diluted - as reported                                      $0.73           $0.61           $0.81           $0.69
                                                        ================================================================
      Diluted - pro forma                                        $0.72           $0.60           $0.77           $0.64
                                                        ================================================================



Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
stock options under the fair value method of SFAS No. 123. The fair value for
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions:



                                                            Options         Options         Options 
                                                             Issued          Issued          Issued
                                                            4/15/03         4/15/02         4/16/01     
                                                        ------------------------------------------------
                                                                                            

Risk-free interest rate                                       3.49%           4.95%           5.20%
Dividend yields                                               2.54%           3.11%           3.50%
Volatility                                                     .540            .564            .547
Weighted-average expected life                                7 years         7 years         7 years
Per share fair value                                        $10.63           $8.83           $7.40




NOTE Q - RECLASSIFICATIONS

Certain amounts in the prior year Consolidated Statement of Income have been
reclassified to conform with the current year presentation.


                                      -14-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE R - CONTINGENCIES

The Company is involved in certain items of litigation, arising in the normal
course of business. While it cannot be predicted with certainty, management
believes that the outcome will not have a material effect on the Company's
financial condition or results of operations.

NOTE S - FINANCING ARRANGEMENTS

The Company maintains two facilities that as of June 30, 2005 collectively
provide $110 million of credit. As of June 30, 2005 the Company was in
compliance with all debt covenants.

The syndicated revolving facility (the "Credit Agreement") was originally signed
on December 20, 2001 and has been amended five times, most recently on March 30,
2005. The amended Credit Agreement provides a commitment of $40 million and is
secured by inventory and certain other assets of the Company and its
subsidiaries. The Company is required to meet certain covenants that relate to
tangible net worth, maintaining a defined leverage ratio and fixed charge
coverage ratio and complying with certain indebtedness restrictions. At June 30,
2005, the Company had no borrowings (loans) outstanding on this credit facility
and had letters of credit totaling $18.1 million outstanding, which reduces the
amount of borrowings available under the Credit Agreement. Outstanding letters
of credit totaled $16.1 million at December 31, 2004, and $24.7 million at June
30, 2004. Letters of credit are comprised mainly of two categories. One such
category is comprised of commercial letters of credit used for the purpose of
purchasing goods from non-U.S. suppliers. The other category is comprised of
performance guarantees for a consolidated subsidiary and insurance bonding
purposes. All letters of credit have a term of one year or less. The amended
facility is scheduled to expire on September 1, 2007.

The Company also maintains a securitization of up to $100 million in accounts
receivable. As of June 30, 2005, $70 million has been committed by lenders and
is available to the Company. The Company sells all right, title and interest in
and to certain of its accounts receivable to Blair Factoring Company, a
wholly-owned subsidiary. Blair Factoring Company is a separate, bankruptcy
remote, special purpose entity that entered into a Receivables Purchase
Agreement (the "RPA") with PNC Bank, National Association, as administrator, and
certain conduit purchasers. The Company's consolidated financial statements
reflect all of the accounts of Blair Factoring Company, including the
receivables and secured borrowings. Transactions entered into under the RPA are
considered secured borrowings and collateral transactions under the provisions
of Statement of Financial Accounting Standards No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities. The
securitization requires certain performance standards for the Company's accounts
receivable portfolio in addition to complying with the covenants in the Credit
Agreement. At June 30, 2005, December 31, 2004 and June 30, 2004, $15 million
had been borrowed under the securitization and is reflected on the balance sheet
as short-term notes payable. $15 million is the minimum amount required to be
outstanding under the Receivables Purchase Agreement. Accordingly, at June 30,
2005, December 31, 2004 and June 30, 2004, $15 million of the $70 million
commitment had been utilized under the terms of the facility, resulting in a
remaining unused commitment of $55 million. For the six months ended June 30,
2005 and June 30, 2004, the weighted average interest rate was 4.01% and 1.91%,
respectively. The interest rate increases are due to the facilities' varying
interest rates that fluctuate based on certain LIBOR indices, which tend to
follow the recent increase in Federal Reserve rates. Interest paid for the three
months and six months ending June 30, 2005 was approximately $146,000 and
$275,000, and for the three months and six months ending June 30, 2004 were
approximately $71,000 and $146,000, respectively.

The securitization has a scheduled termination date of April 7, 2006. On July
18, 2005, the Company announced the execution of an amendment to the RPA and
execution of an Amended Credit Agreement (the "Amended Credit Agreement"), which
together provide the Company up to $200 million in financing. The funds made
available to the Company pursuant to these agreements will be used to fund, in
part, the Company's self-tender offer, which was commenced on July 20, 2005, and
for general corporate purposes.

The amendment to the RPA is dated as of July 15, 2005. The amended RPA increases
the purchase limit from $70 million to $100 million. The facility has a
commitment fee rate of 0.50% and a program fee rate of 1.0%, which converts to a
2.0% fee on the earlier of March 31, 2006 or the date upon which the Purchase
Agreement is terminated, should the parties fail to close the Purchase
Agreement.


                                      -15-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE S - FINANCING ARRANGEMENTS - Continued

The Amended Credit Agreement dated as of July 15, 2005 is by, between and
amongst Blair, and PNC Capital Markets, Inc. as lead arranger and PNC Bank, N.A.
and three other lending institutions. The Amended Credit Agreement provides for
$100 million in first and second lien credit facilities consisting of a senior
secured first lien revolving credit facility not to exceed $75 million, which
matures in five years, and a $25 million senior secured second lien term loan
that matures on the earlier of (x) the date of the close of the sale of Blair's
receivables and credit receivables pursuant to the Purchase Agreement; or (y) in
quarterly payments commencing on July 1, 2006 and terminating on July 1, 2010.

Upon the occurrence of an Event of Default (as such term is defined in the
Amended Credit Agreement), PNC and/or the other lending institutions may declare
a default of the Amended Credit Agreement and accelerate the loan pursuant to
the terms of the Amended Credit Agreement. The collateral for the revolving
credit facility consists of all of Blair's and its subsidiaries assets,
including, but not limited to, inventory, equipment, furniture, general
intangibles, intellectual property, fixtures, certain real property and
improvements, the common stock of Blair's domestic subsidiaries (excluding JLB
Service Bank), as well as a negative and double negative pledge on the assets of
Blair's direct and indirect foreign subsidiaries. The collateral for the term
loan consists of a lien subordinate to the revolving credit facility on all the
aforementioned assets. At Blair's option, any loan under the revolving credit
facility or term loan shall bear interest at the Euro-Rate (calculated with
reference to a LIBOR-based formula in accordance with the Amended Credit
Agreement) or a Base Rate (as that term is defined in the Amended Credit
Agreement), plus a margin, such margin to be calculated in accordance with a
performance based pricing grid in the case of the revolving credit facility and
a locked fixed spread in the case of the term loan. Blair is also required to
pay a commitment fee, a letter of credit fee and reasonable out-of-pocket
expenses pursuant to the Amended Credit Agreement.

As of April 26, 2005, Blair entered into the Purchase Agreement to sell its
credit portfolio to World Financial. The sale of the credit portfolio is
expected to close prior to the end of the fourth quarter of fiscal 2005, subject
to regulatory review and approval and customary closing conditions. Proceeds
from the sale are to be used first to repay and terminate Blair's outstanding
RPA, second to pay any amounts outstanding and extinguish the commitment under
the term loan, and any remaining proceeds will be used to reduce the amount, if
any, outstanding under the revolving credit facility.

NOTE T - ACCRUED EXPENSES

Accrued expenses consist of:



                                                             June 30       December 31
                                                              2005            2004
                                                        --------------------------------
                                                                               

   Employee compensation                                   $ 9,540,882     $ 9,904,200
   Contribution to profit sharing and
        retirement plan                                        712,825       1,525,158
   Health insurance                                            815,667         809,297
   Voluntary Separation Program                                313,987         494,790
   Taxes, other than taxes on income                         1,124,595         325,335
   Other accrued items                                       2,704,543       2,347,851
                                                        --------------------------------
                                                           $15,212,499     $15,406,631
                                                        ================================



                                      -16-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE U - LEASES

Capital Leases

The Company leases certain data processing and telephone equipment under
agreements that expire in various years through 2008. The following is a
schedule by year of future minimum capital lease payments required under capital
leases that have initial or remaining noncancelable lease terms in excess of one
year as of June 30, 2005:


  2005                                                        $ 10,779
  2006                                                          21,568
  2007                                                          12,280
  2008                                                           5,211
                                                           --------------
                                                                49,838
  Less amount representing interest                             (5,402)
                                                           --------------
  Present value of minimum lease payments                       44,436
  Less current portion                                         (18,325)
                                                           --------------
  Long-term portion of capital lease obligation               $ 26,111
                                                           ==============

The Company entered into capital lease obligations amounting to $27,843 and
$29,224 in the second quarter of 2005 and 2004, respectively.

Operating Leases

The Company leases certain data processing, office and telephone equipment under
agreements that expire in various years through 2009. The Company has also
entered into several lease agreements for buildings, expiring in various years
through 2012. The following is a schedule by years of future minimum rental
payments required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of June 30, 2005:


  2005                                                     $ 1,588,619
  2006                                                       2,707,206
  2007                                                       1,875,077
  2008                                                       1,232,368
  2009                                                       1,069,595
  Thereafter                                                 1,549,180
                                                          --------------
                                                           $10,022,045
                                                          ==============


                                      -17-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE V - STOCKHOLDERS' EQUITY

Earnings Per Share and Weighted Average Shares Outstanding

The following table sets forth the computations of basic and diluted earnings
per share as required by Statement of Financial Accounting Standards No. 128:



                                                               Three Months Ended               Six Months Ended
                                                                     June 30                         June 30
                                                              2005            2004            2005            2004
                                                        ----------------------------------------------------------------
                                                                                                         

Numerator:
  Net income                                                $6,064,074      $5,011,326      $6,714,397      $5,582,379
Denominator:
  Weighted average shares outstanding                        8,249,928       8,162,820       8,242,414       8,142,365
  Contingently issueable shares - 
    Omnibus Stock Purchase Plan                                (57,986)        (70,786)        (57,986)        (70,786)
                                                        ----------------------------------------------------------------
Denominator for basic earnings per share                     8,191,942       8,092,034       8,184,428       8,071,579
  Effect of dilutive securities:
   Employee stock options                                      132,983          74,906         133,239          67,982
                                                        ----------------------------------------------------------------
Denominator for diluted earnings per share                   8,324,925       8,166,940       8,317,667       8,139,561
                                                        ================================================================
Basic earnings per share                                         $0.74           $0.62           $0.82           $0.69
                                                        ================================================================
Diluted earnings per share                                       $0.73           $0.61           $0.81           $0.69
                                                        ================================================================




Dividends Declared
            2-13-04   $ 0.15  per share        1-18-05   $ 0.15   per share
            4-29-04     0.15                   4-21-05     0.15
            7-20-04     0.15                   7-19-05     0.15
           10-19-04     0.15

Blair Corporation has declared a dividend for 287 consecutive quarters.

For the three months and six months ended June 30, 2005, the Company declared
dividends of $1,237,624 and $2,474,048 of which $1,197,536 and $2,392,529 were
paid directly to shareholders and charged to retained earnings. For the three
months and six months ended June 30, 2004, the Company declared dividends of
$1,224,789 and $2,444,284 of which $1,177,944 and $2,349,881 were paid directly
to shareholders and charged to retained earnings. The remaining dividends
declared for the three months and six months ended June 30, 2005 of $40,088 and
$81,519, and the three months and six months ended June 30, 2004 of $46,845 and
$94,403, were associated with the shares of stock held by the Company according
to the provisions of the restricted stock awards. These remaining dividends were
applied against the receivable from stock plans and were charged to compensation
in the financial statements.

NOTE W - INCOME TAXES

The liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax basis of assets and liabilities using
the enacted tax rate(s) expected to apply to taxable income in the periods in
which the deferred tax liability or asset is expected to be settled or realized.

The Company accounts for the tax benefit from the exercise of non-qualified
stock options by reducing its accrued income tax liability and increasing
additional paid-in capital.


                                      -18-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE W - INCOME TAXES - Continued

The components of income tax expense (benefits) are as follows:


                                                               Three Months Ended               Six Months Ended
                                                                     June 30                         June 30
                                                              2005            2004            2005            2004
                                                        ----------------------------------------------------------------
                                                                                                         

Currently payable:
   Federal                                                 $ 4,715,000     $ 4,160,000     $ 4,603,000     $ 5,942,000
   Foreign                                                      57,000          12,000          74,000          42,000
   State                                                       732,000         660,000         909,000         863,000
                                                        ----------------------------------------------------------------
                                                             5,504,000       4,832,000       5,586,000       6,847,000
Deferred                                                    (1,929,000)     (1,756,000)     (1,639,000)     (3,422,000)
                                                        ----------------------------------------------------------------
                                                           $ 3,575,000     $ 3,076,000     $ 3,947,000     $ 3,425,000
                                                        ================================================================




The differences between total tax expense and the amount computed by applying
the statutory federal income tax rate of 35% to income before income taxes are
as follows:



                                                               Three Months Ended               Six Months Ended
                                                                     June 30                         June 30
                                                              2005            2004            2005            2004
                                                        ----------------------------------------------------------------
                                                                                                         

Statutory rate applied to pretax income                     $3,373,657      $2,830,564      $3,731,470      $3,152,583
State income taxes, net of Federal tax benefit                 215,800         235,300         209,300         226,200
Other items                                                    (14,457)         10,136           6,230          46,217
                                                        ----------------------------------------------------------------
                                                            $3,575,000      $3,076,000      $3,947,000      $3,425,000
                                                        ================================================================



The Company has approximately $1.3 million of a Pennsylvania net operating loss
carry forward that can be used to offset future Pennsylvania Taxable Income. A
deferred tax asset has been established based on the $1.3 million net operating
loss available to be carried forward. The deferred tax asset is offset by a
valuation allowance because it is uncertain as to whether the Company will
generate sufficient income in the State of Pennsylvania in the future to absorb
the net operating losses before they expire in 2011.


                                      -19-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE W - INCOME TAXES - Continued

Components of the deferred tax assets and liabilities under the liability method
as of June 30, 2005 and December 31, 2004 are as follows:



                                                             June 30,      December 31,
                                                               2005            2004
                                                        --------------------------------
                                                                               

 Current deferred tax assets:
  Doubtful accounts                                        $ 9,241,000     $11,737,000
  Returns allowance                                          1,746,000       1,922,000
  Inventory obsolescence                                       954,000       1,374,000
  State net operating loss                                      41,000          72,000
  Vacation pay                                               1,491,000       1,466,000
  Group insurance                                              509,000         431,000
  Other items                                                1,110,000         946,000
                                                        --------------------------------
  Gross current deferred tax assets                         15,092,000      17,948,000
  State valuation allowance                                    (43,000)       (121,000)
                                                        --------------------------------
                                                            15,049,000      17,827,000

Current deferred tax liabilities:
 Advertising costs                                         $ 2,541,000     $ 6,152,000
 Inventory costs                                               776,000         776,000
 Other items                                                       -0-         242,000
                                                        --------------------------------
 Gross current deferred tax liabilities                      3,317,000       7,170,000
                                                        --------------------------------
Net current deferred tax asset                             $11,732,000     $10,657,000
                                                        ================================

  Long term deferred tax liability:
  Property, plant and equipment                            $ 2,104,000     $ 2,668,000
                                                        ================================



NOTE X - OTHER REVENUE

Other revenue consists of:  


                                                               Three Months Ended               Six Months Ended
                                                                     June 30                         June 30
                                                              2005            2004            2005            2004
                                                        ----------------------------------------------------------------
                                                                                                         

Finance charges on time payment accounts                   $ 9,484,493     $10,420,614     $19,494,454     $21,132,902
Commissions earned                                             237,004         332,568         403,625       1,136,421
Other items                                                  1,139,085         553,550       1,678,075       1,110,240
                                                        ----------------------------------------------------------------
                                                           $10,860,582     $11,306,732     $21,576,154     $23,379,563
                                                        ================================================================



The decrease in finance charges compared to the second quarter of 2004 primarily
resulted from reduced finance charge revenues associated with the previously
announced discontinuance of the Crossing Pointe catalog title and lower credit
sales.

Commissions earned pertain to the Company's continuity program. An arrangement
exists under which a third party sells jewelry to the Company's customers and
all related significant activities are conducted by, and are the responsibility
of, the third party. The Company receives payments from the customer and makes
remittances, net of commissions to the third party. The Company bears the credit
risk and recognizes a credit loss when the customer does not honor its payment
obligation. The decrease in commissions earned is related to a decline in
customer response to the continuity program in the first six months of 2005
compared to the first six months of 2004.

Other items are comprised of items such as customer list rentals, dishonored
check service charges and package insert income.


                                      -20-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE Y - BUSINESS SEGMENT AND CONCENTRATION OF BUSINESS RISK

The Company operates as one segment in the business of selling women's and men's
fashion apparel and accessories and home furnishing items. Specifically, the
segment includes the Womenswear, Menswear, Home, Crossing Pointe, Stores and
Allegheny Trail product lines. The Stores product line was added in the first
quarter of 2004 reflecting a reclassification within the segment from the other
product lines to this product line. As previously announced on May 3, 2004, the
Company formally discontinued circulation of its Crossing Pointe catalog title
as of March 31, 2005. The Company's intention is to more fully focus new
business development efforts on the core Blair brand and its proven appeal to
significant market segments. The decision to focus on core operations is based
in part on the historical success of the Blair brand and an extensive consumer
and brand strategy study undertaken by the Company as part of its efforts to
enhance profitability and shareholder value. The Company has evaluated the
impact of discontinuing circulation of the Crossing Pointe title on all assets
associated with this operation. All appropriate reserves have been recorded.
This decision did not have a negative effect on 2004 profitability, and is
expected to moderately benefit 2005 performance.

On January 25, 2005, the Company decided to phase out its Allegheny Trail
wholesale business. This process was substantially completed by April 30, 2005.
This decision is consistent with the Company's intention to more fully focus new
business development efforts on the core Blair brand and its proven appeal to
significant market segments. The Company has evaluated the impact of phasing out
the Allegheny Trail business on all assets associated with this operation. All
appropriate reserves have been recorded. This decision did not have a
significant negative effect on 2004 profitability, and is not expected to
negatively impact 2005 performance.

The Company's segment reporting is consistent with the presentation made to the
Company's chief operating decision-maker. The Company's customer base is
comprised of individuals throughout the United States and is diverse in both
geographic and demographic terms. Advertising is done mainly by means of
catalogs, direct mail letters and the internet, which offer the Company's
merchandise.

The following table illustrates the percent of net sales that each product line
represents:

                    Six Months                    Six Months
                      Ended                         Ended
                     6/30/05      Percent of       6/30/04      Percent of
                    Net Sales      Total Net      Net Sales      Total Net
 Product Line     (in millions)      Sales      (in millions)      Sales
--------------------------------------------------------------------------

Womenswear            $146.5          64.1%         $162.3         63.5%
Menswear                43.9          19.2%           44.6         17.4%
Home                    34.8          15.2%           33.6         13.2%
Crossing Pointe           .3           0.2%           13.1          5.1%
Stores                   1.3           0.6%            1.4          0.6%
Allegheny Trail          1.6           0.7%             .6          0.2%
                 --------------------------------------------------------
Total                 $228.4         100.0%         $255.6        100.0%
                 ========================================================


NOTE Z - LONG-LIVED ASSETS PREVIOUSLY CLASSIFIED AS HELD FOR SALE

In January 2003, the Company made the decision to close its liquidation outlet
store located in Erie, Pennsylvania. This closure was effective at the close of
business on March 28, 2003. While the Company continues to hold the assets for
sale, the sales process has taken longer than anticipated and the assets are no
longer being classified as Held for Sale in accordance with SFAS No. 144. The
building was not depreciated while classified as Held for Sale. A catch up
journal entry was recorded for depreciation expense when the building was moved
back to property, plant and equipment in the third quarter of 2004. The $1.3
million carrying value of the asset, after considering a $300,773 impairment
charge taken in 2003 to reduce the value of the asset to its fair value less
costs to sell, is deemed to be stated fairly at June 30, 2005.


                                      -21-







             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

NOTE AA- VOLUNTARY SEPARATION PROGRAM

In the first quarter of 2004, the Company accrued and charged to expense $67,000
in separation costs. The costs were charged to General and Administrative
Expense in the income statement. The $67,000 charge represents severance pay,
related payroll taxes and medical benefits due the 33 eligible employees who
accepted the voluntary separation program offered in connection with closing the
Company's Outlet Store located in Warren, Pennsylvania on January 16, 2004. As
of the end of the first quarter of 2004, $67,000 had been paid. This liability
is considered satisfied.

In the first quarter of 2001, the Company accrued and charged to expense $2.5
million in separation costs. The costs were charged to General and
Administrative Expense in the income statement. The $2.5 million charge
represents severance pay, related payroll taxes and medical benefits due the 56
eligible employees who accepted the voluntary separation program rather than
relocate or accept other positions in the Company. The program was offered to
eligible employees of the Blair Mailing Center from which the merchandise
returns operations have been relocated and the mailing operations have been
outsourced. As of the end of the second quarter of 2005, $2.2 million of the
$2.5 million has been paid.

The following table summarizes the charges to income and related accruals as of
June 30, 2005, December 31, 2004 and December 31, 2003 pertaining to the
voluntary separation programs described above.

                               Blair Mailing Center     Starbrick Outlet Store
                             ---------------------------------------------------

Accrual at December 31, 2003               $767,000                  $       -
Expense                                           -                     67,000
Payments                                    267,000                     67,000
                             ---------------------------------------------------
Accrual at December 31, 2004                500,000                          -
Expense                                           -                          -
Payments                                    100,000                          -
                             ---------------------------------------------------
Accrual at March 31, 2005                  $400,000                  $       -
Expense                                           -                          -
Payments                                    100,000                          -
                             ---------------------------------------------------
Accrual at June 30, 2005                   $300,000                  $       -
                             ===================================================

NOTE AB- SUBSEQUENT EVENT

On July 20, 2005, the Company commenced a self-tender offer at $42.00 per share,
for the purchase of approximately 4.4 million shares of its outstanding common
stock, or approximately 53% at an aggregate price of approximately $185 million.
The tender offer will remain open until August 16, 2005, unless it is extended.
In part, the Company is financing the self-tender offer with cash on hand
supplemented by borrowings on the RPA and Amended Credit Agreement. See Footnote
S - FINANCING ARRANGEMENTS.

As a result of the Company's decision to repurchase stock acquired by an
employee under its stock option award program, it will incur compensation
expense. The amount of expense is not presently determinable. It will be based
on the number of shares tendered in the self-tender offer multiplied by the
difference between the option exercise price and the $42.00 tender offer price.
The option exercise price of shares eligible to be tendered ranges from $17.10
to $23.60. At December 31, 2004, the weighted average exercise price was $20.58.
For additional information regarding stock options outstanding and related
option prices, refer to Footnote 5, Stockholders' Equity in the 2004 Blair
Corporation Form 10-K.


                                      -22-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                 OF OPERATIONS

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Results of Operations

Comparison of Second Quarter 2005 and Second Quarter 2004

Net income for the three months ended June 30, 2005 was $6.1 million or $.74 per
basic share and $.73 per diluted share, compared to net income of $5.0 million
or $.62 per basic share and $.61 per diluted share, for the three months ended
June 30, 2004. Results for the second quarter of 2005 reflect the discontinuance
of the Crossing Pointe catalog title and a continuing refocus on the Company's
core business opportunities and profitability.

Net sales for the second quarter of 2005 totaled $120.8 million and were 4.9%
lower ($6.2 million) than net sales for the second quarter of 2004. This net
sales reduction and the advertising efficiency metrics that follow primarily
reflect the Company's strategic decision to discontinue the Crossing Pointe
catalog title, which was completed in March 2005. The number of advertising
mailings and incoming orders decreased in the second quarter of 2005 as compared
to the second quarter of 2004. Gross sales revenue generated per advertising
dollar increased almost 8% in the second quarter of 2005 compared to the second
quarter of 2004. The total number of orders shipped decreased 5.6% and the
average order size increased 1.3% in the second quarter of 2005 as compared to
the second quarter of 2004.

Other revenue decreased 4.0% from $11.3 million to $10.9 million in the second
quarter of 2005 versus the second quarter of 2004 primarily due to decreases in
finance charge revenues and commissions earned. Decreased finance charges
resulted from the previously announced discontinuance of the Crossing Pointe
catalog title and lower credit sales. The decrease in commissions earned is
related to a decline in customer response to the Continuity Program in the
second quarter of 2005 compared to the second quarter of 2004.

Cost of goods sold decreased $3.2 million (5.5%) to $54.7 million in the second
quarter of 2005 as compared to the second quarter of 2004. Cost of goods sold as
a percentage of net sales for the second quarter of 2005 was 45.3% compared to
45.6% for the second quarter of 2004. The improved percentage reflects continued
success in lowering overall liquidation costs and negotiation of lower
merchandise cost from vendors.

Advertising expenses in the second quarter of 2005 decreased $3.7 million
(11.1%) to $29.8 million from the second quarter of 2004. The Company's more
targeted mailings led to strategic decreases in catalog and letter mailings. The
catalog reduction includes the reduction in Crossing Pointe mailings as a result
of the Company's decision to discontinue circulation of its five-year-old
Crossing Pointe catalog title, which was completed as of March 31, 2005.

The total number of catalog mailings released in the second quarter of 2005 was
537,339 or 1.07% less than in the second quarter of 2004. The total number of
prospect catalog mailings decreased 2.4 million or 17.2% in the second quarter
of 2005 as compared to the second quarter of 2004. The reduction in prospect
circulation is primarily attributable to the discontinuance of the Crossing
Pointe catalog title in the first quarter of 2005.

The total number of letter mailings released in the second quarter of 2005
decreased by 14.2% (1.3 million) as compared to the second quarter of 2004. The
decrease in letter mailings primarily pertains to the mailing release schedule
for the first six months of the year. In 2005, letter mailings were accelerated
in support of the Company's customer contact strategy.

Total circulation of the co-op and media advertising programs increased 180%
(113.9 million pieces) in the second quarter of 2005 as compared to the second
quarter of 2004. The pace of media advertising was increased in the second
quarter of 2005 in support of a more aggressive prospecting strategy.

The Company maintains two e-commerce sites, www.blair.com and
www.irvinepark.com. In the second quarter of 2005, the Company generated $24.1
million in e-commerce gross sales demand as compared to $23.7 million in the
second quarter of 2004, a 1.7% increase. The year-over-year increase was
mitigated by the discontinuance of the Crossing Pointe catalog title and related
e-commerce site, which resulted in significantly lower Crossing Pointe
e-commerce gross sales demand in the second quarter of 2005. Crossing Pointe
e-commerce gross sales were $0 in the second quarter of 2005 compared to $2
million in the second quarter of 2004.


                                      -23-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Results of Operations - Continued

Comparison of Second Quarter 2005 and Second Quarter 2004 - Continued

General and administrative expense increased 5.4% ($1.8 million) in the second
quarter of 2005 as compared to the second quarter of 2004. As a percent of net
sales, general and administrative expenses were 28.5% for the quarter ended June
30, 2005 compared to 25.8% for the quarter ended June 30, 2004. Reduced variable
employee costs associated with lower sales volume were more than offset by
increased employee costs and professional fees. Increased employee costs
resulted from annual merit increases, benefits related to improved earnings and
unfavorable health and workers compensation claims experience. Increased
professional fees pertained to costs associated with organizational
restructuring and communication initiatives.

The provision for doubtful accounts decreased $2.6 million from $6.0 million to
$3.4 million or 43.6% in the second quarter of 2005 as compared to the second
quarter of 2004. The decrease is primarily related to a 15.4% reduction in
credit sales in the second quarter of 2005 compared to the second quarter of
2004, implementation of stricter credit requirements, and the discontinuance of
the Crossing Pointe catalog title in the first quarter of 2005. These factors
contributed to the estimated bad debt rate used in the second quarter of 2005
being 184 basis points lower than the bad debt rate used in the second quarter
of 2004.

The provision for doubtful accounts is based on current expectations (consumer
credit and economic trends, etc.), sales mix (prospect/customer) and current and
prior years' experience, especially delinquencies (accounts over 30 days past
due) and actual charge-offs (accounts removed from accounts receivable for
non-payment). At June 30, 2005, the delinquency rate of open accounts receivable
was 210 basis points lower than at June 30, 2004. The charge-off rate for the
second quarter of 2005 was 26 basis points lower than the charge-off rate for
the second quarter of 2004.

At this time, the Company feels that the allowance for doubtful accounts is
sufficient to cover the charge-offs from the current customer accounts
receivable portfolio. Also, credit granting, collection and behavior models
continue to be updated and improved and, along with expanding database
capabilities, provide valuable credit-marketing opportunities and improve the
ability to forecast doubtful accounts.

The net of interest (income) and expense improved by $303,681 in the second
quarter of 2005 compared to the second quarter of 2004 and resulted in net
interest income of $308,761. Interest income increased due to higher average
cash balances and increased rates. Interest expense results primarily from the
Company's required borrowings under the Receivables Purchase Agreement. Interest
rates have been higher in the second quarter of 2005.

Other expense (income), net, is comparable for the second quarter 2005 and 2004.

Income taxes as a percentage of income before income taxes were 37.1% in the
second quarter of 2005 and 38.0% in the second quarter of 2004. The federal
income tax rate was 35% in both years. The Company's interim effective state
income tax rate used for 2005 is based on the overall 2004 annual rate while the
2004 interim rate was based on estimates.


                                      -24-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Results of Operations - Continued

Comparison of Six Month Periods ended June 30, 2005 and June 30, 2004

Net income for the six months ended June 30, 2005 was $6.7 million or $.82 per
basic share and $.81 per diluted share, compared to net income of $5.6 million
or $.69 per basic and diluted share, for the six months ended June 30, 2004.
Results for the first six months of 2005 reflect the discontinuance of the
Crossing Pointe catalog title and a continuing refocus on the Company's core
business opportunities and profitability.

Net sales for the first six months of 2005 totaled $228.4 million and were 10.7%
lower ($27.2 million) than net sales for the first six months of 2004. This net
sales reduction and the advertising efficiency metrics that follow reflect the
Company's strategic decision to discontinue the Crossing Pointe catalog title,
which was completed in March 2005 and to focus on more targeted mailings for
greater efficiency and optimized yield. The number of advertising mailings and
incoming orders decreased in the first six months of 2005 as compared to the
second quarter of 2004. Gross sales revenue generated per advertising dollar
increased approximately 3% in the first six months of 2005 compared to the first
six months of 2004. The total number of orders shipped decreased 9.6% and the
average order size decreased 1.3% in the first six months of 2005 as compared to
the first six months of 2004. The provision for returned merchandise as a
percentage of gross sales decreased 383 basis points in the first six months of
2005 as compared to the first six months of 2004. Management attributes this
favorable change to improved product quality and fit.

Other revenue decreased 7.7% from $23.4 million to $21.6 million in the first
six months of 2005 versus the first six months of 2004 primarily due to
decreases in finance charge revenues and commissions earned. Decreased finance
charges resulted from the previously announced discontinuance of the Crossing
Pointe catalog title and lower credit sales. The decrease in commissions earned
is related to a decline in customer response to the Continuity Program in the
first six months of 2005 compared to the first six months of 2004.

Cost of goods sold decreased $13.6 million (11.2%) to $107.5 million in the
first six months of 2005 as compared to the first six months of 2004. Cost of
goods sold as a percentage of net sales for the first six months of 2005 was
47.1%, a slight improvement from 47.4% for the first six months of 2004. The
percentage improved as increased outbound postage costs were offset by a
continued reduction in the cost of merchandise and lower overall liquidation
costs.

Advertising expenses in the first six months of 2005 decreased $9.6 million
(13.9%) to $59.3 million from the first six months of 2004. The Company's more
targeted mailings led to strategic decreases in catalog and letter mailings. The
catalog reduction includes the reduction in Crossing Pointe mailings as a result
of the Company's decision to discontinue circulation of its five year old
Crossing Pointe catalog title, which was completed as of March 31, 2005.

The total number of catalog mailings released in the first six months of 2005
was 11.9 million or 11.2% less than in the first six months of 2004. The total
number of prospect catalog mailings decreased 12.5 million or 40.1% in the first
six months of 2005 as compared to the first six months of 2004. The reduction in
prospect circulation is primarily attributable to the discontinuance of the
Crossing Pointe catalog title in the first quarter of 2005.

The total number of letter mailings released in the first six months of 2005
increased by .49% (86,808) as compared to the first six months of 2004. The
slight increase in letter mailings was in support of the Company's customer
contact strategy.

Total circulation of the co-op and media advertising programs increased 32.7%
(116.2 million pieces) in the first six months of 2005 as compared to the first
six months of 2004. The pace of media advertising was increased in the second
quarter of 2005 in order to take advantage of new scheduling opportunities.

The Company maintains two e-commerce sites, www.blair.com and
www.irvinepark.com. In the first six months of 2005, the Company generated $48.7
million in e-commerce gross sales demand as compared to $45.6 million in the
first six months of 2004, a 6.7% increase. The year-over-year increase was
mitigated by the discontinuance of the Crossing Pointe catalog title and related
e-commerce site, which resulted in significantly lower Crossing Pointe
e-commerce gross sales demand in the first six months of 2005. Crossing Pointe
e-commerce gross sales were $556,000 in the first six months of 2005 compared to
$4.3 million in the first six months of 2004.


                                      -25-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Results of Operations - Continued

Comparison of Six Month Periods ended June 30, 2005 and June 30, 2004 -
Continued

General and administrative expense decreased .3% ($190,611) in the first six
months of 2005 as compared to the first six months of 2004. As a percent of net
sales, general and administrative expenses were 29.0% for the six months ended
June 30, 2005 compared to 26.01% for the six months ended June 30, 2004. The
increase in percentage of net sales is primarily attributable to increased
employee benefit costs. Reduced variable employee costs associated with lower
sales volume were more than offset by increased employee benefit costs.
Increased employee benefit costs resulted from annual merit increases, benefits
related to improved earnings and unfavorable health and workers compensation
claims experience.

The provision for doubtful accounts decreased $6.7 million from $13.6 million to
$6.9 million or 49.2% in the first six months of 2005 as compared to the first
six months of 2004. The decrease is primarily related to a 19.3% reduction in
credit sales in the first six months of 2005 compared to the first six months of
2004, implementation of stricter credit requirements, reduced prospecting for
non-core customers and the discontinuance of the Crossing Pointe catalog title
in the first quarter of 2005. Prospect credit offers traditionally result in
higher bad debts. These factors contributed to the estimated bad debt rate used
in the first six months of 2005 being 227 basis points lower than the bad debt
rate used in the first six months of 2004.

The provision for doubtful accounts is based on current expectations (consumer
credit and economic trends, etc.), sales mix (prospect/customer) and current and
prior years' experience, especially delinquencies (accounts over 30 days past
due) and actual charge-offs (accounts removed from accounts receivable for
non-payment). At June 30, 2005, the delinquency rate of open accounts receivable
was 210 basis points lower than at June 30, 2004. The charge-off rate for the
first six months of 2005 was 8 basis points higher than the charge-off rate for
the first six months of 2004.

At this time, the Company feels that the allowance for doubtful accounts is
sufficient to cover the charge-offs from the current customer accounts
receivable portfolio. Also, credit granting, collection and behavior models
continue to be updated and improved and, along with expanding database
capabilities, provide valuable credit-marketing opportunities and improve the
ability to forecast doubtful accounts.

The net of interest (income) and expense improved by $437,910 in the first six
months of 2005 compared to the first six months of 2004 and resulted in net
interest income of $433,990. Interest income increased due to higher average
cash balances and increased rates. Interest expense results primarily from the
Company's required borrowings under the Receivables Purchase Agreement. Interest
rates have been higher in the first six months of 2005.

The net of other expense and (income) improved by $270,472 in the first six
months of 2005 compared to the first six months of 2004 and resulted in net
other income of $206,853. In connection with the discontinuance of the Crossing
Pointe catalog title, on March 30, 2005, the Company sold all open Crossing
Pointe credit accounts receivable to a third party at a discount. After
comparing the proceeds of the sale to the net carrying value of this asset, the
Company realized a gain of approximately $500,000, which was recorded on this
financial statement line item.

Income taxes as a percentage of income before income taxes were 37.0% in the
first six months of 2005 and 38.0% in the first six months of 2004. The federal
income tax rate was 35% in both years. The Company's interim effective state
income tax rate used for 2005 is based on the overall 2004 annual rate while the
2004 interim rate was based on estimates.


                                      -26-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Liquidity and Sources of Capital

The Company maintains two facilities that as of June 30, 2005 collectively
provide $110 million of credit. The Company was in compliance with all debt
covenants as of the report date. On July 15, 2005, the Company amended and
restated its credit facilities.

The syndicated revolving facility (the "Credit Agreement") was originally signed
on December 20, 2001 and has been amended five times, most recently on March 30,
2005. The amended Credit Agreement provides a commitment of $40 million and is
secured by inventory and certain other assets of the Company and its
subsidiaries. The Company is required to meet certain covenants that relate to
tangible net worth, maintaining a defined leverage ratio and fixed charge
coverage ratio and complying with certain indebtedness restrictions. At June 30,
2005, the Company had no borrowings (loans) outstanding on this credit facility
and had letters of credit totaling $18.1 million outstanding, which reduces the
amount of borrowings available under the Credit Agreement. Outstanding letters
of credit totaled $16.1 million at December 31, 2004, and $24.7 million at June
30, 2004. Letters of credit are comprised mainly of two categories. One such
category is comprised of commercial letters of credit used for the purpose of
purchasing goods from non-U.S. suppliers. The other category is comprised of
performance guarantees for a consolidated subsidiary and insurance bonding
purposes. All letters of credit have a term of one year or less. The amended
facility is scheduled to expire on September 1, 2007.

The Company also maintains a securitization of up to $100 million in accounts
receivable. As of June 30, 2005, $70 million has been committed by lenders and
is available to the Company. The Company sells all right, title and interest in
and to certain of its accounts receivable to Blair Factoring Company, a
wholly-owned subsidiary. Blair Factoring Company is a separate, bankruptcy
remote, special purpose entity that entered into a Receivables Purchase
Agreement (the "RPA") with PNC Bank, National Association, as administrator, and
certain conduit purchasers. The Company's consolidated financial statements
reflect all of the accounts of Blair Factoring Company, including the
receivables and secured borrowings. Transactions entered into under the RPA are
considered secured borrowings and collateral transactions under the provisions
of Statement of Financial Accounting Standards No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities. The
securitization requires certain performance standards for the Company's accounts
receivable portfolio in addition to complying with the covenants in the Credit
Agreement. At June 30, 2005, December 31, 2004 and June 30, 2004, $15 million
had been borrowed under the securitization and is reflected on the balance sheet
as short-term notes payable. $15 million is the minimum amount required to be
outstanding under the Receivables Purchase Agreement. Accordingly, at June 30,
2005, December 31, 2004 and June 30, 2004, $15 million of the $70 million
commitment has been utilized under the terms of the facility, resulting in a
remaining unused commitment of $55 million. At June 30, 2005 and June 30, 2004,
the weighted average interest rate was 4.01% and 1.91%, respectively. Interest
paid for the three months and six months ending June 30, 2005 was approximately
$146,000 and $275,000, and for the three months and six months ending June 30,
2004 were approximately $71,000 and $146,000, respectively.

The securitization has a scheduled termination date of April 7, 2006. On July
18, 2005 the Company announced the execution of an amendment to the RPA and
execution of an Amended and Restated Credit Agreement (the "Amended Credit
Agreement"), which together provide the Company up to $200 million in financing.
The funds made available to the Company pursuant to these agreements will be
used to fund, in part, the Company's self-tender offer, which was commenced on
July 20, 2005, and for general corporate purposes.

The amendment to the RPA is dated as of July 15, 2005. The amended receivables
purchase facility increases the purchase limit from $70 million to $100 million.
The facility has a commitment fee rate of 0.50% and a program fee rate of 1.0%,
which converts to a 2.0% fee on the earlier of March 31, 2006 or the date upon
which the Purchase, Sale and Transfer Agreement (the "Purchase Agreement") with
a wholly-owned subsidiary of Alliance Data Systems ("Alliance"), World Financial
Capital Bank ("World Financial") is terminated, should the parties fail to close
the Purchase Agreement.


                                      -27-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Liquidity and Sources of Capital - Continued

The Amended Credit Agreement dated as of July 15, 2005 is by, between and
amongst Blair, and PNC Capital Markets, Inc. as lead arranger and PNC Bank, N.A.
and three other lending institutions. The Amended Credit Agreement provides for
$100 million in first and second lien credit facilities consisting of a senior
secured first lien revolving credit facility not to exceed $75 million, which
matures in five years, and a $25 million senior secured second lien term loan
that matures on the earlier of (x) the date of the close of the sale of Blair's
receivables and credit receivables pursuant to the Purchase Agreement; or (y) in
quarterly payments commencing on July 1, 2006 and terminating on July 1, 2010.
Upon the occurrence of an Event of Default (as such term is defined in the
Amended Credit Agreement), PNC and/or the other lending institutions may declare
a default of the Amended Credit Agreement and accelerate the loan pursuant to
the terms of the Amended Credit Agreement.

The collateral for the revolving credit facility consists of all of Blair's and
its subsidiaries assets, including, but not limited to, inventory, equipment,
furniture, general intangibles, intellectual property, fixtures, certain real
property and improvements, the common stock of Blair's domestic subsidiaries
(excluding JLB Service Bank), as well as a negative and double negative pledge
on the assets of Blair's direct and indirect foreign subsidiaries. The
collateral for the term loan consists of a lien subordinate to the revolving
credit facility on all the aforementioned assets. At Blair's option, any loan
under the revolving credit facility or term loan shall bear interest at the
Euro-Rate (calculated with reference to a LIBOR-based formula in accordance with
the Amended Credit Agreement) or a Base Rate (as that term is defined in the
Amended Credit Agreement), plus a margin, such margin to be calculated in
accordance with a performance based pricing grid in the case of the revolving
credit facility and a locked fixed spread in the case of the term loan. Blair is
also required to pay a commitment fee, a letter of credit fee and reasonable
out-of-pocket expenses pursuant to the Amended Credit Agreement.

As of April 26, 2005 Blair entered into the Purchase Agreement to sell its
credit portfolio to World Financial. The sale of the credit portfolio is
expected to close prior to the end of the fourth quarter of fiscal 2005, subject
to regulatory review and approval and customary closing conditions. Proceeds
from the sale are to be used first to repay and terminate Blair's outstanding
receivables purchase facility, second to pay any amounts outstanding and
extinguish the commitment under the term loan, and any remaining proceeds will
be used to reduce the amount, if any, outstanding under the revolving credit
facility.

The Company was in compliance with all debt covenants as of June 30, 2005. The
Company believes it has adequate financial resources to support anticipated
short-term and long-term capital needs and commitments.

The following table and narrative highlight significant changes in cash and cash
equivalents for the six months ended June 30, 2005 and 2004.



                                                                      Six Months Ended
                                                                          June 30
                                                                                             Increase/
                                                            2005            2004            (decrease)
                                                        ------------------------------------------------ 
                                                                                             

Net cash provided by operating activities                $36,641,776     $12,875,920      $23,765,856
Net cash used in investing activities                     (2,873,364)     (2,254,530)        (618,834)
Net cash used in financing activities                     (2,162,792)       (857,948)      (1,304,844)
Effect of exchange rate changes on cash                       (4,128)         (1,396)          (2,732)
                                                        ------------------------------------------------
Net increase in cash and cash equivalents                $31,601,492     $ 9,762,046      $21,839,446
                                                        ================================================


The $31.6 million increase in cash and cash equivalents is primarily due to
favorable cash flow from operations. Net cash provided by operating activities
was $36.6 million for the six months ended June 30, 2005, a $23.8 million
increase compared to the same period in fiscal 2004. This increase is primarily
attributable to favorable changes in several components of working capital. The
primary factors of improved working capital are favorable changes to accounts
receivable ($11.9 million), inventories ($7.1 million), trade accounts payable
and accrued expenses ($9.4 million) and deferred income taxes ($1.8 million),
offset somewhat by lower provisions for doubtful accounts ($6.7 million).


                                      -28-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Liquidity and Sources of Capital - Continued

Anticipated cash requirements during 2005 are primarily to fund the tender
offer, capital expenditures and pay dividends. The Company expects to fund 2005
cash requirements with cash generated from operations, cash on hand and
borrowings on the recently amended RPA and Amended Credit Agreement.

On July 20, 2005, the Company commenced a self-tender offer at $42.00 per share,
for the purchase of approximately 4.4 million shares of its outstanding common
stock, or approximately 53%, at an aggregate price of approximately $185
million. The tender offer will remain open until August 16, 2005, unless it is
extended.

Merchandise inventory turnover was 2.46 times at June 30, 2005, 2.61 times at
December 31, 2004 and 3.1 times at June 30, 2004. Merchandise inventory as of
June 30, 2005 was 9.7% lower than at December 31, 2004 and 9.4% lower than at
June 30, 2004. The decrease in merchandise inventories from June 30, 2004 is
primarily the result of inventory liquidation efforts associated with the
Company's decision to close the Crossing Pointe and Allegheny Trail product
lines.

The merchandise inventory levels are net of the Company's reserve for inventory
obsolescence. The reserve totaled $2.5 million at June 30, 2005, $3.6 million at
December 31, 2004 and $2.2 million at June 30, 2004. The reduction in the
reserve for slow moving inventory is related to actual writedowns associated
with the Company's decisions to discontinue its Crossing Pointe and the
Allegheny Trail product lines, which resulted in one time writedowns of $1.8
million. These writedowns primarily were provided for in the December 31, 2004
obsolescence reserve. Inventory write-offs and write-downs (reductions to below
cost) charged against the reserve for obsolescence were $2.2 million in the
first six months of 2005 and $4.7 million in the first six months of 2004. The
closing of the Starbrick Outlet Store in January 2004, accounts for $2.4 million
of the write-downs in the first six months of 2004. These write-downs were
primarily provided for in the December 31, 2003 obsolescence reserve. Due to the
nonrecurring nature of the write-downs related to the closing of the Starbrick
Outlet Store, the obsolescence reserve at June 30, 2005 was significantly less
than the reserve at December 31, 2004. Management believes that the amount of
the reserve for obsolescence is appropriate. A monthly provision for obsolete
inventory is added to the reserve and expensed to cost of goods sold based on
the levels of merchandise inventory and merchandise purchases.

An operating segment is identified as a component of an enterprise for which
separate financial information is available for evaluation by the chief
decision-maker or decision-making group, in deciding on how to allocate
resources and assess performance. The Company operates as one business segment
consisting of the Womenswear, Menswear, Home, Crossing Pointe, Allegheny Trail
and Store product lines. The Store product line was added in the first quarter
of 2004. It was previously included in the Womenswear, Menswear, Home and
Crossing Pointe product lines.

The reduction in Crossing Pointe net sales is the result of the discontinuance
of the Crossing Pointe catalog title which was completed in March, 2005.

The increase in Allegheny Trail net sales is the result of inventory liquidation
efforts associated with the decision to close this product line.


                                      -29-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Liquidity and Sources of Capital - Continued

The following tables illustrate net sales and the percent of net sales and
merchandise inventory that each product line represents.


                        6/30/05       Percent of       6/30/04       Percent of
                       Net Sales       Total Net      Net Sales       Total Net
Product Line         (in millions)      Sales       (in millions)       Sales
--------------------------------------------------------------------------------

Womenswear               $146.5          64.1%        $ 162.3            63.5%
Menswear                   43.9          19.2%           44.6            17.4%
Home                       34.8          15.2%           33.6            13.2%
Crossing Pointe              .3           0.2%           13.1             5.1%
Stores                      1.3           0.6%            1.4             0.6%
Allegheny Trail             1.6           0.7%             .6             0.2%
                   -------------------------------------------------------------
Total                    $228.4         100.0%         $255.6           100.0%
                   =============================================================


                        6/30/05                        6/30/04
                 Merchandise Inventory          Merchandise Inventory
Product Line         (in millions)                  (in millions)
--------------------------------------------------------------------------------

Womenswear               $ 37.5                        $ 41.8
Menswear                   13.2                           9.2
Home                       10.3                           9.2
Crossing Pointe             0.0                           4.0
Stores                      0.0                           0.5
Allegheny Trail             0.0                           2.7
                   -------------------------------------------------------------
Total                    $ 61.0                        $ 67.4
                   =============================================================

On April 27, 2005, the Company announced entrance into the Purchase Agreement
with World Financial. Pursuant to the Purchase Agreement, the Company's credit
portfolio will be sold at par plus a premium. Additionally, on April 27, 2005,
the Company and World Financial entered into the Program Agreement having an
initial term of ten (10) years. The transaction has been approved by both
parties and is expected to close by the end of the fourth quarter of fiscal
2005, subject to regulatory review and approval and customary closing
conditions. The accounting treatment for this transaction will result in a
significant gain on the sale.

Total consideration received by the Company will be based upon a price equal to
the balance of the consumer credit portfolio plus a premium. As of June 30,
2005, the Company's consumer receivables balance was $162.2 million.


                                      -30-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Liquidity and Sources of Capital - Continued

In addition, under terms of the Program Agreement, Alliance will provide
services including account acquisition and activation, receivables funding,
account authorization, statement generation, marketing services, remittance
processing and customer service functions.

After closing, the Company anticipates that the annual impact of the transaction
to its income before income taxes will be a net reduction in pre-tax income of
$2 to $4 million, as financial benefits from the Alliance partnership will
partially offset the income historically generated by the credit portfolio prior
to divestiture.

The Company currently intends to use the net proceeds from the transaction to
pay down the debt incurred to finance the issuer self-tender offer, which
commenced on July 20, 2005 and is scheduled to terminate on August 16, 2005,
unless it is extended.

The Company has added new facilities, modernized its existing facilities and
acquired new cost-saving equipment during the last several years. Capital
expenditures for property, plant and equipment totaled $3.4 million during the
first six months of 2005, compared to $2.3 million during the first six months
of 2004. Most of the $3.4 million capital expenditures in the first six months
of 2005 were attributable to improving the Company's information services
capabilities as they support the order fulfillment functions.

Upon review of the Company's inventory liquidation strategy, the Company made
the following decisions. In January 2004, the Company closed its outlet store
located in Warren, Pennsylvania. This closure was effective at the close of
business on January 16, 2004. The Company is considering alternative uses for
the building. Evolvement of the Company's inventory liquidation strategy into
more rapid and profitable methods of disposing obsolete and excess inventory led
to this decision. Over the past three years, package insertions, telephone
upsell promotions, sale catalogs and the e-commerce channel have proven to be
more successful and profitable in moving inventory than the traditional outlet
sales process. The building is a sheet metal warehouse design and the Company
has considered the possible impairment of the facility. It is continuing to be
used in other areas and maintained in an operating condition. Several options
for additional and/or alternative uses are being explored for its future use.
For these reasons, management believes the carrying value of the facility is
recoverable.

The Blair Warehouse Outlet building in Erie, Pennsylvania is not currently being
used by the Company. The Company is seeking prospective buyers for the Erie
facility. However, the sales process has taken longer than anticipated and the
assets are no longer being classified as Held for Sale in accordance with SFAS
No. 144. The building was not depreciated while classified as held for sale. A
catch up journal entry was recorded for depreciation expense when the building
was moved back to property, plant and equipment in the third quarter of 2004.
Management believes the carrying value of the asset, after considering a
$300,773 impairment charge taken in 2003 to reduce the value of the asset to its
fair value less costs to sell, is deemed to be stated fairly at June 30, 2005.
The facility will continue to be depreciated.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.


                                      -31-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Contractual Obligations

The Company has contractual obligations consisting of capital leases for data
processing and telephone equipment, operating leases for buildings, data
processing, office and telephone equipment and a line of credit securitization
for general liquidity which requires a minimum borrowing level.

                             Payments Due By Period


                                                      Less than         1 - 3          4 - 5        More than 5
Contractual Obligations                Total            1 year          years          years           years
-----------------------------------------------------------------------------------------------------------------
                                                                                               

Capital Lease
   Obligations                    $    49,838        $   10,779      $   39,059      $      -0-        $    -0-
Operating Leases                   10,022,045         1,588,619       5,814,651       2,052,500         566,275
Unconditional Purchase
   Obligations -
   Outstanding Letters
   of Credit                       18,100,000        18,100,000             -0-             -0-             -0-
Line of Credit -
  Securitization                   15,000,000        15,000,000             -0-             -0-             -0-
-----------------------------------------------------------------------------------------------------------------
Total                             $43,171,883       $34,699,398      $5,853,710      $2,052,500        $566,275
=================================================================================================================



The Company has commercial commitments consisting of a revolving credit facility
of $40 million and a receivables securitization of $70 million. At June 30,
2005, $15 million of undivided interests in the receivables pool has been
utilized as required under the terms of the receivables facility.

                              Amount of Commitment
                              Expiration Per Period



                                   Total Amounts      Less than         1 - 3          4 - 5          After 5
Other Commercial Commitments         Committed          1 year          years          years           years
-----------------------------------------------------------------------------------------------------------------
                                                                                               

Line of Credit-Revolving
   effective 9/01/04              $40,000,000       $       -0-     $40,000,000        $    -0-        $    -0-
Line of Credit-Securitization
    effective 4/9/03               70,000,000        70,000,000             -0-             -0-             -0-
                              -----------------------------------------------------------------------------------
Total                            $110,000,000       $70,000,000     $40,000,000        $    -0-        $    -0-
                              ===================================================================================



On July 18, 2005 the Company announced the execution of an amendment to the RPA
and execution of the Amended Credit Agreement, which together provide the
Company up to $200 million in financing. The funds made available to the Company
pursuant to these agreements being used to fund, in part, the Company's
self-tender offer as well as for general corporate purposes. (See "Liquidity and
Sources of Capital" for details of the Company's credit facilities).

If an event of default should occur, payments and/or maturity of the lines of
credit could be accelerated. The Company is not in default and does not expect
to be in default of any of the provisions of the credit facilities. (See
"Liquidity and Sources of Capital" for details of the Company's credit
facilities).

The Company recently declared a quarterly dividend of $.15 per share payable on
September 15, 2005. The Company has declared dividends for 287 consecutive
quarters. It is the Company's present intention to increase its regular
quarterly cash dividend to 30 cents per share. This increase will occur
subsequent to the successful completion of the previously announced tender offer
for 4.4 million shares of its outstanding common stock and the close of the sale
of its credit portfolio to Alliance Data Systems that is currently scheduled for
the fourth quarter of 2005. The Company will evaluate its dividend practice on
an ongoing basis. (See "Future Considerations").

Future cash needs beyond 2005 will be financed by cash flow from operations,
available cash on hand, existing borrowing arrangements and, if needed, other
financing arrangements that may be available to the Company. However, The
Company's current projection of future cash requirements may be affected by
numerous factors, including changes in sales volume, operating cost fluctuations
and revised capital spending activities.


                                      -32-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Critical Accounting Policies

Preparation of the Company's financial statements requires the application of a
number of accounting policies, which are described in "Note 1, Significant
Accounting Policies" in the "Notes to Consolidated Financial Statements" in the
Company's 2004 10-K. The critical accounting policies, which if interpreted
differently under different conditions or circumstances could result in material
changes to the reported results; deal with properly valuing accounts receivable
and inventory. Properly valuing accounts receivable and inventory requires
establishing proper reserve and allowance levels, specifically the allowances
for doubtful accounts and returns and the reserve for inventory obsolescence.
The Company's senior financial management and the Company's auditors review the
critical accounting policies and estimates with the Audit Committee of the Board
of Directors.

The Company's revenue recognition policy is as follows: Sales (cash, Blair
Credit, or third party credit card) are recorded when the merchandise is shipped
to the customer in accordance with the provisions of Staff Accounting Bulletin
No. 104, Revenue Recognition.

Finance charges on time payment accounts are recognized on an accrual basis of
accounting.

The allowance for doubtful accounts and related items, provision for doubtful
accounts and Blair Credit, are discussed in "Results of Operations, " "Liquidity
and Sources of Capital" and "Future Considerations". A change in the bad debt
rate would cause changes in the provision for doubtful accounts and the
allowance for doubtful accounts. Based on the Company's 2004 level of credit
sales and finance charges, net income would change by approximately $2.3
million, or $.27 per share, from a one percentage point change in the bad debt
rate.

The allowance for returns is a deduction from customer accounts receivable. A
monthly provision for anticipated returns is recorded as a percentage of gross
sales, based upon historical experience. The provision is charged against gross
sales to arrive at net sales, and actual returns are charged against the
allowance for returns. Returns are generally more predictable as they settle
within two-to-three months, but are impacted by season, new products and/or
product lines, type of sale (cash, credit card, Blair Credit) and sales mix
(prospect/customer). Management believes that the allowance for returns is
sufficient to cover the returns that will occur after June 30, 2005 from sales
prior to July 1, 2005. A change in the returns rate would cause changes in the
provision for returns and the allowance for returns. Based on the Company's 2004
level of sales, net income would change by approximately $1.7 million, or $.21
per share, from a one percentage point change in the returns rate.

The reserve for inventory obsolescence and related items, inventory levels and
write-downs, are discussed in "Liquidity and Sources of Capital" and "Future
Considerations". Management believes that the reserve for inventory obsolescence
is sufficient to cover the write-offs that will occur in future years on
merchandise in inventory as of June 30, 2005. A change in the obsolescence rate
would cause changes in cost of goods sold and the reserve for inventory
obsolescence. Based on the Company's 2004 level of merchandise subject to
obsolescence, net income would change by approximately $1.7 million, or $.21 per
share, from a one percentage point change in the obsolescence rate.

The Company's advertising expense policy is as follows: Advertising and shipping
supply inventories include printed advertising material and related mailing
supplies for promotional mailings, which are generally scheduled to occur within
two months. These direct-response advertising costs are then expensed over the
period of expected future benefit, generally nine weeks.

At June 30, 2005, the Company had total gross deferred tax assets of $15.1
million. These assets relate principally to asset valuation reserves including
bad debts, returns and inventory obsolescence. Based on recent historical
earnings performance and current projections, management believes that a
valuation allowance is not required against these deferred tax assets, except
for the valuation allowance against state net operating losses and the Allegheny
Trail inventory obsolescence reserve. The state net operating loss valuation
allowance was provided due to its uncertainty of realization based upon the
state's net operating loss carryforward rules. The Allegheny Trail inventory
obsolescence reserve valuation allowance was provided due to the Company's
decision to phase out this business by April 30, 2005.


                                      -33-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Impact of Inflation and Changing Prices

Although inflation has moderated in the United States economy, the Company is
continually seeking ways to cope with its impact. To the extent permitted by
competition, increased costs are passed on to customers by selectively
increasing selling prices over a period of time. Historically, profit margins
have been pressured by postal and paper rate increases. Paper rates increased 7%
in the first six months of 2005 and increased 5% in 2004. Postal rates increased
on January 10, 1999, on January 7, 2001, on July 1, 2001 and again on September
30, 2002. Based on recent public communications by the United States Postal
Service, it is anticipated that postal rates will not increase again until 2006.
The Company spent approximately $38.5 million for postage and delivery services
in the first six months of 2005 compared to $44.3 million in the first six
months of 2004. The reduction in postage and delivery costs is related to the
lower sales volume and reduced catalog circulation.

The Company principally uses the LIFO method of accounting for its merchandise
inventories. Under this method, the cost of products sold reported in the
financial statements approximates current costs and thus reduces distortion in
reported income due to increasing costs. However, the Company has been
experiencing declining merchandise costs and the LIFO reserve has fallen to $3.5
million at June 30, 2005 compared to $3.8 million at December 31, 2004 and $4.5
million at June 30, 2004.

The World Trade Organization members agreed several years ago that starting in
January of 2005, quota on imported textile products would be removed. The
elimination of this quota has resulted in lower priced textile products from
most of the World Trade member countries. Because some member countries did not
charge for quota, not all products will experience lower costs. However, in most
World Trade member countries, lower prices are anticipated to range between 5%
and 20%, depending on the item and the country of origin. These lower prices
will result in lower landed duty paid prices for American importers.

Property, plant and equipment are continuously being expanded and updated. Major
projects are discussed under "Liquidity and Sources of Capital". Assets acquired
in prior years may be replaced at higher costs but this will take place over
many years. New assets, when acquired, will result in higher depreciation
charges, but in many cases, due to technological improvements, savings in
operating costs should result. The charges to operations for depreciation
represent the allocation of historical costs incurred over past years and are
significantly less than if they were based on the current cost of productive
capacity being used.

Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued 
Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), 
Share-Based Payment, which is a revision of SFAS No. 123, Accounting for 
Stock-Based Compensation.  SFAS No. 123(R) supersedes Accounting Principles 
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and amends
SFAS No. 95, Statement of Cash Flows.  Generally, the approach in SFAS No. 
123(R) is similar to the approach described in SFAS No. 123.  However, SFAS No.
123(R) requires all share-based payments to employees, including grants of 
employee stock options, to be recognized in the income statement based on fair 
values.  Pro forma disclosure is no longer an alternative.  SFAS No. 123(R) must
be adopted no later than January 1, 2006.  We expect to adopt SFAS No. 123(R) on
January 1, 2006.


                                      -34-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Accounting Pronouncements - continued

As permitted by SFAS No. 123, the Company currently accounts for share-based
payments to employees using Opinion 25's intrinsic value method and, as such,
generally recognizes no compensation cost for employee stock options.
Accordingly, the adoption of SFAS No. 123(R)'s fair value method will have a
significant impact on our results of operations, although it will have no impact
on our overall financial position. The impact of the adoption of SFAS No. 123(R)
cannot be predicted at this time because it will depend on levels of share-based
payments granted in the future. However, had we adopted SFAS No. 123(R) in prior
periods, the impact of that standard would have approximated the impact of SFAS
No. 123 as described in the disclosure of pro forma net income and earnings per
share in Note P to our consolidated financial statements. SFAS No. 123(R) also
requires the benefits of tax deductions in excess of recognized compensation
cost to be reported as a financing cash flow, rather than as an operating cash
flow as required under current literature. This requirement will reduce net
operating cash flows and increase net financing cash flows in periods after
adoption. While the Company cannot estimate what those amounts will be in the
future (because they depend on, among other things, when employees exercise
stock options), the amount of operating cash flows recognized in prior periods
for such excess tax deductions for the three months and six months ended June
30, 2005 amounted to $20,000 and $50,000, and for the three months and six
months ended June 30, 2004 amounted to $165,000 and $202,000, respectively.

Future Considerations

The Company is faced with the ever-present challenge of maintaining and
expanding its customer file. This involves the acquisition of new customers
(prospects), the conversion of new customers to established customers (active
repeat buyers) and the retention and/or reactivation of established customers.

These actions are vital in growing the business but are being negatively
impacted by increased operating costs, a declining labor pool, increased
competition in the retail sector, high levels of consumer debt, varying consumer
response rates and an uncertain economy. The preceding factors can also
negatively impact the Company's ability to properly value accounts receivable
and inventories by making it more difficult to establish proper reserve and
allowance levels, specifically, the allowances for doubtful accounts and returns
and the reserve for inventory obsolescence.

The Company's marketing strategy includes targeting customers in the "40 to 75,
low-to-moderate income" market. Success of the Company's marketing strategy
requires investment in database management, digital asset management, campaign
management, financial and operating systems, prospecting programs, catalog
marketing, new product lines, telephone call centers, e-commerce, fulfillment
operations and the management of credit extension. Management believes that
these investments should improve Blair Corporation's position in new and
existing markets and provide opportunities for future earnings growth.

The Company announced on May 3, 2004, that it would discontinue circulation of
its four year-old Crossing Pointe catalog title in 2005. The Company's intention
is to more fully focus new business development efforts on the core Blair brand
and its proven appeal to significant market segments. The decision to focus on
core operations is based in part on the historical success of the Blair brand
and an extensive consumer and brand strategy study undertaken by the Company as
part of its efforts to enhance profitability and shareholder value. This
decision did not have a negative effect on 2004 profitability, and is expected
to benefit 2005 performance.

On January 25, 2005, the Company decided to phase out its Allegheny Trail
wholesale business. This process was substantially completed by April 30, 2005.
The remaining products will be transferred to other existing product lines. This
decision is consistent with the Company's intention to more fully focus new
business development efforts on the core Blair brand and its proven appeal to
significant market segments. The Company has evaluated the impact of phasing out
the Allegheny Trail business on all assets associated with this operation. All
appropriate reserves have been recorded. This decision did not have a negative
effect on 2004 profitability and is not expected to negatively impact 2005
performance.

As of April 26, 2005 Blair entered into the Purchase Agreement to sell its
credit portfolio to World Financial. The sale of the credit portfolio is
expected to close prior to the end of the fourth quarter of fiscal 2005, subject
to regulatory review and approval and customary closing conditions.


                                      -35-







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                           OF OPERATIONS - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Future Considerations - Continued

On July 18, 2005 the Company announced the execution of an amendment to the RPA
and execution of the Amended Credit Agreement, which together provide the
Company up to $200 million in financing. The funds made available to the Company
pursuant to these agreements is being used to fund, in part, the Company's
self-tender offer as well as for general corporate purposes.

On July 20, 2005, the Company commenced a self-tender offer at $42.00 per share,
for the purchase of approximately 4.4 million shares of its outstanding common,
or approximately 53%, stock at an aggregate price of approximately $185 million.
The tender offer will remain open until August 16, 2005, unless it is extended.
In part, the Company is financing the self-tender offer with cash on hand
supplemented by borrowings on the recently amended RPA and Amended Credit
Agreement.

Requirements adopted by the Securities and Exchange Commission in response to
the passage of the Sarbanes-Oxley Act of 2002 require an ongoing review and
evaluation of our internal control systems and attestation of these systems by
our independent auditors. We will review our internal control procedures and
consider further documentation of such procedures that may be necessary in the
future on an ongoing basis. While we currently believe we have identified and
committed the appropriate resources to meet all of the requirements, there is
always a risk inherent in any control system that not all errors or
misstatements will be detected. Any improvements in our internal control systems
or in documentation of such control systems could be costly to prepare or
implement, could divert attention of management of our finance staff, and may
cause our operating expenses to increase over the ensuing year.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Words such as "believes", "anticipates", "plans", "expects" and similar
expressions are intended to identify forward-looking statements. Any statements
contained in this report that are not statements of historical fact may be
deemed to be forward-looking statements. Such forward-looking statements are
included in, but not limited to, this Item 2.

Investors are cautioned that such forward-looking statements involve risks and
uncertainties which could cause actual results to differ materially from those
in the forward-looking statements, including without limitation the following:
(i) the Company's plans, strategies, objectives, expectations and intentions are
subject to change at any time at the discretion of the Company; (ii) the
Company's plans and results of operations will be affected by the Company's
ability to manage its growth, accounts receivable and inventory; (iii) external
factors such as, but not limited to, changes in consumer response rates, changes
in consumer credit trends, success of new business lines and increases in
postal, paper and printing costs; and (iv) other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The carrying amounts of cash, customer accounts receivable, accounts payable,
and accrued liabilities approximate fair value due to the short-term maturities
of these assets and liabilities. The interest rates on the Company's securitized
and revolving credit facilities are adjusted regularly to reflect current market
rates. Accordingly, the carrying amounts of the Company's borrowings also
approximate fair value.

The Company is subject to market interest rate risk from exposure to changes in
interest rates based upon its financing, investing and cash management
activities. The Company utilizes variable-rate debt to manage its exposure to
changes in interest rates. The Company does not expect changes in interest rates
to have a material adverse effect on its income or cash flow in 2005. A change
of one percentage point in the interest rate would cause a change in interest
expense, based on the Company's levels of debt for the years 2004 and 2005, of
approximately $150,000 in each year.


                                      -36-







                         ITEM 4. CONTROLS AND PROCEDURES

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, based on an evaluation of
the Company's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)), each of the Chief Executive Officer and the
Chief Financial Officer of the Company has concluded that the Company's
disclosure controls and procedures are effective to reasonably ensure that
information required to be disclosed by the Company in its Exchange Act reports
is recorded, processed, summarized and reported within the applicable time
periods specified by the SEC's rules and forms.

There have been no significant changes in the Company's internal controls or in
any other factors that materially affected, or are reasonably likely to
materially affect, the Company's internal controls, including its internal
controls over financial reporting. As a result, no corrective actions with
regard to any significant deficiencies or material weaknesses were taken.


                                      -37-







                           PART II. OTHER INFORMATION

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is from time to time a party to ordinary routine litigation
         incidental to various aspects of its operations. Management is not
         currently aware of any litigation that will have a material adverse 
         impact on the Company's financial condition or results of operations.


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         Not Applicable.


Item 3.  Defaults Upon Senior Securities

         Not Applicable.


Item 4.  Submission of Matters to a Vote of Security Holders

         (a) The Company's Annual Meeting of Stockholders was held 
             April 21, 2005.

         (b) At the Annual Meeting of Stockholders, all of the Company's
             directors were elected at said meeting, as follows:


          Steven M. Blair      5,481,658 Votes For,     2,060,609 Votes Withheld

          Robert D. Crowley    5,481,208 Votes For,     2,061,059 Votes Withheld

          Harriet Edelman      6,904,155 Votes For,       638,112 Votes Withheld

          Cynthia A. Fields    6,901,067 Votes For,       641,200 Votes Withheld

          Bryan J. Flanagan    5,399,369 Votes For,     2,142,898 Votes Withheld

          John O. Hanna        6,897,050 Votes For,       645,217 Votes Withheld

          Craig N. Johnson     6,901,222 Votes For,       641,045 Votes Withheld

          Murray K. McComas    5,105,263 Votes For,     2,437,004 Votes Withheld

          Thomas P. McKeever   5,572,153 Votes For,     2,070,114 Votes Withheld

          Ronald L. Ramseyer   6,896,761 Votes For,       645,506 Votes Withheld

          Michael A. Schuler   6,913,879 Votes For,       628,388 Votes Withheld

          John E. Zawacki      5,427,254 Votes For,     2,115,013 Votes Withheld



             As all of the directors of the Company were elected at the Annual
             Meeting of Stockholders, there are no directors whose term of 
             office as a director continued after the meeting.

         (c) The following other matters were voted upon at the meeting, and the
             following number of affirmative votes and negative votes were cast
             with respect to each such matter: The reappointment by the 
             Company's Board of Directors of the firm of Ernst & Young LLP as 
             independent certified public accountants to examine the financial 
             statements and perform the annual audit of the Company for the year
             ending December 31, 2005 was ratified. This matter received 
             7,480,067 affirmative votes, 55,131 negative votes and 7,069 votes
             withheld.


                                      -38-







                     PART II. OTHER INFORMATION - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Item 5.  Other Information

         Not Applicable.


Item 6.  Exhibits

         (a)  Exhibits
             3.1   Restated Certificate of Incorporation (1)
             3.2   Amended and Restated Bylaws of Blair Corporation (2)
             4     Specimen Common Stock Certificate (3)
            10.1   Stock Accumulation and Deferred Compensation Plan for 
                     Directors (4)
            10.2   Blair Corporation 2000 Omnibus Stock Plan (5)
            10.3   Blair Credit Agreement (6)
            10.4   Amendment No. 2 to Credit Agreement (7)
            10.5   Amendment No. 3 to Credit Agreement (8)
            10.6   Amendment No. 4 to Credit Agreement (9)
            10.7   Amendment No. 5 to Credit Agreement (10)
            10.8   Change in Control Severance Agreement-Vice Presidents (11)
            10.9   Change in Control Severance Agreement-CEO and Senior 
                     Vice Presidents (12)
            10.10  Purchase, Sale and Capital Servicing Transfer Agreement (13)
            10.11  Private Label Credit Program Agreement (14)
            10.12  Amendment Agreement, dated as of July 15, 2005, which amends
                     the Receivables Purchase Agreement (15)
            10.13  Amended and Restated Credit Agreement, dated as of 
                     July 15, 2005 (16)
            11     Statement regarding computation of per share earnings (17)
            31.1   CEO Certification pursuant to Section 302
            31.2   CFO Certification pursuant to Section 302
            32.1   CEO Certification pursuant to Section 906
            32.2   CFO Certification pursuant to Section 906


                                               -39-







                     PART II. OTHER INFORMATION - Continued

                       BLAIR CORPORATION AND SUBSIDIARIES
                                   (Unaudited)
                                  June 30, 2005

Item 6.  Exhibits - Continued

(1) Incorporated by reference to Exhibit A to the Quarterly Report on Form 10-Q
of the Company filed with the SEC on August 10, 1995 (SEC File No. 1-878).

(2) Incorporated herein by reference to Exhibit 3.2 to the Companies Quarterly
Report on Form 10-Q filed with the SEC on August 14, 2003 (SEC File No. 1-878).

(3) Incorporated by reference to Exhibit 4.1 to the Form S-8 Registration
Statement filed with the SEC on July 19, 2000 (SEC File No. 333-41770).

(4) Incorporated herein by reference to Exhibit A to the Company's Proxy
Statement filed with the SEC on March 20, 1998 (SEC File No. 1-878).

(5) Incorporated herein by reference to Exhibit A to the Company's Proxy
Statement filed with the SEC on March 17, 2000 (SEC File No. 1-878).

(6) Incorporated herein by reference to Exhibit 99.1 to the Company's Form 8-K
filed with the SEC on January 9, 2002 (SEC File No. 1-878).

(7) Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form
10-Q of the Company filed with the SEC on August 8, 2003 (SEC File No. 1-878).
Certain schedules to the Agreement have been omitted.

(8) Incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form
10-Q of the Company filed with the SEC on November 9, 2004 (SEC File No. 1-878).
Certain schedules to the Agreement have been omitted.

(9) Incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K
of the Company filed with the SEC on March 1, 2005 (SEC File No. 1-878). Certain
schedules to the Agreement have been omitted.

(10) Incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form
10-Q of the Company filed with the SEC on May 6, 2005 (SEC File No. 1-878).
Certain schedules to the Agreement have been omitted.

(11) Incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form
10-Q of the Company filed with the SEC on November 9, 2004 (SEC File No. 1-878).

(12) Incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form
10-Q of the Company filed with the SEC on November 9, 2004 (SEC File No. 1-878).

(13) Incorporated herein by reference to Exhibit 10.1 to the Company's Form 8-K
filed with the SEC on April 27, 2005 (SEC File No. 1-878). Certain schedules to
the agreement have been omitted.

(14) Incorporated herein by reference to Exhibit 10.2 to the Company's Form 8-K
filed with the SEC on April 27, 2005 (SEC File No. 1-878). Certain schedules to
the agreement have been omitted.

(15) Incorporated herein by reference to (b) (i) to the Company's Schedule TO
filed with the SEC on July 20, 2005 (SEC File No. 1-878). Certain schedules to
the agreement have been omitted.

(16) Incorporated herein by reference to (b) (ii) to the Company's Schedule TO
filed with the SEC on July 20, 2005 (SEC File No. 1-878). Certain schedules to
the agreement have been omitted.

(17) Incorporated by reference to Note V of the financial statements included
herein.


                                      -40-







                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.








                                                  BLAIR CORPORATION
                                      ------------------------------------------
                                                     (Registrant)











Date:   August 4, 2005             By              JOHN E. ZAWACKI
---------------------------           ------------------------------------------
                                                   JOHN E. ZAWACKI
                                         President and Chief Executive Officer


                                   By              BRYAN J. FLANAGAN
                                      ------------------------------------------
                                                   BRYAN J. FLANAGAN
                                            Senior Vice President and Chief
                                                   Financial Officer


                                   By              MICHAEL R. DELPRINCE
                                      ------------------------------------------
                                                   MICHAEL R. DELPRINCE
                                                        Controller




                                                      [Certifications to follow]


                                      -41-







                                                                    Exhibit 31.1

                                  CERTIFICATION

   I, John E. Zawacki, certify that:

     1.     I have reviewed this quarterly report on Form 10-Q of Blair
            Corporation;

     2.     Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

     3.     Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this quarterly report;

     4.     The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

        a)  Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under supervision,
            to ensure that material information relating to the registrant,
            including its consolidated subsidiaries, is made known to us by
            others within those entities, particularly during the period in
            which this report is being prepared;

        b)  Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

        c)  Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

     5.     The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent functions):

        a)  All significant deficiencies and material weaknesses in the design
            or operation of internal controls over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

        b)  Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.



Date: August 4, 2005                                     JOHN E. ZAWACKI
--------------------                             -------------------------------
                                                         JOHN E. ZAWACKI
                                                          President and
                                                     Chief Executive Officer


                                      -42-







                                                                    Exhibit 31.2

                                  CERTIFICATION

   I, Bryan J. Flanagan, certify that:

     1.     I have reviewed this quarterly report on Form 10-Q of Blair
            Corporation;

     2.     Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

     3.     Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this quarterly report;

     4.     The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

        a)  Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under supervision,
            to ensure that material information relating to the registrant,
            including its consolidated subsidiaries, is made known to us by
            others within those entities, particularly during the period in
            which this report is being prepared;

        b)  Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

        c)  Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

     5.     The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent functions):

        a)  All significant deficiencies and material weaknesses in the design
            or operation of internal controls over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

        b)  Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.



Date: August 4, 2005                                    BRYAN J. FLANAGAN
--------------------                             -------------------------------
                                                        BRYAN J. FLANAGAN
                                                    Senior Vice President and
                                                     Chief Financial Officer


                                      -43-







                                                                    Exhibit 32.1



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Blair Corporation (the "Company") on
Form 10-Q for the period ended June 30, 2005 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, John E. Zawacki, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

   (1) The Report fully complies with the requirements of Section 13(a) or 15(d)
       of the Securities Exchange Act of 1934; and

   (2) The information contained in the Report fairly presents, in all
       material respects, the financial condition and result of operations of
       the Company.




Date: August 4, 2005                                     JOHN E. ZAWACKI
--------------------                             -------------------------------
                                                         JOHN E. ZAWACKI
                                                          President and
                                                     Chief Executive Officer



A signed original of this written statement required by Section 906, or other
document authentication, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Blair Corporation and will be
retained by Blair Corporation and furnished to the Securities and Exchange
Commission or its staff upon request.


                                      -44-







                                                                    Exhibit 32.2



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Blair Corporation (the "Company") on
Form 10-Q for the period ended June 30, 2005 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Bryan J. Flanagan,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

   (1) The Report fully complies with the requirements of Section 13(a) or 15(d)
       of the Securities Exchange Act of 1934; and

   (2) The information contained in the Report fairly presents, in all
       material respects, the financial condition and result of operations of
       the Company.




Date: August 4, 2005                                    BRYAN J. FLANAGAN
--------------------                             -------------------------------
                                                        BRYAN J. FLANAGAN
                                                    Senior Vice President and
                                                     Chief Financial Officer



A signed original of this written statement required by Section 906, or other
document authentication, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Blair Corporation and will be
retained by Blair Corporation and furnished to the Securities and Exchange
Commission or its staff upon request.


                                      -45-