AMENDED & RESTATED STOCKHOLDERS' AGREEMENT

Exhibit 10.3

AMENDED & RESTATED

STOCKHOLDERS' AGREEMENT

by and among

EL CORTE INGLES, S.A.,

GOTTSCHALKS INC.,

JOSEPH LEVY

and

BRET LEVY

dated as of

July 18, 2008

TABLE OF CONTENTS

TABLE OF CONTENTS
(Cont'd)

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                                THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (the "Agreement"), dated as of July 18, 2008, is made by and among El Corte Ingles, S.A., a Spanish corporation ("ECI"), Gottschalks Inc., a Delaware corporation ("Gottschalks"), Joseph Levy, an individual and Bret Levy, an individual. Capitalized terms used and not defined herein have the meanings given to them in the Asset Purchase Agreement (hereinafter defined).

RECITALS

WHEREAS, Gottschalks, ECI and The Harris Company, a California corporation and a wholly-owned subsidiary of ECI ("Harris"), entered into that certain Asset Purchase Agreement, dated as of July 21, 1998 (the "Asset Purchase Agreement"), pursuant to which Harris sold, and Gottschalks purchased, substantially all of the assets and certain of the liabilities of Harris for certain consideration, including, but not limited to, certain shares of Gottschalks Common Stock (hereinafter defined), upon the terms and subject to the conditions set forth therein; and

WHEREAS, the shares of Gottschalks Common Stock issued pursuant to the Asset Purchase Agreement were issued to Harris, ECI's wholly-owned subsidiary;

WHEREAS, as a condition to the transactions contemplated by the Asset Purchase Agreement, the parties entered into that certain Stockholder's Agreement, dated as of August 20, 1998 (the "Original Stockholder's Agreement") to provide for certain rights and restrictions with respect to the investment by ECI (through Harris) in Gottschalks, certain rights and restrictions of Joseph Levy and Bret Levy with respect to their ownership of Gottschalks Common Stock and the corporate governance of Gottschalks;

WHEREAS, the Original Stockholder's Agreement was amended as of December 7, 2004 (the "First Amendment"), so as to (i) remove certain restrictions on the transfer of shares of Gottschalks Common Stock owned by Investor (hereinafter defined), and (ii) amend the term of the Original Stockholder's Agreement; and

WHEREAS, the parties now desire to amend and restate the Original Stockholder's Agreement, as amended by the First Amendment, so as to amend certain voting rights and obligations of Investor and Management (hereinafter defined) with respect to their respective ownership of shares of Gottschalks Common Stock and to make certain other changes.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

ARTICLE 1

Definitions

As used in this Agreement, the following terms shall have the following respective meanings:

Section 1.1              "Additional Shares" shall have the meaning set forth in Section 6.16.

Section 1.2              "Affiliate" shall have the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, and as in effect on the date hereof.

Section 1.3              "Agreement" shall have the meaning set forth in the first paragraph hereof.

Section 1.4              "Asset Purchase Agreement" shall have the meaning set forth in the second paragraph hereof.

Section 1.5              "Beneficially Own" shall mean, with respect to any security, having direct or indirect (including through any Subsidiary or Affiliate) "beneficial ownership" of such security, as determined pursuant to Rule 13d-3 under the Exchange Act, including pursuant to any agreement, arrangement or understanding, whether or not in writing.

Section 1.6              "Board" shall mean the board of directors of Gottschalks.

Section 1.7              "Change in Control" shall mean the occurrence of any of the following events:

(a)            An acquisition (other than directly from Gottschalks) of any Voting Securities by any person immediately after which such person has Beneficial Ownership of fifty percent (50%) or more of the combined voting power of Gottschalks' then outstanding Voting Securities; provided , however , in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (i) Gottschalks or (ii) a Subsidiary of Gottschalks, (2) Gottschalks or any Subsidiary of Gottschalks, (3) any person or Group who, immediately prior to the date hereof had Beneficial Ownership of fifteen percent (15%) or more of the Gottschalks Common Stock or (4) any person in connection with a "Non-Control Transaction" (as hereinafter defined).

(b)            A merger, consolidation or reorganization involving Gottschalks, unless:

                (i)             the stockholders of Gottschalks immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving

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Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization; and

                (ii)            the individuals who were members of the Designated Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the Board of the Surviving Corporation; and

                (iii)           no person (other than Gottschalks or any Subsidiary of Gottschalks, any employee benefit plan (or any trust forming a part thereof) maintained by Gottschalks, the Surviving Corporation or any Subsidiary of Gottschalks, or any person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of twenty-five percent (25%) or more of the then outstanding Voting Securities) has Beneficial Ownership of twenty-five percent (25%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities; and

                (iv)           a transaction described in clauses (i) through (iii) of this paragraph (b) shall herein be referred to as a "Non-Control Transaction."

(c)            A complete liquidation or dissolution of Gottschalks.

(d)            An agreement for the sale or other disposition of all or substantially all of the assets of Gottschalks to any person (other than a transfer to a Subsidiary).

(e)            The acquisition of any Voting Securities by Joseph Levy, Sharon Levy or their lineal descendents immediately after which Joseph Levy, Sharon Levy and their lineal descendents together have a pecuniary interest in more than fifty percent (50%) of Gottschalks' then outstanding equity securities.

(f)             The acquisition of any Voting Securities by Gerald Blum, his spouse or his lineal descendents immediately after which Gerald Blum, his spouse and his lineal descendents together have a pecuniary interest in more than fifty percent (50%) of Gottschalks' then outstanding equity securities.

(g)            Buyer is no longer a reporting company under the Exchange Act.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person (the "Subject Person") acquired Beneficial Ownership or pecuniary interest of more than the permitted amount of the outstanding Voting Securities or equity securities as a result of the acquisition of Voting Securities or equity securities by Gottschalks which, by reducing the number of Voting Securities or equity securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person or in which the subject person has a pecuniary interest, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by Gottschalks, and after such share acquisition by Gottschalks, the Subject Person becomes the Beneficial Owner of the additional Voting Securities which increases the percentage of the then outstanding

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Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.

Section 1.8              "Closing" shall have the meaning set forth in the Asset Purchase Agreement.

Section 1.9              "Gottschalks Common Stock" shall mean the common stock, par value $0.01 per share, of Gottschalks.

Section 1.10            "Designated Board" shall have the meaning set forth in Section 2.1(a).

Section 1.11            "Director" shall mean a member of the Board.

Section 1.12            "Early Standstill Termination Event" shall have the meaning set forth in the Standstill Agreement.

Section 1.13            "ECI" shall have the meaning set forth in the first paragraph hereof.

Section 1.14            "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

Section 1.15            "First Amendment" shall have the meaning set forth in the fifth paragraph hereof.

Section 1.16            "fully diluted" shall mean, with respect to the Gottschalks Common Stock, the total number of outstanding shares of Gottschalks Common Stock (for such purposes, treating as outstanding Gottschalks Common Stock all options or warrants to purchase and securities convertible into (or exchangeable or redeemable for) the Gottschalks Common Stock as of the relevant measurement date).

Section 1.17            "Gottschalks" shall have the meaning set forth in the first paragraph hereof.

Section 1.18            "Harris" shall have the meaning set forth in the second paragraph hereof.

Section 1.19            "Governmental Entity" means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

Section 1.20            "Group" shall mean a "group" as such term is used in Section 13(d)(3) of the Exchange Act.

Section 1.21            "Independent Nominees" shall have the meaning set forth in Section 2.1(a).

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Section 1.22            "Investor" shall mean ECI (through Harris), and so long as Harris own shares of Gottschalks Common Stock, such persons shall be treated as one entity for the purposes of this Agreement.

Section 1.23            "Investor Nominees" shall have the meaning set forth in Section 2.1(a).

Section 1.24            "Management" shall mean Joseph Levy and Bret Levy.

Section 1.25            "Management Nominees" shall have the meaning set forth in Section 2.1(a).

Section 1.26            "Nominating Committee" shall mean the nominating committee of the Board as it is constituted from time to time.

Section 1.27            "Original Stockholder's Agreement" shall have the meaning set forth in the fourth paragraph hereof.

Section 1.28            "person" shall mean any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, other form of business or legal entity or Governmental Entity.

Section 1.29            "Securities Act" shall mean the Securities Act of 1933, as amended.

Section 1.30            "Standstill Agreement" shall mean that certain Standstill Agreement by and between ECI and Gottschalks dated August 20, 1998.

Section 1.31            "Subsidiary" shall mean any corporation, partnership limited liability company, joint venture, business trust or other entity of which the specified person, directly or indirectly, owns or controls 50% or more of the securities or other interests entitled to vote in the election of directors (or others performing similar functions) with respect to such corporation or other organization, or otherwise has the ability to control such corporation, partnership, limited liability company, joint venture, business trust or other entity.

Section 1.32            "Voting Securities" shall mean at any time shares of any class of capital stock of Gottschalks which are then entitled to vote generally in the election of Directors.

ARTICLE 2

Board of Directors

Section 2.1              Members of the Board .

(a)            Prior to the Closing, the Board is comprised of three members of management of Gottschalks, one person related to certain members of management of Gottschalks and five independent directors. Immediately following the Closing, Gottschalks, Management and ECI will take all action necessary to cause two Investor Nominees (hereinafter

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defined) to be added to the Board. Thereafter, subject to the terms of this Agreement, at each annual or special meeting of stockholders of Gottschalks at, or the taking of action by written consent of stockholders of Gottschalks with respect to, which any Directors are to be elected, Gottschalks, Management and Investor will take all action required by this Agreement to cause the Board to be structured to consist of eleven (11) members, of which two (2) members will be designees of ECI (the "Investor Nominees") and the remaining nine (9) members will consist of members of management or persons affiliated with management that are designated by Management (the "Management Nominees") and independent directors (the "Independent Nominees"), collectively, the "Designated Board"; provided, however, that the Designated Board shall be increased to twelve (12) members, and Investor shall be entitled to a total of three (3) representatives on the Designated Board, if and during such time as Investor Beneficially Owns a number of shares of Gottschalks Common Stock equal to at least 30% of the outstanding Gottschalks Common Stock, on a fully diluted basis.

(b)            Investor's representation on the Designated Board will be reduced to one representative and the size of the Designated Board will be reduced by the number of Investor Nominees so resigning if either: (i) Investor disposes of more than 700,000 shares of Gottschalks Common Stock; or (ii) Investor and its Affiliates Beneficially Own a number of shares of Gottschalks Common Stock equal to less than 10% of the outstanding Gottschalks Common Stock, on a fully diluted basis.

(c)            Investor's representation on the Board will be terminated on the earlier of: (i) the date Investor disposes of more than 1,350,000 shares of Gottschalks Common Stock; or (ii) Investor and its Affiliates Beneficially Own a number of shares of Gottschalks Common Stock equal to less than 5% of the outstanding Gottschalks Common Stock, on a fully diluted basis.

(d)            Subject to the terms of this Agreement: (i) Investor has the right to designate the Investor Nominees; (ii) Joseph Levy (if he is alive and has the capacity) or Bret Levy (if Joseph Levy is not alive or no longer has the capacity) has the right to designate the Management Nominees; and (iii) the Nominating Committee, or the Board if there is no Nominating Committee, has the right to designate the Independent Nominees. In the event both Joseph Levy and Bret Levy are deceased or incapacitated, th