UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                FORM 10-Q

(Mark One)
             Quarterly Report Under Section 13 or 15 (d) of the Securities 
    X        Exchange Act of 1934
             For the quarterly period ended September 6, 1997
             
                                    OR           
             
             Transition Report Pursuant to Section 13 or 15 (d) of the 
             Securities Exchange Act of 1934
             For the transition period from _________to _________

Commission file No.:  33-48862


                       HOMELAND HOLDING CORPORATION
          (Exact name of registrant as specified in its charter)


         Delaware                                        73-1311075
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

                        2601 Northwest Expressway
                      Oil Center-East, Suite 1100
                        Oklahoma City, Oklahoma              73112
               (Address of principal executive offices)    (Zip Code)

                           (405) 879-6600
       (Registrant's telephone number, including area code)

       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 
period 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 has filed all documents 
and reports required to be filed by Section 12, 13 or 15 (d) of the Securities 
Exchange Act of 1934 subsequent to the distribution under a plan confirmed by 
a court. Yes  X    No 

       Indicate the number of shares outstanding of each of the registrant's 
classes of common stock as of October 17, 1997:

          Homeland Holding Corporation Common Stock:  4,816,602 shares
                              
                              
                              
                              
                       HOMELAND HOLDING CORPORATION
                                
                               FORM 10-Q
              FOR THE THIRTY-SIX WEEKS ENDED SEPTEMBER 6, 1997
                                
                                INDEX
                                
                                
                                
                                                                       Page
PART 1 FINANCIAL INFORMATION

ITEM 1.   Financial Statements.........................................  1

          Consolidated Balance Sheets as of
             September 6, 1997, and December 28, 1996..................  1
          Consolidated Statements of Operations
             12 Weeks ended September 6, 1997, 4 Weeks ended September
             7, 1996, (Successor Company), and 8 Weeks ended August
             2, 1996, Predecessor Company).............................  3
          Consolidated Statements of Operations
             36 Weeks ended September 6, 1997, 4 Weeks ended September
             7, 1996 (Successor Company), and 32 Weeks ended August
             2, 1996 (Predecessor Company).............................  4
          Consolidated Statements of Stockholders Equity (Deficit)
             36 Weeks ended September 6, 1997, 4 Weeks ended September
             7, 1996 (Successor Company), and 32 Weeks ended August
             2, 1996 (Predecessor Company).............................  5
          Consolidated Statements of Cash Flows
             36 Weeks ended September 6, 1997, 4 Weeks ended September 
             7, 1996 (Successor Company), and 32 Weeks ended August
             2, 1996 (Predecessor Company).............................  6
          Notes to Consolidated Financial Statements...................  8

ITEM 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations....................................  9

PART II   OTHER INFORMATION

ITEM 4.   Submission of Matters of a Vote of Security Holders.......... 14

ITEM 5.   Other Information............................................ 15

ITEM 6.   Exhibits and Reports on Form 8-K............................. 15






                                      i


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                  HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                       CONSOLIDATED BALANCE SHEETS

              (In thousands, except share and per share amounts)


                             ASSETS

                                              September 6,       December 28,
                                                  1997              1996
                                              (Unaudited)
Current assets:                                      
 Cash and cash equivalents                   $   5,707          $   1,492
 Receivables, net of allowance for 
  uncollectible accounts of $1,298 
  and $1,587                                     7,815              8,522 
 Inventories                                    44,197             45,009
 Prepaid expenses and other current assets       2,602              2,760
                                                             
      Total current assets                      60,321             57,783 

Property, plant and equipment:                               
 Land and land improvements                      8,745              8,731 
 Buildings                                      18,312             18,124 
 Fixtures and equipment                         17,980             15,078
 Leasehold improvements                         12,025             11,374
 Software                                        4,431              2,930
 Leased assets under capital leases              7,447              7,569
 Construction in progress                        3,113              2,675

                                                72,055             66,481
Less, accumulated depreciation                               
 and amortization                                8,283              3,012 

Net property, plant and equipment               63,772             63,469

Reorganization value in excess of amounts                                       
 allocable to identifiable assets, less                                   
 accumulated amortization of $15,369 at
 September 6, 1997, and $5,819 at
 December 28, 1996                              28,007             39,570

Other assets and deferred charges                7,605              7,664
                                                             
   Total assets                              $ 159,705          $ 168,486
                                                             
                                                      Continued


                The accompanying notes are an integral part
                 of these consolidated financial statements.

                                     1


                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED BALANCE SHEETS, Continued

            (In thousands, except share and per share amounts)


                   LIABILITIES AND STOCKHOLDERS' EQUITY
                                

                                             September 6,       December 28,  
                                                 1997              1996
                                              (unaudited)

Current liabilities:                                 
 Accounts payable - trade                    $  17,858          $  17,416
 Salaries and wages                              2,704              3,499
 Taxes                                           4,465              2,903
 Accrued interest payable                          860              2,689
 Other current liabilities                       7,553              8,470
 Current portion of long-term debt               1,727                894
 Current portion of obligations under 
  capital leases                                 1,343              1,343

  Total current liabilities                     36,510             37,214
                                                             
Long-term obligations:                                       
 Long-term debt                                 73,817             72,724
 Obligations under capital leases                2,002              3,005
 Other noncurrent liabilities                    2,691              2,602
                                                             
  Total long-term obligations                   78,510             78,331
                                                             
                                                             
Stockholders' equity:                                        
 Common Stock,                                             
  $0.01 par value, authorized - 7,500,000                                       
  shares, issued 4,816,602 shares at September 
  6, 1997, and, issued 4,758,025
  shares at December 28, 1996                       48                 48
 Additional paid-in capital                     56,017             56,013
 Accumulated deficit                           (11,380)            (3,120)
                                                             
  Total stockholders' equity                    44,685             52,941
                                                             
  Total liabilities and stockholders' 
   equity                                    $ 159,705          $ 168,486
                                                             



                The accompanying notes are an integral part
                 of these consolidated financial statements.

                                     2


                HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF OPERATIONS

             (In thousands, except share and per share amounts)
                                   (Unaudited)
                                

<TABLE>
<CAPTION>
                                                                             Prececessor 
                                               Successor Company               Company 
                                              12 weeks      4 weeks            8 weeks   
                                               ended         ended              ended      
                                            September 6,   September 7,       August 10,  
                                               1997                            1996
<S>                                        <C>             <C>               <C>

Sales, net                                 $  114,935      $    39,536       $  77,416
                                                             
Cost of sales                                  87,690           29,684          58,513                                       

 Gross profit                                  27,245            9,852          18,903
                                                             
Selling and administrative expenses            25,801            8,953          17,578

Amortization of excess reorganization value     3,271            1,154            -

 Operating profit (loss)                       (1,827)            (255)          1,325           
                                                             
Interest expense                                1,890              627             432
                                                             
Income (loss) before reorganization items,
 income taxes and extraordinary items          (3,717)            (882)            893

Reorganization items:
 Allowed claims in excess of liabilities         -                -              7,200
 Professional fees                               -                -              1,100
 Employee buyout expense                         -                -              6,386
 Adjustment of accounts to estimated
   fair value                                    -                -              8,160

Loss before income taxes and
 extraordinary items                           (3,717)            (882)        (21,953)
                                                             
Income tax benefit                               (250)            -               - - 
                  
Loss before extraordinary items                (3,467)            (882)        (21,953)
 
Extraordinary items-debt discharged              -                -             63,118 
                                           
Net income (loss)                          $   (3,467)       $    (882)      $  41,165

Loss before extraordinary items per
 common share                              $     (.73)       $    (.19)      $    (.68)

Extraordinary items per common share             -                -               1.94
                                                             
Net income (loss) per common share         $     (.73)       $    (.19)      $    1.26

Weighted average shares outstanding          4,782,294        4,758,025     32,599,707

                                                             
</TABLE>


                The accompanying notes are an integral part
                 of these consolidated financial statements.

                                     3


                                      
                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF OPERATIONS

             (In thousands, except share and per share amounts)
                                 (Unaudited)
                                

<TABLE>
<CAPTION>

                                                                                Predecessor 
                                                 Successor Company                Company  
                                             36 weeks           36 weeks          32 weeks
                                              ended              ended             ended
                                            September 6,       September 7,      August 10,
                                              1997               1996

<S>                                        <C>               <C>               <C>                 
Sales, net                                 $  351,249        $   39,536        $   323,747          
                                                             
Cost of sales                                 266,171            29,684            244,423 
                                                             
 Gross profit                                  85,078             9,852             79,324
                                                             
Selling and administrative expenses            76,067             8,953             73,000

Amortization of excess reorganization value    10,095             1,154      

 Operating profit (loss)                       (1,084)             (255)             6,324

Interest expense                                5,705               627              5,639

Income (loss) before reorganization items,
 income taxes and extraordinary items          (6,789)             (882)               685
                                     
Reorganization items:
 Allowed claims in excess of liabilities         -                 -                 7,200 
 Professional fees                               -                 -                 4,250 
 Employee buyout expense                         -                 -                 6,386
 Adjustments of accounts to estimated
   fair value                                    -                 -                 8,160
                                                 -                 -                25,996         

Loss before income taxes and        
 extraordinary items                           (6,789)             (882)           (25,311)        
                                                             
Income tax expense                              1,471              -                  -
                         
Loss before extraordinary items                (8,260)             (882)           (25,311)    

Extraordinary items-debt discharged              -                 -                63,118    
                                   
Net income (loss)                              (8,260)             (882)            37,807  

Loss before extraordinary items per 
 common share                              $    (1.73)       $     (.19)        $     (.78)           

Extraordinary items per common share             -                 -                  1.94    
                                                             
Net income (loss) per common share         $    (1.73)       $     (.19)        $     1.16                  
                                                             
Weighted average shares outstanding           4,766,115        4,758,025        32,599,707              
                                                             

</TABLE>


                The accompanying notes are an integral part
                 of these consolidated financial statements.

                                      4



                   HOMELAND HOLDING CORPORATION AND SUBSIDIARY
                                        
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                        
               (In thousands, except share and per share amounts)
                                   (Unaudited)
                                        
<TABLE>
<CAPTION>
                                                                                               Minimum
                                        Common Stock                Additional                 Pension
                                  Successor  Predecessor             Paid-In   Accumulated    Liability
                                    Shares     Shares     Amount     Capital     Deficit     Adjustment
<S>                              <C>         <C>          <C>       <C>        <C>           <C>

Balance, December 30, 1995           -       33,748,482   $  337    $ 55,886   $ (80,188)    $  (1,327)

Net income                           -            -         -           -         37,807          -       

Eliminate predecessor equity         -      (33,748,482)    ( 337)   (55,886)     (2,637)         -
 
Issuance of successor's common
 stock                           4,758,025        -            48     56,013        -             -

Eliminate adjustment of 
 minimum pension liability           -            -          -          -           -            1,327                 

Record excess of reorganization
 value                               -            -          -          -         45,018          -             

Balance, August 10, 1996         4,758,025        -       $   48    $ 56,013   $    -          $  -                   

Net loss                             -            -          -          -           (882)         -             

Balance, September 7, 1996       4,758,025        -       $   48    $ 56,013   $    (882)      $  -  


Balance, December 28, 1996       4,758,025        -       $   48    $ 56,013   $  (3,120)         -       

Net loss                             -            -          -          -         (8,260)         -         

Issuance of successor's common
 stock                              58,577        -          -             4        -             -

Balance, September 6, 1997       4,816,602        -       $   48    $ 56,017   $ (11,380)         -



Continued                                         

</TABLE>

                                                                  Total
                                        Treasury Stock         Stockholders'
                                      Shares      Amount       Equity/Deficit


Balance, December 30, 1995           2,869,493  $  (2,814)     $  (28,106)

Net income                               -           -             37,807

Eliminate predecessor equity        (2,869,493)     2,814         (56,046)     

Issuance of successor's common
 stock                                   -           -             56,061

Eliminate adjustment of
 minimum pension liability               -           -              1,327

Record excess of reorganization
 value                                   -           -             45,018

Balance, August 10, 1996                 -      $    -         $   56,061 

Net loss                                 -           -               (882)

Balance, September 7, 1996               -      $    -         $   55,179


Balance, December 28, 1996               -           -         $   52,941

Net loss                                 -           -             (8,260)

Issuance of successor's common
 stock                                   -           -                  4

Balance, September 6, 1997               -      $    -         $   44,685



                     The accompanying notes are an integral part
                      of these consolidated financial statements.

                                          5


                  HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

              (In thousands, except share and per share amounts)
                                    (Unaudited)
                                

<TABLE>
<CAPTION>

                                                                                 Predecessor        
                                                    Successor Company              Company  
                                                     36 weeks      4 weeks         32 weeks
                                                       ended        ended            ended
                                                    September 6,  September 7,     August 10,
                                                      1997           1996             1996
<S>                                                  <C>           <C>             <C>
Cash flows from operating activities:
 Net loss                                            $ (8,260)     $   (882)       $ 37,807           
 Adjustments to reconcile net income (loss) to net
  cash provided by operating activities:
   Depreciation and amortization                        5,355           588           4,163 
   Amortization of excess reorganization value         10,095         1,154            -
   Amortization of financing costs                         43             5             359
   Reorganization items                                  -             -             15,360      
   Extraordinary gain on debt discharged                 -             -            (63,118) 
   Gain on disposal of assets                              59            85            -
   Amortization of beneficial interest in                  
    operating leases                                       84            10              75          
   Impairment of assets                                  -             -               -   
   Adjustment to excess reorganization value              292          -               -                 
   Deferred income taxes                                1,176          -               - 
   Change in assets and liabilities:
     (Increase) decrease in receivables                   707          (876)            (32)   
     Decrease (increase) in inventories                   812          (666)          4,175              
     Decrease (increase) in prepaid expenses
      and other current assets                            158            41             (83)
     Increase in other assets and
      deferred charges                                    (92)          (21)           (649)         
     Increase (decrease) in accounts payable-trade        442          (545)            298     
     Increase (decrease) in salaries and wages           (791)         (167)            105   
     Increase in taxes                                  1,562           304             226     
     Increase (decrease) in accrued interest payable   (1,829)          582           3,823      
     Decrease in other current liabilities               (917)         (791)         (2,656)       
     Decrease in noncurrent 
      restructuring reserve                              -             -             (1,396)    
     Increase (decrease) in other noncurrent 
      liabilities                                         133          (146)           (886)    
                                             
       Total adjustment                                17,289          (443)        (40,236)         
         
       Net cash provided by operating activities        9,029        (1,325)         (2,429)         
                                                      
Cash flow used in investing activities:
 Capital expenditures                                  (5,762)         (180)         (2,395)      
 Cash received from sale of assets                         25             1           1,738     
                                                      
       Net cash (used in) provided by investing 
        activities                                     (5,737)         (179)           (657)          

Cash flows used by financing activities:
 Borrowings under term loan                              -             -             10,000    
 Borrowings under revolving credit loans               94,476         6,273          74,250 
 Payments under revolving credit loans                (92,504)       (6,273)        (79,718) 
 Principal payments under note payable                    (46)         -               - 
 Principal payments under capital lease obligations    (1,003)         (141)         (1,596)    
 Payments of secured debt obligations                    -             -             (1,500) 
           
       Net cash used in financing activities              923          (141)          1,436         
                                                   
Net increase (decrease) in cash and cash equivalents    4,215        (1,645)         (1,650)       

Cash and cash equivalents at beginning of period        1,492         4,707           6,357      
                                                      
Cash and cash equivalents at end of period           $  5,707       $ 3,062        $  4,707       

Supplemental information:
 Cash paid during the period for interest            $  7,378       $    48        $  1,566  

 Cash paid during the period for income taxes        $   -          $  -           $   - 

</TABLE>

                                
                The accompanying notes are an integral part
                 of these consolidated financial statements.

                                     6


                                 

              HOMELAND HOLDING CORPORATION AND SUBSIDIARY

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (Unaudited)

1.   Basis of Preparation of Consolidated Financial Statements:

            The accompanying unaudited interim consolidated financial
     statements of Homeland Holding Corporation ("Holding") and its 
     Subsidiary, Homeland Stores, Inc. ("Stores" and together with Holding,
     the "Company"), reflect all adjustments, which consist only of normal 
     and recurring adjustments, which are, in the opinion of management,
     necessary for a fair presentation of the consolidated financial
     position and the consolidated results of operations and cash flows
     for the periods presented.  The consolidated financial statements as of
     and for the periods subsequent to August 10, 1996,  were prepared in
     accordance with the American Institute of Certified Public Accountants
     Statement of Position No. 90-7,  "Financial Reporting by Entities in
     Reorganization under the Bankruptcy Code" ("SOP No. 90-7").  The
     accounting under SOP No. 90-7 resulted in "fresh-start" reporting for
     the Company in which a new entity was created for financial reporting 
     purposes.   The periods prior to August 10, 1996, have been designated
     "Predecessor Company" and the periods subsequent to August 10, 1996,
     have been designated "Successor Company."

             These unaudited consolidated financial statements should be read
     in conjunction with the consolidated financial statements of the Company
     for the period ended December 28, 1996, and the notes thereto.

2.     Accounting Policies:

            The significant accounting policies of the Company are summarized
     in the consolidated financial statements of the Company for the 52 weeks
     ended December 28, 1996, and the notes thereto.
     
3.     Net Loss Per Share:

            Net loss per share of common stock is based on the weighted 
     average outstanding shares during the period.   Net loss per share of 
     common stock for periods prior to the reorganization,  which was 
     consummated in August 1996, is not meaningful due to the significant
     change in capital structure.

Item 2.     Management's Discussion and Analysis of  Financial
       Condition and Results of Operations
  
       General
       
              The Company's plan of reorganization became effective on 
       August 2, 1996.  For financial reporting purposes,  the Company 
       accounted for the consummation of the reorganization effective as 
       of August 10, 1996.
       
              As a result of the adoption of "fresh-start" reporting and the
       consummation of the reorganization, the periods prior to and 
       subsequent to August 10, 1996, for financial reporting purposes are
       not necessarily comparable.
       
              For purposes of the discussion of Results of Operations and 
       Liquidity and Capital Resources for the results of the twelve- and 
       thirty-six weeks ended September 7, 1996, the results of the 
       Predecessor Company and Successor Company have been combined.
       
              The table below sets forth selected items from the Company's
       consolidated income statement as a percentage of net sales of the 
       periods indicated:
       
                                12 weeks ended           36 weeks ended
                          September 6, September 7,  September 6, September 7,
                              1997      1996           1997          1996
      Net Sales              100.0%    100.0%         100.0%        100.0%
      Cost of Sales           76.3      75.4           75.8          75.5
         Gross Profit         23.7      24.6           24.2          24.5
      Selling and 
       administrative         22.4      22.7           21.7          22.6
      Amortization of   
       excess reorganization
       value                   2.8       1.0            2.9           0.3 
      Operating profit
       (loss)                 (1.6)      0.9           (0.3)          1.7 
      Interest expense         1.6       0.9            1.6           1.7
      Loss before                                          
       reorganization                                       
       items, income taxes
       and extraordinary
       items                  (3.2)      0.0           (1.9)         (0.1) 
      Reorganization 
       items                    -       19.5             -            7.2
      Loss before income                                   
       tax and
       extraordinary
       items                  (3.2)    (19.5)          (1.9)         (7.2)
      Income tax                                
       provision              (0.2)     -               0.4          -
      (benefit)
      Loss before
       extraordinary
       items                  (3.0)    (19.5)          (2.4)         (7.2)  
      Extraordinary 
       items                  -        (54.0)          -            (17.4) 
         Net loss             (3.0)     34.4           (2.4)         10.2
  
  
  
  
  Results of Operations.
  
            Comparison of Twelve Weeks and Thirty-Six Weeks ended 
  September 6, 1997, with Twelve Weeks and Thirty-Six Weeks ended 
  September 7, 1996.
  
            Net sales for the 12 weeks and 36 weeks ended September 6, 1997,
  decreased 1.7% and 3.3%, respectively, from the net sales of the 
  corresponding periods of 1996. The reduction in net sales was primarily
  due to lower comparable store sales. Comparable store sales for the 12
  weeks and 36 weeks ended September 6, 1997, decreased by 3.2% and 2.5%,
  respectively, as  compared to the corresponding periods of 1996.  The 
  decrease in comparable store sales was attributed to the opening of five
  new competing stores in the Company's trade areas during the third quarter,
  plus lower food price inflation and lower sales to food stamps recipients
  as a result of more stringent eligibility requirements.  These factors
  were offset somewhat by grand openings at six of the Company's remodeled 
  stores.  The Company's anticipated acquisition of three Food Lion stores
  in the fourth quarter of 1997, and the announced closing of five other 
  Food Lion stores in the Company's trade area are expected to have a 
  positive effect on the Company's net sales (see Liquidity and Capital
  Resources).
  
            Gross  profit as a percentage of sales for the 12 weeks ended 
  September 6, 1997, was 23.7%, a decrease from the corresponding period of
  1996 of 24.6%. The decrease in gross profit margin was primarily a result
  of increased promotional activities relating to new competitors and grand
  opening sales of the six remodeled stores. Gross profit as a percentage of
  sales for the 36 weeks ended September 6, 1997, was 24.2% as compared to 
  24.5% of the corresponding period in 1996.
  
            Selling and administrative expenses for the 12 weeks ended
  September 6, 1997, decreased to 22.4%, as a percentage of net sales, 
  compared to 22.7% for the corresponding period of 1996.   For the 36 
  weeks ended September 6, 1997, selling and administrative expenses as a
  percentage of sales decreased by 0.9% to 21.7% from 22.6% in the
  corresponding period of 1996.  The reduction in selling and 
  administrative expenses resulted primarily from lower labor costs
  associated with the modified union agreements and lower occupancy cost that
  resulted from renegotiated leases, all commencing in August 1996.
  
            For  the 12 weeks and 36 weeks ended September 7, 1996, the 
  Company incurred $22.8 million and $26.0 million of reorganization items.
  These items were related to the reorganization consummated in August 1996
  and are not recurring.
  
            The Company recorded amortization of excess reorganization value
  of $3.3 million and $10.1 million for the 12 weeks and 36 weeks ended
  September 6, 1997, respectively. For the 12 weeks and 36 weeks ended
  September 7, 1996, the Company recorded $1.2 million for amortization
  of excess reorganization value. The amortization of the excess
  reorganization value will negatively affect earnings for the next eight 
  fiscal quarters.
  
            Interest  expense for the 12 weeks ended September 6, 1997, 
  was $1.9 million, as compared to $1.1 million in the corresponding period 
  of 1996.  Interest expense for the 36 weeks ended September 6, 1997, was
  $5.7  million, a reduction of $0.6 million from the corresponding period
  of $6.3 million in 1996. The higher interest expense for the 12 weeks ended
  September 6, 1997, as compared to the comparable period for the prior year
  was due to lower interest expense during the 1996 period as a result of 
  the non-accrual of interest from May 13 through August 2, 1996 on the 
  Company's outstanding senior secured notes that were stayed during the
  Company's bankruptcy proceeding. The reduction in interest expenses for 
  the 36 week period versus the prior year was due primarily to the 
  reduction of debt level resulting from the consummation of the 
  reorganization in August 1996.
  
            The  Company recorded an income tax credit of $0.3 million and 
  an income tax provision of $1.5 million for the 12 weeks and 36 weeks ended
  September 6, 1997, respectively. The benefit recorded for the 12 weeks 
  ended September 6, 1997, resulted from the reversal of previously-recorded
  expenses, as the Company adjusted its expected taxable income for fiscal 
  1997.  The effective tax rate differs from the statutory rate due to
  amortization of excess reorganization value, which is not deductible for 
  income tax purposes.   The net operating loss carryforwards available for
  utilization in 1997 ("NOL Carryforward") are limited to approximately 
  $4.5 million, the benefit of which is being recorded as a reduction of
  excess reorganization value rather than a reduction of income tax expense.
  
             As a result of the reorganization that was consummated in 
  August 1996, certain debt of the Company was discharged.  The debt 
  discharged resulted in the Company recognizing an extraordinary gain of 
  $63.1 million for the 12 weeks and 36 weeks ended September 7, 1996.
  
            The Company's EBITDA (as defined hereinafter) for the 12 weeks
  ended September 6, 1997, decreased to $3.3 million or 2.9% of net sales, 
  from the EBITDA of $3.7  million, before reorganization items, or 3.2 % of
  net sales for the corresponding period of 1996.  For the 36 weeks ended
  September 6, 1997, EBITDA was $ 14.5 million or 4.1% of net sales as
  compared to $12.1 million, before reorganization items, or 3.3% of net
  sales for the corresponding period of 1996. The improvement in EBITDA for
  the 36 week period, is attributable to the cost savings realized as a 
  result of the reorganization that was consummated in August 1996.  The
  savings from the reorganization efforts were somewhat offset by reduced
  net sales and a lower gross profit margin.
  
            Net loss for the 12 weeks ended September 6, 1997, was $3.5 
  million or $0.73 per share compared to a net income of $40.3 million or 
  $1.07 per share for the corresponding period in 1996. Net loss for the 
  36 weeks ended September 6, 1997, was $8.3 million or $1.73 per share 
  compared to a net income of $36.9 million or $0.97 per share for the 
  corresponding period in 1996. The net income for the 12 weeks and 36 
  weeks ended September 7, 1996 included an extraordinary gain of $63.1 
  million or $1.94 per share. As a result of the reorganization that was 
  consummated in August 1996, the Company's financial structure has changed
  significantly such that results of earnings per share are not comparable
  to prior years.
  
         The Company is amortizing its excess reorganization value of $45
  million over a three-year period, and such amortization has affected 
  earnings significantly.   If the Company excluded such amortization of 
  excess reorganization value for the 12 weeks and 36 weeks ended September 
  6, 1997, the Company would record a loss of $0.2 million or $0.04 per share
  and an income of $1.8 million or $0.39 per share, respectively.
  
  Liquidity and Capital Resources
  
            The primary sources of liquidity and capital for the Company's
  operations have been borrowing under the revolving credit facility and
  internally-generated funds.

            The Company's EBITDA (earnings before interest, taxes, 
  depreciation and amortization) before reorganization items, as presented
  below, is the Company's measurement of internally-generated cash for 
  working capital needs, capital expenditures and payment of debt obligations:

                                     12 weeks ended      36 weeks ended
                                    Sept.6,   Sept.7,   Sept. 6,   Sept.7,
                                     1997      1996      1997      1996
    Loss  before income                         
     taxes and extraordinary
     items                          (3,717)  (22,835)    (6,789)  (26,193)
                                                          
    Interest expense                 1,890     1,059      5,705     6,266
                                                           
    Amortization of 
     reorganization value            3,271     1,154     10,095     1,154
                                                           
    Reorganization items              -       22,846       -       25,996
                                                           
    Depreciation and
     amortization                    1,889     1,495      5,439     4,836
                                                           
          EBITDA                     3,333     3,719     14,450    12,059
                                                           
        As a percentage of
         sales                        2.9%       3.2%       4.1%      3.3%
                                                           
        As a multiple of 
         interest expense             1.8x       3.5x       2.5x      1.9x
                                 
           Cash flow from operations provided $9.0 million for the 36 weeks
  ended September 6, 1997, as compared to net cash used in operations of 
  $3.8 million for the 36 weeks ended September 7, 1996.  The improvement in
  cash flow from operations was due primarily to cost savings realized from
  the reorganization that was consummated in August 1996.
  
           The Company's investing activities used net cash of $5.7 million
  in the 36 weeks ended September 6, 1997, while the corresponding period of
  1996 investing activities used $0.8 million.  Cash used in investing 
  activities was primarily for the 1997 remodeling program. The Company has
  completed 18 of its remodeling projects as of October 17, 1997.  In August
  1997, the Company acquired a Pratt Discount Foods store in Oklahoma City 
  (the "Pratt Acquisition"). In October 1997, the Company entered into an
  agreement with Food Lion, Inc. to acquire three of its stores located at 
  Yukon, Shawnee and Lawton, Oklahoma (the "Food Lion Acquisition"). The Food
  Lion Acquisition is expected to use approximately $4.4 million. Although 
  the Food Lion Acquisition is expected to close in December 1997, the 
  Company has commenced operations in the three stores as of October 15,
  1997. With the Pratt Acquisition and the Food Lion Acquisition, the 
  Company will operate a total of 70 stores.
  
           The revolving credit facility currently limits the Company's 
  cash capital expenditures for fiscal 1997 to $12.0 million. As a result of
  the Food Lion Acquisition, the Company expects to expend approximately 
  $16.0 million in cash capital expenditures, and accordingly has obtained a
  waiver, effective through December 15, 1997, from its lenders. The Company
  has also received approval from its lenders with respect to amending its
  revolving credit facility to increase the revolving credit facility from
  $27.5 million to $32.0 million, adding vendor receivables to the borrowing
  base and to otherwise address the Food Lion Acquisition. The Company 
  expects completion of the definitive documentation with respect to such 
  amendment to its revolving credit facility prior to December 15, 1997.
  
           Financing activities of the Company provided net cash of $0.9 
  million and $1.3 million for the 36 weeks ended September 6, 1997, and 
  September 7, 1996, respectively.
  
           Management believes that the revolving credit facility, with the 
  amendments discussed above, and cash flows from operations will be adequate
  for the Company's short-term requirements including its 1997 capital 
  expenditure program, the Food Lion Acquisition and the scheduled quarterly
  payments required under the term loan.  As of October 17, 1997, the Company
  had $9.4 million of borrowings and $5.7 million of letters of credit 
  outstanding under its revolving credit facility.  The revolving credit 
  facility, before the amendments discussed above, provides for borrowings of
  up to the lesser of (a) $27.5 million or (b) the applicable borrowing base.
  The applicable borrowing base on October 17, 1997, was approximately $27.1 
  million.

  Safe Harbor Statements Under the Private Securities Litigation Reform Act 
  of 1995
  
           The statements made under Item 2: Management's Discussion and 
  Analysis of Financial Condition and Results of Operations and other 
  statements in this Form 10-Q which are not historical facts, particularly
  with respect to future net sales, are forward-looking statements. These
  forward-looking statements are subject to risks and uncertainties that 
  could render them materially inaccurate or different. The risks and 
  uncertainties include, but are not limited to, the effect of economic 
  conditions, the impact of competitive promotional and new store activities,
  labor cost, capital constraints, availability and costs of inventory, 
  changes in technology and the effect of regulatory and legal developments.
  
  
  PART II - OTHER INFORMATION
  
  Item 4.    Submission of Matters to a Vote of Security Holders
  
           The Company held its 1997 Annual Meeting of Stockholders on July 
  9, 1997.  At such meeting, Robert E. (Gene) Burris, James A. Demme, Edward
  B. Krekeler, Jr., Laurie M. Shahon, John A. Shields, William B. Snow and 
  David N. Weinstein were elected to serve on the Board of Directors
  for a one year term, ending at the next annual meeting.
  
           In the matter of the election of directors, the votes cast were as
  follows (there were no brokers no-votes):
  
                                     For               Withheld/Abstained
       Robert E. Burris               3,876,572                 40/752
       James A. Demme                 3,876,572                 40/752
       Edward B. Krekeler, Jr.        3,876,572                 40/752
       Laurie M. Shahon               3,876,572                 40/752
       John A. Shields                3,876,572                 40/752
       William B. Snow                3,876,572                 40/752
       David N. Weinstein             3,876,572                 40/752
  
  
            In the matter of amending the bylaws for the purpose of 
 staggering the Board of Directors, the filing of vacant directorships and the
 removal of directors only for cause, 2,253,072 votes were cast against, 
 1,371,073 votes cast in favor, and holders of 466 shares abstained or did
 not vote.
         
           In the matter of ratification of the appointment of Coopers and
  Lybrand, LLP as independent certified public accountants, 3,877,213 votes
  were cast in favor of approval, 102 votes were cast against, and holders of
  96 shares abstained or did not vote.
  
           In the matter of  approving Homeland Holding Corporation 1997 
  Non-Employee Directors Stock Option Plan, 2,988,124 votes were cast in 
  favor of approval, 636,378 votes were cast against, and holders of 109 
  shares abstained or did not vote.
  
           In the matter of approving the increase in the number of shares
  available for options to be granted under the Homeland Holding Corporation
  1996 Stock Option Plan, 2,991,340 votes were cast in favor of approval, 
  633,162 votes were cast against, and holders of 109 shares abstained
  or did not vote.
  
           All of such matters (other than the staggering of the Board of
  Directors and the related bylaw amendments) were approved.
  
  Item 5.    Other Information
  
           On September 19,1997, Mr. James A. Demme resigned his position as
  Chairman of the Board of Directors, Chief Executive Officer, President and
  as a member of the Board of Directors of the Company. On the same day, the
  Board of Directors appointed Mr. John A. Shields to the position of Acting
  Chairman of the Board of Directors and Mr. Larry W. Kordisch to the 
  position of Acting Chief Executive Officer of the Company. The Board of 
  Directors has retained a search firm to conduct a nationwide search for 
  a replacement for Mr. Demme.
  
           
  Item 6.    Exhibits and Reports on Form 8-K
  
             (a)     Exhibits:     The following exhibits are filed as part
                                   of this report:
  
                     Exhibit No.   Description
  
                          27       Financial Data Schedule.
  
                          99       Press release of September 19, 1997,
                                   announcing the acquisition of three
                                   Food Lion stores and the resignation of
                                   Mr. James A. Demme.
  
             (b)    Report on Form 8-K:  The Company did not file any 
                    Form 8-K during the quarter ended September 6, 1997.




                                       SIGNATURES
  
            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 thereunto duly authorized.
  
  
                                         HOMELAND HOLDING CORPORATION
  
  
  Date: October 21, 1997                   By: /s/  Larry W. Kordisch
                                               Larry W. Kordisch, Acting Chief
                                               Executive Officer and Secretary
                                               (Principal Executive Officer)
                           
  
  Date: October 21, 1997                   By: /s/  Francis T. Wong
                                               Francis T. Wong, Vice 
                                               President/Finance, Treasurer
                                               and Asst. Secretary (Principal
                                               Financial Officer)