CONFORMED COPY

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

                                FORM 10-K

(Mark One)

  X     Annual report pursuant to Section 13 or 15(d) of the Securities 
        Exchange Act of 1934 [No Fee Required]
        For the fiscal year ended January 3, 1998

                                    OR

        Transition report pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 [No Fee Required]
        For the transition period from           to       .

Commission file number 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 N. W. Expressway
                    Oil Center - East, Suite 1100E
                    Oklahoma City, Oklahoma  73112
        (Address of principal executive offices)  (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par 
value $ .01 per share.

     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 if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be contained, 
to the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. [  ]

     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 of securities under a 
plan confirmed by a court. Yes    X        No

     State the aggregate market value of the voting stock held by 
non-affiliates of the registrant as of March 27, 1998:

           $25,543,164, based on a closing price of $7 7/8 of the registrant's 
           common stock on the NASDAQ NMS.

     Indicate the number of shares outstanding of each of the registrant's 
classes of common stock as of March 27, 1998:

                       Homeland Holding Corporation
                      Common Stock: 4,822,857 shares

     Documents incorporated by reference:  None.



                        HOMELAND HOLDING CORPORATION


                                FORM 10-K
                 FOR THE FISCAL YEAR ENDED JANUARY 3, 1998


                            TABLE OF CONTENTS

                                                                     Page 

PART I

ITEM 1.   BUSINESS...................................................  1

          General....................................................  1
          Background.................................................  1
          AWG Transaction............................................  1
          Restructuring..............................................  2
          Business Strategy..........................................  3
          Homeland Supermarkets......................................  4
          Merchandising Strategy and Pricing.........................  6
          Customer Service...........................................  6
          Advertising and Promotion..................................  6
          Products...................................................  7
          Supply Arrangements........................................  7
          Employees and Labor Relations..............................  8
          Computer and Management Information Systems................  9
          Competition................................................  10
          Trademarks and Service Marks...............................  10
          Regulatory Matters.........................................  11

ITEM 2.   PROPERTIES.................................................  11

ITEM 3.   LEGAL PROCEEDINGS..........................................  11

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE
          OF SECURITY HOLDERS........................................  11


PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY
          AND RELATED STOCKHOLDERS MATTERS...........................  12

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA.......................  12




                                 i

                                                                     Page

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS..............................................  16

          Results of Operations......................................  16
          Liquidity and Capital Resources............................  20
          Recently-Issued Accounting Standards.......................  23
          Year 2000..................................................  23
          Inflation/Deflation........................................  24

ITEM 8.   FINANCIAL STATEMENTS AND
          SUPPLEMENTARY DATA.........................................  24

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH
          ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.......................................  24

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS
          OF THE REGISTRANT..........................................  25

          Compliance with Section 16 (a) of the Securities
          Exchange Act of 1934 (the "1934 Act")......................  28

ITEM 11.  EXECUTIVE COMPENSATION.....................................  28

          Summary of Cash and Certain Other
          Compensation...............................................  28
          Compensation of Directors..................................  30
          Employment Agreements......................................  31
          Management Incentive Plan..................................  32
          Retirement Plan............................................  32
          Management Stock Option Plan...............................  33
          Compensation Committee Report..............................  33
          Compensation Committee Interlocks and
          Insider Participation......................................  33

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN
          BENEFICIAL OWNERS AND MANAGEMENT...........................  34

ITEM 13.  CERTAIN RELATIONSHIPS AND
          RELATED TRANSACTIONS.......................................  36

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT
          SCHEDULES AND REPORTS ON FORM 8-K..........................  37



                                   ii



                                 

                                                                     Page


SIGNATURES...........................................................  II-1

INDEX TO FINANCIAL STATEMENTS AND EXHIBITS...........................   F-1

EXHIBIT INDEX........................................................   E-1











                                    iii


                        HOMELAND HOLDING CORPORATION

                               FORM 10-K
                 FOR THE FISCAL YEAR ENDED JANUARY 3, 1998



ITEM 1.    BUSINESS

General

          Homeland Holding Corporation ("Holding"), through its wholly-owned 
subsidiary, Homeland Stores, Inc. ("Homeland," and, together with Holding, 
the "Company"), is a leading supermarket chain in the Oklahoma, southern 
Kansas and Texas Panhandle region. The Company operates in four distinct 
market places: Oklahoma City, Oklahoma; Tulsa, Oklahoma; Amarillo, Texas; and
certain rural areas of Oklahoma, Kansas and Texas.  As of March 18, 1998, the 
Company operates 70 stores throughout these markets.

          The Company's executive offices are located at 2601 N.W. Expressway, 
Oklahoma City, Oklahoma 73112, and its telephone number is (405) 879-6600.

Background

          Holding and Homeland were organized as Delaware corporations in 1987 
by a group of investors led by Clayton, Dubilier & Rice, Inc. ("CD&R"), a 
private investment firm specializing in leveraged acquisitions with the 
participation of management, for the purpose of acquiring substantially all of 
the assets and assuming specified liabilities of the Oklahoma division of 
Safeway Inc. ("Safeway").  The stores changed their name to "Homeland" in 
order to highlight the Company's regional identity.

AWG Transaction

          On April 21, 1995, the Company sold 29 of its stores and its 
warehouse and distribution center to Associated Wholesale Grocers, Inc. 
("AWG") pursuant to an Asset Purchase Agreement dated as of February 6, 1995 
(the "AWG Purchase Agreement"), for a cash purchase price of approximately 
$72.9 million, including inventory, and the assumption of certain liabilities 
by AWG.  At the closing, the Company and AWG also entered into a seven-year
supply agreement, whereby the Company became a retail member of the AWG 
cooperative and AWG became the Company's primary supplier. The Company has 
purchased 15 shares of AWG Class A Common Stock, representing an equity 
position of 0.3%, in order to be a member of AWG. The transactions between 
the Company and AWG are referred to herein as the "AWG Transaction."

          AWG is a buying cooperative which sells groceries on a wholesale 
basis to its retail member stores.  AWG has more than 800 member stores 
located in a ten-state region and is the nation's sixth largest grocery 
wholesaler, with approximately $3.1 billion in revenues in 1997.

          The AWG Transaction enabled the Company: (a) to reduce the Company's 
borrowed money indebtedness by approximately $37.2 million in the aggregate; 
(b) to have AWG assume, or provide certain undertakings with respect to, 
certain contracts and leases and certain pension liabilities of the Company; 
(c) to sell the Company's warehouse and distribution center, which eliminated 
the high fixed overhead costs associated with the operation of the warehouse 
and distribution center and thereby permitted the Company to close marginal 
and unprofitable stores; and (d) to obtain the benefits of becoming a member 
of the AWG cooperative, including increased purchases of private label 
products, special product purchases, dedicated support programs and access to 
AWG's store systems and participation in the membership rebate and patronage 
programs.

Restructuring

          On May 13, 1996, Holding and Homeland filed voluntary petitions 
under Chapter 11 of the United States Bankruptcy Code with the United States 
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").  
Simultaneously with such filings, the Company submitted a "pre-arranged" plan 
of reorganization which set forth the terms of the restructuring of the 
Company (the "Restructuring").  The purpose of the Restructuring was to 
substantially reduce the Company's debt service obligations and labor costs 
and to create a capital and cost structure that would allow the Company to 
maintain and enhance the competitive position of its business and operations.
The Restructuring was negotiated with, and supported by, the lenders under 
the Company's then existing revolving credit facility, an ad hoc committee 
(the "Noteholders Committee") representing approximately 80% of the Company's
outstanding Old Notes (as defined in Note 2 - Reorganization in Notes to 
Consolidated Financial Statements) and the Company's labor unions.  The 
Bankruptcy Court confirmed the Company's First Amended Joint Plan of 
Reorganization, as modified (the "Plan of Reorganization") on July 19, 1996, 
and the Plan of Reorganization became effective on August 2, 1996 (the 
"Effective Date").

          Pursuant to the Restructuring, the $95 million of the Company's 
Old Notes (as defined hereinafter) plus accrued interest were cancelled, and 
the holders of the Old Notes received in the aggregate, $60 million face 
amount of newly-issued 10% Senior Subordinated Notes Due 2003 of the Company 
(the "New Notes") and $1.5 million in cash. In addition, the Noteholders and 
the Company's general unsecured creditors will receive approximately 60% and 
35%, respectively, of the equity of reorganized Holding (assuming total 
unsecured claims of approximately $63 million, including Noteholder unsecured 
claims). Holding's existing equity holders will receive the remaining 5% of 
the new equity, together with five-year warrants to purchase an additional 
5% of such equity.

          In connection with the Restructuring, the Company negotiated an 
agreement with its labor unions to modify certain elements of the Company's 
existing collective bargaining agreements.  These modifications include, 
among other things, wage and benefit modifications, the buyout of certain 
employees and the issuance to and purchase of new equity by a trust acting
on behalf of the unionized employees.  The modified collective bargaining 
agreements became effective on the Effective Date. See "Business -- Employees 
and Labor Relations."

          On the Effective Date, the Company entered into a loan agreement 
(the "Loan Agreement") with National Bank of Canada ("NBC""), as agent and 
lender, and two other lenders, Heller Financial, Inc. and IBJ Schroder Bank 
and Trust Company, under which the lenders provided a working capital and 
letter of credit facility and a term loan. The Loan Agreement permits the 
Company to borrow, under the working capital and letter of credit facility, 
up to the lesser of: (a) $27.5 million (subsequently increased to $32 million
in November 1997) and (b) the applicable borrowing base.  Funds borrowed under 
such facility are available for general corporate purposes of the Company.  
The Loan Agreement also provides the Company a $10.0 million term loan, which 
has been used to fund certain obligations of the Company under the Plan of 
Reorganization, including an employee buyout offer and a health and welfare 
plan required by the modified collective bargaining agreements, professional 
fees and "cure amounts" relating to executory contracts, secured financing and
unexpired leases. See "Management's Discussion and Analysis of Financial 
Condition and Results of Operations -- Liquidity and Capital Resources" for a 
description of the Loan Agreement.

Business Strategy

          The Company's general business strategy is to continue to build and 
improve on its current strengths which consist of: (a) high quality perishable 
departments; (b) market leading position and competitive pricing; (c) customer 
service; (d) excellent locations; and (e) the "Homeland Savings Card," a 
customer loyalty card program. The Company is also able to effectively reach 
a large customer base with its weekly advertising inserts and radio and 
television media advertisement. In addition, the Company is upgrading its 
stores by focusing its capital expenditures on projects that will improve the 
overall condition of the stores.

          Having been in its market for more than 65 years (through its 
predecessor Safeway), the Company enjoys a high recognition with its 
customers.  The Company continues to build this rapport with its customers by 
participating in local community events and offering the "Apples for Students"
program, whereby schools can obtain computers and other educational products 
by collecting Homeland receipts.  The Company is also a major sponsor of the 
Easter Seals program in its markets.

          The Company is anticipating growth in home meal replacement business 
through the development of hot and chilled meal solutions for lunch and 
dinner.  Capital investment is being made to support the growth of these 
products and menus are being developed to match the quick meal and 
entertainment needs of its customers.

          The Company's plan also involves reviewing marginal and unprofitable 
stores for closing and reviewing new sites, independent stores or new markets 
for growth in its market share. The Company closed 14 stores in 1995 and 
closed 2 additional stores in 1996. The Company also sold its store in Ponca 
City, Oklahoma in April 1996.  In 1997, the Company acquired 4 stores, two in 
Oklahoma City, Oklahoma, one in Shawnee, Oklahoma and the other in Lawton, 
Oklahoma.

          For additional information, see also "Management's Discussion and 
Analysis of Financial Condition and Results of Operations -- Liquidity and 
Capital Resources."

Homeland Supermarkets

          The Company's current network of stores features three basic store 
formats. Homeland's conventional stores are primarily in the 25,000 total 
square feet range and carry the traditional mix of grocery, meat, produce and 
variety products.  These stores contain more than 20,000 stock keeping units, 
including food and general merchandise.  Sales volumes of conventional stores 
range from $60,000 to $125,000 per week.  Homeland's superstores are in the 
35,000 total square feet range and offer, in addition to the traditional 
departments, two or more specialty departments. Sales volumes of superstores 
range from $95,000 to $265,000 per week. Homeland's combo store format 
includes stores of approximately 45,000 total square feet and larger and was
designed to enable the Company to expand shelf space devoted to general 
merchandise.  Sales volumes of combo stores range from $140,000 to $310,000 
per week.  The Company's new stores and certain remodeled locations have 
incorporated Homeland's new, larger superstore and combo formats.

          Of the 70 stores operated by the Company as of March 18, 1998, 10 
are conventional stores, 49 are superstores and 11 are combo stores.

          The chart below summarizes Homeland's store development over the 
last three fiscal years:


                                                    Fiscal Year Ended
                                           1/3/98 (1)    12/28/96    12/30/95
Average sales per store
 (in millions).............................$     7.9    $   7.9   $    7.9 (2)

Average total square feet
 per store....................................37,232     37,295     38,204 (2)

Average sales per
 square foot................................... $212       $212       $207 (2)

Number of stores:
 Stores at start of period....................    66         68        111
 Stores remodeled.............................     6          4          5
 New stores opened............................     4          1          0
 Stores sold or closed........................     0          3         43
 Stores at end of period......................    70         66         68

Size of stores:
 Less than 25,000 sq. ft......................     7          7          8
 25,000 to 35,000 sq. ft......................    27         24         24
 35,000 sq. ft. or greater....................    35         35         36

Store formats:
 Conventional.................................    10         10         11
 SuperStore...................................    49         45         44
 Combo........................................    11         11         13

(1) 53 weeks' data.
(2) Reflects the operations of the 68 stores remaining after the AWG 
    Transaction.

          The Company's network of stores is managed by district managers on 
a geographical basis through four districts.  Each district manager oversees 
store operations for approximately 17 stores.  Store managers are responsible 
for determining staffing levels, managing store inventories (within the 
confines of certain parameters set by the Company's corporate headquarters)
and purchasing products. Store managers have significant flexibility with 
respect to the quantities of items carried while the Company's corporate 
headquarters is directly responsible for merchandising, advertising, pricing 
and capital expenditure decisions.



Merchandising Strategy and Pricing

          The Company's merchandising strategy emphasizes a competitive 
pricing structure, as well as leadership in quality products and service, 
selection, convenient store locations, specialty departments and perishable 
products (i.e., meat, produce, bakery and seafood).  The Company's strategy 
is to price competitively with targeted supermarket operator in each market
area.  In certain areas with discount store competition, the Company will be 
competitive on high-volume, price sensitive items.  The Company's in-store 
promotion strategy is to offer all display items at a lower price than the 
store's regular price and at or below the price offered by the store's 
competitors.  The Company also offers double coupons, with some limitations, 
in all areas in which it operates.

Customer Service

          The Company's stores provide a variety of customer services 
including, among other things, carry-out services, facsimile services, 
automated teller machines, pharmacies, video rentals, check cashing, utility 
payments, money transfers and money orders.  The Company believes it is able 
to attract new customers and retain its existing customers because of its 
level of customer service and convenience.

Advertising and Promotion

          All advertising and promotion decisions are made by the Company's 
corporate merchandising and advertising staff. The Company's advertising 
strategy is designed to enhance its value-oriented merchandising concept and 
emphasize its reputation for variety and quality. Accordingly, the Company is 
focused on presenting itself as a competitively-priced, promotions-oriented
operator that offers value to its customers and an extensive selection of 
high quality merchandise in clean, attractive stores.  This strategy allows 
the Company to accomplish its marketing goals of attracting new customers and 
building loyalty with existing customers.  In addition, new signage was
implemented in the stores calling attention to various in-store specials and 
creating a friendlier and more stimulating shopping experience.

          The Company currently utilizes a broad range of print and 
broadcast advertising in the markets it serves, including newspaper 
advertisements, advertising inserts and circulars, television and radio 
commercials and promotional campaigns that cover substantially all of the 
Company's markets.  The Company receives cooperative and performance 
advertising reimbursements from vendors which reduce its advertising costs.

          In September 1995, the Company introduced a customer loyalty card 
called the "Homeland Savings Card," in its Amarillo, Texas stores.  The 
Company introduced the "Homeland Savings Card" in its other stores in 
August 1996. The Company believes that it is the only supermarket chain in 
its market area that can capitalize on a  customer loyalty card program 
because of the Company's advertising coverage and its leading market share.

Products

          The Company provides a wide selection of name-brand and private 
label products to its customers.  All stores carry a full line of meat, dairy, 
produce, frozen food, health and beauty aids and selected general merchandise.  
As of the close of fiscal year 1997, approximately 83% of the Company's stores 
had service delicatessens and/or bakeries and approximately 63% had in-store
pharmacies.  In addition, some stores provide additional specialty departments 
that offer ethnic food, fresh and frozen seafood, floral services and salad 
bars.

          The Company's private label name is "Pride of America." The Company's 
private label program allows customers to purchase high quality products at 
lower than national brand retail prices. The Company's private label products 
include over 400 items covering most major categories in the Company's stores, 
including dairy products, meat, frozen foods, canned fruits and vegetables
and eggs.

          As a result of the Company's supply relationship with AWG, the 
Company's stores also offer certain AWG private label goods, including Best 
Choice and Always Save.

          Private label products generally represent quality and value to 
customers and typically contribute to a higher gross profit margin than 
national brands.  The promotion of private label products is an integral part 
of the Company's merchandising philosophy of building customer loyalty as 
well as improving the Company's "pricing image."

Supply Arrangements

          The Company is a party to the supply agreement with AWG (the 
"Supply Agreement"), pursuant to which the Company became a member of the AWG 
cooperative and AWG became the Company's primary supplier. AWG currently 
supplies approximately 70% of the goods sold in the Company's stores.  See 
"Business -- AWG Transaction."

          Pursuant to the Supply Agreement, AWG is required to supply products 
to the Company at the lowest prices and on the best terms available to AWG's 
retail members.  In addition, the Company is: (a) eligible to participate in 
certain cost-savings programs available to AWG's other retail members; (b) is 
entitled to receive certain member rebates and refunds based on the dollar
amount of the Company's purchases from AWG's distribution center; and (c) is 
to receive periodic cash payments from AWG, up to a maximum of $1.2 million 
per fiscal quarter, based on the dollar amount of the Company's purchases 
from AWG's distribution centers during such fiscal quarter.

          The Company purchases goods from AWG on an open account basis.  
AWG requires that each member's account be secured by a letter of credit or 
certain other collateral in an amount based on such member's estimated weekly 
purchases through the AWG distribution center.  The Company's open account 
with AWG, as of March 18, 1998, is secured by a $3.3 million letter of credit
(the "AWG Letter of Credit") issued in favor of AWG by NBC.  In addition, the 
Company's obligations to AWG are secured by a first lien on all "AWG Equity" 
owned from time to time by the Company, which includes, among other things, 
AWG membership stock, the Company's right to receive monthly payments and 
certain other rebates, refunds and other credits owed to the Company by AWG
(including patronage refund certificates, direct patronage or year-end 
patronage and concentrated purchase allowances).

          The amount of the AWG Letter of Credit may be decreased on a 
biannual basis upon the request of the Company based on the Company's 
then-current average weekly volume of purchases and by an amount equal to the 
face amount of the Company's issued and outstanding AWG patronage refund 
certificates.  In the event that the Company's open account with AWG exceeds 
the amount of the AWG Letter of Credit plus any other AWG Equity held as 
collateral for the Company's open account, AWG is not required to accept 
orders from, or deliver goods to, the Company until the amount of the AWG 
Letter of Credit has been increased to make up for any such deficiency.

          The Supply Agreement with AWG contains certain "Volume Protection 
Rights," including: (a) the right of first offer (the "First Offer Rights") 
with respect to any proposed sales of stores supplied under the Supply 
Agreement (the "Supplied Stores") and a sale of more than 50% of the 
outstanding stock of Holding or Homeland to an entity primarily engaged in 
the retail or wholesale grocery business; (b) the Company's agreement not to
compete with AWG as a wholesaler of grocery products during the term of the 
Supply Agreement; and (c) the Company's agreement to dedicate the Supplied 
Stores to the exclusive use of a retail grocery facility owned by a retail 
member of AWG (the "Use Restrictions").  The Company's agreement not to 
compete and the Use Restrictions contained in the Supply Agreement are 
terminable with respect to a Supplied Store upon the occurrence of certain
events, including the Company's compliance with AWG's First Offer Rights with 
respect to any proposed sale of such store.  In addition, the Supply Agreement 
provides AWG with certain purchase rights in the event the Company closes 90% 
or more of the Supplied Stores.

Employees and Labor Relations

          At March 18, 1998, the Company had a total of 4,287 employees, of 
whom 3,001, or approximately 70%, were employed on a part-time basis.  The 
Company employs 4,181 in its supermarket operations. The remaining employees 
are corporate and administrative personnel.

          The Company is the only unionized grocery chain in its market areas. 
Approximately 91% of the Company's employees are union members, represented 
primarily by the United Food and Commercial Workers of  North America 
("UFCWNA").

          In March and April of 1996, prior to the Restructuring, the 
Company entered into new collective bargaining agreements with the UFCWNA 
and the local union chapter of the Bakery, Confectionery and Tobacco Workers 
International Union (collectively, the "Modified Union Agreements").

          The Modified Union Agreements have a term of five years commencing 
on the Effective Date.  The Modified Union Agreements consist of five basic 
elements:  (a) wage rate and benefit contribution reductions and work rule 
changes; (b) the Employee Buyout Offer, pursuant to which the Company made up 
to $6.4 million available for the buyout of certain unionized employees;
(c) the establishment of an employee stock option trust (acting on behalf of 
the Company's unionized employees), which will receive, or be entitled to 
purchase, up to 522,222 shares of New Common Stock, or 10% of the New Common 
Stock, pursuant to the terms of the Modified Union Agreements; (d) the UFCWNA's 
right to designate one member of the Boards of Directors of Homeland and 
Holding following the Restructuring; and (e) the elimination of certain "snap 
back" provisions, incentive plans and "maintenance of benefits" provisions.

          Upon the consummation date of the Employee Buyout Offer, 833 of 
the Company's unionized employees accepted the Employee Buyout Offer.  The 
Company paid approximately $6.0 million in the aggregate (which excludes the 
Company's portion of payroll taxes) with each employee receiving an amount 
that ranged from $4,500 to $11,000 (depending on job classification, date of
hire and full- or part-time status).  The Employee Buyout Offer payment was 
funded through borrowings under the Loan Agreement.

Computer and Management Information Systems

          During 1995, the Company installed new client/server systems in 
order to enhance its information management capabilities, improve its 
competitive position and enable the Company to terminate its outsourcing 
arrangement. The new systems include the following features: time and 
attendance, human resource, accounting and budget tracking, and scan support 
and merchandising systems. In 1997, the Company installed a direct store 
delivery system and a check verification and credit card system.  The Company 
is currently installing a centralized scale and pricing system for its meat, 
deli and bakery departments with installation expected to be completed by the 
end of 1998.

          The Company has scanning checkout systems in all of its 70 stores.  
The Company will continue to invest and upgrade its scanning and point-of-sale 
systems to improve efficiency. The Company utilizes the information collected 
through its scanner systems to track sales and to coordinate purchasing.  The 
Company also utilizes the information collected on the purchases made by
its "Homeland Savings Card" holders to target its promotional activities on 
this market segment.  See "Business -- Advertising and Promotion."

Competition

          The supermarket business in the Company's market area is highly 
competitive, but very fragmented, and includes numerous independent operators.  
The Company estimates that these operators represent a substantial percentage 
of its markets.  The Company also competes with larger store chains such as
Albertson's and Wal-Mart, which operate 27 stores and 13 stores, respectively, 
in the Company's market areas, "price impact" stores such as Crest, large 
independent store groups such as IGA, regional chains such as United and 
discount warehouse stores.

          The Company is a leading supermarket chain in Oklahoma, southern 
Kansas and the Texas Panhandle region. The Company attributes its leading 
market position to certain advantages it has over certain of its competitors 
including its high quality perishable departments, effective advertising, 
excellent long-standing store locations and a strong reputation within the
communities in which the Company operates.

          The Company's business has been adversely affected in recent years 
by the entry of new competition into the Company's key markets, which has 
resulted in a decline in the Company's comparable store sales in 1995 and 
1997.  In 1995, there were 8 competitive openings in the Company's market 
areas including 1 new Wal-Mart supercenter and 3 new Albertson's.  In 1996, 
there were 6 additional competitive openings in the Company's market areas, 
including 1 new Albertson's.  In 1997, there were 8 additional competitive 
openings in the Company's market area, including 3 new Wal-Mart's and 2 new 
Albertson's. Based on information publicly available, the Company expects 
that, between mid- to late-1998, Albertson's will open 1 new store, Wal-Mart
will open 3 new stores and independents will open 3 additional stores.

Trademarks and Service Marks

          During the transition from "Safeway" to "Homeland," the Company was 
able to generate a substantial amount of familiarity with the "Homeland" name.  
The Company continues to build and enhance this name recognition through 
promotional advertising campaigns. The "Homeland" name is considered material 
to the Company's business and is registered for use as a service mark and 
trademark.  The Company has received federal and certain state registrations 
of the "Homeland" mark as a service mark and a trademark for use on certain 
products.  The Company also received a federal registration of the service 
mark "A Good Deal Better" in early 1994.

Regulatory Matters

          Homeland is subject to regulation by a variety of local, state and 
federal governmental agencies, including the United States Department of 
Agriculture, state and federal pharmacy regulatory agencies and state and 
local alcoholic beverage and health regulatory agencies.  By virtue of this
regulation, Homeland is obligated to observe certain rules and regulations, 
the violation of which could result in suspension or revocation of various 
licenses or permits held by Homeland.  In addition, most of Homeland's 
licenses and permits require periodic renewals.  To date, Homeland has 
experienced no material difficulties in obtaining or renewing its licenses 
and permits.

ITEM 2.   PROPERTIES

          Of the 70 supermarkets operated by the Company, 14 are owned by 
Homeland and the balance are held under leases which expire at various times 
between 1998 and 2016. Most of the leases are subject up to six (6) five-year 
renewal options.  Out of 56 leased stores, only four have terms (including 
option periods) of fewer than 10 years remaining.  Most of the leases require 
the payment of taxes, insurance and maintenance costs and many of the leases 
provide for additional contingent rentals based on sales in excess of certain 
stipulated amounts. No individual store operated by Homeland is by itself 
material to the financial performance or condition of Homeland as a whole.  
The average rent per square foot under Homeland's existing leases is $3.12
(without regard to amortization of beneficial interest).

          Substantially all of the Company's properties are subject to 
mortgages securing the borrowings under the Loan Agreement (see "Management's 
Discussion and Analysis of Financial Conditions and Results of Operations -- 
Liquidity and Capital Resources").

ITEM 3.   LEGAL PROCEEDINGS

          The Company is a party to ordinary routine litigation incidental 
to its business.

          Homeland and Holding were debtors in cases styled In re Homeland 
Holding Corporation, Debtor, Case No. 96-748 (PJW), and In re Homeland Stores, 
Inc., Debtor, Case No. 96-747 (PJW), initiated with the Bankruptcy Court on 
May 13, 1996.  While the Plan of Reorganization was confirmed on July 19, 1996, 
and became effective on August 2, 1996, the Company is still involved in the
resolution of claims filed in these proceedings.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matters were submitted by Holding to a vote of Holding's 
security holders during the quarter ended January 3, 1998.

                                  PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDERS MATTERS

          The Common Stock of Holding commenced public trading on the Nasdaq 
National Market System ("Nasdaq/NMS") on April 14, 1997.  On March 18, 1998, 
there are 577 stockholders of record. High and low sales prices of the Common 
Stock as reported by Nasdaq/NMS for each fiscal quarter of 1997 following the
commencement of the Nasdaq/NMS listing are listed below:

                                           High            Low
          June 14, 1997                   $9.000          $6.250
          September 6, 1997               $8.813          $7.500
          January 3, 1998                 $9.000          $6.500

          As additional claims are resolved pursuant to the Plan of 
Reorganization, the Company expects that the number of stockholders will 
increase, assuming that there is no change in the number of current 
stockholders.

          No cash dividends were declared or paid during the last two years.  
Holding is restricted from paying dividends by the Loan Agreement and 
Indenture.  See "Management's Discussion and Analysis of Financial Condition 
and Results of Operations -- Liquidity and Capital Resources."

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

          The following table sets forth selected consolidated financial data 
of the Company which has been derived from financial statements of the 
Company for the 53 weeks ended January 3, 1998, and 20 weeks ended December 
28, 1996 (Successor Company), the 32 weeks ended August 10, 1996, and the 52 
weeks ended December 30, 1995, December 31, 1994, and January 1, 1994
(Predecessor Company), respectively, which have been audited by Coopers & 
Lybrand L.L.P.  See "Notes to Selected Consolidated Financial Data" for 
additional information.

          As discussed in "Business -- Restructuring," the Company emerged 
from Chapter 11 proceedings effective August 2, 1996.  For financial reporting 
purposes, the Company accounted for the consummation of the Restructuring 
effective as of August 10, 1996.  The Company has adopted "fresh-start" 
reporting pursuant to SOP No. 90-7.  The periods prior to the Restructuring
have been designated "Predecessor Company" and the periods subsequent to the 
Restructuring have been designated "Successor Company."

          The selected consolidated financial data should be read in 
conjunction with the respective consolidated financial statements and notes 
thereto which are contained elsewhere herein.

        


<TABLE>
<CAPTION>

                                (In thousands, except per share amounts)

                                                  Successor Company                      Predecessor Company

                                                53 weeks      20 weeks       32 weeks      52 weeks        52 weeks        52 weeks
                                                 ended         ended          ended         ended           ended           ended
                                                 1/3/98       12/28/96        8/10/96      12/30/95        12/31/94        01/01/94


Summary of Operations Data:
<S>                                            <C>           <C>            <C>           <C>             <C>             <C>

 Sales, net                                    $  527,993    $ 204,026      $ 323,747     $ 630,275       $ 785,121       $ 810,967

 Cost of sales                                    401,691      154,099        244,423       479,119         588,405         603,220

 Gross profit                                     126,302       49,927         79,324       151,156         196,716         207,747

 Selling and administrative expense               112,322       44,029         73,000       151,985         196,643         190,483

 Operational restructuring costs (1)                 -            -              -           12,639          23,205            -

 Amortization of excess reorganization
  value (2)                                        14,527        5,819           -             -               -               -

 Operating profit (loss)                             (547)          79          6,324       (13,468)        (20,132)         17,264

 Gain on sale of plants                              -            -              -             -               -              2,618

 Interest expense                                  (8,408)      (3,199)        (5,639)      (15,992)        (18,067)        (18,928)

 Income (loss) before reorganization
  items, income taxes and 
  extraordinary items                              (8,955)      (3,120)           685       (29,460)        (38,199)            954

 Reorganization items (3)                            -            -           (25,996)         -               -               -

 Income tax benefit (provision)                    (1,689)        -              -             -             (2,446)          3,252

 Income (loss) before extraordinary items         (10,644)      (3,120)       (25,311)      (29,460)        (40,645)          4,206

 Extraordinary items (4)(5)(6)                       -            -            63,118        (2,330)           -             (3,924)

 Net income (loss)                                (10,644)      (3,120)        37,807       (31,790)        (40,645)            282

 Reduction in redemption value -
  redeemable common stock                            -            -              -              940           7,284            -

 Net income (loss) available to common 
  stockholders                                  $ (10,644)   $  (3,120)     $  37,807     $ (30,850)      $ (33,361)      $     282

 Basis and diluted net income (loss) per
  common share (7)                              $   (2.23)   $   (0.66)     $    1.16     $   (0.93)      $   (0.96)      $    0.01


Consolidated Balance Sheet Data:                 1/3/98       12/28/96        8/10/96      12/30/95        12/31/94        01/01/94

 Total assets                                   $ 166,041    $ 168,486      $ 129,679     $ 137,582       $ 239,134       $ 274,290

 Long-term obligations, including current
  portion of long-term debt obligations         $  86,002    $  80,568      $ 124,411     $ 124,242       $ 176,731       $ 172,600

 Redeemable common stock                        $    -       $    -         $      17     $      17       $   1,235       $   8,853

 Stockholders' equity (deficit)                 $  42,324    $  52,941      $ (38,057)    $ (28,106)      $   4,071       $  36,860


</TABLE>







                 NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA
                             (In thousands)


(1)  Operational restructuring costs during 1995 included the write-off of 
     software no longer utilized by the Company, the write-off of goodwill 
     in connection with the Restructuring and a termination charge resulting 
     from the cancellation of the Company's computer outsourcing agreement.  
     Operational restructuring costs during 1994 included the estimated 
     losses to be incurred on the AWG Transaction and associated expenses and 
     the estimated losses and expenses in connection with the anticipated 
     closing of 15 stores during 1995.

(2)  The Company's reorganization value in excess of amounts allocable to 
     identifiable assets, established in accordance with "fresh-start" 
     reporting, of $45,389 is being amortized on a straight-line basis over 
     three years.

(3)  As a result of the Company's Restructuring, the Company recorded certain 
     reorganization expenses separately in accordance to SOP 90-7.  
     Reorganization items for 1996 consist of: (a) $7,200 of allowed claims 
     in excess of liabilities; (b) $4,250 in professional fees; (c) $6,386 in
     employee buyout expenses; and (d) $8,160 in adjusting certain assets and 
     liabilities to estimated fair value.

(4)  Extraordinary items during 1996 consist of obligations of the Company 
     that were discharged by the Bankruptcy Court pursuant to the Company's 
     Plan of Reorganization.

(5)  Extraordinary items during 1995 included the payment of $906 in premiums 
     and consent fees on the redemption of $15,600 of the Company's Old Notes 
     and the write-off of $1,424 in unamortized financing costs related to 
     the Old Notes so redeemed and the prior revolving credit facility.

(6)  Extraordinary items during 1993 included the payment of approximately 
     $2,776 in premiums on the redemption of $47,750 in aggregate principal 
     amount of the Company's remaining 15-1/2% Subordinated Notes due 
     November 1, 1997 (the "Subordinated Notes") at a purchase price of 
     105.8% of the outstanding principal amount, and the write-off of $1,148 
     in unamortized financing costs related to the Subordinated Notes so 
     redeemed.

(7)  Old Common Stock held by management investors are presented as redeemable 
     common stock and excluded from stockholder's equity since the Company 
     had agreed to repurchase such shares under certain defined conditions,
     such as death, retirement or permanent disability.  In addition, net 
     income (loss) per common share reflects the accretion in/reduction to 
     redemption value as a reduction/increase in income available to all 
     common stockholders.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

Results of Operations

          General

               As discussed in Note 2 to the accompanying Consolidated 
Financial Statements of Holding and Subsidiary, the Company's Plan of 
Reorganization became effective on August 2, 1996.  For financial reporting 
purposes, the Company accounted for the consummation of the Restructuring 
effective as of August 10, 1996.  The Company has adopted "fresh-start" 
reporting pursuant to SOP No. 90-7. The periods prior to the Restructuring
have been designated "Predecessor Company" and the periods subsequent to the 
Restructuring have been designated "Successor Company."  For purposes of the 
discussion of Results of Operations and Liquidity and Capital Resources for 
the fifty-two weeks ended December 28, 1996, the results of the Predecessor
Company and Successor Company have been combined.

               Because of the adjustments associated with the adoption of 
"fresh-start" reporting pursuant to SOP No. 90-7, the periods prior to and 
subsequent to the Effective Date for financial reporting purposes are not 
necessarily comparable.  In addition, it is difficult to identify trends 
between periods which are not necessarily comparable, particularly to the 
extent prior trends have been affected by the Restructuring.

               The table below sets forth selected items from the Company's 
consolidated income statement as a percentage of net sales for the periods 
indicated:

                                                        Fiscal Year

                                                1997        1996       1995

Sales, net..................................  100.00%     100.00%      100.00%
Cost of sales...............................   76.08       75.51        76.02
 Gross profit...............................   23.92       24.49        23.98

Selling and administrative..................   21.27       22.17        24.11
Amortization of excess
 reorganization  value......................    2.75        1.10          -
Operational restructuring costs.............     -           -           2.01
Operating profit (loss).....................   (0.10)       1.22        (2.14)
Interest expense............................   (1.59)      (1.67)       (2.53)

Income (loss) before reorganization
 items, income taxes and
 extraordinary items........................   (1.69)      (0.45)       (4.67)
Reorganization items........................     -         (4.93)         -
Income (loss) before income
 taxes and extraordinary items..............   (1.69)      (5.38)       (4.67)
Income tax benefit (provision)..............   (0.32)        -            -
Income (loss) before
 extraordinary items........................   (2.01)      (5.38)       (4.67)

Extraordinary items.........................     -         11.96        (0.37)

Net income (loss)...........................   (2.01)       6.58        (5.04)



          Comparison of Fifty-Three Weeks Ended January 3, 1998, with Fifty-
Two Weeks Ended December 28, 1996.

          Net sales for 1997 amounted to $528.0 million, a slight increase 
from the net sales of $527.8 million in 1996.  The slight increase is 
attributable to the additional week in 1997 and the newly acquired stores. 
Excluding the additional week, 1997 net sales were $517.2 million, a 2% 
decline from 1996. The Company acquired four new stores in 1997, one on 
August 11, 1997, and the other three on October 15, 1997.

          The Company's comparable store sales for the 66 stores that were in 
operation throughout 1997 decreased 3.2%.  The decrease in comparable store 
sales was attributable to the eight new competitive store openings and lower 
food price inflation as well as lower sales to food stamp recipients as a 
result of more stringent eligibility requirements.  The decrease was somewhat
offset by grand opening events at certain of the Company's stores plus the 
closing of five Food Lion stores in the Company's market area in October 1997.

          Gross profit as a percentage of sales decreased to 23.9% in 1997 
compared to 24.5% in 1996.  The decrease in gross profit margin was primarily 
a result of increased promotional activities as the Company responded to 
certain new competitive store openings and special advertisements at the 
grand openings of six remodeled stores.

          Selling and administrative expenses as a percentage of sales 
decreased in 1997 to 21.3% of sales as compared to 22.2% in 1996.  The 
decrease in selling and administrative expense is primarily a result of lower 
labor costs associated with the Modified Union Agreements and lower occupancy 
cost that resulted from renegotiated leases.  The labor savings from the 
Modified Union Agreements were somewhat offset by the federally-mandated
minimum wage increases.

          The amortization of the excess reorganization value amounted to 
$14.5 million in 1997.  The excess reorganization value is being amortized 
over three years, on a straight line basis.  The excess reorganization value 
will be fully amortized by the third quarter of 1999.

          Interest expenses decreased slightly to $8.4 million in 1997 from 
$8.8 million in 1996.  The decrease is a result of higher borrowings by the 
Predecessor Company during the 32 weeks ended August 10, 1996, and to a 
lesser degree, a decline in interest rates.

          The Company recorded $1.7 million of income tax expense for 1997, 
of which $1.6 million was deferred income tax.  In accordance with SOP 90-7, 
the tax benefit realized from utilizing the pre-reorganization net operating 
loss carryforwards is recorded as a reduction of the reorganization value in 
excess of amounts allocable to identifiable assets rather than realized as
a benefit on the statement of operations.  At January 3, 1998, the Company 
had a tax net operating loss carryforward of approximately $40.9 million, 
which may be utilized to offset future taxable income to the limited amount 
of $3.5 million for 1998 and $3.3 million per year thereafter.

          EBITDA (as defined hereinafter) amounted to $22.5 million or 4.3% 
of net sales in 1997 as compared to $19.5 million or 3.7% of net sales in 
1996.  The improvement in EBITDA resulted primarily from reduced selling and 
administrative expenses. The Company believes that EBITDA is a useful 
supplemental disclosure for the investment community. EBITDA, however, should 
not be construed as a substitute for earnings or cash flow information 
required under generally accepted accounting principles.

          Comparison of Fifty-Two Weeks Ended December 28, 1996, with Fifty-
Two Weeks Ended December 30, 1995.

          Net sales for 1996 amounted to $527.8 million, a decrease of 16.3% 
from the net sales of $630.3 million in 1995, which is attributable primarily 
to a decline in the number of stores operated by the Company.  The Company 
began 1996 with 68 stores.  In April 1996, it sold one store and closed two
additional stores during the year.  The Company opened one new store in 
December 1996 but its impact on net sales was negligible.

          The Company's comparable store sales for the 65 stores in operation 
through 1996 increased by 0.3%.  This increase was due primarily to the 
introduction of the "Homeland Savings Card" in August 1996, and increased 
promotional activities.  See "Business - - Advertising and Promotion."

          Gross profit as a percentage of sales for 1996 increased to 24.5% 
from 24.0% in 1995.  This improvement in gross profit is attributable to an 
improved purchasing environment resulting from the Company better adapting to 
purchasing its merchandise from AWG, rather than operating on a self-supplied
basis as it did prior to April 1995.  See "Business -- AWG Transaction."  
During 1995 (after the consummation of the AWG Transaction in April 1995), 
the Company experienced a number of difficulties associated with this 
conversion from self-supply. These difficulties were largely resolved in 1996 
and the Company improved its purchasing skills.  The higher gross profit from 
the improved purchasing environment was partially offset by more promotional 
activities in the fourth quarter of 1996 with the introduction of the 
"Homeland Savings Card."

          Selling and administrative expenses as a percentage of sales 
decreased in 1996 to 22.2% of sales from 24.1% in 1995. The percentage 
decline is due to cost controls, including reductions in corporate support 
functions and lower operating and occupancy costs commencing as of the 
Effective Date.  These lower costs include the wage rate and benefit 
contribution reduction associated with the Modified Union Agreements, certain 
lease and secured financing concessions, and the rejection of certain 
burdensome executory contracts in connection with the Restructuring.  See 
"Business -- Restructuring." Cost savings from the Modified Union Agreements 
were somewhat offset by increased costs associated with training new employees 
that were hired to replace the 19% of the work force that accepted the 
Employee Buyout Offer and by an increase in the federally mandated minimum 
wage on October 1, 1996.  See "Business -- Employees and Labor Relations."

          Interest expense decreased from $16.0 million in 1995 to $8.8 
million in 1996. This decrease is primarily due to the non-accrual of 
interest on the Old Notes during the bankruptcy proceedings and the 
restructuring of certain indebtedness of the Company, principally the Old 
Notes, during 1996.  The decline in indebtedness associated with the 
restructuring of the Old Notes was offset, in part, by the term loan obtained 
by the Company under the Plan of Reorganization to fund certain costs 
associated with the Restructuring.

          The Company recorded reorganization expenses of $26.0 million in 
1996.  The reorganization expenses consisted primarily of professional fees 
and "fresh-start" reporting adjustments. The excess reorganization value is 
being amortized over a three-year period and the amortized amount for 1996 
was $5.8 million, reflecting amortization commencing after the Effective Date.

          The Company did not record any provision for income taxes for 1996. 
Operating loss carryforwards of the Company have been partially reduced by 
the debt discharged pursuant to the Plan of Reorganization.  At December 28, 
1996, the Company had tax net operating loss carryforwards of approximately 
$42.0 million.

          As of the Effective Date, pursuant to the terms of the Plan of 
Reorganization, certain debt of the Company, principally related to the Old 
Notes and the general unsecured claims of the Company, was discharged.  This 
resulted in a recognition of extraordinary gain amounting to $63.1 million.

          EBITDA, before operational restructuring costs, amounted to $19.5 
million or 3.69% of net sales in 1996 versus $10.5 million or 1.67% of net 
sales in 1995.  The improvement in EBITDA is due primarily to factors 
reflected above including improved comparable store sales and decreases in 
selling and administrative expenses and interest expense associated with the
Restructuring.

Liquidity and Capital Resources

          Debt.  The primary sources of liquidity for the Company's operations 
have been borrowings under credit facilities and internally generated funds.  
On the Effective Date, pursuant to the Plan of Reorganization, the Company 
entered into a Loan Agreement with NBC, as agent and lender, and two other 
lenders, Heller Financial, Inc. and IBJ Schroder Bank and Trust Company 
(subsequently assigned its position to IBJ Schroder Business Credit 
Corporation), under which those lenders provided a working capital and letter 
of credit facility and a term loan.  The Loan Agreement permitted the Company 
to borrow, under the working capital and letter of credit facility, up to the 
lesser of (a) $27.5 million or (b) the applicable borrowing base. Funds 
borrowed under such facility are available for general corporate purposes of 
the Company.

          The Loan Agreement also provided the Company a $10.0 million term 
loan (the "Term Loan"), which was used to fund certain obligations of the 
Company under the Plan of Reorganization, including the Employee Buyout Offer 
and a new health and welfare plan required by the Modified Union Agreements, 
professional fees and "cure amounts" which were required to be paid under the 
Plan of Reorganization in connection with executory contracts, secured 
financing and unexpired leases.

          On November 24, 1997, the Company entered into an amendment to the 
Loan Agreement (the "Amendment") with its lenders which increased the maximum 
amount available under the working capital and letter of credit facility from 
$27.5 million to $32.0 million, added vendor receivables to the borrowing 
base (with an advance rate of 65%) and otherwise addressed the acquisition 
and conversion of the three Food Lion stores.

          The interest rate under the Loan Agreement is based on the prime 
rate publicly announced by National Bank of Canada from time to time in New 
York, New York plus a percentage which varies based on a number of factors, 
including (a) the amount which is part of the working capital and letter of 
credit facility and the amount which is part of the term loan, (b) the time 
period, (c) whether the Company elects to use a London Interbank Offered 
Rate, and (d) the earnings of the Company before interest, taxes, 
depreciation and amortization expenses.

          The indebtedness under the Loan Agreement matures on August 1, 1999. 
The Term Loan, however, requires a principal paydown of approximately $0.4 
million each calendar quarter.  As of March 18, 1998, $9.2 million of the 
Term Loan remains outstanding.

          The obligations of the Company under the Loan Agreement are secured 
by liens on, and security interests in, substantially all of the assets of 
Homeland and are guaranteed by Holding, with a pledge of its Homeland stock 
to secure its obligation.

          The Loan Agreement includes certain customary restrictions on 
acquisitions, asset dispositions, capital expenditures, consolidations and 
mergers, distributions, divestitures, indebtedness, liens and security 
interests and transactions with affiliates.  The Loan Agreement also requires
the Company to comply with certain financial and other covenants.

          As of the Effective Date, the Company entered into an Indenture 
with Fleet National Bank, as trustee, under which the Company issued $60.0 
Million of New Notes. The New Notes, which are unsecured, will mature on 
August 1, 2003.  Interest on the New Notes accrues at the rate of 10% per 
annum and is payable on February 1 and August 1 of each year.

          The Indenture contains certain customary restrictions on 
acquisitions, asset sales, consolidations and mergers, distributions, 
indebtedness, transactions with affiliates and payment of dividends.

          Working Capital and Capital Expenditures.  The Company's primary 
sources of capital have been borrowing availability under the revolving 
credit facility and cash flow from operations, to the extent available.  The 
Company uses the available capital resources for working capital needs, 
capital expenditures and repayment of debt obligations.

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

                             53 Weeks Ended            52 Weeks Ended
                               January 3,       December 28,    December 30,
                                 1998             1996             1995

Income before reorganization
 items, income taxes and
 extraordinary items           $ (8,955)        $ (2,435)        $(29,460)

Interest expense                  8,408            8,838           15,992

Amortization of excess
 reorganization value            14,527            5,819             -

Operational restructuring   
 costs                             -                -              12,639

Depreciation and amortization     8,525            7,243           11,373

EBITDA                         $ 22,505         $ 19,465         $ 10,544

As a percentage of sales          4.26%            3.69%            1.67%

As a multiple of interest  
 expense                          2.68x            2.20x            0.66x

          The Company has positive cash flow from operations of $12.4 million 
as compared to negative cash flow of $3.7 million and $8.0 million for 1996 
and 1995, respectively.  The improvement in cash flow in 1997 was largely the 
result of improved operating performance and better working capital 
management.

          The Company's investing activities used net cash of $14.0 million 
and $5.2 million for 1997 and 1996, respectively, while it provided net cash 
of $65.1 million in 1995. The substantial increase in cash provided in 
investing activities for 1995 was the result of the sale of the warehouse, 
29 stores and inventory to AWG.  The Company invested $14.0 million, $6.9
million and $4.7 million in capital expenditures for 1997, 1996 and 1995, 
respectively.  In August 1997 and October 1997, the Company acquired a Pratt 
Discount Food store and three Food Lion stores, respectively.  The acquisitions 
amounted to approximately $3.6 million. The capital expenditures for 1997 
were funded by internally-generated cash flows from operations and the 
revolving credit facility under the Loan Agreement.

          Financing activities of the Company provided net cash of $4.9 
million and $4.0 million in 1997 and 1996, respectively, and used net cash of 
$51.0 million in 1995.  The net cash provided in financing activities for 
1997 was primarily the result of borrowings under the revolving facility of 
the Loan Agreement.

          The Company considers its capital expenditure program a critical 
and strategic part of the overall plan to support its market competitiveness.  
Cash capital expenditures for 1998 are expected to be at approximately $12.9 
million.  The Loan Agreement limits the Company's capital expenditures for 
1998 to $13.0 million in cash capital expenditures and $7.0 million for 
capital leases.  The 1998 capital expenditures are expected to be invested 
primarily in remodeling and maintenance of certain stores.  The funds for the 
capital expenditures are expected to be provided by internally-generated cash 
flows from operations and borrowings under the Loan Agreement.  As of March 
18, 1998, the Company had $10.8 million of borrowings, $3.3 million of letters 
of credit outstanding and $15.6 million of availability under its revolving 
credit facility.

          The Company's ability to meet its working capital needs, meet its 
debt and interest obligations and capital expenditure requirements is 
dependent on its future operating performance. There can be no assurance that 
future operating performance will provide positive net cash and if the 
Company is not able to generate positive cash flow from its operations,
management believes that this could have a material adverse effect on the 
Company's business.

          Information discussed herein includes statements that are forward-
looking in nature, as defined in the Private Securities Litigation Reform Act.  
As with any forward-looking statements, these statements are subject to a 
number of factors and assumptions, including competitive activities, economic
conditions in the market area and results of its future capital expenditures.  
In reviewing such information, it should be kept in mind that actual results 
may differ materially from those projected or suggested in such forward-
looking statements.

Recently Issued Accounting Standards

          In June 1997, the Financial Accounting Standards Board ("FASB") 
issued Statement No. 130, "Reporting Comprehensive Income."  This statement 
establishes standards for reporting and display of comprehensive income and 
its components in the financial statements.  In February 1998, the FASB 
issued Statement No. 132, "Employers' Disclosures about Pensions and Other 
Postretirement Benefits."  This statement standardizes the disclosure 
requirements for pensions and other postretirement benefits and requires that 
additional information be disclosed regarding changes in the benefit 
obligation and fair values of plan assets.  Both statements are effective 
for fiscal years beginning after December 15, 1997. Because these statements 
are limited to presentation and disclosure changes, their implementation will 
not have an impact on the Company's financial position or results of 
operations.

Year 2000

          The Company is currently working to resolve the impact of Year 2000 
on its data information systems including store level systems.  Based on 
management's most recent evaluation of this issue, the cost to address and 
correct any potential problems is not expected to have a material adverse 
impact on the Company's financial position, results of operations or cash 
flows in future periods.  The Company expects to resolve the Year 2000 issue 
by the first quarter of 1999.

Inflation/Deflation

          Although the Company does not expect inflation or deflation to have 
a material impact in the future, there can be no assurance that the Company's 
business will not be affected by inflation or deflation in future periods.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The Company's consolidated financial statements and notes thereto 
are included in this report following the signature pages.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

          None.



                                PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          Set forth below are the names, ages, present positions and years of 
service (in the case of members of management) of the directors and 
management of Homeland:

                                                             Years with the
                                                             Company and/or
                               Age   Position                   Safeway

John A. Shields*               55    Acting Chairman of the          --
                                     Board, Director
                           
David B. Clark*                45    President, Chief Executive      --
                                     Officer and Director

Larry W. Kordisch*             50    Executive Vice President -       3
                                     Finance, Chief Financial
                                     Officer and Secretary

Steven M. Mason                43    Vice President - Marketing      27

Terry M. Marczewski*           43    Vice President and Controller    3

Prentess E. Alletag, Jr.       51    Vice President - Human          30
                                     Resources

Francis T. Wong*               38    Vice President - Finance,        9
                                     Treasurer and Assistant
                                     Secretary

Robert E. (Gene) Burris        51    Director                        --
Edward B. Krekeler, Jr.        54    Director                        --
Laurie M. Shahon               46    Director                        --
William B. Snow                66    Director                        --
David N. Weinstein             39    Director                        --


*    Holding's Board of Directors is identical to that of Homeland.  Mr. 
     Shields serves as Holding's Acting Chairman of the Board, Mr. Clark as 
     President and Chief Executive Officer, Mr. Kordisch as Executive Vice 
     President - Finance, Chief Financial Officer and Secretary and Mr. 
     Marczewski as Vice President and Controller and Mr. Wong as Vice 
     President - Finance, Treasurer and Assistant Secretary.


          John A. Shields became a director of the Company in May 1993 and 
Acting Chairman of the Board in September 1997.  Mr. Shields has been the 
Chairman and Chief Executive Officer of Delray Farms Fresh Markets, a retail 
perishables specialty chain, since January 1994. From 1983 to 1993, he served 
as President, Chief Executive Officer, Chief Operating Officer and a member 
of the Board of Directors of First National Supermarkets.  Mr. Shields is a 
director of D.I.Y. Home Warehouse, Inc., Delray Farms, Inc. and Wild Oats 
Markets, Inc.

          David B. Clark became President, Chief Executive Officer and a 
director of the Company in February 1998.   From 1996 to February 1998, Mr. 
Clark was Executive Vice President, Merchandising and Distribution, for 
Bruno's, Inc., a $2.8 billion sales company with over 200 stores, having 
joined in 1995 as Senior Vice President, Operations and Distribution. Bruno's 
Inc. filed Chapter 11 bankruptcy on February 2, 1998.  From 1992 through 1995, 
Mr. Clark was Vice President, Operations and subsequently Executive Vice 
President, Merchandising and Operations for the Cub Foods Division of Super 
Valu, Inc., responsible for stores producing sales volume of $1.7 billion.

          Larry W. Kordisch joined the Company in February 1995 and became 
Executive Vice President - Finance, Treasurer, Chief Financial Officer and 
Secretary as of May 1995.  Prior to joining Homeland, Mr. Kordisch served as 
Executive Vice President - Finance and Administration, Chief Financial 
Officer and member of the Board of Directors of Scrivner, Inc. and was 
responsible for the Finance, Accounting, Risk Management, Legal and 
Administrative functions.  Mr. Kordisch is a director of Eateries, Inc.

          Steven M. Mason joined Safeway in 1970 and the Oklahoma Division in 
1986. At the time of the acquisition of the Oklahoma division of Safeway by 
Homeland, he was serving as Special Projects Coordinator for the Oklahoma 
Division.  In November 1987, he joined Homeland and in October 1988, he was 
appointed to the position of Vice President - Retail Operations.  In October
1993, Mr. Mason was appointed to the position of Vice President - Marketing.

          Terry M. Marczewski joined the Company in April 1995 and became the 
Chief Accounting Officer, Assistant Treasurer and Assistant Secretary as of 
May 1995.  From July 1994 to April 1995, he was the controller at Fleming 
Companies, Inc.- Scrivner Group.  From 1990 to July 1994, Mr. Marczewski was 
the Vice President and Controller at Scrivner, Inc., the nation's third 
largest grocery wholesaler, prior to its acquisition by Fleming Companies, 
Inc. In December 1996, Mr. Marczewski was appointed to the position of Vice 
President and Controller.

          Prentess E. Alletag, Jr. joined the Oklahoma Division in October 
1969, where, at the time of the acquisition of the Oklahoma division of 
Safeway by Homeland, he was serving as Human Resources and Public Affairs 
Manager.  In November 1987, Mr. Alletag joined Homeland as Vice President - 
Human Resources.

          Francis T. Wong joined the Company in July 1989. In 1997, Mr. Wong 
was appointed to the additional position of Vice President - Finance. From 
December 1996 to August 1997, Mr. Wong was the Treasurer and Assistant 
Secretary.  Prior to this appointment, Mr. Wong served as Director of Finance, 
Assistant Secretary and Assistant Treasurer of the Company.

          Robert E. (Gene) Burris became a director of the Company on August 
2, 1996.  Since 1988, Mr. Burris has been President of the UFCW Local No. 
1000, which represents approximately 65% of the Company's unionized employees.  
Pursuant to the Modified Union Agreements, the UFCW has the right to 
designate one member of the Boards of Directors of Holding and Homeland.  Mr. 
Burris is the designee of the UFCW. Since February 1995, Mr. Burris has been 
the Chief Executive Officer and owner of G&E Railroad, a retail store.

          Edward B. Krekeler, Jr. became a director of the Company on August 
2, 1996.  Mr. Krekeler has been a senior product manager of First National 
Bank of North Dakota since September 1997.  From 1994 to August 1997, he was 
the President of Krekeler Enterprises, Ltd., a corporate financial consulting
firm.  From 1984 to 1994, he served in various positions as an officer of 
Washington Square Capital, Inc., including Vice-President, Special 
Investments, Vice-President, Administration, Private Placements, Vice-
President, Portfolio Manager, Private Placements, and Chief Investment Analyst. 
From 1970 to 1984, Mr. Krekeler was Director, Fixed Income Investments, of 
The Ohio National Life Insurance Company, Inc. He was Chairman of the Board 
of Directors of Convenient Food Marts, Inc. from 1990 to 1994.

          Laurie M. Shahon became a director of the Company on August 2, 1996. 
Ms. Shahon has been President of Wilton Capital Group, a private direct 
investment firm since January 1994.  Ms. Shahon previously served as Vice 
Chairman and Chief Operating Officer of Color Tile, Inc. in 1989.  From 1988 
to 1993, she served as Managing Director of 21 International Holdings, Inc.,
a private holding company.  From 1980 to 1988, she was Vice President of 
Salomon Brothers Inc, where she was founder and head of the retailing and 
consumer products group.  Ms. Shahon is a director of Arbor Drugs, Inc., One 
Price Clothing Stores, Inc. and Ames Department Stores, Inc.

          William B. Snow became a director of the Company on August 2, 1996. 
Mr. Snow previously served as Vice Chairman of Movie Gallery, Inc., the 
second largest video specialty retailer in the United States from 1994 to 
1997.  From 1985 to 1994, he was Executive Vice President and a director of 
Consolidated Stores Corporation.  From 1980 to 1985, Mr. Snow was Chairman,
President and Chief Executive Officer of Amerimark, Inc., a diversified 
supermarket retailer and institutional food service distributor.  From 1974 
to 1980, he was President of Continental Foodservice, Inc.  From 1966 to 1974, 
Mr. Snow was Senior Vice President of Hartmarx, Inc.   Mr. Snow is a director 
of Movie Gallery, Inc. and Action Industries, Inc.

          David N. Weinstein became a director of the Company on August 2, 
1996. He is a Managing Director of the High Yield Capital Markets group at 
BancBoston Securities, Inc.  From 1993 to March 1996, he served as Managing 
Director and High Yield Capital Market Specialist of Chase Securities, Inc.  
Mr. Weinstein is also a director of Ithaca Industries, Inc.

Compliance with Section 16 (a) of the Securities Exchange Act of 1934 
(the "1934 Act")

          Section 16 (a) of the 1934 Act requires directors, executive 
officers and persons who are the beneficial owners of more than 10% of any 
class of any equity security of the Company to file reports with the 
Securities and Exchange Commission (the "SEC").

          Two directors failed to file timely reports under Section 16(a) 
with respect to the year ended January 3, 1998. John A. Shields failed to 
file a Form 4 to report his acquisition of 298 shares of Common Stock at a 
purchase price of $7.875 on September 5, 1997, and reported such acquisition 
on his timely filed Form 5.  William B. Snow filed his Form 5 on February 19,
1998, two days after the Form 5 was required to be filed.

ITEM 11.  EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

          The following table provides certain summary information concerning 
compensation paid or accrued by the Company to, or on behalf of, the Company's 
Chief Executive Officer and each of the three other most highly compensated
executive officers of the Company (hereinafter referred to as the "Named 
Executive Officers") for the fiscal years ended January 3, 1998, December 28, 
1996 and December 30, 1995:

                           SUMMARY COMPENSATION TABLE

                                 Annual Compensation

Name and                                        Long-Term
Principal                                      Compensation     All Other
Position                Year Salary   Bonus   Option Awards   Compensation (3)

David B. Clark (1)       1997 $    -    $    -         -           $   -
President, Chief 
Executive Officer 
and Director               

James A. Demme (2)(4)    1997 $ 172,115 $    -         -           $  3,181
Former Chairman          1996   200,000   200,000   135,000           4,675
President and Chief      1995   200,000   100,000      -              4,396
Executive Officer

Larry W. Kordisch(4)(5)  1997 $ 166,154 $ 150,000      -           $  2,387
Executive Vice Pres.     1996   150,000   150,000    62,500           1,539
Finance, Chief Financial 1995   126,923   100,000      -              3,907
Officer and Secretary

Steven M. Mason(4)       1997 $ 135,519 $  24,469    12,000        $  2,865
Vice President -         1996   130,500   130,500      -              2,620
Marketing                1995   130,500    19,575      -              6,414

Terry M. Marczewski(6)   1997 $  98,462 $  17,813    12,000        $     86
Vice President -         1996    90,000    45,000      -                 86
Controller               1995    69,326    20,000      -                 43
_______________

(1)  Mr. Clark joined the Company in February 1998.

(2)  Mr. Demme resigned from the Company on September 19, 1997.

(3)  Personal benefits provided to the Named Executive Officer under various 
     Company programs do not exceed 10% of total annual salary and bonus 
     reported for the Named Executive Officer.

(4)  The Company provides reimbursement for medical benefit insurance 
     premiums for certain of the Named Executive Officers. These persons 
     obtain individual private medical benefit insurance policies with 
     benefits substantially equivalent to the medical benefits currently 
     provided under the Company's group plan.  The Company also provides for
     life insurance premiums for executive officers, including certain Named 
     Executive Officers and one other executive officer, who obtain private 
     term life insurance policies with benefits of $500,000 per person.  
     Amounts paid during 1997 are as follows:  James A. Demme, $2,581; Larry 
     W. Kordisch, $1,859; and Steven M. Mason, $2,705.

 (5) Mr. Kordisch joined the Company in February 1995 and was appointed 
     Executive Vice President-Finance, Chief Financial Officer, Treasurer and 
     Secretary of the Company as of May 5, 1995.

(6)  Mr. Marczewski joined the Company in April 1995 and was appointed the 
     Chief Accounting Officer and Controller of the Company as of May 5, 1995.
     
The following table sets forth certain information with respect to grants of 
options to the Named Executive Officers during 1997:

                        Option Grants in Last Fiscal Year


                                                   Potential Realized Value at
                                                     Assumed Rates of Stock
                                                        Appreciation for
                  Individual Grants                       Option Terms
_____________________________________________________    _________________

                  Number of
                 Securities    % of Total
                 Underlying Options Granted
                  Options   to Employees   Exercise  Expiration
Name              Granted   in Fiscal Year  Price     Date     5%     10%

Steven M. Mason     12,000(1)   26.1%  $6.50   May 13, 2007  $49,054 $124,312

Terry M. Marczewski 12,000(1)   26.1%  $6.50   May 13, 2007  $49,054 $124,312

 (1)  The options are exercisable in its entirety on January 1, 1998.  As of 
March 18, 1998, none of these options have been exercised.

Compensation of Directors

          Directors who are not employees of the Company or otherwise 
affiliated with the Company (presently consisting of Ms. Shahon and Messrs. 
Burris, Krekeler, Shields, Snow and Weinstein) are paid annual retainers of 
$15,000 and meeting fees of $1,000 for each meeting of the board or any 
committee attended in person and $250 for each meeting attended by telephone.  
Mr. Shields previously served as a consultant to the Company at the request 
of CD&R.  During 1995, Mr. Shields received $166,662 from CD&R for consulting 
fees for services provided to the Company. 

          In 1997, with the approval of the Company's stockholders, the 
Company established the Homeland Holding Corporation 1997 Non-Employee 
Directors Stock Option Plan ("Directors Plan").  The maximum number of shares 
of Common Stock which may be subject to options is 90,000.  The Directors 
Plan is administered by a committee appointed by the Board of Directors.
Options granted under this Plan are "non-qualified options."  Any option 
granted will terminate and expire at the earlier of (a) 10 years from date of 
grant; (b) termination of optionee's directorship for cause; and (c) 45 days 
after termination of service as director for other than a result of removal 
for cause. As of July 15, 1997, each of the non-employee directors was 
granted the option to purchase up to 15,000 shares of Common Stock of Holding 
at $7 5/8 per share.  The options granted become exercisable ratably over 
3 years commencing on the grant date.




Employment Agreements

          On February 17, 1998, the Company entered into an employment 
agreement with David B. Clark, the Company's President and Chief Executive 
Officer, for an indefinite period.  The agreement provides a base annual 
salary of $250,000 subject to increase from time to time at the discretion of 
the Board of Directors.  Mr. Clark is also entitled to participate in the 
Company's incentive plan with a target annual bonus of 75% of his base annual 
salary. The agreement also provides for (a) relocation expenses of up to 
$45,000 as it relates to the sale and relocation of his residence; (b) a 
company car; (c) a temporary residence in Oklahoma City up to six months; (d)
reimbursement of travel expenses up to two round trips per month; and (e) a 
loan of $125,000.  Under the agreement, Mr. Clark is entitled to participate 
in the Company's employee benefit plans and programs generally available to 
employees and senior executives, if any.  At the commencement of Mr. Clark's
employment, he was granted options to purchase 100,000 shares of Common Stock 
of Holding at an exercise price of $5.50 per share and on June 1, 1998, Mr. 
Clark will be granted additional options to purchase 30,000 shares of Common 
Stock of Holding at an exercise price equal to the fair market value of the 
Common Stock as of such date.  If the Company terminates Mr. Clark's 
employment for any reason other than cause or disability or his employment is 
terminated by Mr. Clark after February 16, 1999, following a change of 
control or certain trigger events (each as defined), Mr. Clark will be paid 
(a) his annual base salary, (b) a pro rata amount of incentive compensation 
for the portion of the incentive year that precedes the date of termination, 
and (c) continuation of welfare benefit arrangements for a period of one year 
after the date of termination.  Mr. Clark's loan of $125,000 from the Company 
shall be deemed to be cancelled with all accrued interest if he remains in 
continuous employment until February 16, 2001 or upon his termination of 
employment on or after February 16, 1999, following a change in control or 
trigger event.

          On September 26, 1995, the Company entered into an employment 
agreement with Larry W. Kordisch, the Company's Executive Vice President-
Finance and Chief Financial Officer. The agreement provides for a base annual 
salary of not less than $150,000, subject to increase from time to time at 
the discretion of the Board of Directors.  Mr. Kordisch is also entitled to
participate in the Management Incentive Plan based upon the attainment of 
performance objectives as the Board of Directors shall determine from time to 
time.  The agreement was amended in April 1996 and on September 19, 1997, to 
provide that, if the agreement is terminated by the Company for other than 
cause or disability prior to December 31, 1999, or is terminated by Mr. 
Kordisch following a change of control or a trigger event (as defined), Mr. 
Kordisch is entitled to receive (a) payment, which would not be subject to 
any offset as a result of his receiving compensation from other employment, 
equal to two years' salary, plus a pro rata amount of the incentive 
compensation for the portion of the incentive year that precedes the date of
termination, and (b) continuation of welfare benefit arrangements for a 
period of two years after the date of termination.   In addition, the 
September 19, 1997, amendment also provides Mr. Kordisch with a minimum 
guaranteed bonus of $100,000 for fiscal 1997 plus a special bonus of $50,000 
for the additional duties performed as acting chief executive officer.

          On February 25, 1998, the Company entered into agreements with 
Steven M. Mason, the Company's Vice President of Marketing, and Terry M. 
Marczewski, the Company's Vice President and Controller.  The agreements 
provide that in the event their employment is terminated prior to December 
31, 1998, for any reason other than cause or disability, the Company will 
continue to pay them their base salary for a period of one year plus a pro
rata target amount of the incentive compensation for the portion of the 
incentive year that precedes the date of termination.

          On January 8, 1997, the Company entered into a settlement agreement 
(the "Settlement Agreement") with Alfred F. Fideline, Sr., the Company's 
former Vice President - Retail Operations, in connection with his termination 
of employment with the Company. Pursuant to the terms of the Settlement 
Agreement, the Company agreed to provide Mr. Fideline with the following:
(a) medical and dental benefits through December 31, 1997; (b) payment of 
his base salary through January 2, 1998; and (c) conveyance of the Company 
car.

Management Incentive Plan

          Homeland maintains a Management Incentive Plan to provide incentive 
bonuses for members of its management and key employees.  Bonuses are 
determined according to a formula based on both corporate, store and 
individual performance and accomplishments or other achievements and are paid 
only if minimum performance and/or accomplishment targets are reached.  At 
minimum performance level, the bonus payout ranges from 25% to 50% of 
salaries for officers (as set forth in the plan), including the Chief 
Executive Officer.  Maximum bonus payouts range from 100% to 200% of salary 
for officers and up to 200% of salary for the Chief Executive Officer.  
Performance levels must significantly exceed target levels before the maximum 
bonuses will be paid.  Under limited circumstances, individual bonus amounts 
can exceed these levels if approved by the Compensation Committee of the 
Board.  Incentive bonuses paid to managers and supervisors vary according to 
their reporting and responsibility levels.  The plan is administered by a 
committee consisting, unless otherwise determined by the Board of Directors, 
of members of the Board who are ineligible to participate in the plan. 
Incentive bonuses earned for certain highly compensated executive officers 
under the plan for performance during fiscal year 1997 are included in the 
Summary Compensation Table.

Retirement Plan

          Homeland maintains a retirement plan in which all non-union 
employees, including members of management, participate.  Under the plan, 
employees who retire at or after age 65 and after completing five years of 
vesting service (defined as calendar years in which employees complete at 
least 1,000 hours of service) will be entitled to retirement benefits equal 
to 1.50% of career average annual compensation (including basic, overtime and 
incentive compensation) plus .50% of career average annual compensation in 
excess of the social security covered compensation, such sum multiplied by 
years of benefit service (not to exceed 35 years).  Retirement benefits will 
also be payable upon early retirement beginning at age 55, at rates 
actuarially reduced from those payable at normal retirement. Benefits are paid 
in annuity form over the life of the employee or the joint lives of the 
employee and his or her spouse or other beneficiary.

          Under the retirement plan, estimated annual benefits payable to the 
named executive officers of Homeland upon retirement at age 65, assuming no 
changes in covered compensation or the social security wage base, would be 
as follows:  David B. Clark, $52,946; Larry W. Kordisch, $47,270; Steven M. 
Mason, $88,539; and Terry M. Marczewski, $60,038.

Management Stock Option Plan

          In December 1996, the Board of Directors of the Company, pursuant 
to the Plan of Reorganization, adopted the Homeland Holding Corporation 1996 
Stock Option Plan (the "Stock Option Plan").  The Stock Option Plan, to be 
administered by the Board of Directors ("Board"), or a committee of the Board 
(the "Committee"), provides for the granting of options to purchase up to an 
aggregate of up to 432,222 shares of Common Stock. Options granted under the 
Stock Option Plan are "non-qualified options." The option price of each option 
must not be less than the fair market value as determined by the Board or the 
Committee.  Unless the Board or the Committee otherwise determines, options 
shall become exercisable ratably over a five-year period or immediately in 
the event of a "change of control" as defined in the Stock Option Plan.  Each 
option must be evidenced by a written agreement and must expire and terminate 
on the earliest of (a) ten years from the date the option is granted (b) 
termination for cause and (c) three months after termination for other than
cause.

Compensation Committee Report

          The Company's Compensation and Benefits Committee was formed in 
September 1996 at the first meeting of the newly installed Board of Directors.  
See "Directors and Executive Officers of the Registrant."  The duties of the 
Compensation and Benefits Committee will include the review and recommendation 
of salary, other compensation arrangements for the officers, management 
incentive and stock option plans, including the 1997 Management Incentive 
Plan, the Stock Option Plan and the Directors Plan.

          No member of the Compensation and Benefits Committee is a current 
or former officer or employee of the Company.

Compensation Committee Interlocks and Insider Participation

          Ms. Shahon and Messrs. Snow and Shields serve on the Company's 
Compensation and Benefits Committee of the Board of Directors.  During 1995, 
Mr. Shields received $166,662 from CD&R for consulting fees for services 
provided to the Company.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

          Under the Company's Plan of Reorganization, each holder of a general 
unsecured claim against the Company, including $40.1 million of general 
unsecured claims in respect of the Old Notes, will receive its ratable share 
of 4,450,000 shares of Common Stock, based on the amount of such holder's 
claim relative to all general unsecured claims.  As of March 18, 1998, the 
final amount of the general unsecured claims has not been determined.

          Under the Plan of Reorganization, the Company has reserved for the 
account of each creditor holding a disputed general unsecured claim the 
Common Stock that would otherwise be distributable to such creditor on the 
Effective Date if such disputed claim were allowed by the Bankruptcy Court.  
If a disputed claim is disallowed in whole or in part, the Company will 
distribute the Common Stock held in reserve ratably to holders of general 
unsecured claims allowed by the Bankruptcy Court.  Such distribution will be 
made on June 30 and December 31 of each following year until the earlier of 
(a) the date on which all disputed claims have been resolved or (b) less than 
5,000 shares of Common Stock are on deposit in the disputed claims reserve.  
If any time after the Effective Date, the number of shares of Common Stock in 
the disputed claims reserve is less than 5,000, the remaining shares of 
Common Stock held in such reserve will, at the Company's option, be cancelled 
or treated as treasury shares.

          The Company estimates that total general unsecured claims will be 
approximately $63.1 million, consisting of approximately $40.1 million in 
general unsecured claims in respect of the Old Notes and approximately $23.0 
million of other general unsecured claims.  Based on such estimate (a) holders 
of the Old Notes will receive (in the aggregate) approximately 2,827,922 
shares of Common Stock representing approximately 60.2% of the Common Stock 
to be outstanding upon consummation of the Restructuring and (b) holders of 
the other general unsecured claims will receive (in the aggregate) 
approximately 1,622,029 shares of Common Stock representing approximately 
34.5% of the Common Stock to be outstanding upon consummation of the
Restructuring.

          In addition, under the Plan of Reorganization, all of the Company's 
issued and outstanding Class A Common Stock, par value $.01 per share (the 
"Old Common Stock"), will be exchanged for (a) an aggregate of 250,000 shares 
of Common Stock, representing approximately 5.3% of the Common Stock to be
outstanding, and (b) warrants to purchase (in the aggregate) up to 263,158 
shares of Common Stock (the "New Warrants") at an exercise price of $11.85 
per share.  Each holder of the Old Common Stock will receive 7.73 shares of 
Common Stock and 8.14 New Warrants for each 1,000 shares of Old Common Stock 
held by such holder.

          Set forth below is certain information as of March 18, 1998, 
regarding the beneficial ownership of Holding's Common Stock by: (a) any 
person or group known to have beneficial ownership of more than 5% of the 
Common Stock of Holding; (b) each of the Named Executive Officers; (c) each 
director; (d) other officers of the Company and (e) all directors, Named 
Executive Officers and officers as a group:


                                            Shares
                                          Beneficially       Percent of
Name of Beneficial Owner                    Owned             Class 
Soros Fund Management, LLC (1)             630,815             12.71%
888 Seventh Avenue, 33rd Floor
New York, NY  10106

Jeffrey D. Tannebaum (2)                   540,196             10.89%
Fir Tree Partners
1211 Avenue of the Americas
New York, NY  10036

Franklin Resources, Inc. (3)               405,662              8.18%
777 Mariners Island Boulevard
San Mateo, CA  94404

John A. Shields (4)(5)                       6,498               *
David B. Clark (6)                            -                  -
Larry W. Kordisch (7)                       62,500              1.26%
Steve M. Mason (8)(9)                       12,665               *
Terry M. Marczewski (8)                     12,000               *
Prentess E. Alletag (10)                    12,792               *
Francis T. Wong (11)                        10,400               *
Robert E. (Gene) Burris (4)                  5,000               *
Edward B. Krekeler, Jr. (4)                  5,000               *
Laurie M. Shahon (4)                         5,000               *
William B. Snow (4)                          5,000               *
David N. Weinstein (4)                       5,000               *

Officers and directors as a group 
 (12 persons)                              141,855              2.86%
______________________
*  Less than 1%

(1)       Based on the Schedule 13G filed by Soros Fund Management LLC, 
          these shares are held for the accounts of Quantum Partners (as 
          defined below) and Quasar Partners (as defined below).  Soros Fund 
          Management LLC, a Delaware limited liability company, serves as
          principal investment manager to Quantum Partners LDC, a Cayman 
          Island exempted duration company ("Quantum Partners"), and Quasar 
          International Partners, C.V., a Netherlands Antilles limited 
          partnership ("Quasar Partners"), and as such, has been granted 
          investment discretion over the shares of Holding.

(2)       Based on the Schedule 13D filed by Mr. Jeffrey Tannebaum and Fir 
          Tree Partners, these shares are for the accounts of Fir Tree Value 
          Fund, L.P., Fir Tree Institutional Value Fund, L.P. and Fir Tree 
          Value Partners LDC.  Mr. Tannebaum is the sole shareholder, officer, 
          director and principal of Fir Tree Partners and he serves as 
          general partner of the Fir Tree Value Fund L.P. and the Fir Tree 
          Institutional Value Fund L.P. and as an investment advisor to the 
          Fir Tree Value Partners LDC.

(3)       Based on the Schedule 13G filed by Franklin Resources, Inc., these 
          shares are beneficially-owned by one or more open or closed-end 
          investment companies or other managed accounts which are advised 
          by direct or indirect investment advisory subsidiaries of Franklin
          Resources, Inc.

(4)       Stock options for 15,000 shares were granted to each director under 
          the Directors Plan in 1997. The options are exercisable ratably over 
          three years commencing July 15, 1997, and will expire on July 15, 
          2007.

(5)       Mr. Shields is the beneficial owner of 1,498 shares of Common 
          Stock.

(6)       Mr. Clark was awarded options to purchase 100,000 shares under the 
          Stock Option Plan as provided for under his employment agreement 
          with the Company.  The options become exercisable ratably over 
          five years commencing February 17, 1999, and will expire on 
          February 17, 2008.

(7)       Mr. Kordisch was awarded options to purchase 62,500 shares under 
          the Stock Option Plan in 1996.  The options are exercisable 
          immediately and will expire on December 26, 2006.

(8)       Messrs. Mason, Marczewski, Alletag and Wong were awarded stock 
          options pursuant to the Stock Option Plan in May 1997 amounting to 
          12,000, 12,000, 12,000 and 10,000 shares, respectively.  The options 
          are exercisable as of January 1, 1998, and will expire on May 13, 
          2007.

(9)       Mr. Mason is the beneficial owner of 324 shares of Common Stock and 
          341 New Warrants.

(10)      Mr. Alletag is the beneficial owner of 386 shares of Common Stock 
          and 406 New Warrants.

(11)      Mr. Wong is the beneficial owner of 400 shares of Common Stock.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Mr. Gene Burris, a director of the Company, is President of UFCW 
Local No. 1000, which represents approximately 95% of the Company's unionized 
employees. Pursuant to the Modified Union Agreements, the UFCW has the right 
to designate one member of the Board of Directors of Holding and Homeland.
Mr. Burris is the designee of the UFCW.


                                  PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K

    The following documents are filed as part of this Report:

          (a)   Financial Statements and Exhibits.

                1.  Financial Statements.  The Company's financial statements 
                    are included in this report following the signature pages.  
                    See Index to Financial Statements and Financial Statement
                    Schedules on page F-1.

                2.  Exhibits.  See attached Exhibit Index on page E-1.

          (b)   Reports on Form 8-K.  No reports on Form 8-K were filed 
                during the last quarter of the period
                covered by this report.



SIGNATURES


          Pursuant to the requirements of Section 13 or 15(d) 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:   March 31, 1998                 By:   /s/  David B. Clark
                                            David B. Clark, President & C.E.O.


          Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.


        Signature                      Title                         Date

    /s/  John A. Shields       Acting Chairman of the Board     March 31, 1998
John A. Shields


   /s/   David B. Clark        President, Chief Executive       March 31, 1998
David B. Clark                 Officer and Director
                               (Principal Executive Officer)


   /s/   Larry W. Kordisch     Executive Vice President/        March 31, 1998
Larry W. Kordisch              Finance, C.F.O. and Secretary                    
                               (Principal Financial Officer)


   /s/   Terry M. Marczewski   Vice President, Controller       March 31, 1998
Terry M. Marczewski            (Principal Accounting Officer)




        Signature                      Title                         Date


   /s/   Robert E. (Gene) Burris    Director                    March 31, 1998
Robert E. (Gene) Burris


   /s/   Edward B. Krekeler, Jr.    Director                    March 31, 1998
Edward B. Krekeler, Jr.


   /s/    Laurie M. Shahon          Director                    March 31, 1998
Laurie M. Shahon


   /s/   William B. Snow            Director                    March 31, 1998
William B. Snow


   /s/   David N. Weinstein         Director                    March 31, 1998
David N. Weinstein


                                  
                       INDEX TO FINANCIAL STATEMENTS
                                   
                       HOMELAND HOLDING CORPORATION
                     Consolidated Financial Statements
                                   
                                   
                                   
                                   
Report of Independent Accountants                                      F-2

Consolidated Balance Sheets as of January 3, 1998,
 and December 28, 1996                                                 F-3

Consolidated Statements of Operations
 for the 53 weeks ended January 3, 1998, and
 20 weeks ended December 28, 1996,
 (Successor Company), and the 32 weeks ended
 August 10, 1996, and 52 weeks ended December 30,
 1995 (Predecessor Company)                                            F-5

Consolidated Statements of Stockholders' Equity
 for the 53 weeks ended January 3, 1998, and 20 weeks
 ended December 28,1996 (Successor Company), and the
 32 weeks ended August 10, 1996, and 52 weeks ended
 December 30, 1995 (Predecessor Company)                               F-6

Consolidated Statements of Cash Flows for the 53 weeks
 ended January 3, 1998, and 20 weeks ended December 28,
 1996 (Successor Company), and the 32 weeks ended
 August 10, 1996, and 52 weeks ended December 30, 1995
 (Predecessor Company)                                                 F-7

Notes to Consolidated Financial Statements                             F-9



                                   F-1

                                   
                                   
                      REPORT OF INDEPENDENT ACCOUNTANTS
                                   
                                   
                                   
To the Board of Directors and Stockholders of
Homeland Holding Corporation

We have audited the accompanying consolidated financial statements of Homeland 
Holding Corporation and Subsidiary as listed on page F-1 of this Form 10-K.
These financial statements are the responsibility of the Company's 
management. Our responsibility is to express an opinion on these financial 
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements. An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a reasonable basis 
for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Homeland Holding 
Corporation and Subsidiary as of January 3, 1998, and December 28, 1996, and 
the consolidated results of their operations and their cash flows for the 53 
weeks ended January 3, 1998, the 20 weeks ended December 28, 1996, the 32 
weeks ended August 10, 1996, and the 52 weeks ended December 30, 1995, in 
conformity with generally accepted accounting principles.






COOPERS & LYBRAND, L.L.P.
Oklahoma City, Oklahoma
March 5, 1998


                                   F-2



                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY               
                    
                        CONSOLIDATED BALANCE SHEETS                   

             (In thousands, except share and per share amounts)


                                   ASSETS
                                         
                                                   January 3,     December 28,
                                                      1998            1996
Current assets:
 Cash and cash equivalents (Notes 3 and 6)        $   4,778       $   1,492
 Receivables, net of allowance for uncollectible 
  accounts of $1,198 and $1,587                       9,313           8,522
  Inventories                                        45,946          45,009
 Prepaid expenses and other current assets            2,581           2,760

   Total current assets                              62,618          57,783

Property, plant and equipment:
 Land and improvements                                9,303           8,731
 Buildings                                           19,995          18,124
 Fixtures and equipment                              22,267          15,078
 Leasehold improvements                              13,459          11,374
 Software                                             4,991           2,930
 Leased assets under capital leases (Note 10)         8,610           7,569
 Construction in progress                             2,769           2,675

                                                     81,394          66,481

Less, accumulated depreciation
 and amortization                                    11,299           3,012

Net property, plant and equipment                    70,095          63,469

Reorganization value in excess of amounts
 allocable to identifiable assets, less
 accumulated amortization of $20,346 and
 $5,819 at January 3, 1998, and December 28,
 1996, respectively                                  23,162          39,570

Other assets and deferred charges                    10,166           7,664

    Total assets                                  $ 166,041       $ 168,486




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


                                   F-3



                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED BALANCE SHEETS, Continued

             (In thousands, except share and per share amounts)

                    LIABILITIES AND STOCKHOLDERS' EQUITY



                                                   January 3,     December 28,
                                                      1998            1996
Current liabilities:
 Accounts payable - trade                         $  18,941       $  17,416
 Salaries and wages                                   2,508           3,499
 Taxes                                                3,605           2,903
 Accrued interest payable                             2,619           2,689
 Other current liabilities                           10,042           8,470
 Current portion of long-term debt (Notes 5 and 6)    1,728             894
 Current portion of obligations under capital
  leases (Note 10)                                    1,286           1,343

   Total current liabilities                         40,729          37,214

Long-term obligations:
 Long-term debt (Notes 5 and 6)                      78,353          72,724
 Obligations under capital leases (Note 10)           2,608           3,005
 Other noncurrent liabilities                         2,027           2,602

   Total long-term obligations                       82,988          78,331

Commitments and contingencies (Notes 9, 10 and 12)     -               -

Stockholders' equity:
 Common stock (Note 2):
  Class A, $0.01 par value, authorized - 7,500,000
  shares, issued 4,820,637 shares and 4,758,025
  shares at January 3, 1998, and December 28,
  1996, respectively                                     48              48
 Additional paid-in capital                          56,040          56,013
 Accumulated deficit                                (13,764)         (3,120)
Total stockholders' equity                           42,324          52,941

Total liabilities and stockholders' equity        $ 166,041       $ 168,486




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


                                   F-4



                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF OPERATIONS                       

             (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>

                                                     Successor Company          Predecessor Company

                                                 53 weeks       20 weeks       32 weeks     52 weeks
                                                   ended          ended         ended         ended
                                                January 3,     December 28,   August 10,   December 30,
                                                   1998           1996           1996         1995

<S>                                             <C>            <C>            <C>           <C>
Sales, net                                      $ 527,993      $ 204,026      $ 323,747     $ 630,275

Cost of sales                                     401,691        154,099        244,423       479,119

 Gross profit                                     126,302         49,927         79,324       151,156

Selling and administrative expenses               112,322         44,029         73,000       151,985
Operational restructuring costs                      -              -              -           12,639
Amortization of excess reorganization value        14,527          5,819           -             -

 Operating profit (loss)                             (547)            79          6,324       (13,468)

Interest expense                                   (8,408)        (3,199)        (5,639)      (15,992)

Income (loss) before reorganization items,
 income taxes and extraordinary items              (8,955)        (3,120)           685       (29,460)

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          -

Income tax provision                                1,689           -              -             -
 Income (loss) before extraordinary items         (10,644)        (3,120)       (25,311)      (29,460)

Extraordinary items - debt discharge (Note 2)        -              -            63,118          -
Extraordinary items - other (Note 5)                 -              -              -           (2,330)

 Net income (loss)                                (10,644)        (3,120)        37,807       (31,790)

Reduction in redemption value -
 redeemable common stock                             -              -              -              940

Net income (loss) available to
 common stockholders                            $ (10,644)     $  (3,120)     $  37,807     $ (30,850)

Basic and diluted earnings per share:
 Loss before extraordinary items per
  common share                                  $   (2.23)     $   (0.66)     $   (0.78)    $   (0.86)
 Extraordinary items per common share                  -              -            1.94         (0.07)
 Net income (loss) per common share             $   (2.23)     $   (0.66)     $    1.16     $   (0.93)
Weighted average shares outstanding              4,782,938      4,758,025     32,599,707    33,223,675

</TABLE>



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

                                   F-5



                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

             (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>



                                                        Common Stock                  Additional
                                           Successor    Predecessor                    Paid-In       Accumulated
                                            Shares         Shares         Amount       Capital         Deficit
<S>                                        <C>          <C>             <C>           <C>            <C>
Balance, December 31, 1994                      -       31,604,989      $    316      $  53,896      $ (48,398)

Purchase of treasury stock                      -        2,143,493            21          1,050           -

Adjustment to recognize
 minimum pension liability                      -             -                -           -              -

Redeemable common stock
 reduction in redemption value                  -             -                -            940           -

Net loss                                        -             -                -           -           (31,790)

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

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           -

Adjustment to eliminate
 minimum pension liability                      -             -                -           -              -

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

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

Net loss                                        -             -                -           -            (3,120)

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

Net loss                                        -             -                -           -           (10,644)

Issuance of common stock                      62,612          -                -             27           -

Balance, January 3, 1998                   4,820,637          -         $     48      $  56,040      $ (13,764)

</TABLE>

Continued


<TABLE>
<CAPTION>


                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

             (In thousands, except share and per share amounts)


                                           Minimum
                                           Pension                                      Total
                                           Liability          Treasury Stock          Stockholders'
                                          Adjustment       Shares        Amount      Equity(Deficit)
<S>                                       <C>            <C>          <C>            <C>
Balance, December 31, 1994                $     -          726,000    $   (1,743)    $        4,071

Purchase of treasury stock                      -        2,143,493        (1,071)              -

Adjustment to recognize
 minimum pension liability                    (1,327)         -             -                (1,327)

Redeemable common stock
 reduction in redemption value                  -             -             -                   940

Net loss                                        -             -             -               (31,790)

Balance, December 30, 1995                    (1,327)    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

Adjustment to eliminate 
 minimum pension liability                     1,327          -             -                 1,327

Record excess of
 reorganization value                           -             -             -                45,018

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

Net loss                                        -             -             -                (3,120)

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

Net loss                                        -             -             -               (10,644)

Issuance of common stock                        -             -             -                    27

Balance, January 3, 1998                  $     -             -       $     -        $       42,324

</TABLE>

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


                                     F-6



                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF CASH FLOWS

              (In thousands, except share and per share amounts)


<TABLE>
<CAPTION>

                                                   Successor Company         Predecessor Company

                                             53 weeks        20 weeks       32 weeks     52 weeks
                                               ended           ended          ended        ended
                                             January 3,     December 28,    August 10,  December 30,
                                                1998           1996           1996          1995
<S>                                        <C>             <C>            <C>            <C>
Cash flows from operating activities:
 Net income (loss)                         $  (10,644)     $  (3,120)     $  37,807      $ (31,790)
 Adjustments to reconcile net
  income (loss) to net cash
  provided by operating activities:
  Depreciation and amortization                 8,404          2,954          4,163         11,192
  Amortization of beneficial interest
   in operating leases                            121             51             75            181
  Amortization of excess reorganization
   value                                       14,527          5,819           -              -
  Amortization of financing costs                  64             24            359          1,019
  Write-off of financing costs on
   long-term debt retired                        -              -              -             1,424
  Reorganization items                           -              -            15,360           -
  Extraordinary gain on debt discharged          -              -           (63,118)          -
  Loss (gain) on disposal of assets               117             90           (114)         8,349
  Gain on sale of stores                         -              -              -           (15,795)
  Impairment of assets                           -              -              -             2,360
  Deferred income taxes                         1,589           -              -              -
  Provision for losses on accounts
   receivable                                    -              -              -             1,750
  Provision for write down of
   inventories                                   -              -              -               847
  Change in assets and liabilities:
   (Increase) decrease in receivables            (791)          (439)           (32)         3,227
   Decrease in receivable for taxes              -              -              -             2,270
   (Increase) decrease in inventories            (937)        (6,225)         3,754         18,297
   (Increase) decrease in prepaid ex-
     penses and other current assets              179            531            (83)         5,542
   Increase in other assets
     and deferred charges                      (2,722)        (3,110)          (649)        (1,215)
   Increase (decrease) in accounts
     payable - trade                            1,525          2,460            298        (12,587)
   Increase (decrease) in salaries
     and wages                                   (991)           846            105           (316)
   Increase (decrease) in taxes                   702         (2,198)           226         (1,616)
   Increase (decrease) in accrued
     interest payable                             (70)         2,672          3,823           (422)
   Increase (decrease) in other current
     liabilities                                1,572         (1,181)        (2,656)        (3,264)
   Increase (decrease) in restructuring
     reserve                                     -              -            (1,396)         1,356
   Increase (decrease) in other non-
     current liabilities                         (783)           122           (886)         1,157

   Net cash provided by (used in)
    operating activities                       12,362           (704)        (2,964)        (8,034)
                                                                                          Continued
                                                                                           

</TABLE>

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

                                     F-7



                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued

              (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>

                                                   Successor Company         Predecessor Company

                                             53 weeks        20 weeks       32 weeks     52 weeks
                                               ended           ended          ended        ended
                                             January 3,     December 28,    August 10,  December 30,
                                                1998           1996           1996          1995
<S>                                        <C>             <C>            <C>            <C>
Cash flows from investing activities:
 Capital expenditures                         (14,021)        (5,085)        (1,860)        (4,681)
 Purchase of assets under capital leases         -              -              -            (3,966)
 Cash received from sale of assets                 70              5          1,738         73,721

   Net cash provided by (used in)
    in investing activities                   (13,951)        (5,080)          (122)        65,074


Cash flows from financing activities:
  Borrowings under term loan                     -              -            10,000           -
  Payments under term loan                       (833)          -              -              -
  Payments under senior secrued floating
    rate notes                                   -              -              -            (9,375)
  Payments under senior secured fixed
    rate notes                                   -              -              -           (15,625)
  Borrowings under revolving credit loans     141,463         42,349         74,250        104,087
  Payments under revolving credit loans      (134,106)       (39,080)       (79,718)      (123,620)
  Net payments under swing loans                 -              -              -            (1,500)
  Principal payments under notes payable          (61)          -              -              (750)
  Principal payments under capital
   lease obligations                           (1,615)          (700)        (1,596)        (3,166)
  Payment of obligations to noteholders          -              -            (1,500)          -
  Proceeds from issuance of common stock           27           -              -              -
  Payments to acquire treasury stock             -              -              -            (1,073)

   Net cash provided by (used in)
    financing activities                        4,875          2,569          1,436        (51,022)

Net increase (decrease) in cash and
 cash equivalents                               3,286         (3,215)        (1,650)         6,018

Cash and cash equivalents at beginning
 of period                                      1,492          4,707          6,357            339

Cash and cash equivalents at end of period  $   4,778      $   1,492      $   4,707      $   6,357

Supplemental information:
 Cash paid during the period for            
  interest                                  $   8,414      $     524      $   1,566      $  13,439
  
 Cash paid during the period for
  income taxes                              $     100      $    -         $    -         $    -

Supplemental schedule of
 non-cash investing activities:
  Capital lease obligations assumed         $   1,161      $    -         $    -         $    -


</TABLE>

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

                                     F-8


                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             (In thousands, except share and per share amounts)


1.   Organization:

     Homeland Holding Corporation ("Holding"), a Delaware corporation, was 
     incorporated on November 6, 1987, but had no operations prior to November  
     25, 1987. Effective November 25, 1987, Homeland Stores, Inc. 
     ("Homeland"), a wholly-owned subsidiary of Holding, acquired 
     substantially all of the net assets of the Oklahoma Division of Safeway
     Inc. Holding and its consolidated subsidiary, Homeland, are 
     collectively referred to herein as the "Company."

     Holding has guaranteed substantially all of the debt issued by Homeland.   
     Holding is a holding company with no significant operations other than
     its investment in Homeland. Separate financial statements of Homeland
     are not presented herein since they are identical to the consolidated
     financial statements of Holding in all respects except for
     stockholders' equity which is as follows:


                                           January 3,        December 28,  
                                             1998                 1996

     Homeland stockholder's equity:
      Common stock, $.01 par value,
       authorized, issued and
       outstanding 100 shares             $       1          $       1
      Additional paid-in capital             56,087             56,060
      Accumulated deficit                   (13,764)            (3,120)
       Total Homeland stockholder's
        equity                            $  42,324          $  52,941

2.   Reorganization:

     On May 13, 1996, the Company filed Chapter 11 petitions with the United 
     States Bankruptcy Court for the District of Delaware (the "Bankruptcy 
     Court"). Simultaneous with the filing of such petitions, the Company 
     filed a plan of reorganization and a disclosure statement, which set 
     forth the terms of the Company's restructuring (the "Restructuring").   
     On June 13, 1996, the Company filed a first amended plan of 
     reorganization and disclosure statement.  The Company's


2.   Reorganization, continued:

     first amended plan of reorganization, as modified (the "Plan"), was 
     confirmed by the Bankruptcy Court on July 19, 1996 and became effective 
     on August 2, 1996 (the "Effective Date").

     On the Effective Date, each of Holding and Homeland adopted amended and  
     restated certificates of incorporation, the principal effects of which 
     were: (a) eliminate the old common stock (the "Old Common Stock") and old 
     class B common stock of Holding, (b) authorize 7,500,000 shares of new 
     common stock of Holding (the "New Common Stock") and (c) include a 
     provision to prohibit the issuance of non-voting securities as and to the 
     extent required by Section 1123 (a) (6) of the Bankruptcy Code for both 
     Homeland and Holding.

     As of the Effective Date, the outstanding $59,375 of Series C Senior 
     Secured Fixed Rate Notes due 1999, $26,126 of Series D Senior Secured 
     Floating Rate Notes due 1997 and $9,499 of Series A Senior Secured 
     Floating Rate Notes due 1997, (collectively, the "Old Notes"), 
     ($95,000 in aggregate face amount plus accrued interest), were cancelled 
     and such holders received (in the aggregate) $60,000 face amount of 
     newly-issued 10% Senior Subordinated Notes due 2003 (the "New  Notes"), 
     $1,500 in cash and approximately 60% of the New Common Stock. The New 
     Notes are unsecured and bear interest at 10% per annum and mature in 2003.

     As of the Effective Date, all of the outstanding Old Common Stock of 
     Holding was canceled and the holders received their ratable share of (a) 
     250,000 shares of New Common Stock and (b) warrants to purchase up to 
     263,158 shares of New Common Stock at an exercise price of $11.85. Each  
     warrant entitles the holder to purchase one share of New Common Stock at 
     any time up to August 2, 2001. Holders of general unsecured claims 
     (including certain trade creditors for unpaid prepetition trade claims 
     and the allowed unsecured noteholders' claims) are entitled to receive  
     their ratable share of 4,450,000 shares of New Common Stock.

     As of the Effective Date, the Company entered into a new Loan Agreement  
     (as defined hereinafter) consisting of a revolving credit facility of up 
     to $27,500 (subject to a borrowing base requirement) and a term loan 
     facility of $10,000. The Loan Agreement is collateralized by a security
     interest in, and liens on, substantially all of the Company's assets and 
     is guaranteed by Holding.


2.   Reorganization, continued:

     On the Effective Date, the modified union agreements negotiated with the 
     Company's labor unions (the "Modified Union Agreements") became
     effective. The Modified Union Agreements, which are effective for a
     term of five years, consist of five basic elements: (a) wage rate and
     benefit contribution reductions and work rule changes, (b) an employee 
     buyout offer, (c) the establishment of an employee stock bonus plan 
     which will entitle plan participants to receive/purchase up to 522,222
     shares of New Common Stock, (d) the right to designate one member of
     the Board of Directors, and (e) the elimination of certain wage 
     reinstatement provisions, incentive plans and "maintenance of benefits."

     The Company's Restructuring was accounted for 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 Company applied the 
     provisions of SOP No. 90-7 as the holders of the Old Common Stock 
     received less than 50% of the New Common Stock and the reorganized value 
     of the assets of the reorganized Company is less than the total of all
     post-petition liabilities and allowed claims.

     For financial reporting purposes, the Company accounted for the 
     consummation of the Restructuring effective August 10, 1996, which is the 
     Company's normal four week period ending date. The periods prior to the 
     Effective Date have been designated "Predecessor Company" and the periods
     subsequent to the Effective Date have been designated "Successor
     Company." As a result of the adoption of the "fresh-start" reporting, 
     the Successor Company's financial statements are not comparable to the
     Predecessor Company's financial statements.

     In accordance with SOP No. 90-7, the Company valued its assets and 
     liabilities at their estimated fair value and eliminated its accumulated 
     deficits on the Effective Date. The total reorganization value of the 
     reorganized Company was determined by analyzing market cash flow
     multiples as applied to the Company's projected annual cash flows as
     well as comparing the reorganization value to a discounted projected
     cash flow calculation. Based on analyses prepared by the Company's
     financial advisor and by the financial advisor to the ad hoc committee
     of noteholders, the total reorganization value was agreed to by the
     parties and confirmed by the Bankruptcy Court. The total reorganization
     value as of the Effective Date was estimated to be $167.4 million,
     which was $45.4 million in excess of the Company's tangible and
     identifiable assets. The excess of the reorganization value over the 
     value of the identifiable assets is reported as "Reorganization value
     in excess of amounts allocable to identifiable assets" and is being
     amortized on a straight-line basis over a three year period.




2.   Reorganization, continued:

     The components of reorganization items and gain recognized on debt 
     discharged resulting from the Restructuring are as follows:

     (i) Reorganization items:

           Fresh-start reporting
            Allowed claims in excess of recorded
             liabilities                                       $    7,200
           Revaluation of property, plant and
            equipment, net                                          4,004
           Other adjustments to estimated fair value                4,156
                   Total fresh-start                               15,360
           Employee buyout expense                                  6,386
           Professional fees incurred with
            the Restructuring                                       4,250

                   Total reorganization items                  $   25,996


    (ii) Gain on debt discharged:

           Elimination of Old Notes and accrued interest       $  101,697
           Elimination of other liabilities                        22,921
           Cash payment to holders of Old Notes                    (1,500)
           Issuance of New Notes                                  (60,000)

                   Gain on debt discharged                     $   63,118

3.   Summary of Significant Accounting Policies:

     Fiscal year - The Company has adopted a fiscal year which ends on the  
     Saturday nearest December 31. Fiscal 1996 includes the 32 weeks prior to 
     the Effective Date which has been designated "Predecessor Company" and  
     the 20 weeks subsequent to the Effective Date which has been designated
     "Successor Company."

     Basis of consolidation - The consolidated financial statements include  
     the accounts of Homeland Holding Corporation and its wholly owned 
     subsidiary.  All significant intercompany balances and transactions have 
     been eliminated in consolidation.

     Revenue recognition - The Company recognizes revenue at the "point of 
     sale," which occurs when groceries and related merchandise are sold to 
     its customers.
     
     
3.   Summary of Significant Accounting Policies, continued:
     
     Concentrations of credit and business risk - Financial instruments which  
     potentially subject the Company to concentrations of credit risk consist  
     principally of temporary cash investments and receivables. The Company
     places its temporary cash investments with high quality financial 
     institutions. Concentrations of credit risk with respect to receivables 
     are limited due to the diverse nature of those receivables, including a 
     large number of retail customers within the region and receivables from  
     vendors throughout the country. The Company purchases approximately 70%  
     of its products from Associated Wholesale Grocers, Inc. ("AWG").  
     Although there are similar wholesalers that could supply the Company 
     with merchandise, if AWG were to discontinue shipments, this could have 
     a material adverse effect on the Company's financial condition.

     Inventories - Inventories are stated at the lower of cost or market, 
     with cost being determined primarily using the gross margin method.

     Property, plant and equipment - As discussed in Note 2, in conjunction  
     with the emergence from Chapter 11 proceedings, the Company implemented  
     "fresh-start" reporting and, accordingly, all property, plant and 
     equipment was restated to reflect reorganization value, which 
     approximates fair value in continued use. Property, plant and equipment
     acquired subsequent to "fresh start" are stated at cost. Depreciation  
     and amortization, including amortization of leased assets under capital 
     leases, are computed on a straight-line basis over the lesser of the 
     estimated useful life of the asset or the remaining term of the lease.
     Depreciation and amortization, of newly acquired assets, for financial 
     reporting purposes are based on the following estimated lives:


                                                 Estimated lives
     Buildings                                       10 - 40
     Fixtures and equipment                           5 - 12.5
     Leasehold improvements                             15
     Software                                         3 - 5

     The costs of repairs and maintenance are expensed as incurred, and the  
     costs of renewals and betterments are capitalized and depreciated at the 
     appropriate rates. Upon sale or retirement, the cost and related  
     accumulated depreciation are eliminated from the respective accounts and
     any resulting gain or loss is included in the results of operations for 
     that period. In the fourth quarter of 1995, approximately  $7.9 million 
     of capitalized software costs, net of accumulated depreciation, were 
     charged to operational restructuring costs as a result of management's 
     decision to replace such software.





3.   Summary of Significant Accounting Policies, continued:

     Reorganization value in excess of amounts allocable to identifiable assets 
     - The Company's reorganization value in excess of amounts allocable to 
     identifiable assets, established in accordance with "fresh start" 
     reporting (see Note 2), is being amortized on a straight-line basis over
     three years.
     
     Other assets and deferred charges - Other assets and deferred charges  
     consist primarily of patronage refund certificates issued by AWG as part  
     of its year-end distribution of income from AWG's cooperative operations 
     and beneficial interests in operating leases amortized on a straight-line 
     basis over the remaining terms of the leases, including all available 
     renewal option periods. The AWG patronage refund certificates bear annual 
     interest of 6% and are redeemable for cash seven years from the date of
     issuance.

     Earnings per share - The Company presents the two earnings per share  
     ("EPS") amounts as required under Statement of Accounting Standard No. 
     128, Earnings Per Share ("SFAS 128"). Basic EPS is computed using the 
     weighted average number of common shares outstanding. Diluted earnings 
     per share is computed using the weighted average number of common shares 
     outstanding and equivalent shares based on the assumed exercise of stock 
     options and warrants (using the treasury method). Earnings (loss) per 
     share data is not meaningful for periods prior to the Effective Date due  
     to the significant change in the Company's capital structure.

     Cash and cash equivalents - For purposes of the statements of cash flows,  
     the Company considers all short-term investments with an original 
     maturity of three months or less when purchased to be cash equivalents.

     Advertising costs - Costs of advertising are expensed as incurred.  Gross 
     advertising costs for 1997, 1996 and 1995, were $7,906, $8,453 and 
     $10,700, respectively.

     Income taxes - The Company provides for income taxes based on enacted 
     tax laws and statutory tax rates at which items of income and expense 
     are expected to be settled in the Company's income tax return. Certain 
     items of revenue and expense are reported for Federal income tax purposes  
     in different periods than for financial reporting purposes, thereby 
     resulting in deferred income taxes. Deferred taxes also are recognized 
     for operating losses that are available to offset future taxable income 
     and tax credits that are available to offset future

     Federal income taxes. Valuation allowances are established when necessary 
     to reduce deferred tax assets to the amounts expected to be realized.



3.   Summary of Significant Accounting Policies, continued:

     Self-insurance reserves - The Company is self-insured for property loss,  
     general liability and automotive liability coverage subject to specific 
     retention levels. Estimated costs of these self-insurance programs are 
     accrued based on projected settlements for claims using actuarially 
     determined loss development factors based on the Company's prior 
     experience with similar claims. Any resulting adjustments to previously 
     recorded reserves are reflected in current operating results. As a result  
     of the Company's filing of Chapter 11 petitions with the Bankruptcy Court  
     on May 13, 1996, all outstanding claims under the self-insured programs,  
     as of that date, will be settled under the terms of the Plan.

     Pre-opening  costs - Store pre-opening costs are charged to expense as 
     incurred.
     
     Use of estimates - The preparation of financial statements in conformity 
     with generally accepted accounting principles requires management to make 
     estimates and assumptions that affect the reported amounts of assets and 
     liabilities and disclosure of contingent assets and liabilities at the 
     dates of the financial statements and the reported amounts of revenues 
     and expenses during the reporting periods. The most significant 
     assumptions and estimates relate to the reserve for self-insurance 
     programs, the deferred income tax valuation allowance, the accumulated  
     benefit obligation relating to the employee retirement plan and the  
     allowance for bad debts.  Actual results could differ from those 
     estimates.
     
     Impact of new financial accounting standards.
     
     In June 1997, the Financial Accounting Standards Board ("FASB") issued 
     Statement No. 130, "Reporting Comprehensive Income." This statement 
     establishes standards for reporting and display of comprehensive income 
     and its components in the financial statements. In February 1998, the 
     FASB issued Statement  No. 132, "Employers' Disclosures about Pensions
     and Other Postretirement Benefits."  This statement standardizes the 
     disclosure requirements for pensions and other postretirement benefits 
     and requires that additional information be disclosed regarding changes 
     in the benefit obligation and fair values of plan assets. Both statements
     are effective for fiscal years beginning after December 15, 1997. Because 
     these statements are limited to presentation and disclosure changes, 
     their implementation will not have an impact on the Company's financial 
     position or results of operations.
     
     
4.   Store Acquisitions.

     The Company acquired one store from Pratt Discount Foods, Inc. and three 
     stores from Food Lion, Inc. on August 11, 1997, and October 15, 1997, 
     respectively. The result of operations from these stores from the  
     acquisition date through fiscal year-end are included in the fiscal 1997
     Consolidated Statements of Operations.

5.   Current and Long-Term Debt:

     Long-term debt at year-end consists of:

     
                                             January 3,      December 28,
                                               1998             1996
     
     New Notes                               $  60,000        $  60,000
     Term Loan                                   9,167           10,000
     Revolving Credit Loans                     10,626            3,269
     Note Payable                                  288              349
                                                80,081           73,618
     Less current portion                        1,728              894
     
     Long-term debt due after one year       $  78,353        $  72,724
     
     The New Notes bear an interest rate of 10%, which is payable semi-
     annually each February 1 and August 1. The New Notes are unsecured and  
     will mature on  August 1, 2003. The Indenture relating to the New Notes 
     has certain customary restrictions on consolidations and mergers, 
     indebtedness, issuance of preferred stocks, asset sales and payment of
     dividends.
     
     On the Effective Date, the Company entered into a new bank credit 
     agreement with a group of lenders (the "Loan Agreement"). The Loan  
     Agreement consists of a $27,500 revolving facility for working capital 
     and letters of credit (the "Revolving  Facility") and a $10,000 term  
     loan (the "Term Loan"). The Revolving Facility permits the Company to
     borrow up to the lesser of $27,500 or the applicable borrowing base.
     
     On November 24, 1997, the Company entered into an amendment to the Loan  
     Agreement whereby the Revolving Facility was increased from $27,500 to 
     $32,000. The amendment also provided the Company a waiver of the capital  
     expenditure limitation as it relates to the Company's acquisition of
     three Food Lion stores.
     
     
     
     
     
5.   Current and Long-Term Debt, continued:
     
     The interest rate, payable quarterly, under the Loan Agreement is based 
     on the Prime Rate, as defined, plus a percentage that varies based on a  
     number of factors, including (a) whether it is the Revolving Facility or  
     the Term Loan, (b) the time period, (c) whether the Company elects to 
     use the London Interbank Offered Rate, and (d) the earnings of the 
     Company before interest, taxes, depreciation and amortization expenses.  
     At January 3, 1998, the interest rate on borrowings on the Revolving 
     Facility was 9.00% and the Term Loan was 9.25%.
     
     The Revolving Facility provides for certain mandatory prepayments based  
     on occurrence of certain defined and specified transactions. The Term 
     Loan requires quarterly principal payments of $417 and will mature, 
     along with the Revolving Facility, on August 1, 1999.
     
     The obligations of the Company under the Loan Agreement are
     collateralized by liens on, and a security interest in, substantially
     all of the assets of Homeland and are guaranteed by Holding. The Loan
     Agreement, among other things, requires a maintenance of EBITDA, 
     consolidated fixed charge ratio, debt-to-EBITDA ratio, current ratio,
     excess cash flow paydown, each as defined, and limits the Company's
     capital expenditures, incurrence of additional debt, consolidation and
     mergers, acquisitions and payments of dividends.
     
     In connection with the early redemption of a portion of the Old Notes on  
     April 21, 1995, the Company incurred an extraordinary loss of $2,330.  
     The loss was comprised of premium and consent fees paid and the write-
     off of unamortized financing costs.
     
     At January 3, 1998, the aggregate annual debt maturities were as follows:
     
               1998                               $  1,728
               1999                                 18,186
               2000                                     61
               2001                                     61
               2002                                     45
               Thereafter                           60,000
                                                  $ 80,081



6.   Fair Value of Financial Instruments:

     The estimated fair value of financial instruments has been determined by 
     the Company using available market information and appropriate valuation   
     methodologies. However, considerable judgment is necessarily required    
     in interpreting market data to develop the estimates of fair value.  
     Accordingly, the estimates presented herein are not necessarily 
     indicative of the amounts that the Company could realize in a current 
     market exchange. The use of different market assumptions and/or 
     estimation methodologies may have a material effect on the estimated fair 
     value amounts. The carrying amount and fair value of financial 
     instruments as of January 3, 1998, and December 28, 1996, are as
     follows:
     
     
                                            January 3,         December 28,
                                              1998                1996
                                        Carrying   Fair     Carrying     Fair
                                         Amount   Value      Amount     Value
     Assets:
      Cash and Cash
       Equivalents                      $ 4,778  $ 4,778    $ 1,492   $ 1,492
     Liabilities:
      Current and Long-Term Debt        $80,081  $74,081    $73,618   $68,818

     Cash and cash equivalents - The carrying amount of this item is a 
     reasonable estimate of its fair value due to its short-term nature.

     Current and long-term debt - The fair value of publicly traded debt is 
     valued based on quoted market values. Based on borrowing rates currently 
     available to the Company for bank borrowings with similar terms and  
     maturities, the Company believes the carrying amount of borrowings under 
     the Loan Agreement approximates fair value.


7.   Income Taxes:

     The components of the income tax provision for 1997, the  20
     weeks ended December 28, 1996, the 32 weeks ended August 10,
     1996, and 1995 were as follows:


                                    Successor Company   Predecessor Company
                                        20 Weeks           32 Weeks
                                         Ended              Ended
                               1997  December 28, 1996   August 10, 1996  1995

     Federal: 
      Current - AMT       $  (  100)    $    -            $    -         $   -
      Deferred               (1,589)         -                 -             -
       Total income tax 
        provision         $  (1,689)    $    -            $    -         $   -

     A reconciliation of the income tax benefit (provision) at the statutory  
     Federal income tax rate to the Company's effective tax rate is as follows:


                                    Successor Company   Predecessor Company
                                        20 Weeks           32 Weeks
                                         Ended              Ended
                               1997  December 28, 1996   August 10, 1996  1995

     Federal income tax at
      statutory rate      $   3,134     $  1,092          $ (13,232)  $ 11,127
     Benefit of non-taxable
      forgiveness of debt       -            945             14,720        -
     Non-deductible 
      reorganization      
       expenses                 -           -                (1,488)       -
     Amortization of 
      intangibles           (5,084)       (2,037)              -           -
     Change in valuation
      allowance                261          -                  -           -
     Limitation of benefit
      of deferred tax 
       assets                   -           -                  -       (10,074)
     Other - net                -           -                  -        (1,053)
      Total income tax 
       provision         $  (1,689)     $   -             $    -      $    -
       


7.   Income Taxes, continued:

     The components of deferred tax assets and deferred tax liabilities are 
     as follows:


                                                January 3,      December 28,
                                                  1998              1996
     Current assets (liabilities):
      Allowance for uncollectible
       receivables                             $    419          $    555
      Prepaid pension                              (393)             (507)
      Other, net                                     18                12

       Net current deferred tax assets               44                60

     Noncurrent assets (liabilities):
      Property, plant and equipment                 855               170
      Targeted job credit carryforward              -                 815
      Employee compensation and benefits            262               929
      Self-insurance reserves                       673               522
      Net operating loss carryforwards           14,315            14,704
      AMT credit carryforwards                      737               630
      Capital leases                                104               159
      Other, net                                    185               742
       Net noncurrent deferred tax
        assets                                   17,131            18,671

      Total net deferred assets                  17,175            18,731
      Valuation allowance                       (17,175)          (18,731)

     Net deferred tax assets                   $    -            $    -

     Due to the uncertainty of realizing the future tax benefits, the full  
     valuation allowance was established to entirely offset the net deferred 
     tax assets as of January 3, 1998. At January 3, 1998, the Company had 
     the following operating loss and tax credit carryforwards available for   
     tax purposes:



7.   Income Taxes, continued:
     
                                                                Expiration
                                                Amount             Dates

     Federal regular tax net
      operating loss carryforwards              $40,900           2002-2010
     Federal AMT credit carryforwards
      against regular tax                       $   737          indefinite

     The net operating loss carryforwards are subject to utilization 
     limitations due to ownership changes. The net operating loss carryforwards 
     may be utilized to offset future taxable income as follows: $3,467 in 
     1998, $3,251 in each of years 1999 through 2009 and $1,672 in 2010.  
     Loss carryforwards not utilized in any year that they are available may  
     be carried over and utilized in subsequent years, subject to their 
     expiration provisions.
     
     In accordance with SOP 90-7, the tax benefit realized from utilizing the   
     pre-reorganization net operating loss carryforwards is recorded as a 
     reduction of the reorganization value in excess of amounts allocable to
     identifiable assets rather than realized as a benefit in the statement  
     of operations. The Company recorded $1,589 of such reduction in 1997.
     
     
     
8.   Incentive Compensation Plans:

     The Company has bonus arrangements for store management and other key  
     management personnel. During 1997, 1996, and 1995, approximately $981, 
     $2,273, and $934, respectively, were charged to costs and expenses for 
     such bonuses.

     In December 1996, the Board of Directors of the Company, pursuant to the  
     Plan, adopted the Homeland Holding Corporation 1996 Stock Option Plan  
     (the "Stock Option Plan"). In 1997, the Company established the 1997 
     Non-Employee Directors Stock Option Plan (the "Directors Stock Option 
     Plan"). The Company applies APB Opinion No. 25, "Accounting for Stock  
     Issued to Employees" and related Interpretations in accounting for these  
     plans. SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 
     123") was issued by the FASB in 1995 and, if fully adopted, changes the  
     methods for recognition of expense on plans similar to the Company's.  
     Adoption of SFAS 123 is optional; however, pro forma disclosures as if 
     the Company adopted the cost recognition requirements under SFAS 123 in  
     1996 and 1997 are presented below.
     
     The Stock Option Plan and the Directors Stock Option Plan, to be 
     administered by the Board of Directors (the "Board"), or a committee of 
     the Board (the "Committee"), provides for the granting of options to 
     purchase up to an aggregate of 432,222 and 90,000 shares of New Common 
     Stock, respectively. Options granted under the plans must be "non-
     qualified options." The option price of each option is determined by the  
     Board or the Committee and it must be not less than the fair market value 
     at the date of grant. Unless the Board or the Committee otherwise 
     determines, options must become exercisable ratably over a five-year 
     period or immediately in the event of a "change of control" as defined in 
     each of the plans. Each option must be evidenced by a written agreement 
     and must expire and terminate on the earliest of: (a) ten years from the 
     date the option is granted; (b) termination for cause; or (c) three 
     months after termination for other than cause.
     
     
8.   Incentive Compensation Plans, continued:
     
     Options granted under the Company's stock option plans have exercise  
     prices ranging from $6.50 to $8.00 per share and have a weighted average 
     contractual life of 9.4 years. A summary of the status of the Company's 
     outstanding stock options as of January 3, 1998, and December 28, 1996,  
     and changes during the years ended on those dates is as follows:
     
     
                                                          Weighted Average
                                            Shares          Exercise Price
      
      Options granted                      197,500              $8.00
      Options exercised                       -                   -
      Options forfeited or cancelled          -                   -
      
       Outstanding at December 28, 1996    197,500               8.00
      
      Options granted                      136,000               7.20
      Options exercised                       -                   -
      Options forfeited or cancelled       135,000               8.00
      
       Outstanding at January 3, 1998      198,500              $7.45
       Exercisable at January 3, 1998      138,500              $7.42

     The weighted average fair value of options granted during 1997 and 1996  
     was $3.53 and $4.02, respectively. No compensation was charged against 
     income in 1997 and 1996.
     
     The fair value of the options granted was estimated on the date of the  
     grant using the Black-Scholes option-pricing model with the following 
     assumptions used:
     
     
                                             1997                1996
     
       Expected dividend yield                0%                  0%
      
       Expected stock price volatility       39%                 30%
     
       Weighted average risk-free
        interest rate                       6.4%                6.4%
     
       Weighted average expected
        life of options                   6 years             8 years
     
     
     
8.   Incentive Compensation Plans, continued:
     
     Had compensation cost of the Company's option plans been determined using 
     the fair value at the grant date of awards consistent with the method of 
     SFAS 123, the Company's net loss and net loss per common share for the 
     Successor Company would have been reduced to the pro forma amounts 
     indicated in the table below:
     
     
                                                      Successor Company
                                                                 20 weeks
                                                                  Ended
                                                      1997       12/28/96
     
     Net loss - as reported                         $(10,644)     $(3,120)
     Net loss - pro forma                           $(10,956)     $(3,914)
     
     Basic EPS - as reported                          $(2.23)     $(0.66)
     Basic EPS - pro forma                            $(2.29)     $(0.82)
     
     Diluted EPS - as reported                        $(2.23)     $(0.66)
     Diluted EPS - pro forma                          $(2.29)     $(0.82)
     
8.   Incentive Compensation Plans, continued:
     
     Options outstanding at January 3, 1998, and December 28, 1996, were not  
     included in the computation of diluted earnings per share because the 
     effect would be antidilutive to applicable periods.
     
     Pursuant to the terms of the Modified Union Agreements, the Company  
     established an employee stock bonus plan for the benefit of the unionized 
     employees (the "Stock Bonus Plan"). The Stock Bonus Plan consists of 
     three separate elements: (a) the issuance of 58,025 shares of New Common 
     Stock each year for three years; (b) up to 58,025 shares of the New 
     Common Stock may be purchased by the plan participants during each of the 
     second, third and fourth years of the Modified Union Agreements (the 
     "Stock Purchase") and (c) the granting of 58,025 shares of New Common 
     Stock for each of the first, second and third anniversaries of the  
     Modified Union Agreements upon the Company's achievement of certain
     escalating EBITDA-based performance goals (see Note 2). The purchase  
     price of the shares under the Stock Purchase element shall be equal to 
     the appraised value or at fair value if the shares are readily tradable 
     on a securities market. For each share of New Common Stock purchased by  
     a participant under the Stock Purchase element, the Company will match 
     33 1/3% of such purchase in the form of stock. The Stock Bonus Plan does 
     not fall under the provisions of SFAS 123.
     
9.   Retirement Plans:

     Effective January 1, 1988, the Company adopted a non-contributory,  
     defined benefit retirement plan for all executive and administrative 
     personnel. Benefits are based on length of service and career average  
     pay with the Company. The Company's funding policy is to contribute an
     amount equal to or greater than the minimum funding requirement of the 
     Employee Retirement Income Security Act of 1974, but not in excess of 
     the maximum deductible limit. Plan assets were held in investment mutual  
     funds during 1997, 1996 and 1995.

     Net pension cost consists of the following:


                                             1997      1996      1995

     Service cost                         $   449   $   503   $   517
     Interest cost                            630       574       465
     Return on assets                      (1,418)     (918)   (1,140)
     Net amortization and deferral            666       345       690
     Curtailment charge                       -         -         (37)

      Net periodic pension cost           $   327   $   504   $   495


9.   Retirement Plans, continued:

     The funded status of the plan and the amounts recognized in the Company's 
     balance sheet at January 3, 1998, and December 28, 1996, consist of the 
     following:



                                                       1997        1996

     Actuarial present value of benefit
      obligations:   
       Vested benefits                            $  (9,031)   $  (7,066)
       Non-vested benefits                             (205)        (152)
          Accumulated benefit
           obligations                            $  (9,236)   $  (7,218)

     Projected benefit obligations                $  (9,911)   $  (7,694)
     Plan assets at fair value                        9,673        8,436
     Excess (deficiency) of plan assets
      versus projected benefit
      obligations                                      (238)         742
     Unrecognized prior service cost                    (73)         (84)
     Unrecognized net loss                            1,533          867

      Net pension asset                           $   1,222    $   1,525





9.   Retirement Plans, continued:

     Actuarial assumptions used to determine year-end plan status
     were as follows:

                                                      1997           1996

     Assumed rate for determination of net
      periodic pension cost                          7.75 %          7.25%

     Assumed discount rate to determine
      the year-end plan disclosures                  7.00%           7.75%

     Assumed long-term rate of return
      on plan assets                                  9.0%            9.0%

     Assumed range of rates of future
      compensation increases
      (graded by age) for net
      periodic pension cost                     3.5%  to  5.5%   3.5% to 5.5%

     Assumed range of rates of future
      compensation increases
      (graded by age) for year-end
      plan disclosures                          3.5%  to  5.5%   3.5% to 5.5%

     The prior service cost is being amortized on a straight line basis over 
     approximately 13 years.
     
     As a result of the sale of the Company's warehouse and distribution  
     center and 29 stores to AWG, as well as the closure of 14 under-
     performing stores during 1995, a significant number of employees were  
     terminated that participated in the Company's non-contributory defined
     benefit retirement plan. The effect of the curtailment resulting from 
     the terminations of such employees was not material to the statement of 
     operations for the year ended December 30, 1995.

     The Company also contributes to various union-sponsored, multi-employer  
     defined benefit plans in accordance with collective bargaining agreements. 
     The Company could, under certain circumstances, be liable for the 
     Company's unfunded vested benefits or other costs of these multi-employer
     plans. The allocation to participating employers of the actuarial 
     present

9.   Retirement Plans, continued:

     value of vested and nonvested accumulated benefits in multi-employer
     plans as well as net assets available for benefits is not available and, 
     accordingly, is not presented. The costs of these plans for 1997, 1996,  
     and 1995 were $1,188, $1,412, and $2,110, respectively.

     Effective January 1, 1988, the Company adopted a defined contribution  
     plan covering substantially all non-union employees of the Company.  
     Participants may contribute from 1% to 12% of their pre-tax compensation.  
     The plan allows  for a discretionary Company matching contribution  
     formula based on the Company's operating results. The Company did not  
     make any contributions to this plan in 1997, 1996 or 1995.

10.  Leases:

     The Company leases 56 of its retail store locations under noncancellable  
     agreements, which expire at various times between 1998 and 2013. These 
     leases, which include both capital leases and operating leases, generally 
     are subject to six five-year renewal options. Most leases also require
     the payment of taxes, insurance and maintenance costs and many of the 
     leases covering retail store properties provide for additional contingent 
     rentals based on sales in excess of certain stipulated amounts.

     Leased assets under capital leases consists of the following:


                                              January 3,     December 28,
                                                1998            1996

     Buildings                               $  2,705         $  2,738
     Equipment                                  2,730            1,658
     Beneficial interest in capital leases      3,173            3,173
                                                8,608            7,569
     Accumulated amortization                   1,984              546

     Net leased assets                       $  6,624         $  7,023




10.  Leases, continued:

     Future minimum lease payments under capital leases and noncancellable 
     operating leases as of January 3, 1998, are as follows:


                                                  Capital        Operating
     Fiscal Year                                  Leases          Leases

     1998                                         $ 1,671        $  6,541
     1999                                           1,367           5,951
     2000                                             523           5,571
     2001                                             182           4,683
     2002                                             182           3,372
     Thereafter                                     1,470          18,502
     Total minimum obligations                      5,395        $ 44,619

     Less estimated interest                        1,501
     Present value of net minimum
      obligations                                   3,894      
     Less current portion                           1,286
      Long-term obligations under
       capital leases                             $ 2,608

     Rent expenses for 1997, 1996 and 1995 are as follows:


                                          1997          1996          1995

     Minimum rents                     $ 6,067        $ 6,039       $10,264
     Contingent rents                      105            105           107

                                       $ 6,172        $ 6,144       $10,371


11.  Related Party Transactions:

     Clayton, Dubilier & Rice, Inc. ("CDR"), a private investment firm of 
     which four directors of the Predecessor Company are employees, received 
     $125 in 1995, for financial advisory and consulting services. As of the 
     Effective Date, CDR, through C&D Fund III and C&D Fund IV, received its 
     ratable share of the 250,000 shares of New Common Stock, and the 263,518
     warrants (see Note 2) for their 76.3% majority holding in the Old 
     Common Stock of Holding.

12.  Commitments and Contingencies:

     On April 21, 1995, the Company and AWG entered into a seven-year supply 
     agreement (the "Supply Agreement"), whereby the Company became a retail 
     member of the AWG cooperative and AWG became the Company's primary 
     supplier (see Note 4 - Concentrations of credit and business risk). The  
     terms of the Supply Agreement allow the Company to purchase products at 
     the lowest prices and best terms available to AWG members and also  
     entitle the Company to participate in its store cost savings programs 
     and receive member rebates and refunds on purchases.
     
     The Company has entered into employment contracts with certain key 
     executives providing for the payment of minimum salary and bonus amounts  
     in addition to certain other benefits in the event of termination of the 
     executives or change of control of the Company.

     The Company is party to various lawsuits arising from the Restructuring  
     and also in the normal course of business. Management believes that the 
     ultimate outcome of these matters will not have a material effect on 
     the Company's consolidated financial position, results of operations and
     cash flows.

     The Company has outstanding at January 3, 1998, $5,748 in letters of 
     credit which are not reflected in the accompanying financial statements.  
     The letters of credit are issued under the credit agreements and the 
     Company paid associated fees of $146, $259 and $335 in 1997, 1996 and
     1995, respectively.


13.  Operational Restructuring:

     In December 1994, the Board of Directors approved a strategic plan for 
     the Company. Pursuant to the plan, the Company sold 29 of its stores and  
     its warehouse and distribution center to AWG on April 21, 1995, and 
     closed sixteen under-performing stores in 1995 and 1996. The charges 
     recognized in 1995 were $12,639. The 1995 charges consist principally of  
     the write-off of capitalized software costs, write-off of the unamortized 
     balance of the excess of purchase price over fair value of net assets
     acquired, the expense associated with the termination of an EDP 
     outsourcing agreement, and expenses associated with closed stores.

     At August 10, 1996, the carrying amount of reserve relating to the 
     operational restructuring was $3,424. As a result of the Restructuring, 
     certain obligations relating to the reserves for the closed stores were 
     discharged under the terms of the Plan. The reserve relating to the 
     operational restructuring at January 3, 1998, amounts to $595 and it is
     included in other current and other non-current liabilities of the 
     Consolidated Balance Sheet.

                              


                                 EXHIBIT INDEX


     Exhibit No.         Description

        2a               Disclosure Statement for Joint Plan of Reorganization
                         of Homeland Stores, Inc. and Homeland Corporation
                         dated as of May 13, 1996. (Incorporated by reference
                         to Exhibit 2a to Form 8-K dated May 31, 1996.)

        2b               First Amended Joint Plan of Reorganization, as 
                         modified, of Homeland Holding Corporaion ("Holding")
                         and Homeland Stores, Inc. ("Homeland"), dated July
                         19, 1996. (Incorporated by reference to Exhibit 2b
                         to Form 10-Q for the quarterly period ended June
                         15, 1996.)

        3a               Restated Certificate of Incorporation of Holding,
                         dated August 2, 1996.

        3b               By-laws of Holding, as amended and restated on 
                         November 14, 1989 and further amended on September
                         23, 1992. (Incorporated by reference to Exhibit 3b
                         to Form 10-Q for quarterly period ended June 19,
                         1993.)

        3c               Restated Certificate of Incorporation of Homeland,
                         dated August 2, 1996.

        3d               By-laws of Homeland, as amended and restated on 
                         November 14, 1989, and further amended on September
                         23, 1992. (Incorporated by reference to Exhibit 3d
                         to Form 10-Q for quarterly period ended June 19,
                         1993.)

        4a               Indenture, dated as of August 2, 1996, among Homeland,
                         Fleet National Bank, as Trustee, and Holding, as
                         Guarantor. (Incorporated by reference to Exhibit T3C
                         to Form T-3 of Homeland, SEC File No. 22-22239.)

        4b               Warrant Agreement, dated as of August 2, 1996, 
                         between Holding and Liberty Bank and Trust Company
                         of Oklahoma City, N.A., as Warrant Agent.
                         (Incorporated by reference to Exhibit 4h to
                         Amendment No. 1 to Form 10.)

        4c               Equity Registration Rights Agreement, dated as of
                         August 2, 1996, by Holding for the benefit of
                         holders of Old Common Stock. (Incorporated by
                         reference to Exhibit 4i to Amendment No. 1 to 
                         Form 10.)

        4d               Noteholder Registration Rights Agreement, dated as 
                         of August 2, 1996, by Holding for the benefit of 
                         holders of Old Notes. (Incorporated by reference
                         to Exhibit 4j to Amendment No. 1 to Form 10.)

        10a 1            Homeland Profit Plus Plan, effective as of January
                         1, 1988. (Incorporated by reference to Exhibit 10q
                         to Form S-1 Registration Statement, Registration
                         No. 33-22829.)

        10a.1 1          Homeland Profit Plus Plan, effective as of January
                         1, 1989. (Incorporated by reference to Exhibit 10q.1 
                         to Form 10-K for the fiscal year ended December 29,
                         1990.)

        10b              Homeland Profit Plus Trust, dated March 8, 1988,
                         between Homeland and the individuals named therein,
                         as Trustees. (Incorporated by reference to Exhibit
                         10r to Form S-1 Registration Statement, Registration
                         No. 33-22829.)

        10c              Homeland Profit Plus Trust, dated January 1, 1989,
                         between Homeland and Bank of Oklahoma, N.A., as
                         Trustee. (Incorporated by reference to Exhibit
                         10r.1 to Form 10-K for the fiscal year ended
                         December 29, 1990.)

        10d.1 1          1995 Homeland Management Incentive Plan. 
                         (Incorporated by reference to Exhibit 10s.7 to
                         Form 10-K for the fiscal year ended December 30,
                         1995.)

        10d.2 1          1996 Homeland Management Incentive Plan.
                         (Incorporated by reference to Exhibit 10.d3 to
                         Form 10-K for the fiscal year ended December 28,
                         1996.)

        10d.3 *1         1997 Homeland Management Incentive Plan.

        10e 1            Form of Homeland Employees' Retirement Plan, 
                         effective as of January 1, 1988. (Incorporated
                         by reference to Exhibit 10t to Form S-1
                         Registration Statement, Registration No. 33-22829.)

        10e.1 1          Amendment No. 1 to Homeland Employees' Retirement
                         Plan effective January 1, 1989. (Incorporated
                         by reference to Form 10-K for the fiscal year ended
                         December 30, 1989.)

        10e.2 1          Amendment No. 2 to Homeland Employees' Retirement
                         Plan effective January 1, 1989. (Incorporated
                         herein by reference to Form 10-K for the fiscal
                         year ended December 30, 1989.)

        10e.3 1          Third Amendment to Homeland Employees' Retirement
                         Plan effective as of January 1, 1988. (Incorporated
                         by reference to Exhibit 10t.3 to Form 10-K for
                         the fiscal year ended December 29, 1990.)

        10e.4 1          Fourth Amendment to Homeland Employees' Retirement
                         Plan effective as of January 1, 1989. (Incorporated
                         by reference to Exhibit 10t.4 to Form 10-K for
                         the fiscal year ended December 28, 1991.)

        10e.5 1          Fifth Amendment to Homeland Employees' Retirement
                         Plan effective as of January 1, 1989. (Incorporated
                         by reference to Form 10-Q for the quarterly period
                         ended September 9, 1995.)

        10f 1            Executive Officers Medical/Life Insurance Benefit
                         Plan effective as of December 9, 1993. (Incorporated
                         by reference to Exhibit 10kk to Form 10-K for
                         the fiscal year ended January 1, 1994.)

        10g              Asset Purchase Agreement, dated as of February 6, 
                         1995, between Homeland and Associated Wholesale 
                         Grocers, Inc. (Incorporated by reference to Exhibit
                         10pp.1 to Form 10-K for the fiscal year ended
                         December 30, 1995.)

        10h              Amended and Restated Revolving Credit Agreement,
                         dated as of April 21, 1995, among Homeland,
                         Holding, National Bank of Canada, as Agent and
                         lender, Heller Financial, Inc. and any other lenders
                         thereafter parties thereto. (Incorporated by 
                         reference to Exhibit 10uu to Form 8-K dated
                         March 14, 1996.)

        10h.1            Waiver Agreement, dated as of December 29, 1995,
                         among Homeland, Holding, National Bank of Canada and
                         Heller Financial, Inc. (Incorporated by reference
                         to Exhibit 10uu.1 to Form 8-K dated March 14, 1996.)

        10h.2            Second Waiver Agreement, dated as of March 1, 1996,
                         among Homeland, Holding, National Bank of Canada and
                         Heller Financial, Inc. (Incorporated by reference
                         to Exhibit 10uu.2 to Form 8-K dated March 14, 1996.)

        10h.3            Ratification and Amendment Agreement to the 
                         $27,000,000 Amended and Restated Revolving Credit
                         Agreement, dated as of May 10, 1996, among
                         Homeland, Holding, National Bank of Canada, as
                         Agent and lender, Heller Financial, Inc. and
                         any other lenders thereafter parties thereto.
                         (Incorporated by reference to Exhibit 10uu.3 to
                         Form 10-Q for quarterly period ended March 23, 1996.)

        10i 1            Employment Agreement dated as of July 10, 1995 and
                         as amended September 26, 1995, between Homeland and
                         Larry W. Kordisch. (Incorporated by reference to 
                         Exhibit 10pp to Form 10 Form 10-K dated September
                         9, 1995.)

        10i.1 1          Amendment to Employment Agreement between Homeland
                         and Larry W. Kordisch, dated as of April 29, 1996.
                         (Incorporated by reference to Exhibit 10vv.1 to
                         Form 10-K for the fiscal year ended December 30,
                         1995.)

        10i.2 *1         Second Amendment to Employment Agreement between
                         Homeland and Larry W. Kordisch, dated as of
                         September 19, 1997.

        10j *1           Employment Agreement dated as of February 25,
                         1998, between Homeland and Steven M. Mason.

        10k *1           Employment Agreement dated as of February 25, 1998,
                         between Homeland and Terry Marczewski.

        10l *1           Employment Agreement dated as of February 17, 1998,
                         between Homeland and David B. Clark.

        10m              Indenture, dated as of August 2, 1996, among
                         Homeland, Fleet National Bank, as Trustee, and
                         Holding, as Guarantor. (Incorporated by reference
                         to Exhibit 10aaa to Form 8-K dated September 30,
                         1996.)

        10n              Loan Agreement, dated as of August 2, 1996, among
                         IBJ Schroder Bank & Trust Company, Heller Financial,
                         Inc., National Bank of Canada, Homeland and Holding.
                         (Incorporated by reference to Exhibit 10q to Form 
                         10-K for the fiscal year ended December 28, 1996.)

        10n.1 *          First Amendmant to the Loan Agreement dated as of
                         November 24, 1997, among IBJ Schroder Bank & Trust
                         Company, Heller Financial, Inc., National Bank of
                         Canada, Homeland and Holding.

        10o              Subsidiaries. (Incorporated by reference to Exhibit
                         22 to Form S-1 Registration Statement, Registration
                         No. 33-22829.)

        10p 1            Employee Stock Bonus Plan for union employees
                         effective as of August 2, 1996. (Incorporated by
                         reference to Exhibit 10s to Form 10-K for the fiscal
                         year ended December 28, 1996.)

        10q 1            Management Stock Option Plan effective as of
                         December 11, 1996. (Incorporated by reference to
                         Exhibit 10t to Form 10-K for the fiscal year ended
                         December 28, 1996.)

        27 *             Financial Data Schedule

        99a              Press Release issue by Homeland Stores, Inc. on
                         April 8, 1997. (Incorporated by reference to Exhibit
                         99 to Form 10-Q for quarterly period ended March 
                         22, 1997.)

        99b              Press Release issued by Homeland Stores, Inc. on
                         July 10, 1997. (Incorporated by reference to 
                         Exhibit 99 to Form 10-Q for quarterly period ended
                         June 14, 1997.)

        99c              Press Release issued by Homeland Stores, Inc. on
                         September 19, 1997. (Incorporated by reference to
                         Exhibit 99 to Form 10-Q for quarterly period ended
                         September 6, 1997.)

        99d *            Press Release issued by Homeland Stores, Inc. on
                         March 6, 1998.