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

                                FORM 10-Q

(Mark One)
             Quarterly Report Under Section 13 or 15 (d) of the Securities 
    X        Exchange Act of 1934
             For the quarterly period ended September 12, 1998
             
                                    OR           
             
             Transition Report Pursuant to Section 13 or 15 (d) of the 
             Securities Exchange Act of 1934
             For the transition period from _________to _________

Commission file No.:  33-48862


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


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

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

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

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

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

       Indicate the number of shares outstanding of each of the registrant's 
classes of common stock as of October 9, 1998:

          Homeland Holding Corporation Common Stock:  4,842,197 shares
                              
                              
                              
                              
                       HOMELAND HOLDING CORPORATION
                                
                               FORM 10-Q
            FOR THE THIRTY-SIX WEEKS ENDED SEPTEMBER 12, 1998
                                
                                INDEX
                                
                                
                                
                                                                       Page
PART 1 FINANCIAL INFORMATION

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

          Consolidated Balance Sheets as of
             September 12, 1998, and January 3, 1998...................  1
          Consolidated Statements of Operations
             Twelve Weeks ended September 12, 1998, and  
             September 6, 1997.........................................  3
          Consolidated Statements of Operations
             Thirty-six Weeks ended September 12, 1998, and  
             September 6, 1997.........................................  4
          Consolidated Statements of Stockholders Equity (Deficit)
             Thirty-six Weeks ended September 12, 1998 and  
             September 6, 1997.........................................  5
          Consolidated Statements of Cash Flows
             Thirty-six Weeks ended September 12, 1998 and  
             September 6, 1997.........................................  6
          Notes to Consolidated Financial Statements...................  7

ITEM 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations....................................  8

PART II   OTHER INFORMATION


ITEM 3.   Submission of Matters of a Vote of Security Holders.......... 12

ITEM 4.   Other Information............................................ 12

ITEM 5.   Exhibits and Reports on Form 8-K............................. 13






                                      i

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                  HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                       CONSOLIDATED BALANCE SHEETS

              (In thousands, except share and per share amounts)


                             ASSETS

                                             September 12,        January 3, 
                                                 1998               1998
                                              (Unaudited)
Current assets:                                      
 Cash and cash equivalents                   $   5,007          $   4,778
 Receivables, net of allowance for 
  uncollectible accounts of $1,085 
  and $1,198                                     9,789              9,313 
 Inventories                                    44,900             45,946
 Prepaid expenses and other current assets       2,583              2,581
                                                             
      Total current assets                      62,279             62,618 

Property, plant and equipment:                               
 Land and land improvements                      9,925              9,303 
 Buildings                                      20,136             19,995 
 Fixtures and equipment                         26,441             22,267
 Leasehold improvements                         16,879             13,459
 Software                                        5,134              4,991
 Leased assets under capital leases              8,970              8,610
 Construction in progress                          311              2,769

                                                87,796             81,394
Less, accumulated depreciation                               
 and amortization                               17,988             11,299 

Net property, plant and equipment               69,808             70,095

Reorganization value in excess of amounts                                       
 allocable to identifiable assets, less                                   
 accumulated amortization of $29,955 at
 September 12, 1998, and $20,346 at
 January 3, 1998                                12,170             23,162

Other assets and deferred charges                9,940             10,166
                                                             
   Total assets                              $ 154,197          $ 166,041
                                                             
                                                      Continued

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

                                     1


                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED BALANCE SHEETS, Continued

            (In thousands, except share and per share amounts)


                   LIABILITIES AND STOCKHOLDERS' EQUITY
                                

                                             September 12,       January 3,  
                                                 1998              1998
                                              (unaudited)

Current liabilities:                                 
 Accounts payable - trade                    $  17,551          $  18,941
 Salaries and wages                              2,414              2,508
 Taxes                                           3,966              3,605
 Accrued interest payable                          959              2,619
 Other current liabilities                       7,621             10,042
 Current portion of long-term debt              22,519              1,728
 Current portion of obligations under 
  capital leases                                 1,286              1,286

  Total current liabilities                     56,316             40,729
                                                             
Long-term obligations:                                       
 Long-term debt                                 60,182             78,353
 Obligations under capital leases                2,054              2,608
 Other noncurrent liabilities                    1,814              2,027
                                                             
  Total long-term obligations                   64,050             82,988
                                                             
                                                             
Stockholders' equity:                                        
 Common Stock,                                             
  $0.01 par value, authorized - 7,500,000                                       
  shares, issued 4,841,025 shares at  
  September 12, 1998, and issued 4,820,637
  shares at January 3, 1998                         48                 48
 Additional paid-in capital                     56,186             56,040
 Accumulated deficit                           (22,403)           (13,764)
                                                             
  Total stockholders' equity                    33,831             42,324
                                                             
  Total liabilities and stockholders' 
   equity                                    $ 154,197          $ 166,041
                                                             



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

                                     2


                HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                                                           
                                                      
                                              12 weeks       12 weeks        
                                               ended           ended            
                                            September 12,   September 6,  
                                                1998           1997

Sales, net                                 $  118,129      $   114,935    
                                                             
Cost of sales                                  89,665           87,690         

 Gross profit                                  28,464           27,245 
                                                             
Selling and administrative expenses            26,497           25,801 

Amortization of excess reorganization value     3,123            3,271 

 Operating loss                                (1,156)          (1,827)    
                                                             
Interest expense                                1,833            1,890 
                                                             
Loss before income taxes                       (2,989)          (3,717) 

Income tax expense (benefit)                      481             (250)     
                  
Net loss                                       (3,470)          (3,467) 

Basic and diluted earnings per share: 
 Net loss per share                        $    (0.72)       $   (0.73)

Weighted average shares outstanding          4,836,046        4,782,294 

                                                             


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

                                     3









                                      
                 HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF OPERATIONS

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


                                                                         
                                             36 weeks           36 weeks   
                                              ended              ended     
                                           September 12,       September 6,
                                              1998               1997

Sales, net                                 $  363,041        $  351,249        
                                                             
Cost of sales                                 275,733           266,171 
                                                             
 Gross profit                                  87,308            85,078   
                                                             
Selling and administrative expenses            79,275            76,067   

Amortization of excess reorganization value     9,609            10,095      

 Operating loss                                (1,576)           (1,084)   

Interest expense                                5,632             5,705   

Loss before income taxes                       (7,208)           (6,789)        
                                                             
Income tax expense                              1,431             1,471   
                         
Net loss                                       (8,639)           (8,260)    

Basic and diluted earnings per share:
 Net loss per share                        $    (1.79)       $    (1.73)        
                                                             
Weighted average shares outstanding           4,827,671        4,766,115        
                                                             



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

                                      4









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

Balance, December 28, 1996       4,758,025    $   48    $ 56,013   $  (3,120)    $   52,941

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

Issuance of common stock            58,577        -            4        -                 4

Balance, September 6, 1997       4,816,602        48    $ 56,017   $ (11,380)    $   44,685    

Balance, January 3, 1998         4,820,637    $   48    $ 56,040   $ (13,764)    $   42,324       

Net loss                             -            -          -        (8,639)        (8,639)                          

Issuance of common stock            20,388        -     $    146        -        $      146           

Balance, September 12, 1998      4,841,025    $   48    $ 56,186   $ (22,403)    $   33,831         -




</TABLE>




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

                                          5



                  HOMELAND HOLDING CORPORATION AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

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


                                                                                
                                                     36 weeks      36 weeks     
                                                      ended         ended       
                                                  September 12,  September 6,
                                                      1998           1997       

Cash flows from operating activities:
 Net loss                                            $ (8,639)     $ (8,260)    
 Adjustments to reconcile net loss to net
  cash provided by operating activities:
   Depreciation and amortization                        6,743         5,355  
   Amortization of excess reorganization value          9,609        10,095 
   Amortization of financing costs                         52            43 
   Loss on disposal of assets                              34            59
   Amortization of beneficial interest in
    operating leases                                       84            84
   Adjustment to excess reorganization value             -              292
   Deferred income taxes                                1,383         1,176   
   Change in assets and liabilities:
     (Increase) decrease in receivables                  (476)          707    
     Decrease in inventories                            1,046           812    
     (Increase) decrease in prepaid expenses
      and other current assets                             (2)          158 
     (Increase) decrease in other assets and
      deferred charges                                     66           (92)    
     Increase (decrease) in accounts payable-trade     (1,390)          442    
     Decrease in salaries and wages                       (94)         (791) 
     Increase in taxes                                    361         1,562    
     Decrease in accrued interest payable              (1,660)       (1,829)   
     Decrease in other current liabilities             (2,421)         (917)  
     Increase (decrease) in other noncurrent 
      liabilities                                        (191)          133    
                                             
       Net cash provided by operating activities        4,505         9,029    
                                                      
Cash flow used in investing activities:
 Capital expenditures                                  (6,083)       (5,762)    
 Cash received from sale of assets                         19            25     
                                                      
       Net cash used in investing activities           (6,064)       (5,737)    

Cash flows used by financing activities:
 Borrowings under revolving credit loans               93,337        94,476  
 Payments under revolving credit loans                (89,838)      (92,504) 
 Payments on tax notes                                    (46)          (46)
 Proceeds from issuance of common stock                   146          - 
 Principal payments under note payable                   (833)         - 
 Principal payments under capital lease obligations      (978)       (1,003)
           
       Net cash provided by financing 
        activities                                      1,788           923    
                                                   
Net increase in cash and cash equivalents                 229         4,215   

Cash and cash equivalents at beginning of period        4,778         1,492    
                                                      
Cash and cash equivalents at end of period           $  5,007       $ 5,707     

Supplemental information:
 Cash paid during the period for interest            $  7,541       $ 7,378   

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


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

                                     6






























                                 

              HOMELAND HOLDING CORPORATION AND SUBSIDIARY

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (Unaudited)

1.   Basis of Preparation of Consolidated Financial Statements:

            The accompanying unaudited interim consolidated financial
     statements of Homeland Holding Corporation ("Holding") and its 
     Subsidiary, Homeland Stores, Inc. ("Stores" and together with Holding,
     the "Company"), reflect all adjustments, which consist only of normal 
     and recurring adjustments, which are, in the opinion of management,
     necessary for a fair presentation of the consolidated financial
     position and the consolidated results of operations and cash flows
     for the periods presented.  

             These unaudited consolidated financial statements should be read
     in conjunction with the consolidated financial statements of the Company
     for the period ended January 3, 1998, and the notes thereto.

2.   Accounting Policies:

            The significant accounting policies of the Company are summarized
     in the consolidated financial statements of the Company for the 53 weeks
     ended January 3, 1998, and the notes thereto.
     
3.   Net Loss Per Share:

            Options to purchase 257,000 shares of common stock with a weighted 
     average exercise price of $6.66 were outstanding at September 12, 1998, 
     but were not included in the computation of diluted earnings per share
     because the effect would be antidilutive.

4.   Term Loan and Revolving Facility

            The Company's Term Loan and Revolving Facility will mature on 
     August 1, 1999.  Because this maturity date is within 12 months of this 
     reporting period, $20,766 million of debt has been reclassified from 
     long-term to current.  The Company is currently in the process of 
     negotiations with its banks to refinance the debt and extend the 
     maturity date.





                                     7











Item 2.     Management's Discussion and Analysis of Financial
       Conditions and Results of Operations
  
       General
       
              The table below sets forth selected items from the Company's
       consolidated income statement as a percentage of net sales of the 
       periods indicated:
       
                                12 weeks ended           36 weeks ended
                         September 12, September 6, September 12, September 6,
                              1998      1997           1998          1997
      Net Sales              100.0%    100.0%         100.0%        100.0%
      Cost of Sales           75.9      76.3           76.0          75.8
         Gross Profit         24.1      23.7           24.0          24.2
      Selling and 
       administrative         22.4      22.4           21.8          21.7
      Amortization of   
       excess reorganization
       value                   2.6       2.8            2.6           2.9 
      Operating profit
       (loss)                 (0.9)     (1.6)          (0.4)         (0.3) 
      Interest expense         1.6       1.6            1.6           1.6
      Loss before income                                   
       taxes                  (2.5)     (3.2)          (2.0)         (1.9) 
      Income tax                                
       provision               0.4      (0.2)           0.4           0.4

         Net loss             (2.9)     (3.0)          (2.4)         (2.4)
  
  
  
  
  Results of Operations.
  
            Comparison of Twelve Weeks and Thirty-Six Weeks ended September 
  12, 1998, with Twelve Weeks and Thirty-Six Weeks ended September 6, 1997.
  
            Net sales for the 12 weeks and 36 weeks ended September 12, 1998,
  increased 2.8 % and 3.4%, respectively, from the net sales of the
  corresponding period of 1997.  Comparable store sales for the 12 weeks
  and 36 weeks ended September 12, 1998, decreased by 1.45% and 1.87%, 
  respectively, as compared to the corresponding periods of 1997.
  
            The improvement in total sales is partially due to an additional 
  four stores in operation versus the same period last year.  Incremental
  improvements have also come from continued usage of frequency card-based
  promotions and direct marketing efforts.  However, the like-store sales
  decline in the quarter and year-to-date is primarily due to increasing 
  competitive promotions and the opening of competitors' stores including 
  third quarter openings of a Wal-Mart Supercenter in Broken Arrow, Ok. and 
  a Price-Mart in Tulsa, Ok.




                                     8


            Gross  profit as a percentage of sales for the 12 weeks ended 
  September 12, 1998, was 24.1%, an increase from the corresponding period in
  1997 of 23.7%. The increase in gross profit percentage for the quarter
  versus last year reflects the cycling of strong promotional spending in the
  prior year as well as improvements in the merchandising mix of higher
  gross profit departments.  Lower cost of goods in certain categories
  also contributed to the margin improvement.  Gross profit as a percentage
  of sales for the 36 weeks ended September 12, 1998, was 24.0%, a decrease
  from the corresponding period in 1997 of 24.2%.  
  
            Selling and administrative expenses for the 12 weeks ended
  September 12, 1998, maintained a level of 22.4%, as a percentage of net 
  sales, compared to 22.4% for the corresponding period of 1997.  The 
  Company was able to maintain last year's level of SG&A as a percentage
  of sales through increasing store level productivity and decreases in 
  certain direct expenses, offset in part by increases in overhead expenses.
  For the 36 weeks ended September 12, 1998, selling and administrative
  expenses as a percentage of net sales increased by 0.1% to 21.8% from   
  21.7% in the corresponding period of 1997.

            The Company recorded amortization of excess reorganization value
  of $3.1 million and $9.6 million for the 12 weeks and 36 weeks ended
  September 12, 1998, respectively.  The amortization of the excess
  reorganization value is expected to negatively affect earnings for the 
  next four fiscal quarters.
  
            Interest  expense for the 12 weeks ended September 12, 1998, and 
  September 6, 1997, was $1.8 million.  Interest expense for the 36 weeks 
  ended September 12, 1998, was $5.6 million compared to $5.7 million 
  for the 36 weeks ended September 6, 1997.
  
            The  Company recorded an income tax provision of $0.1 million 
  and $1.4 million for the 12 weeks and 36 weeks ended September 12, 1998,
  respectively.  The effective tax rate differs from the statutory rate due
  to amortization of excess reorganization value, which is not deductible for 
  income tax purposes.  The net operating loss ("NOL") carryforwards 
  available for utilization in 1998 are limited to approximately 
  $3.3 million, the benefit of which is being recorded as a reduction of
  excess reorganization value rather than a reduction of income tax expense.
  The NOL carryforward available in 1998 is expected to be fully utilized 
  in the fourth quarter of 1998, and accordingly, the Company will commence 
  to incur income tax liabilities.

            The Company's EBITDA (as defined hereinafter) for the 12 weeks
  ended September 12, 1998, increased to $4.3 million or 3.6% of net sales, 
  from the EBITDA of $3.3 million or 2.9% of net sales for the corresponding
  period in 1997.  For the 36 weeks ended September 12, 1998, EBITDA was 
  $14.9 million or 4.1% of net sales compared to $14.4 million or 4.1% for 
  the corresponding period of 1997. 
  
            Net loss for the 12 weeks ended September 12, 1998, was $3.5 
  million or $0.72 per share compared to a net loss of $3.5 million or 
  $0.73 per share for the corresponding period in 1997. Net loss for the 
  36 weeks ended September 12, 1998, was $8.6 million or $1.79 per share



                                   9


  compared to a net loss of $8.3 million or $1.73 per share for the
  corresponding period in 1997.
  
         The Company is amortizing its excess reorganization value of $45
  million over a three-year period, and such amortization has affected 
  earnings significantly. If the Company excluded such amortization of 
  excess reorganization value for the 12 weeks and 36 weeks ended 
  September 12, 1998, the Company would record a loss of $0.3 million or 
  $0.07 per share and income of $1.0 million or $0.20 per share, 
  respectively.
  
  Liquidity and Capital Resources
  
            The primary sources of liquidity and capital for the Company's
  operations have been borrowing under the revolving credit facility and
  internally-generated funds.

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

                                12 weeks ended          36 weeks ended
                         September 12, September 6, September 12, September 6,
                               1998      1997      1998      1997

  Loss before income taxes  (2,989)   (3,717)    (7,208)   (6,789)
                                                          
  Interest expense           1,833     1,890      5,632     5,705
                                                           
  Amortization of 
   reorganization value      3,123     3,271      9,609    10,095
                                                           
  Depreciation and
   amortization              2,333     1,889      6,825     5,439
                                                           
        EBITDA               4,300     3,333     14,858    14,450
                                                           
      As a percentage of
       sales                  3.6%      2.9%       4.1%      4.1%
                                                           
      As a multiple of 
       interest expense       2.3x      1.8x       2.6x      2.5x

           Cash flow from operations provided $4.5 million for the 36 weeks
  ended September 12, 1998, and $9.0 million for the 36 weeks ended 
  September 6, 1997.  The decrease in cash flow from operations for the 
  36 weeks ended September 12, 1998, was primarily due to decreases in trade 
  accounts payable and other current liabilities.






                                    10

  
           The Company's investing activities used net cash of $6.1 million
  in the 36 weeks ended September 12, 1998, as compared to net cash used by
  investing activities of $5.7 million in the 36 weeks ended September 6,
  1997.
  
           Financing activities of the Company provided net cash of $1.8 
  million and $0.9 million for the 36 weeks ended September 12, 1998, and 
  September 6, 1997, respectively.

           As of September 12, 1998, the Company had $14.1 million of 
  borrowings and $3.3 million of letters of credit outstanding under its 
  $32.0 million revolving credit facility.  The revolving credit facility 
  provides for borrowings to the lesser of (a) $32.0 million or (b) the 
  applicable borrowing base.  The applicable borrowing base on September 12,
  was $30.0 million.  Management believes that the revolving credit facility 
  and cash flow from operations will be adequate for the Company's short-  
  term requirements.

           The Company's Term Loan and Revolving Facility will mature on
  August 1, 1999.  The Company is currently in the process of negotiations
  with its banks to refinance the debt and extend the maturity date.
  
           The Company is continuing to improve its store facilities through  
  its capital expenditure program to maintain and enhance its market
  competitiveness.  Cash capital expenditures for 1998 are expected to be
  at $12.9 million.  The credit agreement limits the Company to $13.0 million
  cash capital expenditures for 1998.  The Company is also allowed $7.0
  million of new capital leases each year.

           Year 2000

           As of October, 1996, Homeland had numerous computer systems
  which used a date structure which management was concerned might be
  adversely affected by the year 2000.  Commencing in October, 1996,
  management implemented a program of analyzing its computer systems
  to identify areas of potential concern, both with respect to information
  technology and non-information technology systems (e.g., microcontrollers),
  and making changes to address those potential areas of concern.  Such
  program has been implemented on a system-by-system basis and has included
  and will continue to include both consultation by Homeland with the 
  vendors who provided its computer systems and internal testing by
  Homeland of those computer systems.

           Homeland expects to have substantially completed its analysis
  and testing of its financial reporting and store reporting systems in the
  fourth quarter of 1998.  Management does not presently anticipate that
  such analysis and testing will reflect a need for any substantial changes
  to its financial reporting and store reporting systems.

           Management presently expects its program to be completed in the
  second quarter of 1999.  As of the date hereof, the program is on schedule
  and Homeland has not deferred any part of its program.  The only area
  which management presently believes might not be completely addressed
  by the second quarter of 1999 is the point-of-sale computers used in the
  operation of the stores.  Homeland has been advised by its vendor that
  year 2000 compliant software will be released in December, 1998; however,
  while management wants to review such software upon its release, internal
  tests conducted by Homeland generally reflect that its point-of-sale 
  computers are already year 2000 compliant.  Even if the point-of-sale
  computers are determined not to be year 2000 compliant, management does
  not believe that such non-compliance would have a material adverse effect
  on Homeland because of the extended period available to install the 
  software expected to be available from the vendor, the limited purposes
  for which the information generated thereby is used internally by
  Homeland and the manual systems used by Homeland in connection with the
  generation of that information.

                                 11
                 
   
           Based on its program and its progress to date, management does
  not believe that a contingency plan is necessary and does not believe
  that Homeland has any significant exposure in connection with year 
  2000 compliance.  As of the date hereof, no such contingency plan has
  been developed.  The measurement of year 2000 compliance is necessarily
  fluid and management will continue to monitor the extent of such
  compliance and the effects associated with any non-compliance.

           Homeland is also assessing the status of its vendors' year
  2000 readiness, principally through the review of questionnaires which
  Homeland circulated to its vendors.  Although the responses from the
  vendors have not been conclusive, Homeland does not presently expect
  that it will be adversely affected by its vendors' year 2000 readiness.

          The cost of the program is not expected to exceed $1.5 million,
  most of which will be spent to replace older power management systems
  which operate various systems in 39 stores, unless Homeland needs to
  upgrade its software with respect to its point-of-sale computers and,
  if Homeland were required to upgrade its software with respect to its
  point-of-sale computers, the cost of the program is not expected to
  exceed $2.0 million.  Homeland is funding those costs under its working 
  capital facility.  The program has not caused Homeland to defer any other 
  significant information technology program.


  Safe Harbor Statements Under the Private Securities Litigation Reform Act 
  of 1995
  
           The statements made under Item 2: Management's Discussion and 
  Analysis of Financial Condition and Results of Operations and other 
  statements in this Form 10-Q which are not historical facts, particularly
  with respect to future net sales, are forward-looking statements. These
  forward-looking statements are subject to risks and uncertainties that 
  could render them materially inaccurate or different. The risks and 
  uncertainties include, but are not limited to, the effect of economic 
  conditions, the impact of competitive promotional and new store activities,
  labor cost, capital constraints, availability and costs of inventory, 
  changes in technology and the effect of regulatory and legal developments.
  

















                                      12

  
  PART II - OTHER INFORMATION

  Item 3.   Submission of Matters to a Vote of Security Holders

            The Company held its 1998 Annual Meeting of Stockholders on
  July 9, 1998.  At such meeting, Robert E. (Gene) Burris, David B. Clark,
  Edward B. Krekeler, Jr., Laurie M. Shahon, John A. Shields, William B.
  Snow and David N. Weinstein were elected to serve on the Board of 
  Directors for a one-year term, ending at the next annual meeting.

            In the matter of the election of directors, the votes were 
  as follows:

                                                For       Withhold Authority
            Robert E. (Gene) Burris          3,923,174         37,416
            David B. Clark                   3,953,055          7,535  
            Edward B. Krekeler, Jr.          3,955,483          5,107
            Laurie M. Shahon                 3,953,935          6,655
            John A. Shields                  3,947,329         13,672 
            William B. Snow                  3,949,193         11,397
            David N. Weinstein               3,955,356          5,234

            In the matter of ratification of the appointment of 
  PricewaterhouseCoopers LLP (formerly Coopers & Lybrand L.L.P.) as 
  independent auditors for Fiscal 1998, 3,949,540 votes were cast in favor 
  of approval, 5,401 votes were cast against, and holders of 5,660 shares 
  abstained or did not vote.

            In the matter of approving the amendment to Homeland Holding
  Corporations's 1997 Non-Employee Directors Stock Option Plan, 3,885,240
  votes were cast in favor, 70,774 votes were cast against, and holders
  of 4,463 shares abstained or did not vote.

  
  Item 4.   Other Information
  
            Mr. John C. Rocker has accepted the position of Vice President/ 
  Operations effective September 14, 1998.














                                     13






  Item 5.    Exhibits and Reports on Form 8-K
  
             (a)     Exhibits:     The following exhibits are filed as part
                                   of this report:
  
                     Exhibit No.   Description
  
                          27       Financial Data Schedule.
  
  
             (b)    Report on Form 8-K:  The Company did not file any 
                    Form 8-K during the quarter ended September 12, 1998.



                                       14











































                                       SIGNATURES
  
            Pursuant to the requirements of the Securities Exchange Act of
  1934, the registrant has duly caused this report to be signed on its behalf
  by the undersigned thereunto duly authorized.
  
  
                             HOMELAND HOLDING CORPORATION
  
  
  Date: October 16, 1998         By: /s/  David B. Clark
                                 David B. Clark, President, Chief Executive
                                 Officer and Director
                                 (Principal Executive Officer)
                           
  
  Date: October 16, 1998         By: /s/  Deborah A. Brown
                                 Deborah A. Brown, Vice President - Accounting
                                 Corporate Controller, Treasurer and
                                 Assistant Secretary
                                 (Principal Financial Officer)