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 Exchange
         Act of 1934
         For the quarterly period ended March 27, 1999


                                   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 May 10, 1999:

             Homeland Holding Corporation Common Stock: 4,908,427 shares
                              
                              
                              

                                


                        HOMELAND HOLDING CORPORATION

                                FORM 10-Q

                 FOR THE TWELVE WEEKS ENDED MARCH 27, 1999


                                 INDEX
 



                                                                         Page

PART I    FINANCIAL INFORMATION

ITEM 1.   Financial Statements                                            1 

          Consolidated Balance Sheets
           March 27, 1999, and January 2, 1999                            1
          Consolidated Statements of Operations
           Twelve Weeks ended March 27, 1999,
            and March 28, 1998                                            3
          Consolidated Statements of Cash Flows
           Twelve Weeks ended March 27, 1999,
            and March 28, 1998                                            4
          Notes to Consolidated Financial Statements                      5

ITEM 2.   Management's Discussion and Analysis of Financial Conditions
           and Results of Operations                                      7

PART II   OTHER INFORMATION

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








                                    







                                   



                                    i



PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

                HOMELAND HOLDING CORPORATION AND SUBSIDIARIES
                                
                       CONSOLIDATED BALANCE SHEETS
                                
              (In thousands, except share and per share amounts)


                                                    March 27,     January 2,
                                                      1999           1999
Current assets:
 Cash and cash equivalents                        $   4,033      $   7,856
 Receivables, net of allowance for uncollectible
  accounts of $916 and $972                           7,028          9,961
 Inventories                                         46,343         46,280
 Prepaid expenses and other current assets            3,433          2,527

   Total current assets                              60,837         66,624

Property, plant and equipment:
 Land and land improvements                           9,346          9,346
 Buildings                                           21,668         20,216
 Fixtures and equipment                              29,101         28,466
 Leasehold improvements                              18,907         17,488
 Software                                             5,428          5,396
 Leased assets under capital leases                   9,053          9,053
 Construction in progress                               578          3,278

                                                     94,081         93,243

Less, accumulated depreciation
 and amortization                                    23,098         20,832

Net property, plant and equipment                    70,983         72,411

Reorganization value in excess of amounts
 allocable to identifiable assets, less
 accumulated amortization of $36,657 and
 $34,018 at March 27, 1999, and January 2,
 1999, respectively                                   4,783          7,791

Other assets and deferred charges                    12,326         12,378

    Total assets                                  $ 148,929      $ 159,204

                                                                 Continued


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


                                       1



                  HOMELAND HOLDING CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS, Continued

                (In thousands, except share and per share amounts)

                     LIABILITIES AND STOCKHOLDERS' EQUITY



                                                 March 27,        January 2,
                                                   1999              1999
Current liabilities:
 Accounts payable - trade                       $  17,496        $  20,267
 Salaries and wages                                 1,961            2,827
 Taxes                                              3,078            3,093
 Accrued interest payable                           1,123            2,622
 Other current liabilities                          6,554            8,548
 Current portion of obligations under capital
  leases                                            1,207            1,235
 Current portion of long-term debt                  1,728            1,728


      Total current liabilities                    33,147           40,320

Long-term obligations:
 Long-term debt                                    83,088           83,852
 Obligations under capital leases                   1,466            1,700
 Other noncurrent liabilities                       1,373            1,464

    Total long-term obligations                    85,927           87,016

Stockholders' equity:
 Common stock $0.01 par value, authorized -
  7,500,000 shares, issued 4,908,427 shares
  and 4,904,417 shares at March 27, 1999,
  and January 2, 1999, respectively                    49               49
 Additional paid-in capital                        56,184           56,174
 Accumulated deficit                              (26,378)         (24,355)

Total stockholders' equity                         29,855           31,868

Total liabilities and stockholders' equity      $ 148,929        $ 159,204


               
                

                                    

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


       
                                      2




               HOMELAND HOLDING CORPORATION AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                                 12 weeks         12 weeks
                                                 March 27,        March 28,
                                                   1999             1998

Sales, net                                     $   123,668       $  121,403

Cost of sales                                       94,743           91,922

   Gross profit                                     28,925           29,481

Selling and administrative expenses                 26,067           26,148
Amortization of excess reorganization value          2,639            3,281

   Operating profit                                    219               52

Gain (loss) on disposal of assets                       4               (32)
Interest income                                       129                98
Interest expense                                   (2,000)           (2,049)

Loss before income taxes                           (1,648)           (1,931)

Income tax expense                                   (375)             (479)

Net loss                                           (2,023)           (2,410)

Accumulated deficit at beginning of period        (24,355)          (13,764)

Accumulated deficit at end of period            $ (26,378)        $ (16,174)

Basic and diluted earnings per share:
 Net loss per common share                      $   (0.41)        $   (0.50)

Weighted average shares outstanding             4,906,504         4,822,112



              
               

                                   


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



                                      3




               HOMELAND HOLDING CORPORATION AND SUBSIDIARIES

              CONSOLIDATED STATEMENT OF CASH FLOWS, Continued

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

 
                                                     12 weeks       12 weeks
                                                      ended          ended
                                                     March 27,      March 28,
                                                       1999           1998
Cash flows from operating activities:
   Net loss                                         $  (2,023)     $  (2,410)
   Adjustments to reconcile net loss
    to net cash from operating activities:
    Depreciation and amortization                       2,284          2,192
    Amortization of beneficial interest in 
     operating leases                                      28             28
    Amortization of excess reorganization value         2,639          3,281
    Amortization of financing costs                        12             17
    Loss (gain) on disposal of assets                      (4)            32
    Deferred income taxes                                 369            479
    Change in assets and liabilities:
     Decrease in receivables                            2,933          3,103
     (Increase) decrease in inventories                   (63)           456
     (Increase) decrease in prepaid expenses
      and other current assets                           (906)           244
     Decrease in other assets and 
      deferred charges                                      5             17
     Decrease in accounts payable - trade              (2,771)        (1,110)
     Decrease in salaries and wages                      (866)          (802)
     Decrease in taxes                                    (15)          (591)
     Decrease in accrued interest payable              (1,499)        (1,274)
     Decrease in other current liabilities             (1,994)        (1,567)
     Increase (decrease) in other noncurrent  
      liabilities                                         (84)            37

       Total adjustments                                   68          4,542
       Net cash provided by (used in) 
        operating activities                           (1,955)         2,132

Cash flows from investing activities:
 Capital expenditures                                    (862)        (1,605)
 Cash received from sale of assets                         10            -  

       Net cash used in investing activities             (852)        (1,605)

Cash flows from financing activities:
 Borrowings under revolving credit loans               29,155         26,416
 Payments under revolving credit loans                (29,903)       (26,398)
 Principal payments under notes payable                   (16)           (15)
 Proceeds from issuance of common stock                    10             27
 Principal payments under capital lease obligations      (262)          (304)


       Net cash used in financing activities           (1,016)          (274)

Net increase (decrease) in cash and cash equivalents   (3,823)           253

Cash and cash equivalents at beginning of period        7,856          4,778

Cash and cash equivalents at end of period          $   4,033      $   5,031

Supplemental information:
  Cash paid during the period for interest          $   3,473      $   3,312

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







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

                                    































                                       

                                        
                                       4



               HOMELAND HOLDING CORPORATION AND SUBSIDIARIES

                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"), through its
     wholly-owned subsidiary, Homeland Stores, Inc. ("Homeland") and Homeland's
     wholly-owned subsidiary, SLB Marketing, Inc., (collectively referred to
     herein as 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 2, 1999, and the notes thereto.

2.   Accounting Policies:

             The significant accounting policies of the Company are summarized
     in the consolidated financial statements of the Company for the 52 weeks
     ended January 2, 1999, and the notes thereto.

3.   Subsequent Event:

             On April 23, 1999, subsequent to the close of the first quarter
     of 1999, the Company completed its acquisition of nine Apple Markets from
     Associated Wholesale Grocers, Inc. ("AWG"). The net purchase price was 
     $1.1 million which represents $5.6 million for real property, fixtures and
     equipment, goodwill and a non-compete agreement, plus $2.3 million for 
     inventory, offset by $6.8 million in long-term debt assumed by the Company.
     The Company owns one store and leases the remaining eight from AWG. The 
     one owned store in Pryor, Oklahoma was closed as a result of the 
     proximity to an existing Company store.






                                      
                                      
                                      5                                      


             The Company financed this acquisition principally through the
     assumption of $6.8 million in long-term debt, together with increased
     borrowings under its working capital facility. The debt incurred by the
     Company to AWG is secured by liens on, and security interests in, the 
     assets associated with the nine stores. Subsequent to the closing of the
     acquisition, the Company repaid the portion of its indebtedness to AWG
     which relates to inventory and AWG is releasing its lien on inventory.

             The loan documents with AWG include certain customary restrictions,
     including restrictions on the payment of dividends. Under the various
     agreements of the acquisition, the nine markets are subject to non-compete,
     supply and right-of-first refusal agreements with AWG. In addition to  
     the other customary terms associated with a right-of-first refusal 
     agreement, the right-of-first refusal agreement provides for the repurchase
     by AWG of the nine stores based upon the occurrence of certain exercise
     events. The exercise events include, among other events, a change in
     control of Homeland and a transfer of more than 20% of the ownership
     interest of Holding or Homeland. 


                                    


























        




                                      
                                      6 
                                      


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:
       
       
                                                    March 27,     March 28,
                                                      1999          1998
          Net  Sales                                 100.0%        100.0%
          Cost of sales                               76.6          75.7
           Gross Profit                               23.4          24.3
          Selling and administrative                  21.1          21.6
          Amortization of excess reorganization 
           value                                       2.1           2.7
          Operating profit                             0.2           -
          Gain (loss) on disposal of assets            -             -
          Interest income                              0.1           0.1
          Interest expense                            (1.6)         (1.7)
          Loss before income taxes                    (1.3)         (1.6)
          Income tax provision                        (0.3)         (0.4)
       
            Net loss                                  (1.6)         (2.0)
  
  Results of Operations.
  
             Comparison of the Twelve Weeks Ended March 27, 1999 with the 
  Twelve Weeks Ended March 28, 1998

             Net sales increased $2.3 million, or 1.9%, from $121.4 million
  for the twelve weeks ended March 28, 1998, to $123.7 million for the twelve
  weeks ended March 27, 1999. The increase in sales is attributable to a 3.0%
  increase in comparable store sales partially offset by the sales lost due to
  the closing of one Homeland store during the second quarter of 1998. The 
  increase in comparable store sales is the result of increased promotional 
  activity and the grand re-opening of one remodeled store.
  
             During the twelve weeks ended March 27, 1999, there were six new
  competitive openings within the Company's markets including: two Albertson's;
  one Wal-Mart Supercenter; one Baker's Supermarket; and, the relocation of 
  two independent stores. Based on information publicly available, the Company
  expects that, during the remainder of 1999, Albertson's will open 1 additional
  store; Wal-Mart will open 3 additional supercenters; and regional chains and

  





                                       
                                       7


  independents will open two additional stores. Additionally, it is now expected
  that Wal-Mart could open one Neighborhood Supermarket, a new format in 
  Oklahoma City, by the end of the current fiscal year.
  
             Based in part on the anticipated impact of proposed and recent 
  new store openings and remodelings by competitors, management believes that
  market conditions will remain highly competitive, placing continued pressure
  on comparable store sales and net sales. In response to this highly 
  competitive environment, the Company intends to build on its strengths which
  consist of: (a) high quality perishable departments; (b) market position and
  competitive pricing; (c) customer service; (d) excellent locations; and (e)
  the "Homeland Savings Card," a customer loyalty card program. The Company is
  upgrading its stores by focusing its capital expenditures on projects that 
  will improve the overall appeal of its stores to targeted customers and is
  using its merchandising strategy to emphasize a competitive pricing structure,
  as well as leadership in quality products and services, selection and 
  convenient store locations. Additionally, the in-store merchandising strategy
  combines a strong presentation of fresh products along with meaningful values
  throughout the store on a wide variety of fresh and shelf stable products 
  each week. The Company's main vehicle of value delivery is its Homeland 
  Savings Card which allows customers with the card the opportunity to purchase
  over 2,000 items at a reduced cost each week. Finally, the Company continues
  the use of market research in order to maintain a better understanding of 
  customer behavior and trends in certain markets.
  
             Gross  profit as a percentage of sales decreased 0.9% from 24.3%
  for the twelve weeks ended March 28, 1998, to 23.4% for the twelve weeks 
  ended March 27, 1999. The decrease in gross profit margin primarily reflects
  increased promotional activities including the Company's response to certain
  new competitive store openings and special advertisements for the grand 
  opening of one remodeled Company store and a higher concentration of sales
  in lower gross profit departments.
  
              Selling and administrative expenses as a percentage of sales 
  decreased 0.5% from 21.6% for the twelve weeks ended March 28, 1998, to 21.1%
  for the twelve weeks ended March 27, 1999. The decrease in operating expenses
  is attributable to reduced labor costs as a result of improved store 
  productivity, favorable experience in employee benefit programs, reduced 
  utilities costs and reduced administrative expenses partially offset by an
  increase in advertising expenses and depreciation expenses during the quarter.
  The Company continues to review the alternatives to reduce selling and 
  administrative expenses and cost of sales in order to provide opportunities
  to pass additional savings along to its customers in the form of price 
  reductions in certain categories.
  
              The amortization of the excess reorganization value amounted to
  $2.6 million for the twelve weeks ended March 27, 1999. The excess 
  reorganization value is being amortized over three years, on a straight line 
  basis, and will be fully amortized by the third quarter of 1999.
  
                                      

                                      8


              Interest expense, net of interest income, decreased $0.1 million
  from $2.0 million for the twelve weeks ended March 28, 1998, to $1.9 million
  for the twelve weeks ended March 27, 1999. The decrease reflects lower 
  interest rates and additional interest income from the interest bearing 
  certificates of AWG, partially offset by an additional amount of debt 
  outstanding. During 1999, the Company anticipates that interest expense will
  increase with the acquisition of nine stores from AWG completed in April, 
  1999. See "Liquidity and Capital Resources."
  
              The Company recorded $0.4 million of income tax expense for the
  twelve weeks ended March 27, 1999, substantially all of which 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. As of March 27, 1999, the Company had a tax net operating loss
  carryforward of approximately $37.4 million, which may be utilized to offset
  future taxable income to the limited amount of $3.3 million for 1999 and each
  year thereafter.
  
              EBITDA  (as defined hereinafter) decreased $0.4 from $5.6 million,
  or 4.6% of sales, for the twelve weeks ended March 28, 1998, to $5.2 million,
  or 4.2% of sales for the twelve weeks ended March 27, 1999. The decline in
  EBITDA resulted primarily from the decrease in gross profit. 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.

  Liquidity and Capital Resources

             On August 2, 1996, 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 "Old Loan Agreement").
  The Old Loan Agreement, as amended, permitted the Company to borrow, under
  the working capital and letter of credit facility (the "Revolving Facility"),
  up to the lesser of (a) $32.0 million or (b) the applicable borrowing base.
  Funds borrowed under such facility are available for general corporate 
  purposes of the Company. The Old 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.

              On December 17, 1998, the Company executed a New Loan Agreement
  in exchange for the Old Loan Agreement in order to extend the maturity to 
  August 2, 2002, to provide additional term loan borrowing capacity of $10.0
  million for acquisitions ("Acquisition Term Loan"), to reduce interest rates,
  and to incorporate other technical changes. As of March 27, 1999, there 
  were no borrowings outstanding under the Acquisition Term Loan facility.
  As of March 27, 1999, the original Term Loan has an outstanding balance
  of $7.5 million, and the Company is required to make quarterly principal
  paydowns of approximately $0.4 million.










                                    

                                       

                                       9                                      


              The interest rate payable quarterly under the New Loan Agreement
  is based on the prime rate as defined plus a percentage which varies based
  on a number of factors, including: (a) whether it is the Revolving Facility
  or the Term Loan and the amount, if any, which is part of the Acquisition Term
  Loan; (b) the time period; and (c) whether the Company elects to use a London
  Interbank Offered Rate.
  
              The Revolving Facility provides for certain mandatory prepayments
  based on occurrence of certain defined and specified transactions. As of
  March 27, 1999, the Company had $17.1 million of borrowings, $3.3 million
  of letters of credit outstanding and $10.1 million of availability under
  its revolving credit facility.

              The obligations of the Company under the New 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 New 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.
  
              As of the Effective Date, the Company entered into an Indenture
  with Fleet National Bank (predecessor to State Bank and Trust Company), as 
  trustee, under which the Company issued $60.0 Million of New Notes. 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 New Notes are uncollateralized 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.

              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 net interest expense, taxes,
  depreciation and amortization, and gain/loss on disposal of assets), as 
  presented below, is the Company's measurement of internally-generated 













                                     10


  operating cash for working capital needs, capital expenditures and payment 
  of debt obligations:


                                         12 Weeks Ended        12 Weeks Ended
                                         March 27, 1999        March 28, 1998

       Loss before income taxes            $  (1,648)            $  (1,931)
  
       Interest income                          (129)                  (98)
  
       Interest expense                        2,000                 2,049
  
       (Gain) loss on disposal of assets          (4)                   32
  
       Amortization of excess
        reorganization value                   2,639                 3,281
  
       Depreciation and amortization           2,312                 2,220
  
            EBITDA                         $   5,170             $   5,553
  
       As a percentage of sales                 4.18%                 4.57%
  
       As a multiple of interest expense, net
          of interest income                    2.76x                 2.85x

              Net cash provided by operating activities decreased $4.0 million,
  from cash provided of $2.1 million for twelve weeks ended March 28, 1998, to
  cash used of $1.9 million for the twelve weeks ended March 27, 1999. The 
  decrease principally reflects a reduction in trade payables and other accrued
  liabilities and an increase in prepaid expenses during the first quarter of
  1999.
  
             Net cash used in investing activities decreased $0.7 million, 
  from $1.6 million for the twelve weeks ended March 28, 1998, to $0.9 million
  for the twelve weeks ended March 27, 1999. The Company invested $12.4 million,
  $14.0 million and $6.9 million in capital expenditures for 1998, 1997 and 
  1996, respectively. In August 1997, the Company acquired a Pratt Discount 
  Food store and in October 1997, the Company acquired three Food Lion stores.
  The acquisitions amounted to approximately $3.6 million. The capital 
  expenditures for 1998 were funded by internally-generated cash flows from 
  operations and the revolving credit facility under the Old Loan Agreement.
  
             Net cash used by financing activities increased $0.7 million, 
  from $0.3 million for the twelve weeks ended March 28, 1998, to $1.0 million
  for the twelve weeks ended March 27, 1999. The decrease reflects lower 
  borrowings outstanding under the revolving credit facility.







                                    11


  
             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 1999 are expected to be at approximately $10.5
  million. The New Loan Agreement limits the Company's capital expenditures 
  for 1999 to $13.0 million in cash capital expenditures and $12.0 million 
  for capital expenditures which are financed through capital leases or 
  equipment loans. The estimated 1999 capital expenditures of $10.5 is expected
  to be invested primarily in remodeling and maintenance of certain stores and
  does not include provisions for acquisitions. The funds for the capital
  expenditures are expected to be provided by internally-generated cash flows
  from operations and borrowings under the New Loan Agreement. 
  
             On February 15, 1999, the Company signed a letter of intent with
  AWG for the purchase of nine Apple Market supermarkets operated by Horner 
  Foods, Inc. in eastern Oklahoma. On April 23, 1999, subsequent to the
  close of the first quarter of 1999, the Company completed its acquisition of
  these nine stores. The net purchase price was $1.1 million which represents
  $5.6 million for real property, fixtures and equipment, goodwill and a non-
  compete agreement, plus $2.3 million for inventory, offset by $6.8 million
  in long term debt assumed from Horner Foods, Inc. The Company owns one 
  store and leases the remaining eight from AWG. The one owned store in Pryor,
  Oklahoma was closed as a result of the proximity to an existing Company
  store. 

             The Company financed this acquisition principally through the
  assumption of $6.8 million in long-term debt, together with increased
  borrowings under its working capital facility. The debt incurred by the
  Company to AWG is secured by liens on, and security interests in, the assets
  associated with the nine stores. Subsequent to the closing of the acquisition,
  the Company repaid the portion of its indebtedness to AWG which relates to
  inventory and AWG is releasing its liens on inventory.

             The loan documents with AWG include certain customary restrictions,
  including restrictions on the payment of dividends. Under the various 
  agreements of the acquisition, the nine markets are subject to non-compete,
  supply and right-of-first refusal agreements with AWG. In addition to the
  other customary terms associated with a righ-of-first refusal agreement, the
  right-of-first refusal agreement provides for the repurchase by AWG of the
  nine stores based upon the occurrence of certain exercise events. The 
  exercise events include, among other events, a change in control of Homeland
  and a transfer of more than 20% of the ownership interest of Holding and
  Homeland.

             The Company's ability to meet its working capital needs, meet its
  debt and interest obligations and meet its 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


                                    
                                    12


  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.
  
  Year 2000
  
              The Year 2000 issue results from computer programs being written
  using two digits rather than four to define the applicable year. As the Year
  2000 approaches, systems using such programs may be unable to accurately
  process certain date-based information. Like many other companies, the 
  Company is continuing to assess and modify its computer applications and 
  business processes to provide for their continued functionality. Commencing
  in October 1996, the Company implemented a program of evaluating its computer
  systems to identify areas of potential concern, both with respect to 
  information technology and non-information technology systems (e.g., 
  microcontrollers), remediating / replacing systems to address those potential
  areas of concern, and ultimately testing those changes for compliance. This
  continuing assessment has been implemented on a system-by-system basis and 
  includes the readiness of external entities, such as vendors, which interface
  with the Company. Such program 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. The Company has
  completed its evaluation of systems and its detailed planning for remediating
  or replacing non-compliant systems. Remediation / replacement efforts are
  approximately 80% complete and testing procedures are approximately 75% 
  complete. Testing procedures have included tests of certain systems for which
  remediation / replacement efforts were ultimately deemed unnecessary based 
  on the positive results of such tests.
  
              The Company has assessed its vendors' Year 2000 readiness, 
  principally through the review of questionnaires which the Company has 
  circulated to its vendors. AWG, which supplies approximately 70% of the goods
  sold in the Company's stores, believes that it will be Year 2000 compliant.
  Although not all of the responses from other vendors have been conclusive, 
  management does not presently expect that it will be adversely affected by 
  its vendors' Year 2000 readiness.
  
              A significant portion of the Company's systems were found to be
  Year 2000 compliant without any remediation or replacement efforts. The area
  of most concern for management has been the point of sale ("POS") computers
  used in the operation of the stores. Internal tests conducted by Homeland 
  generally reflect that its POS software is already Year 2000 compliant, 
  however, the Company was unable to obtain reasonable assurance and support
  from the software provider to corroborate the conclusions of its POS testing
  of the current software. As a result, the Company has elected to upgrade its
  POS software to the Year 2000 version which the vendor states is compliant.
  The incremental cost is approximately $0.4 million and will be installed 
  during the second quarter of 1999. Additionally, the Company will further 
  test the software upon full installation. The Company is also replacing 
  older power management systems which operate various systems in the stores.



                                    
                                    
                                    13 


  The new systems are currently being installed and it is anticipated that the
  conversion will be completed by the end of the third quarter of 1999. The 
  estimated capital investment is $1.3 million.
  
             The cost of the program is not expected to exceed $2.0 million, 
  the majority of which is described above for power management systems and 
  upgrades to POS software. Approximately $0.2 million has been incurred as
  of March 27, 1999. Homeland is funding these costs under its working capital
  facility.
  
             Based on its assessment, its progress to date, and its expectation
  of continued testing of systems, the Company believes that its efforts will
  result in Year 2000 compliance by the end of the third quarter of 1999. If
  circumstances arise indicating the Company's and / or vendor's efforts will
  not be successful in achieving Year 2000 compliance, the Company believes it
  can develop and implement effective contingency plans in a timely manner.
  
             Due to the general uncertainty inherent in the Year 2000 process,
  primarily due to issues surrounding the Year 2000 readiness of third-party 
  suppliers and vendors, a reasonable worst case scenario is difficult to 
  determine at this time. The Company does not anticipate more than temporary
  isolated disruptions attributed to Year 2000 issues to affect either the 
  Company or its primary vendors. 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.
  
  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.
















                                    14




  
  PART II - OTHER INFORMATION
           
  Item 6.   Exhibits and Reports on Form 8-K
  
            (a)  Exhibits:  The following exhibit is 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 March 27, 1999.



                                    




































                                    15



                               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: May __, 1999       By:                                     
                                     
                           David B. Clark, President, Chief Executive
                           Officer, and Director
                           (Principal Executive Officer)
                           
  
  Date: May __, 1999       By:                                     
                                     
                           Wayne S. Peterson, Senior Vice President/
                           Finance, Chief Financial Officer and
                           Secretary
                           (Principal Financial Officer)