SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549

                            FORM 10-Q

(Mark One)
[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
          OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 3, 1997
                          
                              OR

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
          OR THE SECURITIES EXCHANGE ACT OF 1934

       For the transition period from ________ to _________        
                                      
                  Commission File Number 0-11822
                    __________________________        

                      MICHAELS STORES, INC.
      (Exact name of registrant as specified in its charter)

    Delaware                                 75-1943604
(State or other jurisdiction of           (I.R.S. Employer
 incorporation or organization)       Identification Number)

           8000 Bent Branch Drive, Irving, Texas  75063
             P.O. Box 619566, DFW, Texas  75261-9566
   (Address of principal executive offices including zip code)

                          (972) 409-1300
       (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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                                         Shares Outstanding as of
         Title                           June 9, 1997

Common stock, par value $.10 per share        26,152,399

<PAGE>

                           MICHAELS STORES, INC.
                                 FORM 10-Q
                      Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

                           MICHAELS STORES, INC.
                        CONSOLIDATED BALANCE SHEETS
                     (In thousands except share data)
                                (Unaudited)
<TABLE>
<CAPTION>
                                  ASSETS
                                
                                                  May 3,        February 1,
                                                   1997            1997    
                                                ________         ________
<S>                                             <C>              <C>
Current assets:
  Cash and equivalents                          $ 77,309         $ 59,069 
  Merchandise inventories                        370,681          351,208 
  Income taxes receivable
    and deferred income taxes                     13,774           15,207 
  Prepaid expenses and other                      13,305           12,059 
                                                ________         ________
      Total current assets                       475,069          437,543 
                                                ________         ________

Property and equipment, at cost                  298,038          294,022 
   Less accumulated depreciation                (113,673)        (104,943)
                                                ________         ________
                                                 184,365          189,079 
                                                ________         ________

Costs in excess of net assets of
  acquired operations, net                       139,729          140,697
Deferred income taxes                             11,758           10,550
Other assets                                       3,383            6,566
                                                ________         ________  
                                                 154,870          157,813
                                                ________         ________      
                                                $814,304         $784,435 
                                                ________         ________
                                                ________         ________


                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                              $115,117         $104,966 
  Accrued liabilities and other                   85,502           92,765
                                                ________         ________ 
    Total current liabilities                    200,619          197,731
                                                ________         ________
 
Senior notes                                     125,000          125,000
Convertible subordinated notes                    96,940           96,940 
Other long-term liabilities                       31,107           31,962
                                                ________         ________  
    Total long-term liabilities                  253,047          253,902 
                                                ________         ________
                                                 453,666          451,633 
                                                ________         ________

Commitments and contingencies

Shareholders' equity:
  Common stock, 26,032,984 shares                                           
    outstanding                                    2,603            2,369 
  Additional paid-in capital                     296,122          271,405 
  Retained earnings                               61,913           59,028 
                                                ________         ________ 
    Total shareholders' equity                   360,638          332,802
                                                ________         ________ 
                                                $814,304         $784,435
                                                ________         ________
                                                ________         ________
</TABLE>

See accompanying notes to consolidated financial statements.









<PAGE>

                           MICHAELS STORES, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands except per share data)
                                (Unaudited)
<TABLE>
<CAPTION>

                                                  Three Months         
                                              _______________________
 
                                               May 3,       April 28,   
                                                1997          1996    
                                              ________      _________

<S>                                           <C>            <C>    
Net sales                                     $321,318       $301,875 

Cost of sales and occupancy expense            220,128        205,067 
Selling, general and administrative
  expense                                       91,884         88,970
                                              ________       ________  
Operating income                                 9,306          7,838


Interest expense                                 5,742          3,710  
Other income, net                               (1,549)          (267)
                                              ________       ________
Income before income taxes                       5,113          4,395 

Provision for income taxes                       1,943          1,670 
                                              ________       ________
Net income                                    $  3,170       $  2,725
                                              ________       ________
                                              ________       ________
 

Earnings per common and common               
  equivalent share                                $.12           $.12  
                                                  ____           ____
                                                  ____           ____

Weighted average common and common
  equivalent shares outstanding                 26,303         22,459
                                                ______         ______
                                                ______         ______
 
</TABLE>





See accompanying notes to consolidated financial statements.

<PAGE> 

                           MICHAELS STORES, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (Unaudited)
<TABLE>
<CAPTION>
                                                        Three Months       
                                                   _______________________

                                                    May 3,       April 28,
                                                     1997          1996    
                                                   ________      _________
<S>                                                <C>           <C>
Operating activities:
  Net income                                       $  3,170      $  2,725 
  Adjustments:            
    Depreciation                                      9,945         7,763
    Amortization                                      1,056         1,046
    Other                                               (60)          149
    Change in assets and liabilities:
      Merchandise inventories                       (19,473)      (11,035)
      Prepaid expenses and other                     (1,245)          727 
      Deferred income taxes and other                   285         3,628 
      Accounts payable                               10,151         5,895 
      Accrued liabilities and other                  (6,546)       (9,304)
                                                   ________      ________
        Net change in assets and liabilities        (16,828)      (10,089)
                                                   ________      ________


        Net cash provided by (used in) 
          operating activities                       (2,717)         1,594  
                                                   ________      _________

Investing activities:
  Additions to property and equipment                (5,427)       (7,779)
  Net proceeds from sales of investments              3,386            -  
                                                   ________      ________
        Net cash used in investing activities        (2,041)       (7,779)
                                                   ________      ________

Financing activities:
  Net borrowings under bank credit facilities            -        (13,700)
  Payment of other long-term liabilities               (996)           -
  Proceeds from issuance of common stock 
    and other                                        23,994        24,925 
                                                   ________      ________
     
        Net cash provided by financing 
          activities                                 22,998        11,225 
                                                   ________      ________

Net increase in cash and equivalents                 18,240         5,040 
Cash and equivalents at beginning of year            59,069         2,870 
                                                   ________      ________
Cash and equivalents at end of period              $ 77,309      $  7,910
                                                   ________      ________
                                                   ________      ________
   
</TABLE>


See accompanying notes to consolidated financial statements.

<PAGE>
                            MICHAELS STORES, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 For the Three Months Ended May 3, 1997   
                                (Unaudited)

Note A
______

The accompanying consolidated financial statements are unaudited (except for
the Consolidated Balance Sheet as of February 1, 1997) and, in the opinion of
management, reflect all adjustments that are necessary for a fair
presentation of financial position and results of operations for the three
months ended May 3, 1997.  All of such adjustments are of a normal and
recurring nature.  Because of the seasonal nature of the Company's business,
the results of operations for the three months ended May 3, 1997 are not
indicative of the results to be expected for the entire year.  

Note B
______

Earnings per share data are based on the weighted average number of shares
outstanding, including common stock equivalents and other dilutive securities
when applicable.  The assumed conversion of the convertible subordinated
notes was anti-dilutive for each period presented and was therefore not
included in the calculation of fully diluted earnings per share data.

Note C
______

In August 1995, two lawsuits were filed by certain security holders against
the Company and certain present and former officers and directors seeking
class action status on behalf of purchasers of the Company's Common Stock
between February 1, 1995 and August 23, 1995.  Among other things, the
plaintiffs allege that misstatements and omissions by defendants relating to
projected and historical operating results, inventory and other matters
involving future plans resulted in an inflation of the price of the Company's
Common Stock during the period between February 1, 1995 and August 23, 1995. 
The plaintiffs seek on behalf of the class an unspecified amount of
compensatory damages and reimbursement for the plaintiffs' fees and expenses. 
The United States District Court for the Northern District of Texas
consolidated the two lawsuits on November 16, 1995.  The Court certified a
class on March 24, 1997 and discovery is proceeding.  The Company believes
that it has meritorious defenses to this action and intends to defend itself
vigorously.

A lawsuit was commenced against the Company and several other parties on
September 19, 1994 in the Superior Court of Stanislaus County, California, on
behalf of a former employee, Naomi Snyder, her child, and her husband.  The
complaint alleges that the former employee and her then-unborn child were
exposed to excessive levels of carbon monoxide in one of the Company's stores
caused by a propane gas powered floor buffer which was operated by an outside
cleaning service, resulting, among other things, in severe and permanent
injuries to the child.  Plaintiffs' Statement of Damages, filed on or about
January 26, 1995, seeks $11 million.  On April 10, 1995 the trial court ruled
the plaintiff's pleadings did not state a cause of action against the Company
upon which relief could be granted.  However, the ruling by the trial court
was overturned by the Court of Appeals of the State of California, Fifth
Appellate District, on September 23, 1996.  On or about November 1, 1996 the
Company filed its petition for review with the California Supreme Court
requesting a review of the appellate decision.  Review was granted on
December 23, 1996.  Should the California Supreme Court sustain the appellate
court ruling and remand the case to the trial court, the Company believes it
has meritorious defenses to this action and will defend itself vigorously.

<PAGE>

The Company is a defendant from time to time in lawsuits incidental to its
business.  Based on currently available information, the Company believes
that resolution of all known contingencies, including the litigation
described above, is uncertain, and there can be no assurance that future
costs related to such litigation would not be material to the Company's
financial position or results of operations.

Note D
______

The FASB has issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share, which is effective for financial statements issued after
December 15, 1997.  The new standard eliminates primary and fully diluted
earnings per share and requires presentation of basic and diluted earnings
per share together with disclosure of how the per share amounts were
computed.  The adoption of this new standard is not expected to have a
material impact on the disclosure of earnings per share in the financial
statements.

<PAGE>

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

General
_______

Certain statements contained in this section which are not historical facts
are forward-looking statements that involve risks and uncertainties,
including, but not limited to, customer demand and trends in the arts and
crafts industry, related inventory risks due to shifts in customer demand,
the effect of economic conditions, the impact of competitors' locations or
pricing, the availability of acceptable real estate locations for new stores,
difficulties with respect to new information system technologies, supply
constraints or difficulties, and the results of financing efforts.


Results of Operations
_____________________

The following table shows the percentage of net sales that each item in the
Consolidated Statements of Operations represents.  This table should be read
in conjunction with the following discussion and with the Company's financial
statements, including the notes:  

<TABLE>
<CAPTION>
                                             For the
                                          Quarter Ended       
                                        ___________________

                                        May 3,    April 28,
                                         1997       1996     
                                        ______    _________

<S>                                     <C>         <C>
Net sales                               100.0%      100.0%
Cost of sales and occupancy
  expense                                68.5        67.9 
Selling, general and
  administrative expense                 28.6        29.5 
                                        _____       _____
Operating income                          2.9         2.6 

Interest expense                          1.8         1.2 
Other income, net                        (0.5)       (0.1)
                                        _____       _____
Income before income taxes                1.6         1.5 
Provision for income taxes                0.6         0.6 
                                        _____       _____
Net income                                1.0%        0.9%
                                        _____       _____
                                        _____       _____

</TABLE>

<PAGE>

Three months ended May 3, 1997 compared to the
______________________________________________

  three months ended April 28, 1996
  _________________________________

Net sales in the first quarter of fiscal 1997 increased $19.4 million, or 6%,
over the first quarter of fiscal 1996.  The results for the first quarter of
fiscal 1997 included sales from 7 new Michaels stores (net of 8 closures)
that were opened during the twelve month period ended May 3, 1997.  During
the first quarter, sales of the new stores accounted for an increase of $4.7
million.  Same store sales increased 4% in the first quarter of fiscal 1997
compared to the first quarter of fiscal 1996 which contributed $14.7 million
to the net sales increase.  The improvement in same store sales performance
is due to strong performance in the Company's core categories as a result of
updated planograms put into place last summer and improved in-stock positions
in top selling and hot items.

Cost of sales and occupancy expense, as a percentage of net sales, for the
first quarter of fiscal 1997 increased by 0.6% compared to the first quarter
of fiscal 1996.  This increase was due to higher occupancy costs and higher
distribution costs.  The increase in occupancy costs is primarily
attributable to rent reserves established for the Company's 1997 store
relocation program and rent increases from the 1996 relocation and expansion
program.  Distribution costs increased due to the Company's investment last
year in an upgraded warehouse network and the related systems.  As the
Company improves its utilization of this increased capacity, return on the
investment will yield improved gross margins.
  
Selling, general and administrative expense, as a percentage of net sales,
decreased by 0.9% in the first quarter of fiscal 1997 compared to the first
quarter of 1996.  The Company saved $4 million in advertising costs versus
last year, as well as showed improved expense leverage in nearly all
categories of store operating expenses with the exception of depreciation
which reflects the impact of its increased investment in the POS system.

<PAGE>

Liquidity and Capital Resources
_______________________________

Cash flow from operations of negative $2.7 million was used during the first
quarter of fiscal 1997 compared to positive $1.6 million of cash flow from
operations generated during the first quarter of fiscal 1996.  These results
are consistent with the Company's pattern of building inventory and opening
and relocating stores early in the fiscal year.  Inventories per Michaels
store decreased 3% to $793,000 at May 3, 1997 compared to $816,000 last year. 
The Company's trade payable leverage improved to 31% from 28% last year
reflecting the fresher nature of the Company's inventory and the improved
utilization of terms through the centralization of payables.  Borrowings
outstanding under the Company's bank credit agreement ("Credit Agreement"),
which expires in June 1999, were $73.5 million at the end of the first
quarter of fiscal 1996.  There were no borrowings outstanding at May 3, 1997,
reflecting net proceeds of $120.9 million received during June 1996 from the
issuance of Senior Notes used to reduce the amount of borrowings under the
credit facility.  The Company is in compliance with all covenants in the
Credit Agreement as of May 3, 1997.

The Company opened three Michaels stores and closed seven during the first
three months of fiscal 1997.  Capital expenditures for the newly opened
stores amounted to approximately $400,000.  Additional capital expenditures
of approximately $5.0 million during the quarter related primarily to the
relocation or remodelling of approximately 12 existing stores, and for
various systems enhancements.  The Company expects capital expenditures
during the remainder of fiscal 1997 to total approximately $26 to $32
million, relating primarily to costs for new stores, store relocations and
remodeling, merchandising and other information systems and various other
projects.  In addition, the Company may incur interim construction costs
during the remainder of fiscal 1997 of up to $12 million for the relocation
in 1998 of one of its distribution centers.

At May 3, 1997, the Company had working capital of $274.5 million compared to
$239.8 million at February 1, 1997.  The Credit Agreement provides for an
unsecured line of credit of up to $100 million. Management believes that the
Company's available cash, funds generated by operations and funds available
under the Credit Agreement should be sufficient to finance continuing
operations and sustain current growth plans.  Management believes that the
Company can finance an annual store expansion of 12% to 15% (on a square
footage basis) from internally generated cash flow.

<PAGE>
                           MICHAELS STORES, INC.

                                 FORM 10-Q
                        Part II - Other Information


Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit 10.1 - Separation Agreement effective January 21, 1997 between
Michaels Stores, Inc. and R. Don Morris.

     Exhibit 10.2 - Michaels Stores, Inc. 1997 Stock Option Plan.

     Exhibit 11 - Computation of Earnings Per Common Share for the Three
Months Ended May 3, 1997.

     Exhibit 27 - Financial Data Schedule.

(b)  Reports on Form 8-K.

No reports on Form 8-K were filed by the Company during the period covered by
this report.


<PAGE>


                                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.



MICHAELS STORES, INC.


By:  /s/ Bryan M. DeCordova 
    _______________________ 
    Bryan M. DeCordova
    Executive Vice President-
    Chief Financial Officer
    (Principal Financial Officer)



Dated: June 17, 1997

<PAGE>

                               EXHIBIT INDEX

EXHIBIT NUMBER              DESCRIPTION                      PAGE

10.1                  Separation Agreement effective
                      January 21, 1997 between Michaels
                      Stores, Inc. and R. Don Morris.

10.2                  Michaels Stores, Inc. 1997 Stock
                      Option Plan.

11                    Computation of Earnings Per Common
                      Share for the Three Months Ended
                      May 3, 1997.
 
27                    Financial Data Schedule

<PAGE>

                                                               EXHIBIT 11
                           MICHAELS STORES, INC.

                 Computation of Earnings Per Common Share
                      Three Months Ended May 3, 1997
                                (Unaudited)
<TABLE>
<CAPTION>
                                                        Weighted
                                                         Average
                                                       Outstanding
                                                    Equivalent Shares 
                                  _______________________________________
   
                                     Total                       Fully
                                  Outstanding     Primary       Diluted  
                                  ___________   __________     __________
<S>                               <C>           <C>            <C> 
Outstanding at beginning
  of year                         23,690,926    23,690,926     23,690,926

Shares issued during
  quarter                          2,342,058     1,538,208      1,538,208 
                                                __________     __________

Weighted average common
  shares outstanding                            25,229,134     25,229,134   
                     
Net shares to be issued upon
  exercise of dilutive stock 
  options after applying treasury    
  stock method                                     842,269      1,074,347
                                  __________    __________     __________

Total outstanding common shares   26,032,984    26,071,403     26,303,481
                                  __________    __________     __________
                                  __________    __________     __________

Earnings per common and 
  common equivalent share                             $.12           $.12
                                                      ____           ____
                                                      ____           ____
 

</TABLE>