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 2, 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 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 10, 1998
         _____                                 _____________

Common stock, par value $.10 per share           29,589,819  

<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>
                                          May 2, 1998   January 31, 1998
                                          ___________   ________________
<S>                                        <C>              <C>
ASSETS

Current assets:
  Cash and equivalents                     $ 140,456        $ 162,283
  Merchandise inventories                    448,922          385,580
  Income taxes receivable and
    deferred income taxes                     11,521           11,291
  Prepaid expenses and other                  13,814           14,029
                                           _________        _________
    Total current assets                     614,713          573,183
                                           _________        _________
 
Property and equipment, at cost              351,327          331,755
  Less accumulated depreciation             (147,472)        (138,719)
                                           _________        _________
                                             203,855          193,036
                                           _________        _________

Costs in excess of net assets of
  acquired operations, net                   135,860          136,827
Deferred income taxes                          3,833            2,695
Other assets                                   2,642            2,753
                                           _________        _________
                                             142,335          142,275
                                           _________        _________
                                           $ 960,903        $ 908,494
                                           _________        _________
                                           _________        _________

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                         $ 148,481        $ 109,456
  Accrued liabilities and other               99,499          105,036
                                           _________        _________
    Total current liabilities                247,980          214,492
                                           _________        _________

Senior notes                                 125,000          125,000
Convertible subordinated notes                96,940           96,940
Other long-term liabilities                   29,605           30,151
                                           _________        _________
    Total long-term liabilities              251,545          252,091
                                           _________        _________
                                             499,525          466,583
                                           _________        _________

Commitments and contingencies

Stockholders' equity:
  Common stock, 29,561,142 shares
    outstanding                                2,956            2,903
  Additional paid-in capital                 364,642          350,977
  Retained earnings                           93,780           88,031
                                           _________        _________
    Total stockholders' equity               461,378          441,911
                                           _________        _________
                                           $ 960,903        $ 908,494
                                           _________        _________
                                           _________        _________
</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>


                                                       Quarter Ended
                                                 _________________________
                                                  May 2,           May 3,
                                                   1998             1997
                                                 ________         ________
<S>                                              <C>              <C>    
Net sales                                        $335,770         $321,318

Cost of sales and occupancy expense               224,874          220,128
Selling, general and administrative
  expense                                          96,561           91,884
Store pre-opening costs                             1,788               -   
                                                 ________         ________

Operating income                                   12,547            9,306

Interest expense                                    5,703            5,742
Other income, net                                  (2,028)          (1,549)
                                                 ________         ________

Income before income taxes                          8,872            5,113
Provision for income taxes                          3,371            1,943
                                                 ________         ________
 
Net income                                       $  5,501         $  3,170
                                                 ________         ________
                                                 ________         ________
 
Earnings per common share:
  Basic                                             $0.19            $0.13
  Diluted                                           $0.18            $0.12

Common shares used in per share calculations:
  Basic                                            29,321           25,229
  Diluted                                          31,277           26,186

</TABLE>

       See accompanying notes to consolidated financial statements.

<PAGE> 

                           MICHAELS STORES, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (Unaudited)
<TABLE>
<CAPTION>
                                                        Quarter Ended       
                                                    ____________________

                                                    May 2,        May 3,
                                                     1998          1997    
                                                   ________      ________
<S>                                                <C>           <C> 
Operating activities:
  Net income                                       $  5,501      $  3,170 
  Adjustments:            
    Depreciation                                     10,350         9,945
    Amortization                                      1,070         1,056
    Other                                               278           (60)
    Change in assets and liabilities:
      Merchandise inventories                       (63,342)      (19,473)
      Prepaid expenses and other                        215        (1,245)
      Deferred income taxes and other                   424           285 
      Accounts payable                               39,025        10,151 
      Accrued liabilities and other                  (6,201)       (6,546)
                                                   ________      ________
        Net change in assets and liabilities        (29,879)      (16,828)
                                                   ________      ________
        Net cash used in operating activities       (12,680)       (2,717) 
                                                   ________      ________

Investing activities:
  Additions to property and equipment               (19,040)       (5,427)
  Net proceeds from sales of property
    and equipment                                       117            -
  Net proceeds from sales of investments                 -          3,386
                                                   ________      ________
        Net cash used in investing activities       (18,923)       (2,041)
                                                   ________      ________

Financing activities:
  Payment of other long-term liabilities             (1,200)         (996)
  Proceeds from stock options exercised               4,813        23,994 
  Proceeds from issuance of common stock 
    and other                                         6,163            -
                                                   ________      ________
        Net cash provided by financing 
          activities                                  9,776        22,998 
                                                   ________      ________

Net (decrease) increase in cash and equivalents     (21,827)       18,240 
Cash and equivalents at beginning of period         162,283        59,069 
                                                   ________      ________

Cash and equivalents at end of period              $140,456      $ 77,309 
                                                   ________      ________
                                                   ________      ________
</TABLE>

       See accompanying notes to consolidated financial statements.

<PAGE>

                           MICHAELS STORES, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     For the Quarter Ended May 2, 1998
                                (Unaudited)

Note A - Basis of Presentation

     The accompanying consolidated financial statements are unaudited (except
for the Consolidated Balance Sheet as of January 31, 1998) and have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.  In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Because of the
seasonal nature of the Company's business, the results of operations for the
quarter ended May 2, 1998 are not indicative of the results to be expected for 
the entire year.  Certain fiscal 1997 amounts have been reclassified to 
conform to the fiscal 1998 presentation.  For further information, refer to the
consolidated financial statements and footnotes thereto included in the 
Company's annual report on Form 10-K for the year ended January 31, 1998.

Note B - Supplemental Cash Flow Information

     Investing and financing activities not affecting cash during the three
months ended May 2, 1998 included additions to property and equipment through
capital lease obligations of $2,026,000 related to the acquisition of new
computer equipment.

Note C - Contingencies

     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 October 30, 1997, the
California Supreme Court sustained the appellate court ruling and remanded
the case to the trial court, and discovery is proceeding. 

     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.



<PAGE>


Note D - Earnings Per Share

    The following table sets forth the computation of basic and diluted
earnings per common share:

<TABLE>
<CAPTION>
                                              Quarter Ended
                                           _____________________

                                           May 2,         May 3,
                                           1998           1997 
                                           ______         ______

                                 (In thousands except per share amounts)
<S>                                       <C>            <C>
Numerator:
  Net income                              $ 5,501        $ 3,170
                                          _______        _______
                                          _______        _______

Denominator:
  Denominator for basic earnings
  per share-weighted average
  shares                                   29,321         25,229

Effect of dilutive securities:
  Employee stock options                    1,956            957
                                          _______        _______
 
Denominator for diluted
earnings per share-adjusted 
weighted average shares and
assumed conversions                        31,277         26,186
                                          _______        _______
                                          _______        _______

Basic earnings per common share             $0.19          $0.13
                                            _____          _____
                                            _____          _____

Diluted earnings per common share           $0.18          $0.12
                                            _____          _____
                                            _____          _____
</TABLE>

     The convertible subordinated notes were not included in the diluted
earnings per common share calculation because they were antidilutive for the
periods presented.  The convertible subordinated notes could potentially
affect diluted earnings per common share in the future.

Note E - Store Pre-Opening Costs

     In April 1998, the AICPA issued Statement of Position 98-5 ("SOP 98-5"),
Reporting the Costs of Start-Up Activities, which requires that costs related
to start-up activities be expensed as incurred.  Prior to fiscal 1998, the
Company deferred store pre-opening costs until the fiscal year in which the
store opened. The Company adopted the provisions of SOP 98-5 in its financial 
statements for the first quarter of fiscal 1998, and as a result began 
expensing pre-opening costs as incurred.  

<PAGE>

Item 2. Management's Discussion and Analysis of Financial
_________________________________________________________

          Condition and Results of Operations
          ___________________________________

General

     Certain statements contained in this discussion and analysis 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 effectiveness of advertising
strategies, the availability of acceptable real estate locations for new
stores, difficulties with respect to new information system technologies and
the Company's ability to address the Year 2000 Issue, supply constraints or
difficulties, the results of financing efforts, and other risks detailed in
the Company's Securities and Exchange Commission filings.

Results of Operations

     The following table sets forth the percentage relationship to net sales
of each line item of the Company's Consolidated Statements of Operations. 
This table should be read in conjunction with the following discussion and
with the Company's Consolidated Financial Statements, including the related
notes.
<TABLE>
<CAPTION>
                                                  Quarter Ended     
                                               _____________________

                                               May 2,         May 3,
                                                1998           1997 
                                               ______         ______
     <S>                                       <C>            <C>
     Net sales                                 100.0%         100.0%

     Cost of sales and occupancy expense        67.0           68.5
     Selling, general and administrative 
       expense                                  28.8           28.6
     Store pre-opening costs                     0.5             - 
                                               _____          _____

     Operating income                            3.7            2.9

     Interest expense                            1.7            1.8
     Other income, net                          (0.6)          (0.5)
                                               _____          _____

     Income before income taxes                  2.6            1.6
     Provision for income taxes                  1.0            0.6
                                               _____          _____

     Net income                                  1.6%           1.0%
                                               _____          _____
                                               _____          _____
</TABLE>

     In the discussion below, all percentages given for expense items are
calculated as a percentage of net sales.

<PAGE>

Quarter ended May 2, 1998 compared to the
  quarter ended May 3, 1997

     Net sales in the first quarter of fiscal 1998 increased $14.5 million,
or 5%, over the first quarter of fiscal 1997.  The results for the first
quarter of fiscal 1998 included sales from 17 Michaels and 3 Aaron Brothers
stores that were opened during the 12-month period ended May 2, 1998. During
the first quarter, sales at the new stores (net of 11 closures) accounted for
an increase of $8.1 million.  Same-store sales increased 2% in the first
quarter of fiscal 1998 compared to the first quarter of fiscal 1997, which
contributed $6.4 million to the net sales increase.  The improvement in 
same-store sales performance was lower than expected, which we believe was the
result of new advertising concepts tested in the months of March and April
which were not as effective as previous advertising methods.  By utilizing
the information provided by our point-of-sale system to continue to improve
our store in-stock position in top-selling items, properly allocating
seasonal merchandise to the stores based upon anticipated sales trends, and
returning to our previous advertising strategy, we expect an improvement in
same-store sales increases. 

     Cost of sales and occupancy expense, as a percentage of net sales, for
the first quarter of fiscal 1998 was 67.0%, a decrease of 1.5% compared to
the first quarter of fiscal 1997.  Significant merchandise gross margin
improvements were primarily attributable to better initial markup on
beginning-of-year inventories.  Occupancy expense decreased, as a percentage
of net sales, principally due to a charge taken in the first quarter of
fiscal 1997 to establish rent reserves for the Company's 1997 store
relocation program.

     Selling, general and administrative expense, as a percentage of net
sales, increased by 0.2% in the first quarter of fiscal 1998 compared to the
first quarter of fiscal 1997.  This increase was due to increased advertising
expense as a percentage of net sales, driven principally by increased grand
openings and higher costs associated with changes in format and distribution
methods, offset in part by improved expense leverage in depreciation and
administrative expenses.

     Store pre-opening costs of $1.8 million, or 0.5% as a percentage of net
sales, were recognized in the first quarter of fiscal 1998 as the Company
adopted a change in accounting rules requiring that store pre-opening costs
be expensed as incurred.  See Note E in the notes to consolidated financial
statements.


<PAGE>

Liquidity and Capital Resources

     Cash flow used by operating activities during the first three months of
fiscal 1998 was $12.7 million compared to $2.7 million of cash flow used by 
operating activities during the first three months of fiscal 1997.  These
results are consistent with the Company's plan to build inventory and open
and relocate stores early in the fiscal year.  Inventories per Michaels store
increased 17% to $925,000 at May 2, 1998 compared to $793,000 last year as a
result of increasing the number of items replenished by the Company's
distribution centers from approximately 6,200 in the prior year to
approximately 10,000 in fiscal 1998, increases in inventory at the
distribution centers caused by the purchase of additional basic merchandise
to support the transition to the new California facility, and to an earlier
receipt of basic fall product compared to the previous year.

     The Company opened 11 Michaels stores and relocated 3 Michaels stores
during the first three months of fiscal 1998.  Capital expenditures for the
newly opened stores amounted to approximately $9.1 million. Additional
capital expenditures of approximately $9.9 million during the first three
months of fiscal 1998 related primarily to existing stores, and for interim 
construction costs for the relocation in the second quarter of fiscal 1998 of 
the Company's California distribution center and various systems enhancements. 
The Company has negotiated a sale/leaseback transaction for the California
distribution facility and the transaction is scheduled to close on June 20,
1998 with gross proceeds to be received by the Company amounting to $13.0
million.  The Company expects additional capital expenditures during the
remainder of fiscal 1998 to total approximately $60 to $65 million (net of
the sale/leaseback transaction), relating primarily to costs for new stores,
store relocations and remodeling, merchandising and other information systems
and various other projects.

     At May 2, 1998, the Company had working capital of $366.7 million
compared to $358.7 million at January 31, 1998.  The Company currently has a
bank credit agreement which provides for an unsecured revolving line of
credit of up to $100 million.  There were no borrowings outstanding on the
revolving line of credit at any time during fiscal 1997 or the first quarter
of fiscal 1998.  Management believes that the Company's available cash, funds
generated by operating activities, funds available under the bank credit
agreement, IBM capital lease financing and proceeds from the sale of stock
through the stock purchase plan, should be sufficient to finance continuing
operations and sustain current growth plans.  Management believes that the
Company can finance an annual store expansion at a rate 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 1. Legal Proceedings
_________________________

     For a description of legal proceedings, see Note C to "Notes to
     Consolidated Financial Statements," which description is incorporated
     herein by this reference.

Item 6. Exhibits and Reports on Form 8-K
________________________________________

(a)  Exhibits

     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>


                           MICHAELS STORES, INC.



                                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 and
    Chief Financial Officer
    (Principal Financial Officer)



Dated: June 16, 1998



<PAGE>




                               EXHIBIT INDEX

EXHIBIT
NUMBER                      DESCRIPTION                          PAGE


27                    Financial Data Schedule