SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

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

                      For the Quarter Ended August 1, 1998
                           Commission File No. 1-11722


                               CHIC BY H.I.S, INC.
--------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)


        Delaware                                             13-3494627
--------------------------------------------------------------------------------
(State of Incorporation)                                 (I.R.S. Employer
                                                         Identification No.)

1372 Broadway, New York, New York                              10018
--------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)


(212) 302-6400
-------------------------------
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
        Date                            Class                        Outstanding
   -------------             ----------------------------            -----------
September 14, 1998           Common Stock, $.01 Par Value             9,870,543




                                                                        -1-




<PAGE>



                               CHIC BY H.I.S, INC.

                                      INDEX
                          ----------------------------



                                                                           PAGE



Part I.  Financial Information

         Item 1: Financial Statements (unaudited, except as noted):

                 Consolidated Balance Sheets at
                    August 1, 1998 and November 1, 1997 (audited)            3

                 Consolidated Statements of Operations
                    for the thirty-nine weeks ended August 1,
                    1998 and August 2, 1997                                  4

                 Consolidated Statements of Operations
                    for the thirteen weeks ended August 1,
                    1998 and August 2, 1997                                  5

                 Consolidated Statements of Cash Flows for the
                    thirty-nine weeks ended August 1, 
                    1998 and August 2, 1997

                 Consolidated Statements of Stockholders'
                    Equity for the thirty-nine weeks ended
                    August 1, 1998 and August 2, 1997                        7

                 Notes to Consolidated Financial Statements                 8-9

         Item 2: Management's Discussion and Analysis of
                 Financial Condition and Results of Operations             10-15

Part II. Other Information

         Item 5: Special Note Regarding Forward-Looking Statements         16-17

         Item 6: Exhibits and Reports on Form 8-K                           18


                 Signature Page                                             19




                                                                        -2-




<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

<S>                                                                                            <C>                     <C>    
                                                                                        August 1, 1998            Nov. 1, 1997
(IN THOUSANDS)                                                                           (Unaudited)                (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Assets
   Current:
       Cash and cash equivalents                                                           $ 4,596                  $ 7,395
       Accounts receivable - net of reserve for possible losses                             33,331                   32,926
       Inventories                                                                          79,166                   71,368
       Deferred income taxes                                                                 5,008                    3,020
       Prepaid expenses and other current assets                                             6,565                    3,560
------------------------------------------------------------------------------------------------------------------------------------
           Total Current Assets                                                            128,666                  118,269
------------------------------------------------------------------------------------------------------------------------------------
   Property, Plant and Equipment, at cost less accumulated
       depreciation and amortization                                                        57,469                   67,998
   Deferred income taxes                                                                     4,500                        -
   Other Assets                                                                              2,357                    2,436
------------------------------------------------------------------------------------------------------------------------------------
                                                                                         $ 192,992                $ 188,703
------------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
   Current:
       Revolving bank loan                                                               $  38,200                 $ 15,000
       Foreign bank debt                                                                     6,926                        -
       Current maturities of long-term debt                                                  2,213                    1,997
       Obligations under capital leases                                                        688                      701
       Accounts payable                                                                     13,100                   17,032
       Accrued liabilities:
           Payroll, payroll taxes and commissions                                            5,637                    5,492
           Income taxes                                                                      2,773                    4,802
           Other                                                                             8,862                    5,731
------------------------------------------------------------------------------------------------------------------------------------
               Total current liabilities                                                    78,399                   50,755
------------------------------------------------------------------------------------------------------------------------------------
   Non-current:
       Long-term debt                                                                       25,585                   25,989
       Pension liability                                                                    10,654                   10,654
       Deferred income taxes                                                                 2,713                    2,713
       Obligations under capital leases                                                      1,298                      660
------------------------------------------------------------------------------------------------------------------------------------
               Total non-current liabilities                                                40,250                   40,016
------------------------------------------------------------------------------------------------------------------------------------
Minority interest                                                                            7,919                    8,864
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
   Preferred stock, $.01 par value -shares authorized 10,000,000; none
       issued                                                                                   -                        -
   Common stock, $.01 par value - 25,000,000 shares authorized;
       10,030,543 and 9,764,968 issued and outstanding                                         100                       99
   Paid-in capital                                                                         107,161                  105,590
   Retained earnings (deficit)                                                             (29,357)                  (6,299)
   Foreign currency translation adjustment                                                    (826)                     332
   Excess of additional pension liability over intangible pension asset                    (10,654)                 (10,654)
------------------------------------------------------------------------------------------------------------------------------------
               Stockholders' Equity                                                         66,424                   89,068
------------------------------------------------------------------------------------------------------------------------------------
                                                                                         $ 192,992                $ 188,703
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>


               See notes to consolidated financial statements.          -3-     


<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

<S>                                                                                           <C>                       <C>
                                                                                      Thirty-nine weeks        Thirty-nine weeks
                                                                                       ended August 1,          ended August 2,
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)                                          1998                     1997
------------------------------------------------------------------------------------------------------------------------------------
Net sales                                                                                  192,968                  204,379
Cost of goods sold                                                                         147,484                  163,015
------------------------------------------------------------------------------------------------------------------------------------
   Gross profit                                                                             45,484                   41,364
Licensing revenues                                                                           2,327                    2,023
------------------------------------------------------------------------------------------------------------------------------------
                                                                                            47,811                   43,387
Selling, general and administrative expenses                                                44,206                   54,202
Restructuring and special charges                                                           24,125                        -
------------------------------------------------------------------------------------------------------------------------------------
   Operating loss                                                                          (20,520)                 (10,815)
------------------------------------------------------------------------------------------------------------------------------------
Gain on sale of subsidiary stock                                                                 -                   34,079
Interest and finance cost                                                                   (3,232)                  (3,628)
Other expense, net                                                                          (1,104)                       -
------------------------------------------------------------------------------------------------------------------------------------
   Income (loss) before provision for income taxes, minority
       interest and extraordinary item                                                     (24,856)                  19,636
Provision (recovery) for income taxes                                                       (3,409)                   9,224
------------------------------------------------------------------------------------------------------------------------------------
   Income (loss) before minority interest and extraordinary item                           (21,447)                  10,412
Minority interest                                                                            1,611                      726
------------------------------------------------------------------------------------------------------------------------------------
   Income (loss) before extraordinary item                                                 (23,058)                   9,686
Extraordinary loss from extinguishment of debt                                                   -                     (330)
------------------------------------------------------------------------------------------------------------------------------------
   Net income (loss)                                                                     $ (23,058)                 $ 9,356
------------------------------------------------------------------------------------------------------------------------------------

Earnings (loss) per common share:
   Basic:
       Income (loss) before extraordinary item                                            $  (2.30)                   $ .99
       Net income (loss)                                                                  $  (2.30)                   $ .96

   Diluted:
       Income (loss) before extraordinary item                                            $  (2.30)                   $ .99
       Net income (loss)                                                                  $  (2.30)                   $ .96
------------------------------------------------------------------------------------------------------------------------------------

Weighted average number of common shares and share equivalents
outstanding:
   Basic                                                                                10,030,543                9,753,868
   Diluted                                                                              10,030,543                9,763,829
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>




               See notes to consolidated financial statements.          -4-


<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>

<S>                                                                                            <C>                      <C>
                                                                                          Thirteen weeks           Thirteen weeks
                                                                                         ended August 1,          ended August 2,
                                                                                              1998                     1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
------------------------------------------------------------------------------------------------------------------------------------
Net sales                                                                                   59,896                   81,906
Cost of goods sold                                                                          45,755                   63,050
------------------------------------------------------------------------------------------------------------------------------------
   Gross profit                                                                             14,141                   18,856
Licensing revenues                                                                           1,066                      721
------------------------------------------------------------------------------------------------------------------------------------
                                                                                            15,207                   19,577
Selling, general and administrative expenses                                                15,059                   15,332
------------------------------------------------------------------------------------------------------------------------------------
   Operating income                                                                            148                    4,245
------------------------------------------------------------------------------------------------------------------------------------
Interest and finance cost                                                                   (1,245)                    (939)
------------------------------------------------------------------------------------------------------------------------------------
   Income (loss) before provision for income taxes, minority  interest                      (1,097)                   3,306
Provision (recovery) for income taxes                                                         (139)                   1,570
------------------------------------------------------------------------------------------------------------------------------------
   Income (loss) before minority interest                                                     (958)                   1,736
Minority interest                                                                              413                      726
------------------------------------------------------------------------------------------------------------------------------------
   Net income (loss)                                                                      ($ 1,371)                 $ 1,010
------------------------------------------------------------------------------------------------------------------------------------

Earnings (loss) per common share:
   Basic:
       Net income (loss)                                                                    ($ .14)                   $ .10

   Diluted:
       Net income (loss)                                                                    ($ .14)                   $ .10
------------------------------------------------------------------------------------------------------------------------------------

Weighted average number of common shares and share equivalents outstanding:
   Basic                                                                                10,030,543                9,753,868
   Diluted                                                                              10,030,543                9,806,784
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>


               See notes to consolidated financial statements.          -5-     


<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

<S>                                                                                          <C>                      <C>
                                                                                                   Thirty-nine weeks ended
------------------------------------------------------------------------------------------------------------------------------------

                                                                                         August 1,                August 2,
(In Thousands)                                                                              1998                     1997
------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                                        $ (23,058)                  $9,356
------------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
   Minority interest                                                                         1,611                      725
   Non-cash restructuring and special charges                                               13,680                       -
   Gain on sale of subsidiary stock                                                             -                   (34,079)
   Gain on sale of property and equipment                                                   (1,912)                      -
   Depreciation and amortization                                                             3,436                    3,377
   Deferred income taxes                                                                    (6,488)                   4,403
Decrease (increase) in:
   Accounts receivable                                                                        (405)                  (4,006)
   Inventories                                                                              (7,798)                 (13,605)
   Prepaid expenses and other current assets                                                (3,005)                  (3,850)
   Other assets                                                                                 79                     (803)
Increase (decrease) in:
   Accounts payable                                                                         (3,932)                   5,355
   Accrued liabilities                                                                       1,248                    1,673
------------------------------------------------------------------------------------------------------------------------------------
       Total adjustments                                                                    (3,486)                 (40,810)
------------------------------------------------------------------------------------------------------------------------------------
       Net cash used in operating activities                                               (26,544)                 (31,454)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment                                                   (7,060)                  (6,627)
Proceeds from the sale of fixed assets                                                       3,187                       -
------------------------------------------------------------------------------------------------------------------------------------
       Net cash used in investing activities                                                (3,873)                  (6,627)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from the sale of subsidiary stock                                                      -                    43,054
Increase in loans under revolving line of credit                                            23,200                    6,800
Increase in foreign revolver debt                                                            6,926                   12,955
Repayment of senior notes payable                                                               -                   (43,000)
Repayment of foreign term loan                                                                 (83)                     (89)
Principal payments under capitalized lease obligations                                        (683)                    (677)
Retirement of capitalized lease obligation                                                    (175)                      -
Proceeds from the issuance of common stock                                                   1,553                       -
Proceeds from short swing profits                                                              118                       -
Dividend payment - shareholder rights redemption                                               (99)                      -
Dividend payment - minority interest                                                        (2,310)                      -
------------------------------------------------------------------------------------------------------------------------------------
       Net cash provided by financing activities                                            28,447                   19,043
------------------------------------------------------------------------------------------------------------------------------------
       Decrease in cash and cash equivalents                                                (1,970)                 (19,038)
------------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rates on cash                                                              (829)                  (3,739)
Cash and cash equivalents, beginning of period                                               7,395                   27,178
Cash and cash equivalents, end of period                                                   $ 4,596                  $ 4,401
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>



                 See notes to consolidated financial statements.        -6-

<PAGE>

                      CHIC BY H.I.S, INC. AND SUBSIDIARIES


<TABLE>
<CAPTION>

<S>                                        <C>           <C>           <C>             <C>             <C>                <C>
                                                                                                                    Excess of
                                                                                                    Foreign         additional
                                                                                   Retained         currency         pension
                                                       Common       Paid-in        earnings       translation     liability over
(IN THOUSANDS)                            Total         stock       capital        (deficit)       adjustment      pension asset
---------------------------------------------------------------------------------------------------------------------------------
Balance, November 2, 1996               $ 80,878      $   98       $ 105,526      ($ 16,764)        $ 1,645         ($ 9,627)
Net income                                 9,356           -               -           9,356              -                 -
Foreign currency translation
adjustment                               (1,802)           -               -               -        (1,802)                 -
---------------------------------------------------------------------------------------------------------------------------------
Balance, August 2, 1997                 $ 88,432      $   98       $ 105,526       ($ 7,408)         ($157)         ($ 9,627)
---------------------------------------------------------------------------------------------------------------------------------

Balance, November 1, 1997               $ 89,068        $ 99       $ 105,590       ($ 6,299)          $ 332        ($ 10,654)
Net loss                                (23,058)           -               -        (23,058)              -                 -
Foreign currency translation
adjustment                               (1,158)           -               -               -         (1,158)                -   
Stock options exercised                    1,553           1           1,552               -              -                 -
Short-swing Section 16(b)
profits                                      118           -             118               -              -                 -
Dividends paid                              (99)           -            (99)               -              -                 -
---------------------------------------------------------------------------------------------------------------------------------
Balance, August 1, 1998                 $ 66,424      $  100       $ 107,161      ($ 29,357)        ($ 826)        ($ 10,654)
---------------------------------------------------------------------------------------------------------------------------------

</TABLE>




               See notes to consolidated financial statements.          -7-


<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 ------------------------------------------------------------------------------


1. Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements 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.


2. Inventories

Inventories consist of the following:

(In Thousands)              August 1, 1998                   November 1, 1997

--------------------------------------------------------------------------------

Raw Materials                    $   8,975                          $   8,138
Work-in-process                     17,293                             16,461
Finished Goods                      52,898                             46,769
--------------------------------------------------------------------------------

                                 $ 79,166                            $ 71,368
--------------------------------------------------------------------------------



3. Restructuring and Special Charges

     In the  thirty-nine  weeks  ended  August 1,  1998,  the  Company  recorded
restructuring  and special  charges of $24.1  million  related to the  Company's
continued closing of domestic manufacturing facilities and relocation to Mexico.
Such costs consist of a write-down in the value of property and  equipment,  the
write-off of operating  inefficiencies  incurred during the shut-down period and
the accrual of estimated costs of  disposition.  The plant closings are expected
to result in the termination of approximately 1,300 employees.  In addition, the
downsizing  associated  with such plant  closings  may  affect  the  accounting,
disclosure and funding of the Company's pension benefit obligation.


4. Recent Accounting Standards

        In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share," which provides for the calculation of "basic" and "diluted" earnings per
share. Basic earnings per share includes no dilution and is computed by dividing
income available to common shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution from the assumed exercise of stock options in a manner
similar to fully diluted earnings per share, except that the use of the market
price at the end of the period, when that price is higher than the average
market price for the period, has been eliminated. This standard is effective for
periods ending after December 15, 1997. The 

                                                                        -8-

<PAGE>

adoption of this  standard did not have a  significant  effect on the  Company's
earnings per share calculation.

In June 1997, the Financial Accounting Standards Board issued two new disclosure
standards.  Results of operations  and financial  position will be unaffected by
implementation of these new standards.

SFAS No.  130,  "Reporting  Comprehensive  Income,"  established  standards  for
reporting and display of  comprehensive  income,  its components and accumulated
balances.  Comprehensive  income is  defined to  include  all  changes in equity
except those resulting from  investments by owners and  distributions to owners.
Among other disclosures,  SFAS No. 130 requires that all items that are required
to  be  recognized   under  current   accounting   standards  as  components  of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements.

SFAS  No.  131,   "Disclosure  about  Segments  of  an  Enterprise  and  Related
Information," which supersedes SFAS No. 14, "Financial Reporting for Segments of
a  Business   Enterprise,"   establishes  standards  for  the  way  that  public
enterprises  report  information  about operating  segments in annual  financial
statements  and  requires  reporting  of selected  information  about  operating
segments  in  interim  financial  statements  issued  to  the  public.  It  also
establishes   standards  for  disclosures   regarding   products  and  services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components of and  enterprises  about which  separate  financial  information is
available that is evaluated  regularly by management in deciding how to allocate
resources and in assessing performance.

Both SFAS Nos. 130 and 131 are effective for  financial  statements  for periods
beginning  after  December  15, 1997 and  require  comparative  information  for
earlier years to be restated.



                                                                        -9-     




<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

Item 2:           Management's discussion and
                  analysis of financial condition
                  and results of operations

General

As a designer,  manufacturer and marketer of moderately priced, basic style male
and female  denim  jeans,  casual  pants and shorts,  Chic by H.I.S,  Inc.  (the
"Company")  believes  that its products  constitute  basic apparel and, as such,
generally do not depend upon impulse buying or high fashion trends.  The Company
distributes its products primarily through mass  merchandisers  which constitute
the Company's traditional channel of distribution.

     The following  table sets forth selected  operating data as a percentage of
net sales for the periods indicated.

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>         <C>        <C>         <C>
                                                                                        THIRTY-NINE WEEKS ENDED THIRTEEN WEEKS ENDED
------------------------------------------------------------------------------------------------------------------------------------
                                                                                          August 1,  August 2,  August 1,  August 2,
                                                                                           1998        1997       1998        1997
------------------------------------------------------------------------------------------------------------------------------------
Net sales
   United States                                                                           61.9%       58.6%      62.8%       67.4%
   Europe                                                                                  38.1        41.4       37.2        32.6
------------------------------------------------------------------------------------------------------------------------------------
   Consolidated                                                                           100.0       100.0      100.0       100.0
------------------------------------------------------------------------------------------------------------------------------------
Gross margin
   United States                                                                           12.2         4.5       12.8        15.0
   Europe                                                                                  42.0        42.5       41.8        39.7
------------------------------------------------------------------------------------------------------------------------------------
   Consolidated                                                                            23.6        20.2       23.6        23.0
------------------------------------------------------------------------------------------------------------------------------------
Licensing revenues                                                                          1.2         1.0        1.8          .1
------------------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses                                               22.9        26.5       25.1        18.7
------------------------------------------------------------------------------------------------------------------------------------
Restructuring and special charges                                                          12.5           -          -           -
------------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)                                                                   (10.6)       (5.3)        .3         5.2
------------------------------------------------------------------------------------------------------------------------------------
Gain on sale of subsidiary stock                                                              -        16.7          -           -
------------------------------------------------------------------------------------------------------------------------------------
Interest and finance costs                                                                 (1.7)       (1.8)      (2.1)       (1.2)
------------------------------------------------------------------------------------------------------------------------------------
Other income (expense)                                                                      (.6)          -          -           -
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before provision for income taxes, minority interest and extraordinary item (12.9)        9.6       (1.8)        4.0
------------------------------------------------------------------------------------------------------------------------------------
Provision (recovery) for income taxes                                                      (1.8)        4.5       ( .2)        1.9
------------------------------------------------------------------------------------------------------------------------------------
Minority interest                                                                            .8          .4         .7          .9
------------------------------------------------------------------------------------------------------------------------------------
Extraordinary item                                                                            -          .2          -           -
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                                         (11.9%)       4.6%      (2.3%)       1.2%
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                                                       -10-     

<PAGE>




                     CHIC BY H.I.S, INC. AND SUBSIDIAIRIES


The following  discussion  provides  information  and analysis of the results of
operations of the Company for the thirty-nine and thirteen weeks ended August 2,
1998 and August 1, 1997 and its liquidity and capital resources.

Thirty-nine  Weeks  ended  August 1, 1998  Compared to  Thirty-nine  Weeks ended
August 2, 1997


          Net Sales.  Net sales for the  thirty-nine  weeks ended August 1, 1998
decreased by $11.4 million,  or 5.6%,  from $204.4  million for the  thirty-nine
weeks ended August 2, 1997 to $193.0  million.  United States sales decreased by
$.4 million,  or .3 %, to $119.4  million  primarily  due to an decrease in unit
sales volume and a decrease in average  selling price. As of August 1, 1998, the
Company  had a total  backlog of  confirmed  domestic  purchase  orders of $61.5
million,  a decrease of 8.8%  compared to $67.5 million as of August 2, 1997. In
the  thirty-nine  weeks ended August 1, 1998,  European  sales  decreased by 9.6
million deutsche marks, or 6.8%, to 132.0 million deutsche marks. When converted
into U.S.  currency  using the prevailing  currency  exchange rate, the European
sales  translated  into a decrease of $11.0 million,  or 13.0%, to $73.5 million
for the  thirty-nine  weeks  ended  August 1, 1998.  As of August 1,  1998,  the
Company  had a total  backlog  of  confirmed  European  purchase  orders of 63.0
million  deutsche marks,  an increase of 4.2% compared to 60.4 million  deutsche
marks as of August 2, 1997. The confirmed European backlog,  when converted into
U.S. currency at the then prevailing  currency exchange rate, was $35.1 million,
an increase of 8.4% compared to $32.4 million on August 2, 1997.

          The  Company's  backlog  consists  of  confirmed  purchase  contracts.
Substantially  all of the unfilled  orders are expected to be shipped  within 12
months. The Company believes that in the past it has shipped at least 95% of its
confirmed  purchase  contracts.   The  Company  has  not  generally  experienced
difficulty in filling orders on a timely basis.

          Gross Profit.  Gross profit for the thirty-nine  weeks ended August 1,
1998 increased  $4.1 million,  or 10.0%,  from $41.4 million in the  thirty-nine
weeks ended August 2, 1997 to $45.5 million,  while gross margin  increased from
20.2% to 23.6%.  United  States  gross profit  increased  $9.2 million from $5.4
million for the  thirty-nine  weeks ended August 2, 1997 to $14.6  million.  The
increase in gross profit and as a percentage  of net sales in the United  States
was  primarily  due to the  increase  in  production  at the  Company's  Mexican
production  facility.  European  gross profit  decreased $5.0 million from $35.9
million for the thirty-nine  weeks ended August 2, 1997 to $30.9 million,  while
gross margin decreased from 42.5% in the thirty-nine  weeks ended August 2, 1997
to 42.0% primarily due to product mix.

          Licensing Revenues. Licensing  revenues  increased  15.1%  for  the
thirty-nine  weeks  ended  August 1, 1998 from $2.0  million in the  thirty-nine
weeks ended August 2, 1997 to $2.3 million. The increase is partially due to the
negotiated settlement of a licensing agreement.

          SG&A EXPENSES.  Selling, general and administrative expenses decreased
$10.0 million, or 18.4%, to $44.2 million for the thirty-nine weeks ended August
2, 1998 primarily due to the special  advertising  charge  recorded in the prior
year period.

          Restructuring  and Special  Charges.  In the  thirty-nine  weeks ended
August 1, 1998,  the  Company  announced  its  intention  to  continue  to close
additional   manufacturing  facilities  in  the  United  States.  In  connection
therewith,  the Company  recorded  restructuring  and  special  charges of $24.1
million  consisting  of a  write-down  in the  value  of  related  property  and
equipment,  the  write-off  of  operating  inefficiencies  incurred  during  the
shut-down  period and the accrual of estimated costs of  disposition.  The 

                                                                       -11-     

<PAGE>

                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

plant closings are expected to result in the termination of approximately  1,300
employees.  In addition,  the downsizing associated with such plant closings may
affect the accounting,  disclosure and funding of the Company's  pension benefit
obligation.

          Operating Income (Loss).  The operating loss for the thirty-nine weeks
ended August 1, 1998  increased  $9.7  million  from an operating  loss of $10.8
million  in the  thirty-nine  weeks  ended  August  2,  1997 to  $20.5  million,
primarily due to the  restructuring  and special  charges,  which were partially
offset by the increase in gross profit and the decrease in operating expenses.

          Gain on Sale of  Subsidiary  Stock.  In the  thirty-nine  weeks  ended
August 2, 1997, the Company recorded a gain on the sale of  approximately  47.5%
of its wholly owned European subsidiary of approximately $34.1 million. Proceeds
of the sale were used in May 1997 to repay domestic borrowings.

          Interest and Finance Costs.  Interest and finance costs  decreased $.4
million or 10.9%,  from $3.6 million for the  thirty-nine  weeks ended August 2,
1997 to $3.2  million  for the  thirty-nine  weeks  ended  August 1,  1998.  The
decrease  in  interest  cost was due to  lower  outstanding  borrowings  for the
period.

          Other Expenses,  Net. In the  thirty-nine  weeks ended August 1, 1998,
the Company incurred non-operating expenses of approximately $2.6 million, which
were  partially  offset by the gain on the sale of fixed assets of $1.5 million.
The  non-operating  expenses  include  costs  incurred  in  connection  with the
reconstitution  of the  Company's  Board  of  Directors,  the  termination  of a
consulting  agreement  with a former  director,  and severance  agreements  with
certain former employees.

          Income Taxes. The recovery for income taxes for the thirty-nine  weeks
ended August 1, 1998 was $3.4 million as compared to a provision of $9.2 million
for the  thirty-nine  weeks  ended  August 2, 1997.  The  deferred  tax  benefit
attributable to the restructuring charge recorded in the thirty-nine weeks ended
August 1, 1998 was  reduced  by  approximately  $4.5  million  to the extent its
future realization is uncertain.

          Extraordinary Item. In the thirty-nine weeks ended August 1, 1997, the
Company  recorded an  extraordinary  charge of $.3 million  attributable  to the
early extinguishment of $43 million of senior notes payable.

Thirteen  Weeks  ended  August 1, 1998 (the "1998  third  Quarter")  Compared to
Thirteen Weeks ended August 2, 1997 (the "1997 Third Quarter")


          Net  Sales.  Net  sales for the 1998  Third  Quarter  decreased  $22.0
million,  or 26.9%,  from  $81.9  million  for the 1997  Third  Quarter to $59.9
million.  United States sales  decreased by $17.6  million,  or 31.9%,  to $37.6
million.  In the 1998 Third  Quarter,  European  sales  decreased by 7.1 million
deutsche marks, or 15.1%,  to 40.0 million  deutsche marks.  When converted into
U.S.  currency using the prevailing  currency  exchange rate, the European sales
translated  into a decrease of $4.4 million,  or 16.6%, to $22.3 million for the
1998 Third Quarter.  The decline in sales is primarily  attributable to the weak
retail environment for basic denim jeans.

                                                                       -12-     

<PAGE>

                        CHIC BY H.I.S, AND SUBSIDIARIES

          Gross Profit.  Gross profit for the 1998 Third Quarter  decreased $4.7
million,  or 25.0%,  from  $18.9  million  in the 1997  Third  Quarter  to $14.1
million,  while gross margin increased from 23.0% to 23.6%.  United States gross
profit  decreased  $3.4 million from $8.3 million for the 1997 Third  Quarter to
$4.8  million.  The decrease in gross profit and as a percentage of net sales in
the United States was  primarily  due to the decrease in sales volume.  European
gross  profit  decreased  $1.3  million  from $10.6  million  for the 1997 Third
Quarter to $9.3  million,  while gross margin  increased  from 39.7% in the 1997
Third Quarter to 41.8% primarily due to product mix.

          Licensing  Revenues.  Licensing  revenues  increased  $.3 million,  or
48.0%, for the 1998 Third Quarter from $.7 million for the 1997 Third Quarter to
$1.1 million.  The increase is primarily due to the  negotiated  settlement of a
licensing agreement.

          SG&A Expenses.  Selling, general and administrative expenses decreased
$.3 million,  or 1.8%, to $15.1 million for the 1998 Third Quarter primarily due
to the reduction in various  administrative  expenses which was partially offset
by the provision for certain European employee  incentive  expenses and domestic
promotional programs.

          Operating  Income.  The  operating  income for the 1998 Third  Quarter
decreased  $4.1  million  from $4.2  million  in the 1997  Third  Quarter to $.1
million,  primarily due to the decrease in sales,  which was partially offset by
the decrease in operating expenses.

          Interest and Finance Costs.  Interest and finance costs  increased $.3
million or 32.7%,  from $.9 million for the 1997 Third  Quarter to $1.2  million
for the 1998 Third  Quarter.  The  increase in  interest  expense was due to the
increase in average outstanding borrowings for the period.

          Income Taxes. The recovery for income taxes for the 1998 Third Quarter
was $.1 million as compared  to a provision  of $1.6  million for the 1997 Third
Quarter as a result of the decrease in income.


Liquidity and Capital Resources

          The Company's principal capital requirements have been to fund working
capital  needs and capital  expenditures.  The Company has  historically  relied
primarily on internally generated funds, trade credit, bank borrowings and other
debt offerings to finance these needs.

          In the  thirty-nine  weeks  ended  August 1,  1998,  net cash of $26.5
million was used in operations,  as compared to $31.4 million in the thirty-nine
weeks  ended  August 2,  1997.  The net cash used in  operations  was  primarily
attributable to the net loss for the period, as well as the increase in accounts
receivables,  inventories,  and prepaid and other  assets,  and the  decrease in
accounts  payable,  which  were  partially  offset by the  increase  in  accrued
expenses.

          Net cash of $3.9  million  was  used in  investing  activities  in the
thirty-nine  weeks ended  August 1, 1998,  as  compared  to $6.6  million in the
thirty-nine  weeks ended August 2, 1997.  Cash used in investing  activities was
primarily  attributable  to the  acquisition  of  manufacturing  facilities  and
equipment.  The Company is continuing to expand its manufacturing  facilities in
Mexico and intends to 

                                                                       -13-     

<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

develop a laundry operation in the foreseeable future. The Company's  investment
in such manufacturing operations was offset by the proceeds from the disposition
of the corporate aircraft and certain idle property and equipment. In the second
quarter of fiscal 1998, the Company  announced its intention to close additional
domestic manufacturing facilities. In connection therewith, the Company recorded
restructuring  and special charges in the thirty-nine weeks ended August 1, 1998
which include a valuation adjustment of the related property and equipment,  the
write-off  of  manufacturing  inefficiencies  and  accrued  estimated  costs  of
disposition. In addition, the downsizing associated with such plant closings may
affect the accounting,  disclosure and funding of the Company's  pension benefit
obligation.

          Net cash  provided by financing  activities  was $28.4  million in the
thirty-nine  weeks ended  August 1, 1998,  as  compared to $19.0  million in the
thirty-nine  weeks  ended  August  2,  1997.  The  cash  provided  by  financing
activities  in  the  thirty-nine  weeks  ended  August  1,  1998  was  primarily
attributable  to  the  increase  in  borrowings  against  the  Company's  credit
facilities  and proceeds  from the sale of common  stock issued  pursuant to the
exercise  of  outstanding  stock  options.  In August  1998,  the  Company  used
approximately  $1.0 million to repurchase  160,000 shares of its common stock on
the open market.  This repurchase  partially  offsets the  potentially  dilutive
effect of the stock options exercised. The cash provided by financing activities
in the thirty-nine weeks ended August 2, 1997 was primarily  attributable to the
proceeds from the sale of the Company's  subsidiary stock and borrowings against
the Company's credit facilities.

          As of August 1, 1998,  the  Company  had  domestic  credit  agreements
providing a $50 million  revolving  line of credit,  of which $38.2  million was
outstanding.  In addition,  the Company had $25.5 million of IRBs outstanding at
August 1, 1998.  The Company also has foreign  financing  agreements  with three
banks providing term loans aggregating 4.3 million deutsche marks (approximately
$2.4 million,  based on the August 1, 1998 foreign  currency  exchange rate) and
lines of credit  aggregating  38 million  deutsche  marks  (approximately  $21.1
million,   based  on  the  August  1,  1998  foreign  currency  exchange  rate).
Approximately  $6.9 million was outstanding  against the foreign lines of credit
as of August 1, 1998.  As of August 1, 1998,  the  Company was in  violation  of
certain  financial  covenants of its domestic credit agreement for which waivers
have been  obtained  through  September  30,  1998.  The  Company  is  currently
negotiating  to cure an  existing  event of  default  and amend the terms of the
credit agreement.

          In recent years, certain retail customers have experienced significant
financial  difficulties.  The  Company  attempts  to  minimize  its credit  risk
associated  with these customers by closely  monitoring its accounts  receivable
balances  and  their   ongoing   financial   performance   and  credit   status.
Historically,  the Company has not  experienced  material  adverse  effects from
transactions   with  these   customers.   However,   considering   the  customer
concentration  of the Company's  net sales,  any material  financial  difficulty
experienced  by a  significant  customer  could  have an  adverse  effect on the
Company's financial position or results of operations.

          The Company is a holding company, and is dependent upon the receipt of
dividends or other payments from its subsidiaries. The Company expects that cash
generated from  operations and the credit  agreements will provide the financial
resources  sufficient  to meet  its  foreseeable  working  capital  and  capital
expenditure requirements.  There can be no assurance,  however, that the Company
will not need to borrow from other sources during future periods.

                                                                       -14-     

                                                                                




<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES




Part II       OTHER INFORMATION

Item 5:       Special Note Regarding Forward-looking Statements

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for forward-looking  statements.  Except for the historical  information
contained or incorporated by reference in this filing,  the matters discussed or
incorporated  by  reference   herein  are   forward-looking   statements.   Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results, performance, or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance,   or   achievements   expressed   or   implied  by  such
forward-looking  statements. Such factors include, among others, those set forth
below  under  the  heading  "Additional  Cautionary  Statements"  as well as the
following: general economic and business conditions; industry capacity; fashion,
apparel and other industry trends; competition;  overseas expansion; the loss of
major  customers;  changes  in  demand  for the  Company's  products;  cost  and
availability  of raw  materials;  changes in business  strategy  or  development
plans; quality of management; and availability, terms and deployment of capital.

Additional Cautionary Statements

     Dependence on Major Customers.  The Company's two largest customers,  Kmart
Corporation  ("K-Mart")  and  Target,  a division of Dayton  Hudson  Corporation
("Target"),  together  accounted for  approximately 38% and 30% of the Company's
consolidated net sales during fiscal 1996 and fiscal 1997, respectively. Each of
these   customers   accounted  for  more  than  ten  percent  of  the  Company's
consolidated net sales in fiscal 1996,  while only K-Mart  represented more than
ten percent of the Company's  consolidated net sales in fiscal 1997. The loss of
either  K-Mart or Target  as a  customer  could  have an  adverse  effect on the
results of the  Company's  operations.  In  addition,  several of the  Company's
licensees sell products bearing the Company's  trademarks to the same retailers,
including  K-Mart.  The  Company  has  no  long-term  commitments  or  long-term
contracts with any of its customers.

     Recent Apparel  Industry  Trends.  Competition in the apparel  industry has
been exacerbated by the recent consolidations and closings of major stores. Like
many of its  competitors,  the  Company  sells  to  certain  retailers  who have
recently  experienced  financial  difficulties  and some of whom  are  currently
operating  under the  protection of the federal  bankruptcy  laws.  Although the
Company  monitors the financial  condition of its customers,  the Company cannot
predict what effect, if any, the financial condition of such customers will have
on the Company.  The Company  believes  that  developments  to date within these
companies  have not had a material  adverse  effect on the  Company's  financial
position or results of operations.

     Nature of Industry;  Dependence  on Jeans.  The apparel  industry is highly
competitive and characterized  generally by ease of entry. Many of the Company's
competitors are substantially  larger and have greater financial,  marketing and
other resources than the Company. The Company's revenues are derived principally
from sales of jeans products.  Although the Company's  products for the domestic
market  have  historically  been less  sensitive  to fashion  trends than higher
fashion  lines,  the apparel  industry is subject to rapidly  changing  consumer
preferences,  which may have an adverse  effect on the results of the  Company's
operations if the Company materially misjudges such preferences.

                                                                       -15-

<PAGE>


                      CHIC BY H.I.S, INC. AND SUBSIDIARIES

     Risks of Doing Business Overseas. In general, the Company believes that the
demand for jeans in foreign  markets is more  susceptible  to changes in fashion
preferences  than in the domestic  market.  In  addition,  it is not possible to
predict  accurately the effect that the continued  elimination of trade barriers
among  members of the European  Union will have on the  Company's  operations in
Europe.  The Company is also expanding its activities in Eastern  Europe,  where
economic, political and financial conditions are changing rapidly, and commenced
manufacturing  operations in Mexico during fiscal 1997. In general, there can be
no  assurance  that the  results of the  Company's  European  operations  or the
operations  in  Mexico  will  not be  adversely  affected  by  factors  such  as
restrictions  on  transfer of funds,  political  instability,  competition,  the
relative strength of the U.S. dollar, changes in fashion preferences and general
economic conditions.

     Absence of Dividends.  The Company has not, in recent years,  paid any cash
or other  dividends on its Common Stock,  and there can be no assurance that the
Company will pay cash dividends in the foreseeable future. As a holding company,
the ability of the Company to pay  dividends  is  dependent  upon the receipt of
dividends or other payments from its subsidiaries. The Company's domestic credit
agreements (the "Loan Agreements")  contain certain limitations on the Company's
ability to pay dividends.

     Leverage and Financial  CovenantS.  Although the Company's  initial  public
offering in February 1993 and the other  components of its refinancing plan (the
"Refinancing Plan") improved the Company's operating and financial  flexibility,
the Company  continues  to have  indebtedness  that could  adversely  affect its
ability to respond to changing  business and economic  conditions.  At August 1,
1998,  the  Company  had  an  aggregate  of   approximately   $74.9  million  of
indebtedness   (including   capital   leases)   outstanding  and  the  Company's
stockholders'  equity was  approximately  $66.4  million.  The Company's  credit
agreements  contain  covenants  that  impose  certain  operating  and  financial
restrictions  on the Company.  Such  restrictions  affect,  and in many respects
limit or  prohibit,  among  other  things,  the  ability of the Company to incur
additional  indebtedness,  create  liens,  sell  assets,  engage in  mergers  or
acquisitions  and pay  dividends.  As of  August 1,  1998,  the  Company  was in
violation of certain  financial  covenants of its domestic credit  agreement for
which waivers have been  obtained  through  September  30, 1998.  The Company is
currently  negotiating  to cure an existing event of default and amend the terms
of the credit agreement.


The Year 2000

The  Company  is  currently  evaluating  the  impact  of the  year  2000  on its
management and information  systems.  At this time,  management does not believe
the impact of the year 2000 will have a  material  effect on its  operations  or
financial results.




                                                                       -16-


<PAGE>









Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

             (a)    Exhibits

                    None

             (b)    Reports on Form 8-K
                    None


































                                                                       -17-

<PAGE>



                                    SIGNATURE




     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.










                                              CHIC BY H.I.S, INC.




Dated:     September 14, 1998                 By: /s/ Daniel Rubin
                                                  -----------------
                                              Daniel Rubin
                                              Chief Executive Officer




Dated:     September 14, 1998                 By: /s/ Christine A. Hadjigeorge
                                                  -----------------------------
                                              Christine A. Hadjigeorge
                                              Chief Financial Officer




                                                                       -18-




<PAGE>