UNITED STATES 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     September 30, 1997       

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

          For the transition period from           to                  


                               Commission File No. 1-5137


                                  FIELDCREST CANNON, INC.                 

                 (Exact name of registrant as specified in its charter)

                     DELAWARE                               56-0586036   
          (State or other jurisdiction of              (I.R.S. Employer
           incorporation or organization)              Identification No.)


              One Lake Circle Drive
                 Kannapolis, NC                                28081     
             (Address of principal                        (Zip Code)
              executive offices)

          Registrant's telephone number, including area code  (704) 939-2000  




          Former name, former address and former fiscal year, if changed since
          last report

          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 and
          (2) has  been subject to  such filing requirements  for the  past 90
          days.  Yes  x  .  No    .

                   Number of shares outstanding    September 30, 1997

                           Common Stock                9,243,602



                                                        Total pages 12<PAGE>
                                                        Exhibit Index Page 11

                            PART 1. FINANCIAL INFORMATION
     <TABLE>
     FIELDCREST CANNON, INC.
     Consolidated statement of financial position                               
     <CAPTION>
                                                  September 30   December 31,
     Dollars in thousands                             1997           1996    
     <S>                                            <C>           <C>
     Assets                                                                  
     Cash                                           $  5,475      $  4,647
     Accounts receivable                             170,071       154,511
     Inventories (note 3)                            202,064       216,165
     Other prepaid expenses and current assets         2,218         2,489     
     Total current assets                            379,828       377,812  
     Plant and equipment, net                        342,392       323,838
     Deferred charges and other assets                67,259        66,843

     Total assets                                   $789,479      $768,493


     Liabilities and shareowners' equity                                    

     Accounts and drafts payable                    $ 63,893      $ 63,910
     Deferred income taxes                            20,593        18,212
     Accrued liabilities                              69,435        61,172
     Current portion of long-term debt                 4,697         5,508 
     Total current liabilities                       158,618       148,802
     Senior long-term debt                           111,320       107,746
     Subordinated long-term debt                     197,500       203,750
     Total long-term debt                            308,820       311,496
     Deferred income taxes                            39,758        38,291
     Other non-current liabilities                    52,962        54,149

     Total liabilities                               560,158       552,738

     Shareowners' equity:
     Preferred Stock, $.01 par value,
     10,000,000 authorized, 1,500,000 issued
     and outstanding September 30, 1997 and
     December 31, 1996 (aggregate liquidation
     preference of $75,000)                               15            15

     Common Stock, $1 par value,
     25,000,000 authorized, 12,850,002 issued
     September 30, 1997 and 12,738,894
     December 31, 1996                                12,850        12,739 

     Additional paid in capital                      226,758       224,611
     Retained earnings                               106,923        95,615
     Excess purchase price for Common Stock
       acquired and held in treasury - 
       3,606,400 shares                             (117,225)     (117,225)

     Total shareowners' equity                       229,321       215,755

     Total liabilities and shareowners' equity      $789,479      $768,493

     /TABLE
<PAGE>
                                See accompanying notes
                                         (2)

   FIELDCREST CANNON, INC.
   Consolidated statement of operation and retained earnings
   <TABLE>
   <CAPTION>
                                         For the three months  For the nine months
   Dollars in thousands,                ended September 30    ended September 30
   except per share data                  1997       1996        1997      1996
   <S>                                  <C>        <C>         <C>       <C>
   Net sales                            $286,966   $285,221    $820,635  $812,995

   Cost of sales                         243,060    249,568     695,615   706,482
   Selling, general and administrative    29,395     28,253      85,563    78,406
   Restructuring charges                       -      4,500           -     8,130

   Total operating costs and expenses    272,455    282,321     781,178   793,018

   Operating income                       14,511      2,900      39,457    19,977

   Other deductions (income):
     Interest expense                      6,150      7,160      18,708    21,496
     Other, net                             (347)        97      (2,021)      519

   Total other deductions                  5,803      7,257      16,687    22,015

   Income (loss) before income taxes       8,708     (4,357)     22,770    (2,038)
   Federal and state income
     taxes (benefit)                       2,884     (1,634)      8,087      (764)

   Net income (loss)                       5,824     (2,723)     14,683    (1,274)
   Preferred dividends                    (1,125)    (1,125)     (3,375)   (3,375)

   Earnings (loss) on common               4,699     (3,848)     11,308    (4,649)

   Amount added to (subtracted from)
     retained earnings                     4,699     (3,848)     11,308    (4,649)
   Retained earnings,
    beginning of period                  102,224     98,254      95,615    99,055

   Retained earnings, end of period     $106,923   $ 94,406    $106,923  $ 94,406

   Net income (loss) per common share   $    .51   $   (.43)   $   1.23  $   (.52)
   Fully diluted income (loss)
    per common share                    $    .47   $   (.43)   $   1.23  $   (.52)

      Average primary shares outstanding            9,275,112    9,044,250     9,204,171   9,002,815
   Average fully diluted shares outstanding     14,595,551    9,044,250     9,247,477   9,003,562  
       

   /TABLE
<PAGE>


                                See accompanying notes

                                         (3)

     FIELDCREST CANNON, INC.
     Consolidated statement of cash flows
     <TABLE>
     <CAPTION>
                                                            Nine Months
                                                         ended September 30   
     Dollars in thousands                               1997            1996  
     <S>                                             <C>            <C>
     Increase (decrease) in cash
     Cash flows from operating activities:
     Net income (loss)                               $ 14,683       $ (1,274)
     Adjustments to reconcile net income (loss) to
       net cash provided by operating activities: 
     Depreciation and amortization                     26,241         26,979
     Deferred income taxes                              1,467         (2,732)
     Other                                             (2,319)         8,625
     Change in current assets and liabilities:
       Accounts receivable                            (15,560)         4,156
       Inventories                                     14,101        (36,219)
       Other prepaid expenses and current assets          271          2,369
       Accounts payable and accrued liabilities         8,246          7,210
       Deferred income taxes                            2,381           (616)

       Net cash provided by operating activities       49,511          8,498

     Cash flows from investing activities:
     Additions to plant and equipment                 (46,214)       (21,035)
     Proceeds from disposal of plant and equipment      3,277          3,911

       Net cash (used in) investing activities        (42,937)       (17,124)

     Cash flows from financing activities:
     Increase in revolving debt                         4,294         11,826
     Proceeds from issuance of long-term debt               -          3,610
     Payments on long-term debt                        (6,665)          (800)
     Proceeds from sale of common stock                     -             41
     Dividends paid on preferred stock                 (3,375)        (3,375)

       Net cash provided by (used in) 
         financing activities                          (5,746)        11,302

     Increase in cash                                     828          2,676

     Cash at beginning of year                          4,647          9,124

     Cash at end of period                           $  5,475       $ 11,800


     </TABLE>







         See accompanying notes<PAGE>


                                         (4)


                               FIELDCREST CANNON, INC.

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  September 30, 1997  



          1. Basis of Presentation
             The consolidated financial  statements are unaudited.   In the
             opinion  of  management all  adjustments,  consisting only  of
             normal recurring items, have been  made which are necessary to
             show  a  fair presentation  of the  financial position  of the
             Company  at September  30,  1997 and  the  related results  of
             operations for the three  and nine months ended  September 30,
             1997  and  1996.     The   unaudited  consolidated   financial
             statements should  be read in  conjunction with  the Company's
             Form 10-K for the year ended December 31, 1996.

          2. Income Per Common Share
             Reference  is  made to  Exhibit  11 to  this Form  10-Q  for a
             computation  of  primary  and  fully-diluted  net  income  per
             Common share.

          3. Inventories
             Inventories are classified as follows:
          <TABLE>
          <CAPTION> 
                                           September 30,    December 31, 
             (In thousands)                    1997             1996    
          <S>                                <C>              <C>
             Finished goods                  $ 92,655         $104,092
             Work in process                   65,718           68,668
             Raw materials and supplies        43,691           43,405  

                                             $202,064         $216,165   

             At September  30, 1997  approximately 65%  of the  inventories
             were valued on the last-in, first-out method (LIFO).

          </TABLE>
















                                         (5)<PAGE>




                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS



          Changes in Financial Condition

          The Company's  debt (including  the current portion  of long-term
          debt)  decreased $3.5  million during  the first  nine months  of
          1997.  Capital expenditures totaled  $46.2 million for the  first
          nine months of 1997 compared to $21.0  million for the first nine
          months of 1996.  Capital expenditures for 1997 are expected to be
          approximately $70 million.   At September 30, 1997, approximately
          $87.5  million of  the  Company's $200  million revolving  credit
          facility was  available  and  unused.   It  is  anticipated  that
          financing of future capital expenditures will be provided by cash
          flows  from   operations  and  borrowings   under  the  Company's
          revolving credit facility.

          On  September  10,  1997,  the  Company  entered  into  a  merger
          agreement with Pillowtex Corporation  under which Pillowtex  will
          acquire  the Company  for  a combination  of  cash and  Pillowtex
          common stock.  Under  the agreement each share of  Company common
          stock would  be exchanged  for $27 in  cash and  $7 in  Pillowtex
          common stock and each share of preferred stock would be exchanged
          for $46.15 in  cash and  $11.97 in Pillowtex  common stock.   The
          merger is conditioned upon, among  other things, approval of each
          company's  shareholders and customary  regulatory clearances, and
          is expected to be completed by the end of 1997.


          Changes in Results of Operations

          Quarter   Ended   September   30,   1997    vs.   Quarter   Ended
          September 30, 1996

          Net  sales  for the  third quarter  of  1997 were  $287.0 million
          compared  to  $285.2 million  in the  third  quarter of  1996, an
          increase of 1%.  Excluding  the effects of the sales during  1996
          of  the Company's Blanket Division, sales in the third quarter of
          1997 increased 8%.  The increase in revenues was due primarily to
          volume increases.

          Gross profit margins increased from 12.5% in the third quarter of
          1996  to 15.3%  in  the third  quarter  of  1997.   The  increase
          reflects  lower  raw material  costs,  the  benefits of  recently
          completed  capital  projects,  and  continued  emphasis  on  cost
          reduction programs.   Operating income  for the third  quarter of
          1997  was adversely affected by $2.7 million of costs relating to
          lower labor productivity, lower mill activity  and administrative
          costs  in  connection  with   union  organizing  efforts  at  the
          Kannapolis, N.C.  area plants  that occurred in  August 1997  and
          $1.3 million  for expenses  related to stock  appreciation rights
          plans.   Operating  income  for the  third  quarter of  1996  was
          reduced  $1.7  million  by  equipment   relocation  and  employee
          training costs related  to the consolidation  and closing of  two
          towel facilities.<PAGE>



                                         (6)

          Selling,  general  and  administrative expenses  increased  as  a
          percentage of  sales from 9.9% to  10.2% in the  third quarter of
          1997 compared  to the same quarter of 1996.  The increase was due
          primarily  to higher  information technology  expenses associated
          with  implementation  of new  enterprise information  systems and
          higher advertising expenses.

          In the third quarter of 1996 operating income was reduced by pre-
          tax   restructuring  charges   of   $4.5  million   for  employee
          termination benefits  and facility disposal costs  related to the
          sale of certain Blanket Division assets to Pillowtex Corporation.


          Interest  expense decreased $1.0 million in  the third quarter of
          1997 as  compared to the third quarter of 1996 due primarily to a
          decrease in average  debt outstanding.  Total debt declined $67.2
          million  from  September 30,  1996 to  September  30, 1997,  as a
          result  of the sale of  the Blanket Division  and lower inventory
          levels.   Inventories  at September 30,  1997 were  $37.5 million
          lower   than  September   30,  1996,   after   excluding  blanket
          inventories.

          The effective income tax rate was 33.1% for the third quarter  of
          1997 compared to 37.5% for the third quarter of 1996.

          Net  income was $5.8 million,  or $.51 per  share after preferred
          dividends, in the third quarter of 1997, compared to a loss after
          the  effect of the restructuring charges of $2.7 million, or $.43
          per share  after preferred  dividends, in  the  third quarter  of
          1996.


          Nine  Months  Ended September  30,  1997  vs.  Nine Months  Ended
          September 30, 1996

          Net  sales for the first nine months  of 1997 were $820.6 million
          compared  to $813.0  million in  the first  nine months  of 1996.
          Excluding the effects of  the sales during 1996 of  the Company's
          Blanket  Division, sales in 1997 increased 6.5%.  The increase in
          revenues was due primarily to volume increases.

          Gross profit  margins  increased from  13.1%  in the  first  nine
          months of 1996  to 15.2% in the  first nine months of  1997.  The
          increase  reflects  lower raw  material  costs,  the benefits  of
          recently completed  capital projects,  and continued  emphasis on
          cost reduction programs.   Operating income  for the nine  months
          ended September  30, 1996 was  reduced $3.3 million  by equipment
          relocation   and   employee   training  costs   related   to  the
          consolidation and closing of two towel facilities.

          Selling,  general  and  administrative  expenses  increased  as a
          percentage of sales from 9.6% to  10.4% in the first nine  months
          of 1997 compared to the first  nine months of 1996.  The increase
          was 
          due   primarily   to  higher   information   technology  expenses
          associated  with  implementation  of new  enterprise  information
          systems and higher advertising expenses.<PAGE>






                                         (7)

          Pre-tax restructuring charges of  $8.1 million in the  first nine
          months of 1996 include  $3.6 million for closing a  towel weaving
          plant and  a yarn manufacturing plant as  a part of the Company's
          ongoing  consolidation effort to  utilize assets more effectively
          and $4.5  million for employee termination  benefits and disposal
          costs related to sale of certain Blanket Division assets.

          Interest expense  decreased $2.8 million the first nine months of
          1997 as compared  to the first nine months  of 1996 due primarily
          to  a decrease in average  debt outstanding.   The decreased debt
          resulted from the sale  of the Blanket Division in 1996 and lower
          inventory levels.

          The effective income tax rate was 35.5% for the first nine months
          of 1997 compared to 37.5% for the first nine months of 1996.

          Net income for  the first nine months of 1997  was $14.7 million,
          or  $1.23 per share after preferred dividends, compared to a loss
          after the effect of the restructuring charges of $1.3 million, or
          a loss of $.52 per share after preferred dividends, for the first
          nine months of 1996.

          In  February,  1997,  the  Financial Accounting  Standards  Board
          issued Statement No. 128, Earnings  per Share, which is  required
          to be  adopted on December 31,  1997.  At that  time, the Company
          will be required to  change the method currently used  to compute
          earnings per share and to restate  all prior periods.  Under  the
          new requirements for calculating  primary earnings per share, the
          dilutive effect of stock options will be excluded.  The impact of
          Statement  128 on the calculation of earnings per share for these
          quarters is not expected to be material.<PAGE>




                                         (8)




          Item 6.   Exhibits and Reports on Form 8-K





             (a).   Exhibits



                    11     Computation of  Primary  and Fully  Diluted  Net
                           Income Per Share.


             (b).   Reports on Form 8-K

                    On September  15, 1997 the Registrant  filed a Form  8-K
                    to  report  under   Item  5  (Other  Events),  that   on
                    September  10,   1997,  Fieldcrest  Cannon,  Inc.   (the
                    "Company"),  Pillowtex  Corporation ("Pillowtex")  and a
                    wholly-owned  subsidiary of  Pillowtex ("Newco") entered
                    into  an agreement (the  "Merger Agreement") pursuant to
                    which, on  the terms  and subject  to the condition  set
                    forth  therein, Newco will  be merged  with and into the
                    Company, and  the Company will  thereby become a  wholly
                    owned subsidiary of Pillowtex.    <PAGE>





                                         (9)









                                 S I G N A T U R E S

          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.







                                               FIELDCREST CANNON, INC.    
                                                (Registrant)






                                         BY:  /s/ T. R. Staab              
                                             T. R. Staab      
                                             Vice President and
                                             Chief Financial Officer













          Date:  October 29, 1997<PAGE>





                                         (10)




                                  EXHIBIT INDEX TO 

                         QUARTERLY REPORT ON FORM 10-Q FOR 

                               FIELDCREST CANNON, INC.

                      FOR THE QUARTER ENDED SEPTEMBER 30, 1997 




   <TABLE>
   <CAPTION>
        Exhibit                                      Page
        Number          Description                  Number



       <S>          <C>                              <C>

       (11)         Computation of Primary and Fully
                    Diluted Net Income Per Share       12




   /TABLE
<PAGE>


                                        (11)<PAGE>


                 Exhibit 11
     <TABLE>
                     Computation of Primary and Fully Diluted Net Income Per Share
     <CAPTION>
                                               For the three months        For the nine months
                                                 ended September           ended September 30 
                                               1997            1996         1997          1996
     <S>                                     <C>               <C>         <C>         <C>
     Average shares outstanding            $ 9,225,965    $8,884,750      $9,184,756   8,995,373

     Add shares assuming exercise of
       options reduced by the number
       of shares which could have been
       purchased with the proceeds from 
       exercise of such options                 49,147         5,455          19,415       7,442

     Average shares and equivalents
       outstanding, primary                  9,275,112     9,044,250       9,204,171   9,002,815

     Average shares outstanding              9,225,965     9,038,795       9,184,756   8,995,373

     Add shares giving effect to the
       conversion of the convertible
       subordinated debentures               2,632,248        (1)             (1)          (1)

     Add shares giving effect to the
       conversion of the convertible 
       preferred stock                       2,564,100        (1)             (1)          (1)  

     Add shares assuming exercise of
       options reduced by the number 
       of shares which could have been 
       purchased with the proceeds from 
       exercise of such options                173,238         5,455          62,721       8,189

     Average shares and equivalents
       outstanding, assuming full
       dilution                             14,595,551     9,044,250       9,247,477   9,003,562

     Primary Earnings

       Net income (loss)                   $ 5,824,000   $(2,723,000)    $14,683,000 $(1,274,000)

       Preferred dividends                  (1,125,000)   (1,125,000)     (3,375,000) (3,375,000)

       Earnings (loss) on Common           $ 4,699,000   $(3,848,000)    $11,308,000 $(4,649,000)

     Primary earnings (loss)
       per common share                    $       .51   $      (.43)    $      1.23 $      (.52)

     Fully Diluted Earnings  

       Earnings (loss) on Common           $ 4,699,000   $(3,848,000)    $11,308,000 $(4,649,000)

       Add convertible subordinated
       debenture interest, net of taxes      1,066,000        (1)             (1)         (1)

       Add convertible preferred dividends   1,125,000        (1)             (1)         (1)   

       Net income (loss)                   $ 6,890,000   $(3,848,000)    $11,308,000 $(4,649,000)<PAGE>


     Fully diluted earnings (loss)
       per Common share                    $       .47   $      (.43)    $      1.23 $      (.52)


     (1)   The assumed  conversion of  the Registrant's  Convertible  Subordinated Debentures  and
           Convertible Preferred  Stock for the  three months  ended September 30,  1996 and  nine
           months ended  September 30, 1997  and 1996 would have  an anti-dilutive effect  for the
           computation of earnings per share; therefore, conversion has not been assumed for these
           periods.
     </TABLE>
                                                 (12)<PAGE>