SECURITIES AND EXCHANGE COMMISSION
                              
                   WASHINGTON, D.C. 20549
                              
                          FORM 8-K
                              
                       CURRENT REPORT
                              
           Pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934
                              
              Date of Report:  February 6, 1997
      Date or earliest event report:  January 31, 1997
                              
                              
                              
                      PHARMHOUSE CORP.
     (Exact Name of Registrant specified in its charter)



  New York                I-7090                 13-2634868
(State of other   (Commission File No.)         (IRS Employer
jurisdiction of                             Identification No.)
 incorporation)



                        860 Broadway
                  New York, New York  10003
          (Address of principal executive offices)
                              
                        (212)477-9400
    (Registrant's telephone number, including area code)




Item 5.        Other Events

     On January 31, 1997, the Registrant and F.W. Woolworth Co. and
Woolworth Corporation (collectively, "Woolworth") and their respective
affiliates entered into a Mutual Release and Settlement Agreement
(the "Settlement Agreement"), pursuant to which the Registrant and Woolworth
resolved their outstanding disputes arising out of the sale by Woolworth
to the Registrant of the inventory, fixtures and leases relating to 24
deep discount The Rx Place stores (the "Rx Stores) pursuant to an
Asset Purchase Agreement dated April 13, 1995, as amended (the "Asset
Purchase Agreement").

          Pursuant to the Settlement Agreement, the Registrant and
Woolworth agreed as follows:

     (a)  The legal action instituted between Registrant against
          Woolworth arising out of the Asset Purchase Agreement and
          pending in the New York Supreme Court has been dismissed
          with prejudice and all claims asserted by Woolworth in a
          related arbitration proceeding have been withdrawn with
          prejudice.

     (b)  The Registrant (including its principal officers)
          exchanged releases subject only to the continuing
          obligations of the Registrant and Woolworth under the
          Settlement Agreement described herein.

     (c)  Prior to the Settlement Agreement, Woolworth held
          three promissory notes of the Registrant (which, as of
          December 28, 1996, were in the aggregate amount, including
          principal and accrued interest, of approximately $9.5
          million, which represented the deferred portion of the
          purchase price paid by the Registrant to Woolworth for the
          assets of the Rx Stores under the Asset Purchase Agreement.
          Woolworth has cancelled and surrendered two of those three
          promissory notes pursuant to the Settlement Agreement.  The
          third promissory note (in the principal amount of approximately
          $2.9 million and originally due April 28, 1998) was modified by
          the terms of the Settlement Agreement (the "Modified Third Note")
          and, as so modified, represents a remaining obligation of the
          Registrant in the principal amount of $1 million.  The
          Modified Third Note does not bear any interest or other
          finance charges and is only to be due and payable by the
          Registrant to Woolworth in the event that on or prior to
          July 30, 1998, the Registrant either liquidates
          substantially all of its assets, ceases to conduct
          substantially all of its operations (except in the event of
          a merger, consolidation or sale of assets with or to third
          parties) or files for bankruptcy.  If no such event occurs
          as of July 30, 1998, the Modified Third Note will be
          surrendered by Woolworth to the Registrant for cancellation
          and the $1 million obligation evidenced thereby will be
          irrevocably forgiven.  By reason of the foregoing
          arrangements, the Registrant's indebtedness to Woolworth was
          reduced by more than $8.5 million after giving effect to the
          remaining contingent obligation represented by the Modified
          Third Note.

     (d)  The Registrant and Woolworth agreed to the following
          arrangements with respect to the leases and occupancy of the
          premises of seven (the "Affected Stores") of the 24 Rx
          Stores which were acquired by the Registrant under the
          Asset Purchase Agreement.

          (i)  The lease of one of the Affected Stores has been
               reassigned to Woolworth and such reassignment shall become
               effective upon the Registrant's surrender of possession of
               the premises of that store by not later than May 31, 1997.

          (ii) The Registrant redelivered the lease governing a
               second Affected Store upon execution of the Settlement
               Agreement.  That lease is the subject of a pending legal
               action with the landlord and Woolworth has agreed both to
               assume the defense and to defend the Registrant, at
               Woolworth's cost, in such action.  The Registrant has agreed
               to surrender the premises of this Affected Store within the
               earlier of 65 days from the date of the Settlement Agreement
               or a court order.

          (iii)With respect to the remaining five Affected
               Stores, the Registrant has been granted the option by
               Woolworth to surrender possession and reassign the lease
               governing any one or more of these Affected Stores which
               have not shown a store operating profit during the four
               month period ending May 31, 1997 as calculated by Pharmhouse
               (the "Profitability Test").  The option with respect to
               these five Affected Stores is exercisable by the Registrant
               up to July 31, 1997.  Whether or not the Registrant elects
               to exercise the foregoing option, Woolworth reserves the
               right, at any time after the date of the Settlement
               Agreement, to terminate Registrant's possession of the
               premises of any one of these five Affected Stores and to
               require reassignment by Registrant to Woolworth of leases to
               any one or more of such Affected Stores.  Whether the
               Registrant exercises such option or Woolworth exercises its
               reassigned right, the Registrant will be required to
               surrender possession of the premises governing any one of
               these five Affected Stores within a stipulated period after
               the date of exercise by the Registrant of such option or by
               Woolworth of such right of reassignment.
          
          (iv) Woolworth has undertaken to pay rental and other
               fixed monthly sums payable to the landlord under each of the
               leases governing the seven Affected Stores described in
               clauses (i) through (iii) of this paragraph (d) as well as
               reimburse the Registrant for additional occupancy costs
               payable to such landlords through the date of reassignment,
               redelivery, or in the case of the five Affected Stores
               referred to in clause (iii), July 31, 1997.

          (v)  While the Registrant remains in possession of any of
               the seven Affected Stores, the Registrant shall be permitted
               to retain all proceeds from the sale of inventory and other
               asset sales effected in connection with such occupancy.

     (e)  With respect to the leases governing the remaining 17
          Rx Stores acquired by the Registrant pursuant to the Asset
          Purchase Agreement, Woolworth shall have no further
          obligation under the special real estate indemnification
          provisions in the Asset Purchase Agreement and, in the event
          that the Registrant fails to perform its obligation under
          the leases governing these 17 Rx Stores, Woolworth shall
          have the right to cure any such defaults and to have
          Registrant reassign such leases in the event that
          Registrant does not reimburse Woolworth for amounts it
          shall have paid to cure any such defaults.

     (f)  The Registrant has agreed to pay Woolworth certain
          prior outstanding rentals and other charges through January
          31, 1997 (previously accrued in the Registrant's financial
          statements), subject to certain offsets in the Registrant's
          favor, which, after giving effect to such offsets, equal
          approximately $195,000.  That amount is to be paid by the
          Registrant within 120 days after the date of the Settlement
          Agreement.

     (g)  Woolworth extended the term of the Registrant's license
          to use the service mark "The Rx Place" for an additional
          three year period beyond that set forth in the Asset
          Purchase Agreement and the Trademark License Agreement
          executed by the parties.  As so extended, the Registrant's
          license will extend through April 28, 2001 with the right on
          the part of the Registrant to extend such license for one
          additional year upon written notice from the Registrant to
          Woolworth prior to the expiration of the extended license term.

     (h)  The Settlement Agreement contains certain other terms
          and conditions providing for remedies in the event that
          either one of the parties fails to perform its continuing
          obligations with respect to the matters and transactions
          described above.

For further information concerning:

     (i)  the terms and conditions of the Asset Purchase
          Agreement between the Registrant and Woolworth, reference is
          hereby made to the Registrant's Annual Report on Form 10-K
          for its fiscal year ended January 28, 1995; and

     (ii) the claims asserted by the Registrant in the legal
          action and the claims asserted by Woolworth in the related
          arbitration proceedings which have been dismissed pursuant
          to the Settlement Agreement, reference is hereby made to
          Note 6 to the Registrant's Consolidated Financial Statements
          included in the Registrant's Form 10-Q Reports for the
          fiscal quarters ended August 3, 1996 and November 2, 1996.



                              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.

                                      PHARMHOUSE CORP.


                                      By:  /s/ Marcie B. Davis
                                      --------------------------
                                          Marcie B. Davis
                                          Executive Vice President

February 6, 1997