<PAGE>     1      

                             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 October 26, 1996 
        
                           or

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

     For the transition period from          to                      

                    Commission File Number:  0-16309

                        FAMILY BARGAIN CORPORATION
           (Exact name of registrant as specified in its charter)

          Delaware                               51-0299573
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)                 Identification No.) 


  315 East 62nd Street, New York NY                  10021  
(Address of principal executive office)            (Zip Code)

                              (212) 980-9670
            (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. [X] YES    [  ] NO

The number of shares outstanding of the registrant's of common stock, as
of December 6, 1996, was 4,693,337 shares.







<PAGE>     2

                         FAMILY BARGAIN CORPORATION
         
          FORM 10-Q FOR THE QUARTERLY PERIOD ENDED OCTOBER 26, 1996

                                   INDEX

<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION
------    ---------------------      
                                                                       Page
                                                                        No.
                                                                       ----
<S>       <C>                                                          <C> 
Item 1.   Financial Statements

          Family Bargain Corporation and Subsidiaries Consolidated 
          Balance Sheets as of January 27, 1996 and 
          October 26, 1996 (Unaudited)                                  F-1

          Family Bargain Corporation and Subsidiaries Consolidated 
          Statements of Operations (Unaudited) for the three months 
          ended October 28, 1995 and October 26, 1996                   F-3

          Family Bargain Corporation and Subsidiaries Consolidated 
          Statements of Operations (Unaudited) for the nine months 
          ended October 28, 1995 and October 26, 1996                   F-4

          Family Bargain Corporation and Subsidiaries Consolidated 
          Statements of Cash Flows (Unaudited) for the nine months 
          ended October 28, 1995 and October 26, 1996                   F-5

          Family Bargain Corporation and Subsidiaries Notes to 
          Consolidated Financial Statements (Unaudited)                 F-7

Item 2.   Management's Discussion and Analysis of Financial Condition 
          and Results of Operations                                     3

PART II.  OTHER INFORMATION
-------   -----------------

Item 6.   Exhibits and Reports on Form 8-K                              8
</TABLE>


                                   - 2 -


















<PAGE>     3     
                                   PART I

                                   ITEM 1

                 FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS 
                  AS OF JANUARY 27, 1996 AND OCTOBER 26, 1996
<TABLE>
<CAPTION>
                                              January 27,         October 26,
                                                 1996                 1996
                                                                  (Unaudited)

<S>                                          <C>                 <C>
Assets
------
Current assets:
  Cash                                       $   1,958,000         1,373,000
  Accounts receivable - non-trade                  887,000           953,000
  Layaway receivables                              695,000         1,704,000
  Merchandise inventories                       25,874,000        43,557,000
  Prepaid expenses                                 776,000         1,845,000
                                               -----------       -----------
    Total current assets                        30,190,000        49,432,000

Real property held for sale                      4,500,000               --
Leasehold improvements and equipment, net        9,001,000        10,958,000
Other assets                                       708,000           545,000
Excess of cost over net assets acquired
  (goodwill), less accumulated amortization
  of $3,366,000 and $4,772,000 at
  January 27, 1996 and October 26, 1996,
  respectively                                  42,753,000        41,947,000
                                               -----------       -----------
    Total assets                             $  87,152,000       102,882,000
                                               ===========       =========== 
</TABLE>

                                                                 (Continued)

                                     F-1
























<PAGE>     4
                FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS 
                 AS OF JANUARY 27, 1996 AND OCTOBER 26, 1996
                               (Continued)
<TABLE>
<CAPTION>
                                            January 27,          October 26,
                                               1996                 1996
                                                                 (Unaudited)
<S>                                         <C>                   <C>
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
  Current maturities of long-term debt
    and capital leases                       $    5,238,000          3,344,000
  Accounts payable                               17,866,000         24,925,000
  Accrued salaries, wages and bonuses             1,758,000            413,000
  Other accrued expenses                          5,514,000          3,620,000
                                                -----------        -----------
    Total current liabilities                    30,376,000         32,302,000 

Revolving credit notes                           15,159,000         28,912,000
Long-term debt, less current maturities           9,864,000         12,741,000
Deferred rent                                     1,646,000          1,467,000
Capital lease and other long-term obligations     2,390,000            161,000
                                                -----------        -----------
    Total liabilities                            59,435,000         75,583,000
                                                -----------        ----------- 
Stockholders' equity:
  Series A convertible preferred stock,
    $.01 par value, 4,500,000 shares
    authorized, 3,200,000 and 3,727,415
    shares issued and outstanding, aggregate
    liquidation preference of $32,000,000 and
    $37,274,000 at January 27, 1996 and
    October 26, 1996, respectively               26,981,000         28,238,000
  Common stock, $.01 par value, 80,000,000
    shares authorized, 3,985,393 and 4,693,337
    shares issued and outstanding at 
    January 27, 1996 and October 26, 1996,
    respectively                                      7,000             14,000
  Additional paid-in capital                     19,763,000         21,714,000
  Accumulated deficit                           (19,034,000)       (22,667,000)
                                                -----------        -----------
    Total stockholders' equity                   27,717,000         27,299,000 

  Commitments and contingencies                        --                 -- 

    Total liabilities and stockholders' equity $ 87,152,000        102,882,000 
                                                ===========        ===========
</TABLE>
  
         See accompanying notes to consolidated financial statements.    
 
                                  F-2










<PAGE>    5
               FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
     FOR THE THREE MONTHS ENDED OCTOBER 28, 1995 AND OCTOBER 26, 1996
                               (Unaudited)
<TABLE>
<CAPTION>
                                           For the                 For the    
                                     Three Months Ended      Three Months Ended
                                      October 28, 1995        October 26, 1996
 
<S>                                      <C>                      <C>
Net sales                                $ 47,322,000             65,557,000 
Cost of sales                              30,393,000             42,264,000 
                                           ----------             ----------
  Gross profit                             16,929,000             23,293,000 

General and administrative expenses        14,024,000             21,609,000 
Amortization of goodwill                      314,000                467,000 
                                           ----------             ----------
  Operating income                          2,591,000              1,217,000

Interest expense and financing fees           852,000              1,297,000 
                                           ----------             ---------- 
  Net income (loss)                         1,739,000                (80,000)  

Preferred stock dividends                     760,000                885,000
                                           ----------             ----------  
  Net income (loss) 
     applicable to common stock         $     979,000               (965,000) 
                                           ==========             ========== 
Net loss per common share and 
  common stock equivalents:
    Primary                              $       0.24                  (0.21)
    Assuming full dilution                       0.14                  (0.21)
  
Weighted average shares outstanding:
  Primary                                   4,008,311              4,693,337  
  Fully diluted                            12,008,311              4,693,337
                                
</TABLE>
                                    
                                    
      See accompanying notes to consolidated financial statements.
                                    
                                   F-3




















<PAGE>    6
                 FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE NINE MONTHS ENDED OCTOBER 28, 1995 AND OCTOBER 26, 1996
                               (Unaudited)
<TABLE>
<CAPTION>
                                             For the               For the    
                                        Nine Months Ended     Nine Months Ended 
                                         October 28, 1995      October 26,1996
 
<S>                                     <C>                      <C>
Net sales                               $ 115,672,000            172,891,000 
Cost of sales                              76,178,000            110,864,000 
                                          -----------            -----------
  Gross profit                             39,494,000             62,027,000 

General and administrative expenses        38,300,000             58,023,000 
Amortization of goodwill                      943,000              1,406,000 
                                          -----------            -----------
  Operating income                            251,000              2,598,000 

Interest expense and financing fees         2,302,000              3,607,000 
                                          -----------            ----------- 
  Net loss                                 (2,051,000)            (1,009,000)  

Preferred stock dividends                   2,280,000              2,624,000
                                          -----------            -----------  
  Net loss applicable
     to common stock                     $ (4,331,000)            (3,633,000) 
                                          ===========            =========== 
Net loss per common share and 
  common stock equivalents:
    Primary                              $      (1.08)                 (0.82)
    Assuming full dilution                      (1.08)                 (0.82)
  
Weighted average shares outstanding:
  Primary                                   4,008,311              4,440,572  
  Fully diluted                             4,008,311              4,440,572   

</TABLE>
                                    
         See accompanying notes to consolidated financial statements.

                                    
                                   F-4




















<PAGE>     7
                  FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE NINE MONTHS ENDED OCTOBER 28, 1995 AND OCTOBER 26, 1996
                                  (Unaudited)
                                       
<TABLE>
<CAPTION>            
                                             For the             For the
                                        Nine Months Ended   Nine Months Ending
                                         October 28, 1995    October 26, 1996
<S>                                          <C>                 <C>

Cash flows from operating activities:
  Net loss                                   $ (2,051,000)        (1,009,000)
  Adjustments to reconcile loss to
    net cash used in operating
    activities:
      Depreciation and amortization             2,246,000          3,221,000
      Amortization of debt discount               770,000            785,000
      Deficiency of straight-line 
        rent over cash payments                   (21,000)          (179,000)
      Increase in merchandise inventories      (8,082,000)       (17,683,000)
      Increase in accounts receivable 
        non trade, prepaid expenses
        other assets                           (5,588,000)          (777,000)
      Increase in layaway receivables          (1,139,000)        (1,009,000)
      Increase in accounts payable              5,048,000          4,894,000
      Decrease  in accrued salaries
        wages and bonuses                        (455,000)        (1,345,000)
      Increase (decrease) in other accrued
        expenses and other current 
        liabilities                               251,000         (1,895,000)
                                              -----------        -----------
Net cash used in operations                    (9,021,000)       (14,997,000) 
                                              -----------        -----------
Cash flows used in investing activities:
  Purchase of leasehold improvements
    and equipment                              (3,297,000)        (3,496,000)
  Sale of land and building                           --           4,500,000   
                                              -----------        -----------
                                               (3,297,000)         1,004,000
                                              -----------        -----------
Cash flows from financing activities:
  Borrowings on revolving credit note         136,764,000        221,868,000
  Payments on revolving credit note          (124,775,000)      (208,115,000)
  Payments on notes payable and capital 
    lease obligations                            (753,000)        (3,647,000)
  Proceeds from issuance of note payable        1,500,000          3,100,000  
  Net proceeds from issuance of preferred
    stock                                             --           2,856,000
  Payment of dividends on preferred stock      (2,280,000)        (2,624,000)
  Payment of deferred debt issuance costs        (518,000)           (30,000) 
                                              ------------       -----------
    Net cash provided by
      financing activities                      9,938,000         13,408,000
                                              ------------       ----------- 
</TABLE>
                                                               (continued)
                                    F-5





<PAGE>     8

                  FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
       FOR THE NINE MONTHS ENDED OCTOBER 28, 1995 AND OCTOBER 26, 1996
                                  (Continued) 

<TABLE>

<S>                                           <C>                 <C> 
Net decrease in cash                           (2,380,000)          (585,000) 

Cash at the beginning of the period             2,522,000          1,958,000
                                              -----------        -----------
Cash at the end of the period                 $   142,000          1,373,000
                                              ===========        ===========
Supplemental disclosure of cash flow 
   information:

  Cash paid during the period for interest    $ 1,183,000          2,183,000    



</TABLE>


      See accompanying notes to consolidated financial statements.








                                   F-6






























<PAGE>     9
               FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               (Unaudited)


(1)  Unaudited Interim Financial Statements
   
     The accompanying unaudited consolidated financial statements do not
     include all of the information and footnotes required by generally
     accepted accounting principles for annual financial statements and should
     be read in conjunction with the financial statements for the fiscal year 
     ended January 27, 1996 included in the Family Bargain Corporation and
     Subsidiaries (the Company) Form 10-K as filed with the Securities and
     Exchange Commission.  The unaudited consolidated financial statements
     include the accounts of Family Bargain Corporation and its subsidiaries.
     All significant intercompany transactions have been eliminated in 
     consolidation.

     In the opinion of management, the unaudited consolidated financial
     statements as of and for the three and nine months ended October 26, 1996
     reflect all adjustments (which include normal recurring adjustments) 
     necessary to present fairly the financial position, results of operations
     and cash flows for the periods presented.  Due to the seasonal nature of 
     the Company's business, the results of operations for the interim periods
     may not necessarily be indicative of the results of operations for a
     full year.


(2)  Financing Transactions

     In March 1996, the Company issued 726,000 shares of its Series A
     Convertible Preferred Stock (Preferred Stock) for net proceeds of
     $2,856,000 and, in connection therewith, 181,500 five-year warrants
     to purchase common stock of the Company at $1.875 per share.

     In February 1996, the Company issued 153,846 shares of Preferred Stock
     to be held in escrow to secure a $1.0 million obligation (the Obligation)
     arising from the settlement of the Mandel-Kahn lawsuit.  The Company is
     permitted to sell these shares under the settlement agreement provided
     that the proceeds of the sale are applied to reduce the Obligation. The
     escrowed shares have not been reflected as outstanding in the 
     accompanying balance sheet but are treated as treasury shares. 
     Dividends paid on the escrowed shares during the nine months ended
     October 26, 1996 are not reflected as dividends on the accompanying
     statements of operations for the three and nine months ended October 26, 
     1996 but are reflected as a reduction in the outstanding principal
     balance of the Obligation on the accompanying balance sheet at
     October 26, 1996. 

     During the nine months ended October 1996, the Company borrowed
     $1.1 million under an installment note payable to finance the acquisition
     of electronic point-of-sale equipment with interest, accruing at a prime 
     rate of interest plus 2% (10.25% at October 26, 1996), payable monthly
     in arrears and principal payable in monthly installments of $30,556
     over 36 months.
     

                                   F-7






<PAGE>     10

     In April 1996, the Company borrowed $2.0 million for working capital
     purposes under an installment note payable.  The $2.0 million note bears
     interest, payable monthly in arrears, at a prime rate plus 3% (11.25% 
     at October 26, 1996) and is subject to monthly principal payments of
     $33,333 over 60 months. 

     The Company extinguished a mortgage note in the amount of 
     approximately $2.3 million with the proceeds of the sale of certain
     real property (Note 3).
 

(3) Sale of Land and Building

     In July 1996, the Company sold certain real property (the Nogales 
     Property)  obtained in its acquisition of Factory 2-U, Inc. 
     (Factory 2-U).  
     
     In connection with the Company's agreement to purchase Factory 2-U,
     the Company was contingently obligated to the former shareholders of
     Factory 2-U under a promissory note with a stated principal amount of
     $600,000 (the Contingent Note).   The principal amount of the note
     was contingent upon the timing and net proceeds of the sale of the
     Nogales Property.  The carrying value of the Contingent Note was 
     adjusted in April 1996 to $600,000, with a corresponding charge to
     goodwill,  to reflect the resolution of the contingency arising from the
     sale of the Nogales Property.  Principal and interest, to accrue at an
     annual rate of 8.75%, on the Contingent Note are due October 30, 1998. 
 
(4)  Issuance of Stock Options
  
     In July 1996, the Company granted options to purchase 1,764,668 shares
     of common stock to employees and directors.  These options vest between
     May 1997 and May 2001 and have an exercise price of $3.64 per share. 


(5) Provision for Income Taxes

     No provision for income taxes has been reflected in the consolidated
     statement of operations for the three and nine months ended October 26, 
     1996 since the Company generated tax losses during these periods.  While
     losses would increase the Company's net operating loss carry forwards 
     (NOLs),  realization of such losses is not assured due to limitations on 
     utilization of NOLs and the Company's history of losses.  As a result, a 
     full valuation allowance has been recognized against the deferred tax
     assets arising from the NOLs and no benefit for income taxes has been
     reflected in the accompanying statements of operations for the three 
     and nine months ended October 26, 1996.


(6) Proposed Convertible Subordinated Debenture Offering

     In November 1996, the Company delayed its proposed offering of 
     convertible subordinated debentures (the Proposed Offering).  The
     Company's decision whether to proceed with a financing will depend
     on available terms, conditions and amounts, as well as other factors
     including, but not limited to, the market price of its common stock. 




                                   F-8



<PAGE>     11

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Management's discussion of the results of operations provides analyses of
the Company's operations during the three and nine months ended October 28, 
1995 and October 26, 1996.


RESULTS OF OPERATIONS

THREE MONTHS ENDED OCTOBER 26, 1996 COMPARED TO THE THREE MONTHS
ENDED OCTOBER 28, 1995

Net sales (gross sales less sales tax and sales returns) were $65.6 million
for the three months ended October 26, 1996 compared to $47.3 million for the
three months ended October 28, 1995, an increase of $18.2 million or 38.5%.
$13.7 million of the increase was attributable to Factory 2-U, which was 
acquired in November 1995. Comparable store sales (sales at stores open
throughout both periods) for the three months ended October 26, 1996
increased 3%.  As of October 26, 1996, there were 147 stores in operation
compared to 102 stores as of October 28, 1995.

Gross profit was $23.3 million for the three months ended October 26, 1996
compared to $16.9 million for the three months ended October 28, 1995, an
increase of $6.4 million. As a percentage of sales, gross profit was 35.5% 
for the three months ended October 26, 1996 compared to 35.8% for the three
months ended October 28, 1995.  

General and administrative expenses were $21.6 million for the three months
ended October 26, 1996 compared to $14.0 million for the three months ended
October 28, 1995, an increase of $7.6 million.  Of the total increase,
$4.7 million was attributable to increased overhead to support the
additional stores arising from the acquisition of Factory 2-U and $2.9 
million was due to increased overhead related to new stores opened since
October 28, 1995.  As a percentage of sales, general and administrative
expenses were 33.0% for the three months ended October 26, 1996 compared
to 29.6% for the three months ended October 28, 1995. The increase in general
and administrative expenses as a percentage of sales was due to a higher
overhead rate for the Factory 2-U stores acquired in November 1995 and an
incremental increase in administrative expenses related to planned growth
of the Company.

Amortization of goodwill was $467,000 for the three months ended October 26,
1996 compared to $314,000 for the three months ended October 28, 1995.  The 
increase of $153,000 was attributable to increased goodwill arising from the 
acquisition of Factory 2-U.

Interest expense was $1.3 million for the three months ended October 26, 1996
compared to $852,000 for the three months ended October 28, 1995.  The 
increase of $445,000 was attributable to the increased interest related
to the additional working capital needs arising from the expansion of the 
Company and debt assumed in the acquisition of Factory 2-U. 

                            - 3 -








<PAGE>    12

The net loss applicable to common stock was $1.0 million for the three months
ended October 26, 1996 compared to net income applicable to common stock of
$1.0 million for the three months ended October 28, 1995.


NINE MONTHS ENDED OCTOBER 26, 1996 COMPARED TO THE NINE MONTHS
ENDED OCTOBER 28, 1995

Net sales (gross sales less sales tax and sales returns) were $172.9 million
for the nine months ended October 26, 1996 compared to $115.7 million for the
nine months ended October 28, 1995, an increase of $57.2 million or 49.5%.
Of the total increase, $39.1 million was attributable to sales of Factory 2-U,
which was acquired in November of 1995. Comparable store sales (sales at
stores open throughout both periods) for the nine months ended October 26,
1996 increased 7.0%. As of October 26, 1996 there were 147 stores in operation
compared to 102 stores as of October 28, 1995.

Gross profit was $62.0 million for the nine months ended October 26, 1996
compared to $39.5 million for the nine months ended October 28, 1995, an
increase of $22.5 million. As a percentage of sales, gross profit was 35.9% 
for the nine months ended October 26, 1996 compared to 34.1% for the nine
months ended October 28, 1995.  The increase in gross profit as a percentage 
of sales resulted primarily from advantageous buying opportunities that
benefitted the current period as compared to the prior period.

General and administrative expenses were $58.0 million for the nine months
ended October 26, 1996 compared to $38.3 million for the nine months ended
October 28, 1995, an increase of $19.7 million.  Of the total increase,
$13.6 million was attributable to increased overhead to support the
additional stores arising from the acquisition of Factory 2-U and $6.1 
million was due to increased overhead related to new stores opened since 
October 28, 1995.  As a percentage of sales, general and administrative
expenses were 33.6% for the nine months ended October 26, 1996 compared to 
33.1% for the nine months ended October 28, 1995.  
 
Amortization of goodwill was $1.4 million for the nine months ended
October 26, 1996 compared to $943,000 for the nine months ended
October 28, 1995.  The increase of $463,000 is attributable to increased
goodwill arising from the acquisition of Factory 2-U.

Interest expense was $3.6 million for the nine months ended October 26, 1996
compared to $2.3 million for the nine months ended October 28, 1995.  The 
increase of $1.3 million was attributable to the increased interest related
to the additional working capital needs related to the expansion of the 
Company and debt assumed in the acquisition of Factory 2-U. 

The net loss applicable to common stock was $3.6 million for the nine months
ended October 26, 1996 compared to $4.3 million for the nine months ended 
October 28, 1995.


                               - 4 -












<PAGE>     13


LIQUIDITY AND CAPITAL RESOURCES

THE PARENT COMPANY

OBLIGATIONS OF THE PARENT COMPANY. As of October 26, 1996, the 
Company, exclusive of General Textiles and Factory 2-U (the Operating
Subsidiaries), (the Parent) had outstanding indebtedness in the principal 
amount of $1.9 million, comprised of $1.0 million owed to the former 
shareholders of Factory 2-U and $875,000 owed in settlement of a lawsuit
arising from a previously discontinued distribution business (the Settlement
Obligation). 

In April 1996, the Parent repaid the final installment of
$250,000 on the note payable to Texas Commerce Bank.  In April 1996, the
Contingent Note payable to the former shareholders of Factory 2-U was
adjusted from zero to $600,000 to reflect the expected final principal
amount of the Contingent Note based upon the execution of an agreement
to sell the Nogales Property which was ultimately consummated in
July 1996. 

The Company issued 153,846 shares of its Preferred Stock to an escrow
account to secure the $1.0 million settlement obligation.  The Company
is permitted to sell these shares of Preferred Stock under the settlement
agreement provided that the proceeds of the sale are applied to reduce the
Obligation. 
 
The Parent has annual dividend obligations of $3.5 million on its
Preferred Stock based on the number of preferred shares outstanding at
October 26, 1996 and an annual dividend rate of $0.95 per preferred share, 
payable quarterly if, as, and when declared by the Board of Directors.
For the nine months ended October 26, 1996, the Parent paid $2.6 million in 
dividends on the Preferred Stock.  The Company issued 786,000 shares
of Preferred Stock including 726,000 preferred shares in an exempt
offering to non-U.S. purchasers and the issuance of 60,000 preferred
shares in return for consulting services. Preferred shareholders converted
258,585 shares of Preferred Stock to common stock during the nine months 
ended October 26, 1996.

The Parent does not, itself, operate any business.  Accordingly, the Parent
relies on payments from the Operating Subsidiaries to finance its ongoing
operating expenses and pay its outstanding indebtedness and dividends on the
Preferred Stock.  Such payments from General Textiles include payments
pursuant to a tax sharing agreement, certain subordinated debt and the
secured term note of General Textiles (which the Parent owns) and a
management agreement. General Textiles is prohibited, under a plan of
reorganization, from making dividend payments or other distributions to the
Parent.  Payments by Factory 2-U to the Parent are limited, under an agreement
with the lender of its revolving credit facility, to payments pursuant to a
management agreement and a guarantee fee agreement.






                               - 5 -

  





<PAGE>     14

Management believes that the Parent's sources of cash will be adequate to
finance its operations and meet the obligations under its existing 
indebtedness as they become due for at least the next twelve months.
The ability of the Operating Subsidiaries to make scheduled payments to
the Parent is dependent upon the Operating Subsidiaries' results of 
operations and cash flows.  Should the Operating Subsidiaries not meet sales
projections, the Operating Subsidiaries may require additional financing or
may need to reduce their planned rate of expansion or otherwise reduce cash
outflows by controlling costs in order to conserve capital and continue 
making scheduled payments to the Parent.  There can be no assurance that
additional financing will not be required and, if required, that such
financing will be available and, if available, on terms acceptable to the
Company. The ability of the Parent to make dividend payments on the Preferred
Stock as they become due will be dependent on the results of operations of the
Parent and the Operating Subsidiaries.

GENERAL TEXTILES

GENERAL.  General Textiles finances its operations through credit provided by
suppliers, borrowings under its $25.0 million revolving credit facility, 
installment notes, and internally generated cash flow.  Credit terms provided
by suppliers are usually net 30 days.

REVOLVING CREDIT FACILITY. As of October 26, 1996, General Textiles had $21.0
million outstanding and $2.8 million available to borrow under its revolving
credit facility.   As of December 6, 1996, General Textiles had $19.1 million
outstanding and $5.9 million available to borrow under its revolving credit
facility.

EQUIPMENT FACILITIES.  As of October 26, 1996, General Textiles had $1.8
million outstanding under its equipment facilities (the Equipment Facilities),
with monthly principal payments of $37,750 (final balloon payment of 
$216,500 due April 1998) and $30,556 (commencing in June 1996 with final
payment due no later than May 1999).

TERM NOTE.  As of October 26, 1996, General Textiles had $1.9 million
outstanding under an installment note payable with monthly principal payments
of $33,333 due in July 2001. 


FACTORY 2-U

GENERAL.  Factory 2-U finances its operations through credit provided by
suppliers, borrowings under its $10.0 million revolving credit facility and
internally generated cash flow.  Credit terms provided by suppliers are 
usually net 30 days.

REVOLVING CREDIT FACILITY.  As of October 26, 1996, Factory 2-U had $7.9 
million outstanding and $430,000 available to borrow under its 
revolving credit facility.  As of December 6, 1996, Factory 2-U had $8.3 
million outstanding and $482,000 million available to borrow under its 
revolving credit facility.


                                - 6 -









<PAGE>     15

NOGALES MORTGAGE.  In July 1996, Factory 2-U extinguished the
Mortgage Note in the amount of  $2.3 million with the proceeds from the
sale of the Nogales Property.


PROPOSED CONVERTIBLE DEBENTURE OFFERING

In November 1996, the Company delayed its proposed offering of 
convertible subordinated debentures (the Proposed Offering).  The Company's
decision whether to proceed with a financing will depend on the available
terms, conditions and amounts, as well as other factors including, but not
limited to, the market price of its common stock. 

CAPITAL EXPENDITURES

The Company's planned future capital expenditures include costs to open
new General Textiles and Factory 2-U stores and to renovate and/or relocate
existing stores.  Management believes that future capital expenditures will 
be financed from internal cash flow, the Proposed Offering or an alternative
financing, and the General Textiles and Factory 2-U revolving credit
facilities.

INFLATION

In general, the Company believes that it will be able to offset the effects of
inflation by increasing operating efficiencies, by monitoring and controlling
expenses and by increasing prices to the extent permitted by competitive 
factors.

RECENT CHANGES IN FEDERAL AND STATE LAWS

Effective October 1996, federal law required employers to increase the
minimum hourly wage paid to employees from $4.25 to $4.75 and, effective 
September 1997, from $4.75 to $5.15.  In addition, California law requires
that employers pay a minimum hourly wage of $5.00 effective March 1997,
increasing to a minimum of $5.75 in March 1998.  While the Company may be 
able to raise its retail prices to offset any increases in the minimum wage,
there is no assurance that it will be able to do so.  Nonetheless, any 
increases in payroll costs may be offset in whole or in part by a resulting
increase in the purchasing power available to certain customers of the
Company.


SEASONALITY AND QUARTERLY FLUCTUATIONS

The Company historically has realized its highest level of sales and income
during the first and fourth quarters of the fiscal year (the quarters ending
in October and January) as a result of the "Back to School" (August and
September) and Christmas (November and December) seasons.  The Company
incurred a net loss for the quarter and nine months ended October 26, 1996.



                                  - 7 -










<PAGE>      16   


                                 PART II


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
 
The Company filed no reports of Form 8-K during the nine months ended
October 26, 1996.



                               SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        FAMILY BARGAIN CORPORATION



Date:     December  10, 1996         By:     /s/  Jeffrey C. Gerstel     
                                         ----------------------------        
                                         Name:  Jeffrey C. Gerstel
                                         Title: Executive Vice President,
                                                Finance
                                                (duly authorized 
                                                 officer and principal
                                                 financial officer)
     



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