<PAGE>

                       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 26, 1998

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

    For the transition period from__________________  to  _______________

                         Commission file number 0-14756

                           THE COSMETIC CENTER, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                    52-1266697
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                    Identification No.)

       8700 ROBERT FULTON DRIVE,
         COLUMBIA, MARYLAND                              21046
(Address of principal executive offices)              (Zip Code)

        Registrant's telephone number, including area code: 410-309-4600

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
                                              -    -

As of September 26, 1998, 10,025,601 shares of Class C Common Stock, par value
$.01 per share, and no shares of Class A Common Stock, par value $.01 per
share, or Class B Common Stock, par value $.01 per share, were outstanding.


<PAGE>

                                           THE COSMETIC CENTER, INC.
                                      UNAUDITED CONDENSED BALANCE SHEETS
                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>

                                                                     SEPTEMBER 26,       DECEMBER 27,
                                ASSETS                                   1998               1997
                                                                    --------------     -------------
                                                                               (Unaudited)
<S>                                                                 <C>                 <C> 
Current assets:
          Cash....................................................      $    2,747       $      5,359
          Accounts receivable, net................................           1,556              1,320
          Inventories.............................................          78,311             88,976
          Deferred tax assets.....................................           2,794              2,879
          Prepaid expenses and other..............................             108                179              
                                                                    ---------------    ---------------
              Total current assets................................          85,516             98,713              
 Property and equipment, net......................................          12,878             14,172              
 Other assets.....................................................             870              1,031              
 Intangible assets related to businesses acquired, net............           4,404              4,494       
                                                                    ---------------    ---------------
             Total assets.........................................     $   103,668       $    118,410 
                                                                    ===============    ===============

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
         Accounts payable.........................................     $    16,054       $     17,234
         Accrued expenses and other...............................          10,139              9,715   
         Accounts payable to Products Corporation.................          11,624              2,500   
         Note payable - Bank......................................          36,024               -- 
         Notes payable - Products Corporation.....................          20,255               --  
                                                                    ---------------    ---------------
               Total current liabilities..........................          94,096             29,449  
Note Payable - Products Corporation...............................           --                13,255
Long-term debt....................................................           --                38,954  
Other long-term liabilities.......................................           1,337              2,065  

Stockholders' equity:
         Class A common stock, $.01 par value; 5,000,000 shares
            authorized; no shares issued and outstanding..........           --               --
         Class B common stock, $.01 par value; 5,000,000 shares
            authorized; no shares issued and outstanding..........           --               --
         Class C common stock, $.01 par value; 40,000,000 shares
            authorized; 10,025,601 and 10,015,101, respectively,
            issued and outstanding................................             100                100
         Additional paid in capital...............................          39,334             39,291  
         Accumulated deficit......................................         (31,199)            (4,704)
                                                                    ---------------    ---------------
             Total stockholders' equity...........................           8,235             34,687
                                                                    ---------------    ---------------
             Total liabilities and stockholders' equity...........    $    103,668          $ 118,410
                                                                    ===============    ===============
</TABLE>
                          See Notes to Unaudited Condensed Financial Statements.


 
                                                      2


<PAGE>
                                         THE COSMETIC CENTER, INC.
                              UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
                         (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                            SEPTEMBER 26,                     SEPTEMBER 26,
                                                                     ----------------------------      ----------------------------
                                                                          1998           1997               1998           1997
                                                                     ------------   -------------      ------------   -------------
<S>                                                                  <C>            <C>                <C>            <C>
Net sales........................................................    $    40,653       $  45,355         $ 118,047       $ 94,687  
                                                                     ------------   -------------      ------------   -------------

Cost of sales, including buying, occupancy and distribution......         30,845          32,250            97,205         65,908  

Selling, general and administrative expenses.....................         13,159          13,330            43,464         31,732  

Business consolidation costs.....................................            -               -                 -            4,000
                                                                     ------------   -------------      ------------   -------------

Operating expenses...............................................         44,004          45,580           140,669        101,640
                                                                     ------------   -------------      ------------   -------------

Loss from operations.............................................         (3,351)           (225)          (22,622)        (6,953) 

Interest expense.................................................         (1,331)         (1,120)           (3,945)        (2,292)  

Other income (expense), net......................................             21              26                72            (38)
                                                                     ------------   -------------      ------------   -------------

Loss from operations before income taxes.........................         (4,661)         (1,319)          (26,495)        (9,283) 

Provision for income taxes.......................................            -               -                 -               20   
                                                                     ------------   -------------      ------------   -------------

Net loss.........................................................    $    (4,661)       $ (1,319)       $  (26,495)       $(9,303)
                                                                     ============   =============      ============   =============

Basic and diluted loss per common share:
              Net loss...........................................    $     (0.46)       $  (0.13)        $   (2.64)       $ (1.00)  
                                                                     ============   =============      ============   =============

Basic and diluted weighted average
              common shares outstanding..........................     10,025,601      10,015,101        10,022,870      9,345,665
                                                                     ============   =============      ============   =============

</TABLE>
                          See Notes to Unaudited Condensed Financial Statements.


                                                         3


<PAGE>


                                             THE COSMETIC CENTER, INC.
                                   UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
                                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED
                                                                          ---------------------------
                                                                          SEPTEMBER 26, SEPTEMBER 26,
CASH FLOWS FROM OPERATING ACTIVITIES:                                         1998         1997
                                                                          ------------- -------------
<S>                                                                         <C>         <C> 
     Net loss...........................................................    $(26,495)   $ (9,303)
     Adjustments to reconcile net loss to
          net cash (used for) provided by operating activities:
        Depreciation and amortization...................................       3,312       2,839
        Inventory write-down............................................       6,598        --
        Change in assets and liabilities, net of aquired assets and
liabilities:
             Increase in accounts receivable, net.......................        (236)       (194)
             Decrease (increase) in inventories.........................       4,067      (5,902)
             Decrease in prepaid expenses and other current assets......         156         819
             Decrease in other assets...................................         161         804
             (Decrease) increase in accounts payable....................      (1,180)     11,324
             Increase in accrued expenses and other.....................         424       1,340
             Increase in accounts payable to Products Corporation.......       9,124        --   
             Decrease in other long-term liabilities....................        (728)     (2,480)
                                                                            --------    --------
     Net cash used for operating activities.............................      (4,797)       (753)
                                                                            --------    --------

     CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures...............................................      (1,928)     (3,463)
     Acquisition of business, net of cash acquired......................        --       (19,883)
                                                                            --------    --------
     Net cash used for investing activities.............................      (1,928)    (23,346)
                                                                            --------    --------

     CASH FLOWS FROM FINANCING ACTIVITIES:
     Net (repayments to) borrowings from bank...........................      (2,930)     23,271
     Increase in notes payable - Products Corporation...................       7,000         940
     Exercise of  stock option..........................................          43        --
                                                                            --------    --------
     Net cash provided by financing  activities.........................       4,113      24,211
                                                                            --------    --------

     Net (decrease) increase in cash....................................      (2,612)        112
     Cash at beginning of period........................................       5,359       3,479
                                                                            --------    --------

     Cash at end of period..............................................    $  2,747    $  3,591
                                                                            ========    ========

     Supplemental schedule of cash flow information: 
        Cash paid during the period for:
             Interest...................................................    $  3,689    $  1,356
             Income taxes, net of refunds...............................          16          36

</TABLE>
                          See Notes to Unaudited Condensed Financial Statements.


                                                        4


<PAGE>
                           THE COSMETIC CENTER, INC.

               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(1) BASIS OF PRESENTATION

         The Cosmetic Center, Inc. (the "Company") operates in one segment as a
specialty retailer primarily engaged in the sale of a wide range of prestige
and mass-merchandised brand name cosmetics, fragrances, skincare and treatment,
haircare, bath and body, personal care appliances, hosiery, beauty care and
related items (sometimes referred to herein as "Beauty Products") primarily at
discounted prices. As of September 26, 1998, the Company operated 60 retail
stores and 193 outlet stores in 42 states. Retail stores operate in strip
shopping centers and sell, primarily at discount prices, an extensive selection
of first quality Beauty Products that are usually found in mass market
retailers and department stores. Outlet stores operate in outlet centers and
sell, at deep discount prices, a wide range of first quality, first quality
excess, returned, refurbished and discontinued brand name Beauty Products.

         The Company is an approximately 85% owned subsidiary of Revlon
Consumer Products Corporation (together with its subsidiaries other than the
Company, "Products Corporation"), which is a direct wholly owned subsidiary of
Revlon, Inc.

         On April 25, 1997, Prestige Fragrance & Cosmetics, Inc. ("PFC"), then
a wholly owned subsidiary of Products Corporation, merged (the "Merger") with
and into The Cosmetic Center, Inc. (prior to the Merger, "CCI"), with the
Company being the surviving corporation. The Merger was accounted for as a
reverse acquisition using the purchase method of accounting, and PFC is
considered to be the acquiring entity and CCI the acquired entity for
accounting purposes, even though CCI was the surviving legal entity. The
historical financial statements of the Company for the period prior to the
Merger include the results of operations of PFC only, and for the period
subsequent to the Merger include the results of operations of both entities. As
a result of the Merger, the Company changed its fiscal year to a 52- or 53-week
year ending on the last Saturday in December. See Note 3.

         The accompanying Condensed Financial Statements are unaudited. In
management's opinion, all adjustments (consisting only of normal recurring
adjustments other than the charges described in Note 5) necessary for a fair
presentation have been made. In the Unaudited Condensed Financial Statements,
the Company has made a number of estimates and assumptions relating to the
assets and liabilities, the disclosure of contingent assets and liabilities and
the reporting of revenues and expenses to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates. The results of operations and financial position,
including working capital, for interim periods are not necessarily indicative
of results to be expected for a full year, due, in part, to seasonal
fluctuations, which are normal for the Company's business. These unaudited
condensed financial statements should be read in conjunction with the financial
statements and related notes contained in the Company's 1997 Annual Report on
Form 10-K.

         In June 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and displaying
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The only component of comprehensive income for the
Company is net income (loss).

         Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. Due to the similarity in type of product and
method of distribution of products for CCI and PFC stores, and the similarity
of customers for the products, the Company's financial reports are presented as
a single operating segment.

         The aforementioned recently issued accounting pronouncements establish
standards for disclosures only and therefore do not effect the Company's
financial position or results of operations.

                                       5
<PAGE>



(2)  BASIC AND DILUTED LOSS PER SHARE

         Basic and diluted loss per common share has been computed based upon
the weighted average number of shares of common stock outstanding during the
period. The Company's outstanding stock options represent the only dilutive
potential common stock outstanding. The amounts of loss and number of shares
used in the calculations of basic and diluted loss per common share were the
same for the periods presented, and diluted loss per share does not include any
incremental shares that would have been outstanding assuming the exercise of
any stock options because the effect of those incremental shares would have
been antidilutive. Weighted average shares outstanding is computed assuming
that the 8,479,335 shares of the Company's Class C Common Stock, par value
$0.01 per share (the "Class C Common Stock"), that Products Corporation
received in the Merger were outstanding and owned by Products Corporation for
all periods prior to the Merger.

(3)  THE MERGER

         Pursuant to the Merger, Products Corporation received 8,479,335 shares
of Class C Common Stock. As a result of the Merger, CCI's stockholders
received, for each share of Class A Common Stock or Class B Common Stock held,
one share of newly issued Class C Common Stock or, at each stockholder's
election subject to a limitation, $7.63 in cash (the "Cash Election"). Holders
of options to purchase CCI's Class A Common Stock or Class B Common Stock with
an exercise price of less than $7.63 received for each such option they held,
an equivalent option to purchase Class C Common Stock or, at each such
optionholder's election and subject to a limitation, cash equal to the
difference between $7.63 and the exercise price per share of such option. The
number of shares of Class C Common Stock owned by Products Corporation after
the Merger constitutes approximately 85% of the outstanding Class C Common
Stock after giving effect to the Cash Election.

         The Merger was accounted for as a reverse acquisition, using the
purchase method of accounting, for a purchase price of approximately $27,905.
This amount was allocated to the assets of CCI acquired and liabilities of CCI
assumed to the extent of Products Corporation's ownership interest based upon
their estimated fair values. The excess of acquisition cost over estimated fair
value of CCI's net tangible assets of $3,280 has been allocated to goodwill and
is being amortized over 40 years. As a result of the Merger, the Company
incurred costs of approximately $6,800, which costs were included in the
purchase price of CCI and primarily related to direct costs of the acquisition,
closing certain CCI stores and severance benefits for certain CCI employees. As
of September 26, 1998, approximately $1,900 of these direct costs remained in
accrued liabilities and other long-term liabilities.

(4) LONG-TERM DEBT

         As a result of the Company's operating losses, on September 25, 1998,
the financial covenants in the Company's credit facility were amended. The
credit facility carries interest at a rate of LIBOR plus 2.50% per annum or the
agent bank's prime rate plus 0.75% per annum.

          The outstanding balance of the Company's credit facility is reflected
as current debt since it expires in less than one year on April 30, 1999. The
Company intends to refinance its credit facility, although no assurance can be
given that such refinancing will be consummated or if consummated, will be
consummated on favorable terms.

         The credit facility provides up to $70 million of revolving credit
tied to a borrowing base of 65% of eligible inventory, as defined in the credit
facility. Availability under the credit facility varies with the borrowing
base. As of September 26, 1998 and October 31, 1998, $36.0 million and $42.2
million, respectively, was outstanding under the credit facility and an
additional $6.9 million and $5.8 million, respectively, was available for
borrowing under the credit facility.

         In order to provide for its liquidity needs and to fund its strategic
initiatives, during the third quarter, the Company borrowed $7 million from
Products Corporation, $5 million of which had previously been disclosed in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 27, 1998.
Such borrowings bear interest at 9.25% and may be repaid following demand by
Products Corporation in whole or in part only if after such



                                       6

<PAGE>

repayment the Company has a certain minimum availability under its credit
facility. These borrowings are in addition to the "Accounts payable to Products
Corporation."

(5)   CHARGES RELATED TO STRATEGIC INITIATIVES

         The Company incurred charges related to the implementation of certain
strategic initiatives, resulting in an accrual of $10.5 million during the
second quarter of 1998. These charges include write-offs of $6.6 million for
inventory, primarily resulting from remerchandising plans related to the
Company's new strategic plan, and $3.9 million of SG&A (as defined below)
related write-offs of which $2.3 million related to severance and other
employment costs and $1.6 million related to other charges in connection with
the implementation of the Company's new strategic plan. As of September 26,
1998, $3.1 million and $2.3 million of these charges remained in inventory
reserves and accrued expenses, respectively.

(6) SUBSEQUENT EVENTS

         The Company announced that it received a letter from the Nasdaq (as
defined below) stating that the Class C Common Stock of the Company will be
delisted from the Nasdaq National Market at the opening of business on November
11, 1998 for failure to satisfy the continuing listing requirement that the
minimum value of publicly held shares is at least $5 million. The Company has
petitioned the Nasdaq for a waiver from such listing requirements and the
de-listing of the Company's Class C Common Stock will be stayed during the
review of such petition by the Nasdaq. There can be no assurance that such
petition will be successful.

                                       7
<PAGE>



                           THE COSMETIC CENTER, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

OVERVIEW

         On April 25, 1997, PFC, then a wholly owned subsidiary of Products
Corporation, merged with and into CCI, with the Company being the surviving
corporation. The Merger has been accounted for as a reverse acquisition using
the purchase method of accounting, and PFC is considered to be the acquiring
entity and CCI the acquired entity for accounting purposes, even though CCI was
the surviving legal entity. The historical financial statements and all other
financial data included herein of the Company for the period prior to the
Merger include the results of operations of PFC only, and for the period
subsequent to the Merger include the results of operations and other financial
data of both entities. This Quarterly Report on Form 10-Q should be read in
conjunction with the Company's 1997 Annual Report on Form 10-K.

         The Company operates in a single business segment as a specialty
retailer primarily engaged in the sale of a wide range of prestige and
mass-merchandised brand name Beauty Products primarily at discounted prices. As
of September 26, 1998, the Company operated 60 retail stores and 193 outlet
stores in 42 states. Retail stores operate in strip shopping centers and sell,
primarily at discount prices, an extensive selection of first quality Beauty
Products that are usually found in mass market retailers and department stores.
Outlet stores operate in outlet centers and sell, at deep discount prices, a
wide range of first quality, first quality excess, returned, refurbished and
discontinued brand name Beauty Products.

         The Company has been experiencing declining comparable store sales and
increasing losses. In the second quarter of 1998, the Company initiated the
implementation of strategic initiatives intended to focus on improving
financial and operating performance. The Company's strategic plan is intended
to increase sales, enhance profitability and improve operational performance
through, among other things, (i) strengthening the organization, including
hiring a new President and Chief Executive Officer with significant experience
in the retail industry, (ii) remerchandising stores to improve sales and
productivity by implementing newly developed, rationalized planograms which are
expected to have an updated appeal with a focus on differentiation from the
competition, (iii) opening new stores in high growth, densely populated,
middle-to-higher income regions, (iv) closing stores which do not meet
financial return expectations, (v) developing a new store prototype to provide
the Company's customers with a more pleasant shopping experience, (vi) focusing
on operational disciplines intended to improve inventory controls and increase
warehouse and distribution efficiencies and (vii) improving information systems
by, among other things, upgrading the Company's merchandise management and
financial systems and introducing product scanning into stores. There can be no
assurance that the Company's strategic initiatives will be successful. If such
strategic initiatives are unsuccessful, the Company may be required to adopt
one or more alternatives including but not limited to reducing or delaying one
or more aspects of such strategic alternatives, selling assets or operations,
or closing stores.

         The Company incurred charges related to the implementation of certain
strategic initiatives, resulting in an accrual of $10.5 million in the second
quarter of 1998. These charges included write-offs of $6.6 million for
inventory, primarily resulting from remerchandising plans related to the
Company's new strategic plan and $3.9 million of SG&A (as defined below)
related write-offs, of which $2.3 million related to severance and other
employment costs and $1.6 million related to other charges in connection with
the implementation of the Company's new strategic plan. As of September 26,
1998, $3.1 million and $2.3 million of these charges remained in inventory
reserves and accrued expenses, respectively.

RESULTS OF OPERATIONS

         Net sales for the three months ended September 26, 1998 were $40.7
million, a decrease of $4.7 million, or 10.4%, from the $45.4 million in net
sales for the three months ended September 26, 1997. Net sales for the nine
months ended September 26, 1998 were $118.0 million, an increase of $23.3
million, or 24.6%, from the $94.7 million in net sales for the nine months
ended September 26, 1997. The decrease in net sales for the three months ended
September 26, 1998 was attributable primarily to a decline in comparable store
sales and a reduction in the number of stores compared with the prior period.
Comparable store sales for the three months ended September 26, 1998 declined
to $39.1 million from $42.4 million for the three months ended September 26,
1997. Comparable store sales declined for the third quarter primarily due to
sales declines in older stores and stores in certain underperforming malls and
strip shopping centers, increased competitive activity, as well as reduced
advertising, disruptions due to the remerchandising






                                       8


<PAGE>



program, a planned reduction in stock keeping units to eliminate unprofitable
or low-margin merchandise and a decline in prestige brand offerings. The
increase in net sales for the nine months ended September 26, 1998 was
attributable primarily to incremental sales resulting from the Merger with CCI,
in which CCI contributed approximately $73.6 million for the nine months ended
September 26, 1998 compared with $49.6 million from the date of the Merger to
September 26, 1997, offset in part primarily by a decline in comparable store
sales and a reduction in the number of stores compared with the prior period.
On a proforma basis, comparable store sales for the nine months ended September
26, 1998 declined to $113.2 million from $120.8 million for the nine months
ended September 26, 1997 due primarily to the reasons set forth above for the
three month period ended September 26, 1998, as well as disruptions resulting
from the Merger and the integration of the operations of CCI and PFC.

         Cost of sales, including buying, occupancy and distribution expenses
("COS"), were $30.8 million (75.9% of net sales) for the three months ended
September 26, 1998 compared to $32.3 million (71.1% of net sales) for the three
months ended September 26, 1997. COS as a percentage of net sales for the three
months ended September 26, 1998 increased primarily as a result of the planned
markdown program to sell-through slow moving and discontinued merchandise, and
product mix. COS for the nine months ended September 26, 1998, excluding the
impact of the inventory charges taken in the second quarter of 1998, were $90.6
million (76.7% of net sales) compared to $65.9 million (69.6% of net sales) for
the nine months ended September 26, 1997. COS as a percentage of net sales,
excluding the impact of inventory charges, increased for the nine months ended
September 26, 1998 over the comparable 1997 period due to the planned markdown
program to sell-through slow moving and discontinued merchandise, product mix
and the higher COS in the CCI stores included from the date of the Merger.
Including the effect of the inventory charges taken in the second quarter of
1998, COS were $97.2 million for the nine months ended September 26, 1998.

         Selling, general and administrative ("SG&A") expenses were $13.2
million (32.4% of net sales) for the three months ended September 26, 1998
compared to $13.3 million (29.4% of net sales) for the three months ended
September 26, 1997. SG&A expenses as a percent of net sales for the three
months ended September 26, 1998 increased due to lower net sales. SG&A
expenses for the nine months ended September 26, 1998, excluding the impact of
the charges taken in the second quarter of 1998, were $39.6 million (33.5% of
net sales) compared to $31.7 million (33.5% of net sales) for the nine months
ended September 26, 1997. Including the impact of the charges taken in the
second quarter of 1998, SG&A expenses for the nine months ended September 26,
1998, were $43.5 million (36.8% of net sales).

         Interest expense was $1.3 million for the three months ended September
26, 1998 compared to $1.1 million for the three months ended September 26, 1997
and was $3.9 million for the nine months ended September 26, 1998 compared to
$2.3 million for the nine months ended September 26, 1997. The increase in
interest expense for the 1998 periods is primarily attributable to higher
borrowings under the Company's credit facility.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash used for operating activities was $4.8 million for the nine
months ended September 26, 1998 and $0.8 million for the nine months ended
September 26, 1997. The increase in the 1998 period compared with the 1997
period resulted primarily from the increase in the net loss of the Company in
the 1998 period, partially offset by a decrease in inventories and an increase
in accounts payable.

         Net cash used for investing activities was $1.9 million and $23.3
million for the nine months ended September 26, 1998 and September 26, 1997,
respectively. The decrease in cash used for investing activities during the
1998 period compared with the 1997 period is primarily due to lower capital
expenditures in the 1998 period as well as the cash used in the Merger during
the 1997 period.

         Net cash provided by financing activities was $4.1 million for the
nine months ended September 26, 1998 compared with $24.2 million for the nine
months ended September 26, 1997. The decrease in the 1998 period compared with
the 1997 period resulted primarily from the net repayment of borrowings under
the credit facility in the 1998 period partially offset by increased
borrowings from Products Corporation in the 1998 period, compared with
borrowings under the Company's credit facility in the 1997 period which were 
used to fund the Merger.



                                       9


<PAGE>

         The credit facility, which expires on April 30, 1999, provides up to 
$70 million of revolving credit tied to a borrowing base of 65% of eligible
inventory, as defined in the credit facility. Availability under the credit
facility varies with the borrowing base. As of September 26, 1998 and October
31, 1998, $36.0 million and $42.2 million, respectively, was outstanding under
the credit facility and an additional $6.9 million and $5.8 million,
respectively, was available for borrowing under the credit facility.

         The Company's principal sources of funds are expected to be cash flow
generated from operations and borrowings under the credit facility. The
Company's principal uses of funds are expected to be the payment of operating
expenses, working capital, costs to implement the Company's strategic plan,
capital expenditures, debt service and principal repayment on the Company's
credit facility at maturity on April 30, 1999.

         As a result of the Company's operating losses, on September 25, 1998,
the financial covenants in the Company's credit facility were amended. The
credit facility carries interest at a rate of LIBOR plus 2.50% per annum or the
agent bank's prime rate plus 0.75% per annum. The outstanding balance of the
Company's credit facility is reported as a current liability since it expires on
April 30, 1999. The Company intends to refinance its credit facility, although
no assurance can be given that such refinancing will be consummated or, if
consummated, will be consummated on favorable terms.

         To provide for its liquidity needs and to fund its new strategic
initiatives, the Company borrowed $7 million from Products Corporation during
the three months ended September 26, 1998, $5 million of which had previously
been disclosed in the Company's Quarterly Report on Form 10-Q for the quarter
ended June 27, 1998. Such borrowings bear interest at 9.25% and may be repaid
following demand by Products Corporation in whole or in part only if after such
repayment the Company has certain minimum availability under its credit
facility.

         Based upon the Company's current level of operations and anticipated
growth as a result of its strategic initiatives, the Company is unable to
predict whether cash flows from operations and funds from its credit facility
will be sufficient to enable the Company to meet its anticipated cash
requirements for the foreseeable future. If the Company is unable to satisfy
such cash requirements, the Company could be required to adopt one or more
alternatives, such as reducing or delaying capital or other expenditures, store
openings, or other aspects of the Company's strategic initiatives, borrowing
additional funds, restructuring indebtedness, selling assets or operations or
closing stores, issuing additional shares of capital stock of the Company or
seeking capital contributions from third parties or affiliates. There can be no
assurance that any of such alternatives could be adopted or that they could be
adopted on favorable terms, or if adopted they would enable the Company to
continue to satisfy its cash requirements or that they would be permitted under
the terms of the credit facility or the Products Corporation or REV Holdings
Inc. debt instruments then in effect.

         The Company estimates that capital expenditures for the fourth fiscal
quarter of 1998 are expected to be approximately $2.3 million, including
upgrades to the Company's information systems. Pursuant to a tax sharing
agreement, the Company may be required to pay Products Corporation amounts
equal to the taxes that the Company would otherwise have to pay if it were to
file separate federal, state and local tax returns. The Company currently
anticipates that no significant federal tax payments or payments in lieu of
federal taxes pursuant to the tax sharing agreement will be made by the Company
for 1998.

         In addition, Products Corporation has announced that it is
implementing its previously announced strategy of withdrawing from operating
retail stores and has determined to dispose of its 85% interest in the Company.
As a result of Products Corporation's determination, the Company has determined
to explore its strategic alternatives. There can be no assurance that any
strategic alternative will be consummated or, if consummated, as to the terms
of any such strategic alternative.

         The Company announced that it received a letter from the Nasdaq Stock
Market, Inc. (the "Nasdaq") stating that the Class C Common Stock of the
Company will be delisted from the Nasdaq National Market at the opening of
business on November 11, 1998 for failure to satisfy the continuing listing
requirement that the minimum value of publicly held shares is at least $5
million. The Company has petitioned the Nasdaq for a waiver from such listing
requirements and the de-listing of the Company's Class C Common Stock will be
stayed during the review of such petition by the Nasdaq. There can be no
assurance that such petition will be successful.




                                      10
<PAGE>

YEAR 2000

         The Company has developed a comprehensive plan to address Year 2000
issues. The plan addresses three main areas: (a) information technology
systems; (b) non-information technology systems (including point of sale
systems and other embedded systems); and (c) business partner readiness
(including customers, inventory and non-inventory suppliers, banks, insurance
companies and tax and other governmental agencies). The Company has designated
the Company's Chief Financial Officer and Vice President of Information Systems
to oversee the process.

         The Company has identified potential deficiencies related to Year 2000
in its information systems, both hardware and software, and is in the process
of addressing them through upgrades and other remediation. The Company expects
to complete remediation and testing of its internal systems in the third
quarter of 1999. In respect to other equipment with date sensitive operating
controls such as HVAC, security and other similar systems, the Company is in
the process of identifying those items which may require remediation or
replacement. The Company expects to complete remediation or replacement and
testing of these systems in the third quarter of 1999. As for business
partners, the Company is in the process of identifying and contacting
suppliers, both inventory and non-inventory, customers and other strategic
business partners, including banks and insurance companies. This process
includes the solicitation of written responses to questionnaires and/or
meetings with certain of such third parties. The Company expects to have a
better understanding of the Year 2000 readiness of these third parties over the
next several months.

         The Company has determined to upgrade its merchandising, distribution,
and financial information systems due to, among other things, their age and
absence of functionality that the Company views as important. Such new
information systems will be Year 2000 compliant. The expenditures for such
upgrade is expected to be $1.5 million, of which $.4 million has been spent,
and $.2 million will be spent in the fourth quarter of 1998 and $.9 million
will be spent in 1999. Based upon the Company's current estimates, any
additional out-of-pocket costs of its Year 2000 program are expected to be
immaterial. These additional costs are expected to be incurred primarily in
1999 and include third party consultants, remediation or replacement of PC
based store controller and cash register software and replacement or
remediation of embedded systems. The Company intends to develop contingency
plans in the event the Year 2000 compliant information systems are not expected
to be installed and running by the end of 1999.

         At this stage of the process, the Company believes that it is
difficult to specifically identify the cause of the most reasonably likely
worst case Year 2000 scenario. A reasonably likely worst case scenario would
be the result of failures of the Company's information systems and inability to
effectively purchase and/or distribute products or failure of one or more
strategic business partners to supply product or other goods and services upon
which the Company is dependent, which if continued for more than a brief period,
could have a material adverse effect on the Company's results of operations.

         The Company's Year 2000 efforts are ongoing and its overall plan, as
well as the consideration of contingency plans, will continue to evolve, as new
information becomes available. While the Company anticipates continuity of its
business activities, that continuity will be dependent upon its ability, and
the ability of third parties with which the Company relies on directly, or
indirectly, to be Year 2000 compliant.

FORWARD-LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q for the quarter ended September 26,
1998 as well as other public documents of the Company contain forward-looking
statements which involve risks and uncertainties and such statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Any statement in this Form 10-Q that is not historical is a
forward-looking statement. The Company's actual results may differ materially
from those discussed in such forward-looking statements. Statements which use
the terms "believes," "does not believe," "no reason to believe," "expects,"
"plans," "intends," "estimates," "anticipated," "anticipates" or similar
expressions, as they relate to the Company or the Company's management, are
intended to identify forward-looking statements. Such statements include,
without limitation, statements regarding anticipated growth in sales, profit
enhancement and improved operational performance, costs to integrate further
the operations of CCI and PFC, costs






                                      11
<PAGE>


associated with anticipated store openings, closings and relocations and
otherwise, implementing the Company's strategic initiatives, costs to expand
the operations of the Company, capital expenditures including information
system upgrades, the Company's intent to refinance the credit facility, the
Company's intent to explore strategic alternatives, expectations as to the
Company's cash flows from operations and the availability of funds from the
credit facility, borrowing additional funds and restructuring indebtedness,
capital contributions or loans from affiliates or third parties, the sale of
assets or operations or closing stores, issuing additional shares of the
Company and obtaining a waiver from the Nasdaq. Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions. In addition to factors that have
been or may be described in the Company's filings with the Securities and
Exchange Commission (the "Commission"), including this filing, the following
factors, among others, could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by the
Company: (i) the unavailability of sufficient funds from the Company's credit
facility, insufficient cash flows from operations, the inability to secure
capital contributions or loans from affiliates or the inability to sell assets
or additional shares of the Company to affiliates or third parties to fund the
Company's cash requirements, (ii) the inability of the Company to refinance, or
repay borrowings under, its credit facility upon such facility's expiration on
April 30, 1999, or the terms and conditions of any refinancing of the Company's
credit facility, (iii) the inability of the Company to satisfy the financial or
other covenants in its credit facility, the inability of the Company to obtain
any necessary amendments or waivers of such covenants or the terms of any
amendments or waivers that may be obtained, (iv) lack of success of the
Company's new marketing and advertising initiatives in maintaining or
increasing the Company's customer base or net sales, (v) negative effects on
net sales as a result of new store prototypes and remerchandising efforts, (vi)
unanticipated costs or difficulties or delays in integrating further the
operations of CCI and PFC, (vii) unanticipated costs or difficulties or delays
in connection with store openings, closings, remodelings or relocations, (viii)
unanticipated costs or difficulties or delays in implementing the new
information systems, including the merchandising and purchasing systems and
product scanning, or in the Company's information systems becoming Year 2000
compliant, (ix) lack of success improving inventory and distribution
efficiencies and reducing costs through such efficiencies, (x) actions by
competitors, including combinations within the retail industry, expansion of
the number of stores of competitors, pricing pressure, marketing initiatives or
successful new retail store concepts, (xi) the lack of commercial success of
the Company's salon arrangement, (xii) the unavailability of product or the
loss of suppliers, including salon product and secondary source suppliers,
(xiii) unanticipated capital expenditures or other costs or difficulties or
delays in implementing the Company's strategic initiatives or lack of success
of the Company's strategic initiatives, (xiv) general business and economic
conditions, (xv) the Company's inability to obtain a waiver of the Nasdaq's
listing requirements, (xvi) the results of the Company's efforts to pursue
strategic alternatives, including disruption to the Company's business as a
result of such efforts, whether any strategic alternatives will ultimately be
pursued or entered into or the terms of any such strategic alternatives and
(xvii) the success of the Company's Year 2000 compliance program and that of
its strategic business partners. The Company assumes no responsibility to
update forward-looking information contained herein.

EFFECT OF NEW ACCOUNTING STANDARD

         In March 1998, the AICPA Accounting Standards Executive Committee
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," which requires capitalization
of certain development costs of software to be used internally. The effect of
adopting the statement and the timing of its adoption have not yet been
determined.

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<PAGE>




PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is a respondent in an arbitration filed by Dromineen
Partners LLC ("Dromineen") on September 2, 1998 with the American Arbitration
Association. Dromineen and the Company had entered into an agreement for the
creation and implementation of a web site for the Company. Dromineen claims
that the Company breached its obligations under the web site agreement and
seeks alleged out-of-pocket expenses and alleged lost profits pursuant to the
contract. The Company believes that the claims are without merit and intends to
contest the claims vigorously.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits

                4.1 -- Amendment No. 3 dated as of September 25, 1998 to the
                Loan and Security Agreement dated as of April 25, 1997, as
                amended, by and among the Company, BankAmerica Business Credit,
                Inc., as agent, and the lenders that are party thereto.

                10.1 -- The Cosmetic Center, Inc. Amended and Restated 1991 
                Stock Option Plan.

     (b) Reports on Form 8-K - None

                                   SIGNATURES

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

                           THE COSMETIC CENTER, INC.
                                  (Registrant)

By                                           By
    ---------------------------                 ------------------------
    MARY ELIZABETH BURTON                       DWIGHT W. CRAWLEY
    President and Chief Executive Officer       Senior Vice President - Finance,
                                                Chief Financial Officer and
                                                Chief Accounting Officer

Dated:   November ___, 1998



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