<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
            ______________________________________________________

                                   FORM 10-K
(Mark One)

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

     For the fiscal year ended January 31, 1998.

[ ]  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: 0-21448

                          NATIONAL HOME CENTERS, INC.
            (Exact name of registrant as specified in its charter)

                   Arkansas                             71-0403343
       (State or other jurisdiction of      (I.R.S. Employer Identification No.)
        incorporation or organization)                     
                 

               Highway 265 North
              Springdale, Arkansas                        72765
    (Address of principal executive offices)            (Zip Code)

      Registrant's telephone number, including area code: (501) 756-1700

       SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

   Common Stock, $.01 par value traded on The Nasdaq National Market 

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S) 229.405 of this chapter) (is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment of this Form 10-K [ ]

     On April 6, 1998, there were outstanding 7,142,251 shares of the
registrant's Common Stock, $.01 par value.

     The aggregate market value of the 2,446,668 shares of Common Stock held by
non-affiliates of the registrant as of April 6, 1998 was $4,893,336.

                      DOCUMENTS INCORPORATED BY REFERENCE

     National Home Centers, Inc. Annual Report for fiscal year ended January 31,
1998 (certain portions incorporated by reference into Part II)

     Proxy Statement for Annual Meeting of Stockholders, June 4, 1998 and
Adjournments (certain portions incorporated by reference into Part III)
<PAGE>
 
PART I

Items 1 and 2.  Business and Properties.

                                  THE COMPANY
BACKGROUND

     General.  National Home Centers, Inc. ("NHC" or the "Company") started its
building supply operations in 1972 and opened its first store, serving primarily
professional contractors, in 1977.  In 1983, NHC began implementing a dual-
customer strategy, serving both professional contractors and retail consumers,
but in the last six months the focus has shifted to professional contractors.
Today, the Company operates two large home center superstores, one appliance
sales warehouse and six contractor sales locations all in Arkansas, and
approximately 55% of its sales are to contractor consumers.

     The Company operates its stores in four Arkansas markets:  Northwest
Arkansas (3 stores); Little Rock (3 stores); Russellville (2 stores); and Fort
Smith (1 store).  NHC also operates fabrication facilities for value-added
conversion products such as countertops, pre-hung door units, and window units.
In October 1997, NHC closed its Conway superstore, and in December 1997, the
Rogers contractor facility was combined into the Bentonville contractor
facility.  Subsequent to fiscal 1997 year-end, the Company closed its Rodney
Parham store in Little Rock and its Fayetteville superstore.  The Company is
also reducing exposure in the retail portion of its Russellville, Arkansas
facility.

     Executive Offices.  The Company's executive offices are located at Highway
265 North, Springdale, Arkansas 72765.  The Company's telephone number is (501)
756-1700.

                                   BUSINESS

GENERAL

     The Company is a retailer of home improvement products and building
materials with an established core market primarily in Arkansas, but including
Oklahoma and Missouri.  The Company operates large building supply operations
serving both retail consumers and professional contractors.  NHC's business
strategy capitalizes on professional contractor sales by providing a broad
product assortment and a full range of services in each of its four Arkansas
markets.

     The Company operates in the highly competitive home improvement industry.
NHC's primary competition comes from home centers, discount retail stores,
supermarkets, warehouse stores, certain specialty stores, traditional hardware,
plumbing and electrical suppliers, and lumberyards.  The introduction of
national and/or regional home improvement stores to NHC's markets has
significantly increased competition for market share in recent years.  In an
attempt to gain market share, these new competitors have offered reduced prices
on products similar to those carried by NHC.  This has placed pressure on NHC's
stores and its prospective sales, gross margins, and operating income.  Although
NHC's markets are fairly saturated and few national or regional chains are
aggressively expanding, it is possible that competition will continue to
increase in those markets served by NHC.  Such additional competition may
adversely affect the Company's future earnings.

     In the last year, NHC has prepared a business plan based on a realistic
assessment of its strengths, weaknesses and competitive position.  The Company
previously retained Senn-Delaney, a retail-consulting group affiliated with
Arthur Andersen LLP, to assist in the implementation of the 

                                       2
<PAGE>
 
business plan. The business plan also was designed to reflect the operational,
marketing, administrative, and financial components of NHC's efforts to focus on
sales to contractors. Many of the components of the business plan have been, or
are currently being implemented. NHC's business plans is designed to: (a)
stabilize the Company and return it to profitability; and (b) provide a solid
base for continued growth within its core markets. The Company continues to
scrutinize it's utilization of resources and methods of doing business in order
to maximize efficiency, cash flow, and the Company's competitive ability. The
business plan incorporates the impact of actions already taken or identified for
implementation by NHC.

REDUCTION IN EXPOSURE OF RETAIL ASSETS

     The Company initially entered the retail segment of the market in the early
1980's primarily as a hedge against rising interest rates and reduced housing
starts. As a result of the recent drastic increase in competition for the retail
home improvement dollar and non-inflationary economic environment, NHC has
reevaluated its niche in the industry. The Company plans to reduce its exposure
to the retail segment of the home improvement industry. Because regional
contractors have long recognized NHC as a quality operation and because the
Company has developed a strong, loyal following of contractors, NHC plans to
reemphasize and refocus its efforts on becoming a leader in the professional
contractor market. The Company's goal is to increase revenues from professional
contractors to approximately 70% - 80% of the Company's total revenues within
the next year. NHC plans to explore some industry consolidation possibilities
including, but not limited to, buyouts of other contractor-related companies.

     Initial positive results have been produced from the Company's business
plan as evidenced by the closing of the Conway, Arkansas home center in October
1997. As of December 1, 1997, the Rogers contractor facility was closed and
combined into the Bentonville contractor facility. Also, the Company announced
plans in December 1997 to close the Rodney Parham and Fayetteville stores, both
of which were liquidated and closed after the fiscal year end. The Company is
also reducing the inventory levels in the Russellville home center and plans to
primarily operate the facility long-term as a contractor location. All related
restructuring costs were expensed as nonrecurring charges in the fourth quarter
ending January 31, 1998.

CAPITALIZATION OF THE COMPANY

     NHC currently has a revolving credit agreement that expires in December
1999.  The advance rates on this revolver are 85% of eligible receivables and
65% of eligible inventory.  The existing lender has expressed their intent to
honor the line of credit through December 1999 but because of the Company's
recent financial difficulties, NHC has struggled to meet its financial covenant
requirements.  As a result, the lender raised the interest rate 50 basis points
on February 1, 1998 as additional compensation for year-end covenant waivers.
Additionally, the Company granted deeds of trust on two parcels of undeveloped
land as additional security. Over the next five years, NHC plans to reduce its
outstanding revolver balance while at the same time reducing all other total
long term debt.

     Over the past year, as continued losses have been reported and excess
availability under the revolver has been restricted, the Company has become past
due with several vendors.  This has resulted in vendors reducing credit limits.
Also, the Company has not been able to take advantage of vendor discounts.  NHC
estimates that lost discounts in fiscal 1997 were approximately $500,000.  The
Company recognizes that, to successfully implement its business plan, it must
improve relationships 

                                       3
<PAGE>
 
and increase credit lines with its trade vendors. NHC estimates that $3.5
million is required to become current with all of its trade vendors and the
Company has identified several sources of funds with which to accomplish this.
Cash from the sale of land parcels, a 10% increase in the inventory advance rate
as previously discussed, and continued reduction of retail inventory at its
existing stores will provide the Company with the source of funds necessary to
pay down vendors. Additionally, from the aforementioned sources of cash, NHC
will have the capital available to allow the Company to again take advantage of
vendor discounts over time.

MONETIZE REAL ESTATE VALUES

     NHC owns several pieces of undeveloped real estate and buildings that no
longer fit in the Company's strategic plan.  The following is a table of the
properties for sale:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------ 
          Name                           Debt         Asking Price        Acres      Sale Condition
          ----                           ----         ------------        -----      --------------
<S>                                  <C>              <C>                 <C>        <C>
Fort Smith Land                             -0-       $ 1,500,000           7.5      Under contract
Branson Land                                -0-           500,000          30.0      Listed for Sale
S. Fayetteville Land                        -0-         1,800,000          26.1      Under contract
Conway Land & Building               $2,800,000         2,800,000           7.6      Under contract
Fayetteville Land & Building          2,900,000         6,500,000          15.7      Under contract
Corp. Office Land                           -0-           275,000          14.7      Under contract
                                     ----------       -----------
Total                                $5,700,000       $13,375,000
------------------------------------------------------------------------------------------------------------
</TABLE>


     If NHC is successful in its efforts to sell the above properties, the
Company will have made significant strides towards ending its immediate cash
crisis.  By doing so, NHC will be able to focus its efforts on implementing a
long-term strategy for competing in the home improvement industry.

     In summary, if the Company is successful in implementing all of the above
strategies within the next twelve months, the Company believes the impact will
be as follows:

     .  Outside of normal operating activities, NHC estimates that it will
        generate approximately $7,000,000 of net excess cash by refinancing
        existing debt, reducing inventory balances, and monetizing non-producing
        assets;

     .  The Company anticipates being current with all of its trade vendors,
        reestablishing credit lines, and again taking advantage of vendor
        discounts;

     .  NHC anticipates improving its capital structure by obtaining more
        favorable terms on its debt instruments with fewer financial covenants;

     NHC believes it has developed a realistic and attainable business plan that
addresses the needs of its creditors and provides a vehicle for the Company to
return to profitability.

STORE PROPERTIES

     The following table shows the location, opening date, size, 
retail/contractor sales mix and approximate number of SKUs of each of the
Company's stores:

                                       4
<PAGE>
 
<TABLE>
<CAPTION>
                                                    AREA IN SQUARE FEET    
                             OPENING                -------------------   RETAIL/CONTRACTOR              FABRICATION 
       STORE LOCATION         DATE       ACREAGE    RETAIL    WAREHOUSE        MIX (%)         SKUs      OPERATIONS 
       --------------         ----       -------    ------    ---------        -------         ----      ----------
<S>                           <C>        <C>        <C>       <C>         <C>                 <C>        <C>
I.   NORTHWEST ARKANSAS
     Springdale               11/83         21       50,000     190,000         20/80         25,000        door,
                                                                                                            window
     Bentonville              06/92          6       20,200      18,000         10/90         20,000          --
     Rogers Superstore        10/95         20      186,406      20,000         90/10         35,000          --
II.  FORT SMITH                                                                                      
     Fort Smith               12/77         10       31,074     110,000         15/85         11,500        door,
                                                                                                            window
III. LITTLE ROCK                                                                                      
     North Little Rock        10/85         13       95,200     150,000         40/60         35,000        door,
                                                                                                            window
     Conway Contractor        05/93          4            0      30,000         0/100         10,000         door
     Maumelle                 06/93          3            0      20,000         0/100            500   
IV.  RUSSELLVILLE                                                                                      
     Russellville             06/93         14      102,652      80,000         50/50         35,000        door,
                                                                                                            window
     Clarksville              09/95          1            0      14,000         0/100         11,000          --
                                                    -------     -------
       Total area                                   485,532     632,000
</TABLE>


     The Springdale, Bentonville, Fort Smith and North Little Rock stores are
leased from the Company's chairman.  The Clarksville, Maumelle and a portion of
the Russellville properties are leased from third parties.  Lease terms for
these properties range from 10 to 15 years and provide for renewal options.  The
Rogers, Conway contractor and a portion of the Russellville property are owned
by the Company.

     The Company owns the land and building for the closed Fayetteville and
Conway retail stores.  The Company currently has sales contracts pending for
these sites.  Mr. Newman has agreed to release the Company from the Rogers
contractor location as of June 30, 1998.  The Rodney Parham store is leased from
an unaffiliated third party.  The Company is attempting to find a suitable
sublease tenant for the remainder of the lease which expires June 30, 2003.

     The Company owns a thirty (30) acre parcel in Branson, Missouri, a seven
(7) acre parcel in Fort Smith, Arkansas and a twenty-four (24) acre parcel in
Fayetteville, Arkansas.  All three parcels are owned free of debt and have been
placed on the market for sale.  The Company has an agreement for sale on the
Fort Smith parcel and has received a good faith deposit.  The sale is expected
to take place in June 1998 with estimated net proceeds to the Company of
approximately $1,500,000.

                                       5
<PAGE>
 
FABRICATION FACILITIES

     NHC maintains fabrication facilities in Springdale, Fort Smith,
Russellville, Conway and North Little Rock for value-added conversion products,
such as counter tops, pre-hung door units and window units.  Management believes
that this vertical integration provides an advantage in serving professional
contractors by offering them a wide variety of products at competitive prices,
thus encouraging increased sales. The Company's door shops are equipped with
modern, automated machinery and are capable of producing high-quality interior
and exterior door units at competitive prices.  The Company manufactures over
10,000 pre-hung door units per month.  Door shops, which also are equipped and
staffed to custom cut and produce laminated kitchen and bath counter tops, serve
both retail customers and professional contractors and enable the Company to
provide prompt, local service at lower costs.  Management believes that its
fabrication facilities are adequate to meet existing and foreseeable needs.

PRODUCTS

     The Company's stores offer a large selection of lumber, building materials,
hardware and tools, electrical and plumbing supplies, paint, lighting, home
decor, pre-hung doors, windows, appliances, cabinets, garden supplies and
seasonal items.  Each store currently stocks between 10,000 and 35,000 SKUs.
Many of the items sold in the Company's stores are nationally advertised, brand-
name products.  NHC classifies its product offerings into five categories:

  BUILDING MATERIALS--Dimensional lumber, plywood, roofing, trusses, siding,
  windows, finish lumber, pre-hung doors and moldings.

  HARDWARE/PLUMBING/ELECTRICAL--Electrical wire and wiring materials, lighting
  fixtures, plumbing materials, power and hand tools, and door locks.

  HOME DECOR--Paint, wall and floor coverings and housewares.

  APPLIANCES/CABINETS--Kitchen appliances, washers, dryers, cabinets and
  fireplaces.

  LAWN AND GARDEN--Plants, fertilizer, mowers, garden tools and outdoor
  furniture.

     The percentage of sales accounted for by the merchandise categories for
each of the Company's three most recent fiscal years were as follows:

<TABLE>
<CAPTION>
                                                           Fiscal Year Ending January 31,
   Products                                            1998             1997             1996
   --------                                            ----             ----             ----
   <S>                                                 <C>              <C>              <C>
   Building Materials..........................          54               52               53
   Hardware/Plumbing/Electrical................          18               19               18
   Home Decor..................................          10               11               10
   Appliances/Cabinets.........................          10               11               13
   Lawn and Garden.............................           8                7                6
                                                       ----             ----             ----
   Total.......................................         100%             100%             100%
</TABLE>

Purchasing

     Except for pre-hung doors which are fabricated by the Company, NHC
purchases its merchandise from more than 800 manufacturers and suppliers.  No
single supplier accounted for more than 10% of NHC's total purchases in fiscal
1997.  The Company believes it has good relationships with its suppliers and
does not consider itself dependent upon any single source for its merchandise.
Management does not believe that the loss of any single supplier would have a
material adverse effect on the Company.

                                       6
<PAGE>
 
     The Company's corporate merchandise buyers, located in the Springdale
corporate office, make all decisions on new products to be sold in NHC stores.
Once the corporate buyers have selected a new product, they issue initial
purchase orders for all NHC stores where that product will be sold.  Buyers in
each store are responsible for making subsequent orders for all in-stock
merchandise.  Each store's computer system tracks the quantity of any product
sold and automatically generates recommended purchase orders which are edited by
store buyers who then issue purchase orders directly to the vendor.  Merchandise
is typically shipped directly to the store that will stock the product.  In
addition, sales volumes resulting from successful implementation of the
Company's dual-customer strategy permit NHC to maximize economies available from
discount purchases.  These large volume purchases may be shipped to the
Company's Springdale or North Little Rock stores for subsequent distribution to
other NHC stores in those markets.

CREDIT

     NHC offers credit for professional contractors which allows those customers
to make purchases at any NHC store.  Professional contractors make the majority
of their purchases on credit.  Subcontractors hired by a professional
contractor, as well as the property owner, may charge materials purchased for
that job to the professional contractor's account.  Credit policies and
procedures are established by the Company's credit department, and all
professional contractor sales representatives are trained in those policies and
procedures.  Each of NHC's market areas has a dedicated credit manager who
interacts with sales representatives, management and credit agencies to manage
and monitor customer credit.  The Company also has a Corporate Credit Manager
who oversees five area credit managers and activities and policies relating to
contractor receivables.  NHC's credit policies are designed to maximize
extension of credit to professional contractors without unduly risking bad
credit.  Credit sales accounted for substantially all of NHC's total sales to
professional contractors in fiscal 1997, while the Company's credit loss was
0.36% of contractor sales.  In addition, NHC accepts third-party credit cards
such as MasterCard, Visa, American Express and Discover, and maintains a
private-label credit program, the National Home Centers Home Project Plus Card,
administered by Household Retail Services, Inc.  Approximately 30% of NHC's
retail sales were made on third-party and proprietary credit cards in fiscal
1997.

MARKETING

     Management believes that its strongest marketing tools are exceptional
customer service and everyday low prices.  Because many retail customers make
buying decisions in the store, NHC focuses its marketing efforts on maintaining
a well-stocked inventory and superior service to encourage add-on sales which
augment the average purchase.  As a result of this approach, NHC spent 0.71% of
sales on advertising in fiscal 1997, primarily on seasonal direct mail
advertising for special promotions and to reinforce customer awareness of its
everyday low pricing.  Television advertising will be significantly reduced in
fiscal year 1998.

     NHC offers various volume-oriented price levels to professional contractors
to promote larger purchases.  The Company's computerized pricing system permits
sales personnel to provide consistent quantity discounts and immediate response
to customer requests for discounts on volume purchases.

     For the past 20 years, the Company has offered professional contractors a
travel incentive program in which customers earn, through their purchases,
credit toward trips arranged each year by the Company.  The program, which has
been highly successful in helping the Company increase its share of the
professional contractor business, gives the Company an opportunity to present
product seminars during each trip.  There are currently 245 customers signed up
for a fall 1998 trip to Switzerland.  Builders qualify for the travel incentive
program by purchasing certain volumes of materials and by making timely payments
each month.

                                       7
<PAGE>
 
MANAGEMENT INFORMATION SYSTEMS

     NHC's management information systems have been designed and developed to
address a wide range of functions including sales analysis, merchandise ordering
and processing, merchandise management and presentation and financial
management.  Through these systems, management has access to concise, relevant
information on performance that includes the daily individual store and
department information necessary for financial and merchandising decisions,
strategic planning and analysis.

     The Company maintains a fully computerized point-of-sale retail management
system and custom-designed software.  The Company utilizes IBM RS-6000 hardware
and special building materials software developed by Computer System Dynamics.
NHC's system provides (1) point-of-sale scanning, (2) sales and inventory
tracking, compiling data by store, employee, product category and individual
SKU, (3) receivables tracking, (4) computer generated purchase orders, and (5)
other operating and management reports.  NHC is currently utilizing Electronic
Data Interchange ("EDI") with selected vendors.

     NHC's point-of-sale system is a fully integrated sales, credit,
receivables, inventory, purchasing and data collection system.  This system
includes UPC scanning for all items sold at NHC stores and provides automatic
price check at the register as well as sales audit reporting, advertised item
reporting, item sales performance and history, daily computer review and
suggested purchase orders.  The system also tracks professional contractor
receivables and requires management approval for any transaction which would
exceed the customer's account credit limit.  Accounting software handles the
Company's payroll, accounts payable and general ledger.  These functions are
centralized at the Company's corporate office.  The Company has implemented the
Oracle Relational Database Management System.  This system allows integration of
the point-of-sale system and the accounting system.  The Company has entered
into service contracts with third parties for service and upgrades of computer
software.  Company policies require daily backup at each store which is
maintained at secure off-site locations.  In addition, the Company maintains a
standby mainframe unit to operate as backup for its primary system.

     The efficient operation of the Company's business is dependent in part on
its computer software programs and operating systems. These programs and systems
are used in several key areas of the Company's business, including merchandise
purchasing, inventory management, pricing, sales, shipping and financial
reporting, as well as in various administrative functions. The Company has been
evaluating its programs and systems to identify potential year 2000 compliance
problems. These actions are necessary to ensure that the programs and systems
will recognize and process the year 2000 and beyond. It is anticipated that
modification or replacement of most of the Company's programs and systems will
be necessary to make such programs and systems year 2000 compliant. The Company
is communicating with suppliers and others to coordinate year 2000 conversion.
Based on present information, the Company believes that it will be able to
achieve year 2000 compliance by upgrading its key programs and systems to those
that are already year 2000 compliant. However, no assurance can be given that
these efforts will be successful. The Company does not expect expenditures
associated with achieving year 2000 compliance to have a material effect on its
financial results in 1998.

COMPETITION

     NHC operates its stores in four Arkansas markets.  For many years, NHC
dominated the home improvement industry in Arkansas primarily because these
markets lacked competition from national home improvement chains.  Once
considered to be too small, these markets began to attract several nationally
known competitors in their efforts to continue their nationwide expansion.  Upon
entering these markets, these new competitors offered lower prices than NHC.  As
a result, NHC has been forced to meet prices on most occasions to remain
competitive resulting in a steady decline in gross margins and sales per square
foot.  The Company's principal competitors in these markets are Lowe's, Home
Depot, Sutherlands, Payless Cashways, Meeks, Ridout, and Home Quarters.

PATENTS AND TRADEMARKS

     The Company has obtained federal trademark registration for the service
mark National Home Centers(R).  The federal registration covers NHC's use of the
mark for retail lumber, building materials and hardware store services, but does
not contemplate use of the mark on other products.

EMPLOYEES AND LABOR RELATIONS

     As of January 31, 1998, the Company employed 742 persons, consisting of 643
full-time and 99 part-time personnel.  Generally, the Company believes that
relations with its employees are excellent.  None of the Company's employees are
represented by a union or covered by a collective bargaining group.

                                       8
<PAGE>
 
Item 3.  Legal Proceedings.

         From time to time, the Company is involved in lawsuits arising in the
ordinary course of business.  Such lawsuits have not resulted in any material
losses to date.

Item 4.  Submission of Matters to a Vote of Security Holders.

         Not applicable.

PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

         The Company is authorized to issue 25,000,000 shares of Common Stock,
$.01 par value of which 7,142,251 shares were outstanding as of April 6, 1998,
and 5,000,000 shares of Preferred Stock, $1.00 par value, of which no shares
were outstanding as of April 6, 1998.

                                 COMMON STOCK

         The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. Subject
to preferences applicable to any outstanding Preferred Stock, holders of Common
Stock are entitled to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor. Holders of Common
Stock have no preemptive or subscription rights and there are no redemption or
conversion rights with respect to such shares. The outstanding shares of Common
Stock are fully paid and non-assessable. As of January 31, 1998, the Company's
Chairman beneficially owned approximately 62.9% of the outstanding Common Stock.

         The Company has not previously paid any cash dividends on its Common
Stock and does not anticipate paying any cash dividends in the future. See
"Dividend Policy."

         At April 6, 1998, the 7,142,251 shares of Common Stock then outstanding
were held by approximately 584 persons (excluding persons holding shares in
nominee names). The Transfer Agent and Registrar for the Common Stock is UMB
Bank of Kansas City.

         The Company's Common Stock is currently traded on The Nasdaq National
Market under the symbol "NHCI." The following table sets forth the quarterly
high and low sales price for the Common Stock as reported on The Nasdaq National
Market.

<TABLE>
<CAPTION>
                                                       HIGH            LOW
                                                       ----            ---
FISCAL 1996
<S>                                                  <C>              <C>
First Quarter...................................      $3.13           $2.25
Second Quarter..................................       3.25            2.13
Third Quarter...................................       3.00            2.00
Fourth Quarter..................................       2.50            1.50
 
FISCAL 1997
First Quarter...................................       2.69            1.50
Second Quarter..................................       2.06            1.50
Third Quarter...................................       1.88            0.88
Fourth Quarter..................................       1.38            0.88
 
FISCAL 1998
First Quarter (through April 6, 1998)...........       2.50            0.88
</TABLE>

                                       9
<PAGE>
 
The Nasdaq Stock Market listing requirements were recently amended.  The Company
must meet certain requirements by May 28, 1998 to remain listed  on The Nasdaq
National Market.  In the event such listing requirements are not met, the
Company may be required to phase-down  from the Nasdaq National Market to The
SmallCap Market.

                                PREFERRED STOCK

         The Board of Directors is authorized to provide for the issuance of
Preferred Stock in one or more series and to fix the dividend rate, conversion
rights, voting rights, rights and terms of redemption, redemption price or
prices, liquidation preferences and qualifications, limitations and restrictions
thereof with respect to each series.  Although the Company has no present
intention to issue shares of Preferred Stock, the issuance of shares of
Preferred Stock or the issuance of rights to purchase such shares could have an
anti-takeover effect and may delay, defer or prevent a tender offer or takeover
attempt that a stockholder might consider in his best interest, including
attempts that might result in a premium over the market price for the shares
held by such stockholder.

                                DIVIDEND POLICY

         The Company has not previously paid cash dividends on its Common Stock.
The Company intends to retain any earnings for use in its business and therefore
does not anticipate paying any cash dividends in the foreseeable future. The
Company's revolving credit facility prohibits the payment of cash dividends on
its Common Stock, unless certain profit goals are met.

Item 6.  Selected Financial Data.

         Incorporated by reference from the section captioned "Selected
Consolidated Financial Data," page 2 of the National Home Centers, Inc. 1997
Annual Report (the "1997 Annual Report").

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operations.

         Incorporated by reference from the sections captioned "Management's
Discussion and Analysis," pages 3 through 5 of the 1997 Annual Report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.  Not
applicable.

Item 8.  Financial Statements and Supplementary Data.

         Incorporated by reference from the sections captioned "Consolidated
Balance Sheets, "Consolidated Statements of Operations and Retained Earnings,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Report of Independent Public Accountants," pages 6 through 18
of the 1997 Annual Report.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

         None

                                       10
<PAGE>
 
PART III

Item 10.  Directors and Executive Officers of the Registrant.

          Incorporated by reference from the sections captioned "Election of
Directors," "Executive Officers" and "Section 16 Requirements" contained in the
Company's Proxy Statement for Annual Meeting of Stockholders, June 4, 1998 and
Adjournments (the "Proxy Statement").

Item 11.  Executive Compensation.

          Incorporated by reference from the section captioned "Executive
Compensation" contained in the Proxy Statement.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

          Incorporated by reference from the section captioned "Principal
Stockholders" contained in the Proxy Statement.

Item 13.  Certain Relationships and Related Transactions.

          Incorporated by reference from the sections captioned "Executive
Compensation--Compensation Committee Interlocks and Insider Participation" and
"Certain Transactions" contained in the Proxy Statement.

PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

 (a)  Documents filed as a part of this report.

      1.  Financial Statements.

                The following consolidated financial statements of National Home
          Centers, Inc. and Subsidiary have been incorporated by reference from
          the 1997 Annual Report into Item 8 of this Report.

          Description

          Consolidated Balance Sheets
          Consolidated Statements of Operations and Retained Earnings
          Consolidated Statements of Cash Flows
          Notes to Consolidated Financial Statements
          Report of Independent Public Accountants

      2.  Financial Statement Schedules.

          The information required to be presented in Schedule II Valuation and
Qualifying Accounts is presented in Note 9 of the Notes to Consolidated
Financial Statements.

                                       11
<PAGE>
 
      3.  Exhibits required by Item 601 of Regulation S-K.

 
          Exhibit No.        Description
          -----------        ----------- 

             3.1             Amended and Restated Articles of Incorporation of
                             the Company./1/

             3.2             Amended and Restated By-Laws of the Company./1/
 
             4.1             Form of the Company's Common Stock Certificate.1
 
             4.2             Amended and Restated Articles of Incorporation of
                             the Company, Sections 5 through 7./1/

            10.1             Life Insurance Policy, dated May 15, 1983, issued
                             by Executive Life Insurance Company on the life of
                             Dwain A. Newman, in the amount of $1,000,000 with
                             the Company named as beneficiary, including
                             Assignment, dated September 10, 1992, to the
                             Arkansas Teachers Retirement System./1/
 
            10.2             Lease Agreement dated September 1, 1992 between
                             Dwain A. Newman and Glenda R. Newman and the
                             Company for the Springdale, Arkansas store./1/
 
            10.3             Lease Agreement dated September 1, 1992 between
                             Dwain A. Newman and Glenda R. Newman and the
                             Company for the North Little Rock, Arkansas 
                             store./1/
                             
            10.4             Lease Agreement dated September 1, 1992 between
                             Dwain A. Newman and Glenda R. Newman and the
                             Company for the Fort Smith, Arkansas store./1/
                             
            10.5             Lease Agreement dated June 1, 1992 between Dwain A.
                             Newman and Glenda R. Newman and the Company for the
                             Bentonville, Arkansas store./1/
 
            10.6             Lease Agreement dated June 1, 1992 between Dwain A.
                             Newman and Glenda R. Newman and the Company for the
                             Rogers, Arkansas store./1/
 
            10.7             Lease Agreement dated June 1, 1992 between Dwain A.
                             Newman and Glenda R. Newman and the Company for the
                             Cabinet Craft facility in Springdale, Arkansas./1/
 
            10.8             Lease Agreement dated July 1, 1993 between Parham
                             Properties, Inc. and the Company for the Little
                             Rock, Arkansas store./3/

                                       12
<PAGE>
 
            10.9             Lease Agreements dated December 22, 1992 between
                             Valley Park Limited Partnership and the Company for
                             the Russellville, Arkansas store./1/
 
            10.10            Subordination, Attornment and Non-Disturbance
                             Agreement and Estoppel Certificate dated September
                             10, 1992 between ATRS, the Company, and Dwain A.
                             Newman and Glenda R. Newman for the Springdale,
                             North Little Rock and Fort Smith Leases./1/
                             
            10.11            Form of the 1993 Employee Stock Purchase Plan of
                             National Home Centers, Inc./1/

            10.12            Form of the Company's 1993 Incentive Compensation
                             Plan./1/

            10.13            Loan and Security Agreement dated December 29, 1992
                             between the Company and MetLife Capital Corporation
                             with Supplemental Security Agreement and Term
                             Promissory Note No. One dated December 29, 1992,
                             and Supplemental Security Agreement and Term
                             Promissory Note No. Two, dated March 8, 1993./1/
                             
            10.14            Loan Agreement dated August 4, 1993 between the
                             Company and MetLife Capital Corporation./2/

            10.15            Supplemental Security Agreement and Term Promissory
                             Note No. Three between the Company and MetLife
                             Capital Corporation dated October 25, 1993./3/
                             
            10.16            Supplemental Security Agreement and Term Promissory
                             Note No. Four between the Company and MetLife
                             Capital Corporation dated December 29, 1993./3/
                             
            10.17            Note and Security Agreement dated December 31, 1993
                             between the Company and NationsBanc Leasing
                             Corporation./3/
 
            10.18            Promissory Note and Security Agreement dated
                             5/31/94 between the Company & Metlife Capital
                             Corporation./4/
 
            10.19            Note & Security Agreement dated 6/15/94 between the
                             Company and NationsBanc Leasing Corp./4/

            10.20            Assignment of Policy dated 5/20/94 between the
                             Company and the Newman 1994 Family Trust./4/

                                       13
<PAGE>
 
            10.21            Assignment of Policy dated 5/20/94 between the
                             Company and the Newman 1994 Family Trust./4/

            10.22            Split Dollar Insurance Agreement dated 5/20/94
                             between the Company and the Newman 1994 Family 
                             Trust./4/
 
            10.23            Split Dollar Insurance Agreement dated 5/20/94
                             between the Company and the Newman 1994 Family
                             Trust./4/
 
            10.24            Guaranty Agreement effective May 20, 1994./5/
 
            10.25            Supplemental Security Agreement and Term Promissory
                             Note No. 1 dated December 6, 1994 between the
                             Company and MetLife Capital Corporation./6/
 
            10.26            Promissory Note and Mortgage dated May 5, 1995 to
                             First Bank of Arkansas for Conway, Arkansas 
                             Store./7/

            10.27            Merchant Agreement dated March 16, 1995 between the
                             Company and Household Bank (Illinois), N.A./7/

            10.28            Note and Security Agreement dated August 30, 1995
                             between the Company and NationsBank Leasing
                             Corporation./8/
 
            10.29            Loan and Security Agreement dated December 19, 1995
                             between the Company and BankAmerica Business
                             Credit, Inc./9/
                             
            10.30            Form of the Company's 401(k) Adoption Agreement
                             with First Tennessee National Bank as Trustee./9/
 
            10.31            Waiver letter from BankAmerica dated April 8,
                             1997./12/
  
            10.32            1996 Long-Term Performance Plan./12/
 
            10.33            First Amendment to Loan and Security Agreement 
                             with BankAmerica Business Credit, Inc./10/
 
            10.34            Term Loan Agreement dated September 25, 1996
                             between the Company and NBD Bank./11/

            10.35            Waiver letter from BankAmerica dated January 28,
                             1998.

                                       14
<PAGE>
 
            10.36            Second Amendment to Loan and Security Agreement
                             with BankAmerica Business Credit, Inc. dated April
                             30, 1997.

            10.37            Third Amendment to Loan and Security Agreement with
                             BankAmerica Business Credit, Inc. dated February
                             23, 1998.

            10.38            Fourth Amendment to Loan and Security Agreement
                             with BankAmerica Business Credit, Inc. dated April
                             1, 1998.

            11.1             Computation of Loss Per Share.

            13.1             National Home Centers, Inc. 1997 Annual Report
                             (only those portions specifically incorporated
                             herein by reference shall be deemed filed with the
                             Commission).

            21.1             Subsidiaries of the Company./1/

            23.1             Consent of Arthur Andersen LLP, Independent
                             Certified Public Accountants.

            27.1             Financial Data Schedule.

(b) Reports on Form 8-K.

    The Company did not file any Current Reports on Form 8-K during fiscal 1997.


/1/ Incorporated by reference from National Home Centers, Inc. Form S-1
    Registration Statement No. 33-60078, as amended, filed with the Securities
    and Exchange Commission on March 26, 1993.

/2/ Incorporated by reference from National Home Centers, Inc. Quarterly Report
    on Form 10-Q for the period ended October 31, 1993, filed with the
    Securities and Exchange Commission on December 13, 1993.

/3/ Incorporated by reference from National Home Centers, Inc. Annual Report on
    Form 10-K for the fiscal year ended January 31, 1994, filed with the
    Securities and Exchange Commission on April 29, 1994.

/4/ Incorporated by reference from National Home Centers, Inc. Quarterly Report
    on Form 10-Q for the period ended July 31, 1994, filed with the Securities
    and Exchange Commission on September 15, 1994.

/5/ Incorporated by reference from National Home Centers, Inc. Quarterly Report
    on Form 10-Q for the period ended October 31, 1994, filed with the
    Securities and Exchange Commission on December 15, 1994.

/6/ Incorporated by reference from National Home Centers, Inc. Annual Report on
    Form 10-K for the fiscal year ended January 31, 1995, filed with the
    Securities and Exchange Commission on April 29, 1995.

/7/ Incorporated by reference from National Home Centers, Inc. Quarterly Report
    on Form 10-Q for the period ended April 30, 1995, filed with the Securities
    and Exchange Commission on June 12, 1995.

/8/ Incorporated by reference from National Home Centers, Inc. Quarterly Report
    on Form 10-Q for the period ended July 31, 1995, filed with the Securities
    and Exchange Commission on September 13, 1995.

/9/ Incorporated by reference from National Home Centers, Inc. Annual Report on
    Form 10-K for the period ending January 31, 1996, filed with the Securities
    and Exchange Commission on April 30, 1996.

                                       15
<PAGE>
 
/10/ Incorporated by reference from National Home Centers, Inc. Quarterly Report
     on Form 10-Q for the period ended April 30, 1996, filed with the Securities
     and Exchange Commission on June 13, 1996.

/11/ Incorporated by reference from National Home Centers, Inc. Quarterly Report
     on Form 10-Q for the period ended October 31, 1996, filed with the
     Securities and Exchange Commission on December 16, 1996.

/12/ Incorporated by reference from National Home Centers, Inc. Annual Report on
     Form 10-K for the period ending January 31, 1997, filed with Securities and
     Exchange Commission on May 1, 1997.


                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.


                                        NATIONAL HOME CENTERS, INC.


         April 30, 1998                 By
                                          ------------------------------------
                                          Dwain A. Newman
                                          Chairman of the Board and
                                            Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



         April 30, 1998                 By
                                          ------------------------------------
                                          Dwain A. Newman
                                          Chairman of the Board, Chief Executive
                                            Officer and Director


         April 30, 1998                 By
                                          ------------------------------------
                                          Danny R. Funderburg
                                          President, Chief Operating Officer
                                            and Director


         April 30, 1998                 By
                                          ------------------------------------
                                          Roger A. Holman
                                          Vice President, Purchasing - Marketing
                                            and Director


         April 30, 1998                 By
                                          ------------------------------------
                                          Larry C. Chumley
                                          President, Contractor Division and
                                            Director

         April 30, 1998                 By
                                          ------------------------------------
                                          Brent A. Hanby

                                       16
<PAGE>
 
                                          Executive Vice President,
                                          Chief Financial Officer and
                                            Director

         April 30, 1998                 By
                                          ------------------------------------
                                          Richard D. Denison
                                            Director



         April 30, 1998                 By
                                          ------------------------------------
                                          David W. Truetzel
                                            Director

                                       17
<PAGE>
 
                               INDEX OF EXHIBITS


          Exhibit No.        DESCRIPTION
          -----------        ----------- 

             3.1             Amended and Restated Articles of Incorporation of
                             the Company./1/

             3.2             Amended and Restated By-Laws of the Company./1/
 
             4.1             Form of the Company's Common Stock Certificate.1
 
             4.2             Amended and Restated Articles of Incorporation of
                             the Company, Sections 5 through 7./1/

            10.1             Life Insurance Policy, dated May 15, 1983, issued
                             by Executive Life Insurance Company on the life of
                             Dwain A. Newman, in the amount of $1,000,000 with
                             the Company named as beneficiary, including
                             Assignment, dated September 10, 1992, to the
                             Arkansas Teachers Retirement System./1/
 
            10.2             Lease Agreement dated September 1, 1992 between
                             Dwain A. Newman and Glenda R. Newman and the
                             Company for the Springdale, Arkansas store./1/
 
            10.3             Lease Agreement dated September 1, 1992 between
                             Dwain A. Newman and Glenda R. Newman and the
                             Company for the North Little Rock, Arkansas 
                             store./1/
                             
            10.4             Lease Agreement dated September 1, 1992 between
                             Dwain A. Newman and Glenda R. Newman and the
                             Company for the Fort Smith, Arkansas store./1/
                             
            10.5             Lease Agreement dated June 1, 1992 between Dwain A.
                             Newman and Glenda R. Newman and the Company for the
                             Bentonville, Arkansas store./1/
 
            10.6             Lease Agreement dated June 1, 1992 between Dwain A.
                             Newman and Glenda R. Newman and the Company for the
                             Rogers, Arkansas store./1/

                                       18
<PAGE>
 
            10.7             Lease Agreement dated June 1, 1992 between Dwain A.
                             Newman and Glenda R. Newman and the Company for the
                             Cabinet Craft facility in Springdale, Arkansas./1/
 
            10.8             Lease Agreement dated July 1, 1993 between Parham
                             Properties, Inc. and the Company for the Little
                             Rock, Arkansas store./3/
 
            10.9             Lease Agreements dated December 22, 1992 between
                             Valley Park Limited Partnership and the Company for
                             the Russellville, Arkansas store./1/
 
            10.10            Subordination, Attornment and Non-Disturbance
                             Agreement and Estoppel Certificate dated September
                             10, 1992 between ATRS, the Company, and Dwain A.
                             Newman and Glenda R. Newman for the Springdale,
                             North Little Rock and Fort Smith Leases./1/
                             
            10.11            Form of the 1993 Employee Stock Purchase Plan of
                             National Home Centers, Inc./1/

            10.12            Form of the Company's 1993 Incentive Compensation
                             Plan./1/

            10.13            Loan and Security Agreement dated December 29, 1992
                             between the Company and MetLife Capital Corporation
                             with Supplemental Security Agreement and Term
                             Promissory Note No. One dated December 29, 1992,
                             and Supplemental Security Agreement and Term
                             Promissory Note No. Two, dated March 8, 1993./1/
                             
            10.14            Loan Agreement dated August 4, 1993 between the
                             Company and MetLife Capital Corporation./2/

            10.15            Supplemental Security Agreement and Term Promissory
                             Note No. Three between the Company and MetLife
                             Capital Corporation dated October 25, 1993./3/
                             
            10.16            Supplemental Security Agreement and Term Promissory
                             Note No. Four between the Company and MetLife
                             Capital Corporation dated December 29, 1993./3/

                                       19
<PAGE>
 
            10.17            Note and Security Agreement dated December 31, 1993
                             between the Company and NationsBanc Leasing
                             Corporation./3/
 
            10.18            Promissory Note and Security Agreement dated
                             5/31/94 between the Company & Metlife Capital
                             Corporation./4/
 
            10.19            Note & Security Agreement dated 6/15/94 between the
                             Company and NationsBanc Leasing Corp./4/

            10.20            Assignment of Policy dated 5/20/94 between the
                             Company and the Newman 1994 Family Trust./4/

            10.21            Assignment of Policy dated 5/20/94 between the
                             Company and the Newman 1994 Family Trust./4/

            10.22            Split Dollar Insurance Agreement dated 5/20/94
                             between the Company and the Newman 1994 Family 
                             Trust./4/
 
            10.23            Split Dollar Insurance Agreement dated 5/20/94
                             between the Company and the Newman 1994 Family
                             Trust./4/
 
            10.24            Guaranty Agreement effective May 20, 1994./5/
 
            10.25            Supplemental Security Agreement and Term Promissory
                             Note No. 1 dated December 6, 1994 between the
                             Company and MetLife Capital Corporation./6/
 
            10.26            Promissory Note and Mortgage dated May 5, 1995 to
                             First Bank of Arkansas for Conway, Arkansas 
                             Store./7/

            10.27            Merchant Agreement dated March 16, 1995 between the
                             Company and Household Bank (Illinois), N.A./7/

            10.28            Note and Security Agreement dated August 30, 1995
                             between the Company and NationsBank Leasing
                             Corporation./8/
 
            10.29            Loan and Security Agreement dated December 19, 1995
                             between the Company and BankAmerica Business
                             Credit, Inc./9/

                                       20
<PAGE>
 
            10.30            Form of the Company's 401(k) Adoption Agreement
                             with First Tennessee National Bank as Trustee./9/
 
            10.31            Waiver letter from BankAmerica dated April 8,
                             1997./12/
  
            10.32            1996 Long-Term Performance Plan./12/
 
            10.33            First Amendment to Loan and Security Agreement 
                             with BankAmerica Business Credit, Inc./10/
 
            10.34            Term Loan Agreement dated September 25, 1996
                             between the Company and NBD Bank./11/

            10.35            Waiver letter from BankAmerica dated January 28,
                             1998.

            10.36            Second Amendment to Loan and Security Agreement
                             with BankAmerica Business Credit, Inc. dated April
                             30, 1997.

            10.37            Third Amendment to Loan and Security Agreement with
                             BankAmerica Business Credit, Inc. dated February
                             23, 1998.

            10.38            Fourth Amendment to Loan and Security Agreement
                             with BankAmerica Business Credit, Inc. dated April
                             1, 1998.

            11.1             Computation of Loss Per Share.

            13.1             National Home Centers, Inc. 1997 Annual Report
                             (only those portions specifically incorporated
                             herein by reference shall be deemed filed with the
                             Commission).

            21.1             Subsidiaries of the Company./1/

            23.1             Consent of Arthur Andersen LLP, Independent
                             Certified Public Accountants.

            27.1             Financial Data Schedule.

                                       21