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 June 27, 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 0-14938.


                         STANLEY FURNITURE COMPANY, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                         54-1272589
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                              Identification No.)

            1641 Fairystone Park Highway, Stanleytown, Virginia 24168
               (Address of principal executive offices, Zip Code)


                                  (540)627-2000
              (Registrant's telephone number, including area code)



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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of July 10, 1998.


Class                                                        Number

Common Stock, par value $.02 per share                   7,054,768 Shares


<PAGE>
<TABLE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                         STANLEY FURNITURE COMPANY, INC.
                                 BALANCE SHEETS
                        (In thousands, except share data)
<CAPTION>
                                                                                     (Unaudited)
                                                                                      June 27,      December31,
                                                                                        1998           1997
<S>                                                                                  <C>            <C>  
ASSETS
Current assets:
    Cash.....................................................................        $    1,532    $     756
    Accounts receivable, less allowances of $2,229 and $1,895................            31,128       27,427
    Inventories:
       Finished goods........................................................            24,251       21,220
       Work-in-process.......................................................             7,108        6,997
       Raw materials.........................................................            19,394       17,513
                                                                                         ------       ------
                                                                                    
                                                                                         50,753       45,730
    Prepaid expenses and other current assets................................             1,625        1,571
    Deferred income taxes....................................................             1,184          770
                                                                                          -----          ---
                                                                                    
              Total current assets...........................................            86,222       76,254
Property, plant and equipment, net...........................................            51,532       51,714
Goodwill, less accumulated amortization of $3,192 and $3,024.................            10,248       10,416
Other assets.................................................................             4,283        4,841
                                                                                          -----        -----
                                                                                    
                                                                                       $152,285     $143,225
                                                                                       ========     ========
LIABILITIES
Current liabilities:
     Current maturities of long-term debt....................................        $    5,086     $    5,086
     Accounts payable........................................................            19,964         18,164
     Accrued salaries, wages and benefits....................................             9,708          9,687
     Other accrued expenses..................................................             2,352          1,877
                                                                                          -----          -----
                                                                                    
         Total current liabilities...........................................            37,110         34,814
Long-term debt, exclusive of current maturities..............................            45,270         47,491
Deferred income taxes........................................................            10,357         10,448
Other long-term liabilities..................................................             2,225          2,225
                                                                                          -----          -----
                                                                                  
    Total liabilities........................................................            94,962         94,978
                                                                                         ------         ------
                                                                                        

STOCKHOLDERS' EQUITY
Common stock, $.02 par value, 10,000,000  shares authorized, 7,054,768
    and 6,865,518  shares issued and outstanding.............................               140            137
Capital in excess of par value...............................................            39,662         37,439
Retained earnings ...........................................................            17,521         10,671
                                                                                         ------         ------
                                                                                    
    Total stockholders' equity...............................................            57,323         48,247
                                                                                         ------         ------
                                                                                    
                                                                                       $152,285       $143,225
                                                                                       ========       ========
</TABLE>


                 The accompanying notes are an integral part of
                           the financial statements.

<PAGE>
<TABLE>


                         STANLEY FURNITURE COMPANY, INC.
                              STATEMENTS OF INCOME
                                   (Unaudited)
                      (In thousands, except per share data)


<CAPTION>

                                                                            Three Months            Six Months
                                                                               Ended                  Ended
                                                                        June 27,    June 29,    June 27,  June 29,
                                                                          1998        1997        1998       1997
                                                                       ----------  ---------  ----------  --------
<S>                                                                    <C>         <C>        <C>        <C>    

Net sales.........................................................        $61,863    $49,469   $119,554     $99,100

Cost of sales.....................................................         46,590     36,981     90,136      74,150
                                                                           ------     ------     ------      ------
                                                                          
        Gross profit..............................................         15,273     12,488      29,418     24,950


Selling, general and administrative expenses......................          8,350      7,199      16,102     14,327
                                                                            -----      -----      ------     ------
                                                                         

       Operating income...........................................          6,923      5,289      13,316     10,623

Other expense, net................................................             48         65          82        134
Interest expense..................................................          1,102        744       2,186      1,500
                                                                            -----        ---       -----      -----
                                                                        
    Income before income taxes....................................          5,773      4,480      11,048      8,989

Income taxes......................................................          2,193      1,724       4,198      3,461
                                                                            -----      -----       -----      -----
                                                                         

Net income........................................................        $ 3,580   $  2,756     $ 6,850    $ 5,528
                                                                          =======   ========     =======    =======
                                                                          
                                                                             
Earnings per share:

  Basic...........................................................      $     .51 $      .30  $      .99 $      .60
                                                                        ========= ==========  ========== ==========
                                                                        
  Diluted.........................................................      $     .45 $      .28  $      .86 $      .55
                                                                        ========= ==========  ========== ==========
                                                                        

Weighted average shares outstanding:

  Basic...........................................................          6,978      9,174       6,932      9,172
                                                                            =====      =====       =====      =====
                                                                         
  Diluted.........................................................          8,016     9,942        7,968      9,986
                                                                            =====     =====        =====      =====
 </TABLE>
                                                                      





                 The accompanying notes are an integral part of
                            the financial statements.

<PAGE>
<TABLE>


                         STANLEY FURNITURE COMPANY, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)
<CAPTION>


                                                                                        Six Months Ended
                                                                                  June 27,           June 29,
                                                                                    1998               1997
<S>                                                                               <C>                <C>    

Cash flows from operating activities:
Cash received from customers..................................................   $ 115,643            $98,443
Cash paid to suppliers and employees..........................................    (105,969)           (92,047)
Interest paid.................................................................      (1,725)              (968)
Income taxes paid, net........................................................      (3,388)            (4,520)
                                                                                 ---------            -------- 
                                                                                
  Net cash provided by operating activities...................................        4,561               908
                                                                                 ---------            --------
                                                                               
Cash flows from investing activities:
Capital expenditures..........................................................       (2,460)             (696)
Purchase of other assets......................................................          (41)              (88)
                                                                                  ---------            -------- 
  Net cash used by investing activities.......................................       (2,501)             (784)
                                                                                  ---------            -------- 
                                                                              

Cash flows from financing activities:
Proceeds from revolving credit facility.......................................        2,065
Repayment of Senior Notes.....................................................       (4,286)
Proceeds from exercised stock options.........................................          937                80
                                                                                  ---------            --------  
                                                                              
  Net cash (used) provided by financing activities............................       (1,284)               80
                                                                                  ---------            --------  
                                                                             
Net increase in cash..........................................................         776                204
Cash at beginning of year.....................................................         756              8,126
                                                                                  ---------            -------- 
  Cash at end of quarter......................................................   $   1,532            $ 8,330
                                                                                 ==========            ========
                                                                               

Reconciliation of net income to net cash provided
   by operating activities:

   Net income.................................................................   $   6,850            $ 5,528
   Adjustments to reconcile net income to net
       cash provided by operating activities:
       Depreciation and amortization..........................................       2,854              2,704
       Loss on sale of assets.................................................           8                 75
       Changes in assets and liabilities:
         Accounts receivable..................................................      (3,701)              (631)
         Inventories..........................................................      (5,023)            (7,725)
         Prepaid expenses and other current assets............................         263                (88)
         Accounts payable.....................................................       1,800              1,520
         Accrued salaries, wages and benefits.................................          21               (137)
         Other accrued expenses...............................................       1,764               (143)
         Deferred income taxes................................................        (505)              (389)
       Other assets...........................................................         230                194
                                                                                       ---                ---
                                                                                
   Net cash provided by operating activities..................................   $   4,561          $     908
                                                                                 =========          =========
                                                                                 
</TABLE>
               The accompanying notes are an integral part of the
                              financial statements.

<PAGE>

                         STANLEY FURNITURE COMPANY, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


 1.      Preparation of Interim Financial Statements

The financial  statements of Stanley  Furniture  Company,  Inc.  (referred to as
"Stanley" or the "Company")  have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission ("SEC"). In the opinion of
management,  these  statements  include  all  adjustments  necessary  for a fair
presentation of the results of all interim  periods  reported  herein.  All such
adjustments are of a normal recurring nature.  Certain  information and footnote
disclosures prepared in accordance with generally accepted accounting principles
have been either  condensed  or omitted  pursuant to SEC rules and  regulations.
However,  management  believes that the disclosures made are adequate for a fair
presentation of results of operations and financial position.  Operating results
for the interim  periods  reported  herein may not be  indicative of the results
expected for the year. It is suggested that these  financial  statements be read
in conjunction with the financial  statements and accompanying notes included in
Stanley's latest annual report on Form 10-K.

 2.      Property, Plant and Equipment

<TABLE>

                                                                             (Unaudited)
                                                                               June 27,        December 31,
                                                                                 1998              1997
<S>                                                                            <C>             <C>
        
         Land and buildings...............................................      $34,150            $33,941
         Machinery and equipment..........................................       50,123             48,180
         Office fixtures and equipment....................................        1,836              1,836
         Construction in progress.........................................          879                588
                                                                                -------            ------- 
         Property, plant and equipment, at cost......................            86,988             84,545
         Less accumulated depreciation....................................       35,456             32,831
                                                                                -------            -------
                                                                                $51,532            $51,714
                                                                                =======            =======
 3.      Long-Term Debt

                                                                             (Unaudited)
                                                                               June 27,         December 31,
                                                                                 1998              1997

         7.28% senior notes due March 15, 2004............................      $25,714           $30,000
         7.57% senior note due June 30, 2005..............................        8,625             8,625
         7.43% senior notes due November 18, 2007.........................       10,000            10,000
         Revolving credit facility........................................        6,017             3,952
                                                                                -------           -------
                                                                            
           Total..........................................................       50,356            52,577
         Less current maturities..........................................        5,086             5,086
                                                                                -------           -------
                                                                              
                                                                                $45,270           $47,491
                                                                                =======           =======
</TABLE>
<PAGE>
                                                                                





 4.       Earnings Per Common Share and Stock Split

Basic  earnings  per common  share are based upon the  weighted  average  shares
outstanding.  Outstanding  stock options are treated as common stock equivalents
for  purposes  of  computing  diluted  earnings  per  share  and  represent  the
difference between basic and diluted weighted average shares outstanding.

On April 7, 1998, the Board of Directors  approved a two-for-one  stock split to
be distributed in the form of a stock dividend, which was distributed on May 15,
1998 to stockholders  of record on May 1, 1998.  Accordingly,  3,478,462  shares
were issued,  and  approximately  $70,000 was  transferred  to common stock from
capital in excess of par value,  representing  the aggregate par value ($.02 per
share) of the  shares  issued.  All  related  amounts  have  been  retroactively
adjusted to reflect the stock split.




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

Results of Operations

Net sales  increased $12.4 million,  or 25.1%,  for the three month period ended
June 27, 1998 from the  comparable  1997 period.  For the six month period,  net
sales increased $20.5 million,  or 20.6%,  from the comparable 1997 period.  The
increase was due primarily to higher unit volume.

Gross  profit  margin for the three and six month  periods of 1998  decreased to
24.7% and 24.6%,  respectively,  from 25.2% for the comparable 1997 periods. The
decrease resulted from higher raw material costs,  primarily  lumber,  partially
offset by improved operating efficiencies.

Selling,  general and  administrative  expenses for both the three and six month
periods of 1998 as a percentage  of net sales  decreased to 13.5% from 14.6% and
14.5%,  respectively,  for the comparable 1997 periods. The lower percentages in
1998 were due  principally  to higher net sales.  The majority of the  increased
expenditures in 1998 were selling  expenses  directly  attributable to the sales
increase.

As a result of the above,  operating  income for the three and six month periods
of 1998 increased to $6.9 million,  or 11.2% of net sales, and $13.3 million, or
11.1% of net sales, respectively,  from $5.3 million, or 10.7% of net sales, and
$10.6 million, or 10.7% of net sales, for the comparable 1997 periods.

Interest  expense  for the  1998  three  and six  month  periods  increased  due
primarily to higher  average debt levels  resulting  from the Company's June and
November 1997 repurchases of its common stock.

The Company's  effective income tax rate was 38.0% for the 1998 six month period
and total year 1997.

Financial Condition, Liquidity and Capital Resources

At June 27, 1998, long-term debt including current maturities was $50.4 million.
Debt service  requirements  are $800,000 in 1998,  $11.2  million in 1999,  $5.2
million in 2000,  $6.7 million in 2001, and $6.8 million in 2002. As of June 27,
1998,  approximately $18.0 million of additional borrowings were available under
the Company's  revolving credit  facility.  The Company believes that cash flows
from operations and funds  available  under existing  credit  facilities will be
sufficient to fund capital expenditures and debt service requirements.

Cash  generated  from  operations  increased  to $4.6 million in the 1998 period
compared to $908,000 during the 1997 period,  due primarily to increased  sales.
Cash  provided  in the 1998  period was used to fund  capital  expenditures  and
reduce  borrowings.  The  cash  generated  in the 1997  period  was used to fund
capital expenditures.

Net cash  used by  investing  activities  was $2.5  million  in the 1998  period
compared  to  $784,000  in the  1997  period.  Expenditures  in each  year  were
primarily  for plant and  equipment  and other  assets in the  normal  course of
business.

Net cash  used by  financing  activities  was $1.3  million  in the 1998  period
compared to net cash  provided by  financing  activities  of $80,000 in the 1997
period. In the 1998 period, cash generated from operations and proceeds from the
revolving credit facility were used to fund senior note payments.

Year 2000

The  Company  recognizes  that  the  year  2000  presents  many  challenges  for
information  systems.  The Company has  established a  cross-functional  team to
identify and address any internal hardware and software  compliance  issues. All
critical  applications are expected to be compliant prior to the end of calendar
year  1999.  The  cost of  updating  systems  is  believed  to be  incrementally
immaterial because the Company has been upgrading information systems technology
since 1996 to support the  Company's  sales,  manufacturing  and  administrative
functions.  In addition, the Company is communicating with customers,  suppliers
and  others  with whom it does  business  to  determine  Year  2000  compliance.
However,  there can be no assurance that the systems of other  companies will be
timely converted and will not have an adverse effect on the Company.

Forward-Looking Statements

Certain  statements made in this report are not based on historical  facts,  but
are forward-looking statements. These statements can be identified by the use of
forward-looking  terminology  such  as  "believes,"  "expects,"  "may,"  "will,"
"should," or "anticipates"  or the negative thereof or other variations  thereon
or comparable  terminology,  or by  discussions  of strategy.  These  statements
reflect the Company's  reasonable judgment with respect to future events and are
subject to risks and  uncertainties  that could cause  actual  results to differ
materially  from  those  in  the  forward-looking  statements.  Such  risks  and
uncertainties   include  the  cyclical   nature  of  the   furniture   industry,
fluctuations in the price for lumber which is the most  significant raw material
used by the Company,  competition in the furniture  industry,  capital costs and
general economic conditions.



PART II.  OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

         At the 1998 annual meeting,  the holders of the Company's Common Stock,
         par value  $.02 per  share,  approved  an  amendment  to the  Company's
         Certificate of Incorporation to require  unanimous  written consent for
         action  taken  without a meeting  of  stockholders.  A  Certificate  of
         Amendment was filed on May 26, 1998.



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

(a)      The annual meeting of the Company's  stockholders was held on April 30,
         1998,  adjourned to and completed on May 20. 1998.  The record date for
         the Company's  annual meeting  occurred prior to the two-for-one  stock
         split, distributed in the form of a stock dividend, and accordingly the
         votes reported below do not reflect this stock split.

(c)(i)   The  stockholders  of the Company  elected two directors for three-year
         terms  expiring  at the Annual  Meeting of  Stockholders  to be held in
         2001. The elections were approved by the following vote:

                                         For         Withheld
         Edward J. Mack               2,704,031        288,170
         Thomas L. Millner            2,704,258        287,943

   (ii)  The   stockholders   approved  the  proposal  to  amend  the  Company's
         Certificate of Incorporation to require  unanimous  written consent for
         stockholder  action taken without a meeting.  The proposal received the
         following vote:

                     FOR                            1,823,345

                     AGAINST                          995,764

                     ABSTAIN                           18,988

                     BROKER NON-VOTES                 211,985

   (iii) The  stockholders  did not approve the proposal to amend the  Company's
         Certificate  of  Incorporation  to increase the percentage of shares of
         common stock  required to approve  mergers and certain other  corporate
         transactions   to  two-thirds  of  the  shares  of  common  stock  then
         outstanding. The proposal received the following vote:

                     FOR                            1,365,437

                     AGAINST                        1,456,205

                     ABSTAIN                           16,455

                     BROKER NON-VOTES                 211,985

   (iv)  The stockholders  approved the ratification of the selection of Coopers
         & Lybrand L.L.P. as the independent  public accountants for the Company
         for the current  fiscal  year.  The  ratification  was  approved by the
         following vote:

                     FOR                            2,975,457

                     AGAINST                              888

                     ABSTAIN                           15,856


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         Exhibit   2.    Certificate of Incorporation as amended.*

         Exhibit  11.    Schedule of Computation of Earnings Per Share.*

         Exhibit  27.1   Financial Data Schedule for the quarters ended June 27,
                         1998 and restated March 28, 1998.*

                  27.2   Restated  financial  data  schedule  for the  quarters
                         ended  March  30,  1997,  June 29,  1997, September 28,
                         1997 and December 31, 1997.*

                  27.3   Restated  financial  data  schedule  for the  quarters
                         ended  March  31,  1996,  June 30,  1996, September 29,
                         1996 and December 31, 1996.*

                  27.4   Restated financial data schedule for the year ended
                         December 31, 1995.*

(b)      Reports on Form 8-K
         None.

* Filed herewith.


<PAGE>


                                    SIGNATURE



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

                         STANLEY FURNITURE COMPANY, INC.


Date: July  14 , 1998                               By: /s/Douglas I. Payne
                                                    Douglas I. Payne
                                                    Sr. V.P. - Finance and
                                                    Administration,
                                                    Secretary and Treasurer
                                                   (Principal Financial and
                                                      Accounting Officer)