SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON DC 20549

                                   FORM 10-Q

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

                   For quarterly period ended April 29, 2000

                                       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 No. 0-17870

                                 LECHTERS, INC.

             (Exact Name Of Registrant As Specified In Its Charter)

             New Jersey                               No. 13-2821526
(State or Other Jurisdiction of Incorporation)        (I.R.S. Employer
                                                      Identification No.)

1 Cape May Street, Harrison, New Jersey               07029-2404
(Address of Principal Executive Offices)              (Zip Code)


Registrant's telephone number, including area code:   (973) 481-1100

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,  and (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                    YES    X      NO
                                        ------
The number  of  shares  of the Registrant's  common  stock,  without  par value,
outstanding at June 6, 2000: 15,426,586:

<PAGE>

                        LECHTERS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                        FOR QUARTER ENDED APRIL 29, 2000
                                     INDEX

                                                                        Page No.
 PART I.  Financial Information

        Item 1. Financial Statements

                Consolidated Balance Sheets at                            1
                April 29, 2000 and January 29, 2000

                Consolidated Statements of Operations                     2
                for the Thirteen Weeks Ended
                April 29, 2000 and May 1,1999

                Consolidated Statements of Cash Flows                     3
                for the Thirteen Weeks Ended
                April 29, 2000 and May 1,1999

                Consolidated Statement of Shareholders'                   4
                Equity for the Thirteen Weeks Ended
                April 29, 2000

                Notes to Consolidated Financial Statements                5-7

        Item 2. Management's Discussion and Analysis of                   8-9
                Financial Condition and Results of Operations

        Item 3. Quantitative and Qualitative Disclosures About            9-10
                Market Risk

PART II.  Other Information

        Item 6. Exhibits and Reports on Form 8-K                          10

<PAGE>
                             SAFE HARBOR STATEMENT
           UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

In  connection  with  the  safe  harbor  provisions  of the  Private  Securities
Litigation  Reform Act of 1995  ("Reform  Act"),  the  Company is hereby  filing
cautionary  statements  identifying  important  factors  that  could  cause  the
Company's   actual  results  to  differ   materially  from  those  projected  in
forward-looking  statements  (as such term is defined in the Reform Act) made by
or on  behalf  of the  Company  in  this  quarterly  report  on  Form  10-Q,  in
presentations,  in response to  questions  or  otherwise.  Any  statements  that
express, or involve discussions as to expectations,  beliefs, plans, objectives,
assumptions or future events or performance (often, but not always,  through the
use  of  words  or  phrases  such  as  "anticipates",  "believes",  "estimates",
"expects",  "intends",  "plans",  "predicts",  "projects", "will likely result",
"will continue",  or similar expressions) are not statements of historical facts
and may be forward-looking.

Forward-looking statements involve estimates, assumptions, and uncertainties and
are  qualified in their  entirety by reference to, and are  accompanied  by, the
following   important   factors,   which  are  difficult  to  predict,   contain
uncertainties,  are  beyond  the  control of the  Company  and may cause  actual
results to differ materially from those contained in forward-looking statements:

-   economic and geographic factors including political and economic risks;
-   changes in and compliance with environmental and safety laws and policies;
-   weather conditions;
-   population growth rates and demographic patterns;
-   competition for retail customers;
-   market demand, including structural market changes;
-   changes in tax rates or policies or in rates of inflation;
-   changes in project costs;
-   unanticipated changes in operating expenses and capital expenditures;
-   capital market conditions;
-   legal   and  administrative   proceedings  (whether  civil or criminal)  and
    settlements that influence the business and profitability of the Company.

Any forward-looking statement speaks only as of the date on which such statement
is made, and the Company undertakes no obligation to update any  forward-looking
statement  to  reflect  events or  circumstances  after  the date on which  such
statement is made or to reflect the  occurrence  of  unanticipated  events.  New
factors  emerge  from  time to time and it is not  possible  for  management  to
predict all of such factors,  nor can it assess the impact of any such factor on
the business or the extent to which any factor,  or combination of factors,  may
cause results to differ  materially from those contained in any  forward-looking
statement.

<PAGE>

Part I.   Financial Information
Item 1.  Financial Statements
                        LECHTERS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
           (Amounts in thousands, except share and per share amounts)

<TABLE>
<CAPTION>

                                               April 29, 2000   January 29, 2000
                                               --------------   ----------------
                                                (unaudited)
        ASSETS
<S>                                                <C>                <C>
Current Assets:
        Cash and Cash Equivalents                    $4,742             $9,917
        Marketable Securities                        27,696             65,301
        Accounts Receivable                           6,793              2,881
        Merchandise Inventories                     115,122            103,100
        Prepaid Expenses                              4,265              2,043
                                               --------------   ----------------
        Total Current Assets                        158,618            183,242

Property and Equipment:
        Fixtures and Equipment                       56,349             56,194
        Leasehold Improvements                       92,587             92,368
                                               --------------   ----------------
                                                    148,936            148,562
        Less Accumulated Depreciation
        and Amortization                             96,678             93,780
                                               --------------   ----------------
        Net Property and Equipment                   52,258             54,782

Other Assets                                         11,591             11,497
                                               --------------   ----------------
Total Assets                                       $222,467           $249,521
                                               ==============   ================

     LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
        Accounts Payable                            $14,553            $16,305
        Dividends Payable-Preferred Stock               - -              1,010
        Salaries, Wages and Other Accrued
        Expenses                                     14,059             15,662
        Taxes, Other Than Income Taxes                1,959              2,041
                                               --------------   ----------------
        Total Current Liabilities                    30,571             35,018

Long-Term Debt
        5% Convertible Subordinated Debentures
        due September 27, 2001 (Net of
        Unamortized Discount of $1,399
        and $2,251, respectively)                   41,906              57,804
                                               --------------   ----------------
          Total Long-Term Debt                      41,906              57,804

Deferred Income Taxes and Other Deferred
Credits                                             12,729              12,538

Shareholders' Equity:
        Convertible Preferred Stock, $100
        Par Value
            Authorized 1,000,000 Shares,
            Issued and Outstanding Series
            A-149,999 Shares and Series
            B-50,001 Shares                          20,000             20,000
        Common Stock, No Par Value,
        Authorized-50,000,000
            Shares, Issued 17,176,286 and
            17,176,286, respectively                     58                 58
        Accumulated Other Comprehensive Loss            (94)               (65)
        Additional Paid-in-Capital                   62,380             62,380
        Retained Earnings                            57,128             63,129
                                               --------------   ----------------
                                                    139,472            145,502
        Less: Treasury Stock at Cost
            Common Stock:  1,219,700 shares
            and 684,000 shares, respectively         (2,211)            (1,341)
                                               --------------   ----------------
        Total Shareholders' Equity                  137,261            144,161
                                               --------------   ----------------

Total  Liabilities  and  Shareholders' Equity      $222,467           $249,521
                                               ==============   ================
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      -1-

<PAGE>

                        LECHTERS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
            (Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>

                                                    Thirteen Weeks Ended
                                                    --------------------
                                              April 29, 2000        May 1, 1999
                                              --------------       -------------
                                                         (unaudited)


<S>                                                 <C>                 <C>
Net Sales                                           $83,743             $83,407

Cost of Goods Sold
  (including occupancy and indirect costs)           63,822              61,837
                                              --------------        ------------
Gross Profit                                         19,921              21,570

Selling, General and Administrative Expenses         30,285              28,734
                                              --------------        ------------
Operating Loss                                      (10,364)             (7,164)

Other Expenses (Income):
   Interest Expense                                     977               1,133
   Interest Income                                     (693)               (807)
   Net Investment Gain/Income                           (63)               (240)
                                              --------------        ------------
       Total Other Expenses (Income)                    221                  86
                                              --------------        ------------
Loss Before Tax Benefit and Extraordinary Item      (10,585)             (7,250)

Income Tax Benefit                                   (3,705)             (2,973)
                                              --------------        ------------
Net Loss Before Extraordinary Item                   (6,880)             (4,277)

Extraordinary Item - Gain on Early
Extinguishment
   of Debentures (net of income tax of $474)            879                 - -
                                              --------------        ------------
Net Loss                                             (6,001)             (4,277)

Preferred Stock Dividend Requirement                    252                 252
                                              --------------        ------------

Net Loss Available to Common Shareholders           ($6,253)            ($4,529)
                                              ==============        ============
Net Loss Per Common Share
   Basic
    Loss Before Extraordinary Item                   ($0.43)             ($0.26)
    Extraordinary Item                                 0.05                 - -
                                              --------------       -------------
    Net Loss                                         ($0.38)             ($0.26)
                                              ==============       =============

  Diluted
   Loss Before Extraordinary Item                    ($0.43)             ($0.26)
   Extraordinary Item                                  0.05                 - -
                                              --------------       -------------
   Net Loss                                          ($0.38)             ($0.26)
                                              ==============       =============
Weighted Average Common Shares Outstanding
   Basic and Diluted                             16,401,000          17,176,000
                                              ==============       =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      -2-

<PAGE>

                        LECHTERS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
<TABLE>
<CAPTION>

                                                     Thirteen Weeks Ended
                                                     --------------------
                                              April 29, 2000       May 1,1999
                                              ---------------      -----------
                                                          (unaudited)
<S>                                                 <C>                 <C>
Cash Flows from Operating Activities:
   Net Loss                                         ($6,001)            ($4,277)

Adjustments to Reconcile Net Loss to Net Cash
   Used in Operating Activities:
     Depreciation and Amortization                    3,888               3,960
     Gain on Repurchase of Debentures                (1,353)                - -
     Other                                              261                 364
   Changes in Operating Assets and Liabilities:
     Increase in Accounts Receivable                 (3,912)             (3,617)
     Increase in Merchandise Inventories            (12,022)            (18,744)
     Increase in Prepaid Expenses                    (2,222)             (2,656)
     (Decrease)/Increase in Accounts Payable,
        Accrued Salaries, Wages and Other
        Accrued
        Expenses and Taxes, Other than Income
        Taxes                                        (3,437)              6,358
     Increase in Other Assets                          (741)             (1,783)
                                              ---------------      -------------

   Net Cash Used in Operating Activities            (25,539)            (20,395)

Cash Flows from Investing Activities:
   Capital Expenditures                                (567)             (1,672)
   Decrease/(Increase) in Available for
     Sales Securities                                37,572                (270)
                                              ---------------      -------------

   Net Cash Provided by (Used in) Investing
     Activities                                      37,005              (1,942)
                                              ---------------      -------------

Cash Flows from Financing Activities:
     Payment of Preferred Stock Dividend             (1,010)             (1,010)
     Purchase of Treasury Stock                        (870)                - -
     Repurchase of Debentures                       (14,761)                - -
                                              ---------------      -------------

     Net Cash Used in Financing Activities          (16,641)             (1,010)
                                              ---------------      -------------

Net Decrease in Cash and Cash Equivalents            (5,175)            (23,347)

Cash and Cash Equivalents, Beginning of Period        9,917              35,503
                                              ---------------      -------------

Cash and Cash Equivalents, End of Period             $4,742             $12,156
                                              ===============      =============

Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
     Interest                                          $437                $- -
                                              ===============      =============
     Income Taxes                                       $31                 $15
                                              ===============      =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      -3-
<PAGE>


                        LECHTERS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                  Convertible    Additional                     Accumulated
                      Common       Preferred      Paid-In       Retained    Other Comprehensive    Treasury            Comprehensive
                      Stock          Stock        Capital       Earnings           Loss             Stock       Total       Loss
                     --------     -----------   -----------    ----------   -------------------   ---------   -------- -------------
<S>                      <C>         <C>           <C>           <C>                  <C>          <C>       <C>             <C>
Balance,
 January 29, 2000        $58         $20,000       $62,380       $63,129              ($65)        ($1,341)  $144,161
Net Loss - Thirteen
Weeks
 Ended April 29, 2000    - -             - -           - -        (6,001)              - -             - -     (6,001)       (6,001)
Other Comprehensive
Loss
 Net of Tax:
 Unrealized Loss on
 Available for Sale
 Securities              - -             - -           - -           - -               (29)            - -        (29)          (29)
Purchase of Treasury
Stock                    - -             - -           - -           - -               - -            (870)      (870)          - -
                     --------     -----------   -----------    ----------   -------------------   ---------  --------- -------------
Balance,
 April 29, 2000
 (unaudited)             $58         $20,000       $62,380       $57,128              ($94)        ($2,211)  $137,261       ($6,030)
                     ========     ===========   ===========    ==========   ===================   =========  ========= =============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      -4-
<PAGE>


                        LECHTERS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except share and per share amounts)
                                  (UNAUDITED)


1.   GENERAL

     The  accompanying  unaudited  Consolidated  Financial  Statements have been
     prepared  in  accordance  with the  instructions  for Form  10-Q and do not
     include all the  information and footnotes  required by generally  accepted
     accounting principles for complete financial statements.  In the opinion of
     management,  all  adjustments  (consisting  of normal  recurring  accruals)
     considered  necessary for a fair presentation for interim periods have been
     included.

     Certain information and footnote disclosures normally included in financial
     statements  prepared  in  accordance  with  generally  accepted  accounting
     principles  have been  condensed  or omitted.  It is  suggested  that these
     condensed consolidated financial statements be read in conjunction with the
     audited  financial  statements  and  the  notes  thereto  included  in  the
     Company's Annual Report on Form 10-K for the year ended January 29, 2000.

     The Company's  results of operations for the thirteen weeks ended April 29,
     2000 are not necessarily  indicative of the operating  results for the full
     year.

     Certain reclassifications have been made to the financial statements of the
     prior year to conform with the classifications used for Fiscal 2000.

2.   NET LOSS PER SHARE

     "Basic" net loss per share data were computed by dividing net loss, reduced
     by the Convertible  Preferred Stock Dividend  requirement,  by the weighted
     average number of common shares outstanding during the thirteen weeks ended
     April 29,  2000 and May 1, 1999.  With  respect to  "diluted"  net loss per
     share, stock options, which are potential common shares, were excluded from
     the weighted average of outstanding  shares because  inclusion would reduce
     the  loss  per  share.   With  respect  to  the  Company's  5%  Convertible
     Subordinated  Debentures and the Company's Convertible Preferred Stock, for
     the purpose of computing diluted net loss per share, the assumed conversion
     of  such   debentures  and  such   preferred   stock  would  each  have  an
     anti-dilutive effect on diluted loss per share for the thirteen weeks ended
     April 29, 2000 and May 1, 1999.

                                      -5-
<PAGE>

3.   SEGMENT INFORMATION

          The Company  defines its principal  business  into two  segments,  the
          Specialty Housewares segment, which operates as Lechters Housewares(R)
          and  Lechters  Kitchen  Place(R),  and  the  Off-Price  Home  Business
          segment, which operates as Famous Brands Housewares Outlet(R) and Cost
          Less Home Store(SM).  The  contribution of these segments,  as well as
          "corporate  and other" for the thirteen weeks ended April 29, 2000 and
          May 1, 1999 are  summarized  below.  "Corporate  and  other"  includes
          general  corporate  expenses,  principally  service office expense and
          distribution centers as well as interest income and expense.

     The Company's segment disclosures are as follows:
<TABLE>
<CAPTION>


                                                    Thirteen Weeks Ended
                                                    --------------------
                                            April 29, 2000           May 1, 1999
                                            --------------           -----------
<S>                                              <C>                   <C>
SALES
Specialty Housewares                              $63,755               $64,646
Off-Price Home Business                            19,988                18,761
                                            --------------           -----------

Total Sales                                       $83,743               $83,407
                                            ==============           ===========

LOSS BEFORE INCOME TAX BENEFIT
Specialty Housewares                              ($1,689)                ($385)
Off-Price Home Business                               640                   378
Corporate and Other                                (9,315)               (7,157)
                                            --------------           -----------
Operating Loss                                    (10,364)               (7,164)
Other Expenses (Income)                               221                    86
                                            --------------           -----------

Total Loss Before Income Tax Benefit             ($10,585)              ($7,250)
                                            ==============           ===========

DEPRECIATION AND AMORTIZATION EXPENSE
Specialty Housewares                               $2,009                $2,250
Off-Price Home Business                               415                   369
Corporate and Other                                 1,464                 1,341
                                            --------------           -----------

Total Depreciation and Amortization Expense        $3,888                $3,960
                                            ==============           ===========

CAPITAL ADDITIONS
Specialty Housewares                                 $189                $1,024
Off-Price Home Business                               122                   367
Corporate and Other                                   256                   281
                                            --------------           -----------

Total Capital Additions                              $567                $1,672
                                            ==============           ===========

TOTAL ASSETS
Specialty Housewares                              $92,759              $102,762
Off-Price Home Business                            23,007                23,617
Corporate and Other                               106,701               142,684
                                            --------------           -----------

Total Assets                                     $222,467              $269,063
                                            ==============           ===========
</TABLE>


                                      -6-
<PAGE>

4.   COMPREHENSIVE LOSS

     The following is a summary of the Company's comprehensive loss:

<TABLE>
<CAPTION>


                                                    Thirteen Weeks Ended
                                                    --------------------
                                            April 29, 2000           May 1, 1999
                                            --------------           -----------
<S>                                               <C>                   <C>
Net  Loss                                         ($6,001)              ($4,277)

Components of
Comprehensive Loss:

Unrealized Loss on Available-For-Sale
     Securities, Net of Applicable Income
     Tax Benefit                                      (29)                 (104)
                                            --------------           -----------

Comprehensive Loss                                ($6,030)              ($4,381)
                                            ==============           ===========

</TABLE>

5.   STOCK REPURCHASE PLAN

     In May 1999, the Board of Directors authorized the Company to repurchase of
     up to one million  shares of the  Company's  common stock from time to time
     when warranted by market conditions.  In March 2000, the Board of Directors
     authorized  an  additional  repurchase  of up to 3  million  shares  of the
     Company's common stock.  During Fiscal 1999, the Company  purchased 684,000
     shares at an average cost of $1.96.  For the thirteen weeks ended April 29,
     2000 an  additional  535,700  shares were  purchased  at an average cost of
     $1.625 per share.  Subsequent to April 29, 2000,  the Company has purchased
     an  additional  530,000  shares  at an  average  cost of $1.47  per  share,
     bringing  the  total  amount  of  treasury  stock,  as of June  7,  2000 to
     1,749,700 shares at an average cost of $1.71 per share.

                                      -7-

<PAGE>

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

RESULTS OF OPERATIONS

THIRTEEN WEEKS ENDED APRIL 29, 2000 IN COMPARISON  WITH THIRTEEN WEEKS ENDED MAY
1, 1999.

(Amounts in thousands, except share and per share amounts)

For the thirteen weeks ended April 29, 2000 ("First Quarter 2000") the Company's
total  comparable  store sales  increased 3.8%.  Comparable  store sales for the
Specialty Housewares segment,  which is comprised of Lechters  Housewares(R) and
Lechters Kitchen  Place(R),  increased 3.5% while comparable store sales for the
Off-Price Home Business segment, comprised of Famous Brands Housewares Outlet(R)
and Cost Less Home Store(SM), increased 5.0%. On an overall basis, net sales for
First  Quarter 2000  increased  $336 to $83,743,  a 0.4%  increase  from $83,407
reported  for the  comparable  thirteen  week  period of the prior  fiscal  year
("First  Quarter  1999").  The  increase  was  primarily   attributable  to  the
previously  mentioned  increase  in  comparable  store  sales  and to  increased
promotional  activity,  including  accelerated  price  reductions as compared to
First Quarter 1999. For First Quarter 2000,  sales for the Specialty  Housewares
segment, which had 45 or 10.2% fewer locations,  decreased 1.4%, while sales for
the Off-Price Home Business  segment,  which had 14 fewer  locations,  increased
6.5%.  During First Quarter 2000,  the Company opened one store and closed seven
stores,  reducing  the stores in operation at April 29, 2000 to 517 from the 523
open as of January 29,  2000.  At the end of First  Quarter  1999 there were 576
stores in operation.

Gross Profit for the quarter was $19,921,  a decrease of $1,649 from $21,570 for
First Quarter 1999.  The Gross Profit rate was 23.8% of net sales  compared with
25.9% in the prior  year.  By  operating  segment,  gross  profit for  Specialty
Housewares  decreased  $1,788  to  $14,108  or 22.1%  of net  sales,  while  the
Off-Price  Home Business  gross profit  increased $139 to $5,813 or 29.1% of net
sales.  The  reduction in gross  profit,  both in amount and rate,  was due to a
change in the Company's  inventory and  promotional  strategies  for Fiscal Year
2000. The Company has adopted a strategy of accelerating price reductions. While
the price  reductions  reduced gross profit in the period compared to last year,
they stimulated sales and improved the Company's inventory position.

Selling,  General and Administrative Expenses increased $1,551 to $30,285, which
constituted  36.2% of sales,  an increase in the expense rate of 1.7% from First
Quarter  1999.  The  increase in  expenses  was due to the  amortization  of new
systems,  additional outside warehousing expenses and administration expenses to
support  the  Company's  new  business  initiatives   including  the  e-commerce
strategy.

Other  (Income)/Expense  for the first quarter  increased  $135 to an expense of
$221, 0.3% of sales compared to $86, 0.1% of sales,  for First Quarter 1999. The
increase was due to the reduction in the interest  income and investment  income
reflecting  the lower  balances  of cash and  marketable  securities,  partially
offset by a reduction in interest expense due to the repurchases of $21,695 face
value, of the  Convertible  Subordinated  Debentures  prior to their due date of
September 27, 2001.

By  operating  segment,  Specialty  Housewares  incurred a loss before  taxes of
$1,689 and the Off-Price Home Business contributed income before income taxes of
$640 for First  Quarter  2000.  "Corporate  and other"  expenses  totaled a loss
before taxes of $9,315 for First Quarter 2000.

                                      -8-
<PAGE>

The Company  recognized  an  extraordinary  gain of $879,  net of tax,  from the
repurchase of $16,750 of Convertible  Subordinated Debentures prior to their due
date of September 27, 2001.

The net loss for First Quarter Fiscal 2000 was $6,001 compared to a net loss for
Fiscal 1999 of $4,277.  The  increased  loss was primarily the result of reduced
gross profit, and the net effect of other contributing factors noted above.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow during the  thirteen  weeks ended April 29, 2000 as  reflected  on the
Consolidated  Statements  of Cash  Flows,  was a net  decrease  in cash and cash
equivalents of $5,175. Operating activities,  comprised of the operating loss of
$6,001 adjusted for non-cash  expenses such as depreciation and amortization and
by changes in operating  assets,  utilized  $25,539 of cash during First Quarter
2000.  Significant  components  of operating  activities  for the first  quarter
included  depreciation and  amortization  which is a non-cash expense of $3,888,
merchandise   inventories  which  increased  using  $12,022  of  cash.  Accounts
receivable  and prepaid  expenses  increased  $3,912 and  $2,222,  respectively.
Accounts  payable,  accrued expenses and taxes other than income taxes decreased
and utilized cash of $3,437.

Investing  activities provided net cash of $37,005 compared to a net use of cash
of $1,942  during the thirteen  weeks ended May 1, 1999,  due to the decrease in
Marketable Securities of $37,572.

Capital  expenditures  were primarily for  construction  of and fixtures for new
stores,  renovations and remodels of existing stores.  Capital expenditures were
$567 compared to $1,672 for First Quarter 1999.

Cash flows from financing activities utilized $16,641 of cash. The repurchase of
$16,750 face value of the Company's Convertible Subordinated Debentures utilized
$14,761  of cash.  The  Company  paid  $1,010 in  dividends  on the  Convertible
Preferred  Stock and  purchased  535,700  shares of treasury  stock at a cost of
$870.  Subsequent to April 29, 2000, the Company purchased an additional 530,000
shares at an average cost of $1.47 per share.

On November 30, 1999, the Company entered into a new $120 million senior secured
revolving  credit  facility  with  BankBoston  Retail  Finance  Inc.  and  other
financial  institutions,  replacing the Company's  credit agreement which was to
expire on March 26, 2001.  The proceeds of the credit  facility may be used for:
(i) on-going working capital requirements; (ii) the replacement,  refinancing or
retirement  of certain of the Company's  securities,  and/or (iii) other general
corporate  purposes.  The credit  facility is scheduled to mature on December 1,
2003.

The credit  facility  permits  the  Company  to  repurchase  its 5%  convertible
subordinated  debentures and/or up to $10 million of its capital stock, provided
that the Company can show excess  availability  under the credit facility of not
less than $25 million, after giving effect to the repurchases.

As of April 29, 2000 there were no  outstanding  borrowings  under the facility.
The credit facility is secured by a security  interest in  substantially  all of
the Company's assets.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company  imports  about 20% of its  merchandise  from the Far  East,  which
subjects it to the market risk of currency  fluctuations.  However,  the Company
uniformly  utilizes purchase  contracts and letters of credit  denominated in US
dollars to mitigate this risk. Additionally,  there are multiple suppliers, both
foreign and

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<PAGE>

domestic, for its products.  With respect to marketable securities,  the Company
is subject to the variations in the investment  markets.  It mitigates this risk
by  employing  the services of an  investment  management  firm,  which with the
Company's  oversight,  invests  solely in the  highest  quality  securities  and
spreads  the  market  risk  among  various  types  of  securities  with  varying
maturities.

Although  the  Company has not had to borrow  funds  under the Credit  Agreement
during First Quarter 2000 and First Quarter 1999,  should it need to utilize the
line of credit for direct  borrowings,  the  interest  rate is subject to market
conditions at the time of the borrowing.

PART II.  Other Information
Item 6.  Exhibits and Reports on Form 8-K

a.  Exhibits.

3.1       Restated  Certificate of  Incorporation  of the Company  (Incorporated
          herein by  reference  to  Exhibit  3.2 to the  Company's  Registration
          Statement   on  Form  S-1  File  No.   33-29465   (the   "Registration
          Statement")).

3.2       By-laws of the Company  (Incorporated  herein by  reference to Exhibit
          3.2 to the  Company's  Registration  Statement  on Form  S-1  File No.
          33-40372).

4.1       Preferred Stock Purchase  Agreement dated April 5, 1996  (Incorporated
          herein by reference to the  Company's  Annual  Report on Form 10-K for
          the year ended February 1, 1997).

4.2       Indenture,  dated as of September  27,  1991,  between the Company and
          Chemical  Bank,  as Trustee  (Incorporated  herein by reference to the
          Company's  Annual  Report on Form 10-K for the year ended  January 25,
          1992).

27  Financial Data Schedule*

b.  Reports on Form 8-K.

1.  No reports on Form 8-K were filed for the quarter for which this report is
    filed.

*Filed herewith.

SIGNATURES

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

                                 LECHTERS, INC.

     By:  /s/ Daniel L. Anderton        /s/ John D. Sullivan
          ----------------------        --------------------
          Principal Financial Officer,  Principal Accounting Officer, and
          and Vice President-Finance    Vice President and Corporate Controller


Date:   June 13, 2000

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