<PAGE> 1

<TABLE>
Kellwood Company and Subsidiaries                                                Exhibit 13
FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share data)

<CAPTION>
                                                 YEAR ENDED APRIL 30,
-------------------------------------------------------------------------------------------
                                          1998                 1997                  1996
-------------------------------------------------------------------------------------------
<S>                                    <C>                   <C>                 <C>
Net Sales                              $1,781,582            $1,521,005          $1,466,036
                                       ==========            ==========          ==========
Net Earnings                           $   42,747            $   37,596          $   28,024
                                       ==========            ==========          ==========

Per Share Data:
Net Earnings:
   Basic                               $     2.00            $     1.78          $     1.32
                                       ==========            ==========          ==========
   Diluted                             $     1.95            $     1.75          $     1.31
                                       ==========            ==========          ==========
Cash Dividends Declared                $      .64            $      .60          $      .60
                                       ==========            ==========          ==========
</TABLE>


<TABLE>
COMMON STOCK DATA

<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                        Fiscal 1998                              Fiscal 1997
------------------------------------------------------------------------------------------------------------------------
                                                    Stock Price                             Stock Price
                                            --------------------------     Dividends   --------------------    Dividends
                                               High            Low           Paid        High        Low         Paid
------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>             <C>       <C>          <C>         <C>
First Quarter (July 31)......               $34 1/2          $23 7/8         $.16      $18 1/2      $16         $.15
Second Quarter (October 31)..                38 9/16          30 7/8          .16       18 1/4       15 3/4      .15
Third Quarter (January 31)...                36               26 5/16         .16       22 5/8       17 3/4      .15
Fourth Quarter (April 30)....                34 5/8           29 1/8          .16       27 1/8       22 1/4      .15
</TABLE>

Common stock of Kellwood Company is traded on the New York Stock Exchange,
ticker symbol KWD.  At June 8, 1998, there were approximately 1,454
shareowners of record and 3,400 shareowners in the Dividend Reinvestment
Plan.  The current annual dividend rate per year is $.64.

                                    1
<PAGE> 2

REPORTS OF MANAGEMENT AND INDEPENDENT ACCOUNTANTS


REPORT OF MANAGEMENT
--------------------

      The management of Kellwood Company is responsible for the fair
presentation of the financial statements and other financial information
included in this report.  The financial statements have been prepared in
conformity with generally accepted accounting principles applying estimates
and management's best judgments as required to present fairly Kellwood
Company's financial position, results of operations and cash flows.

      The accounting systems and internal accounting controls of Kellwood are
designed to provide reasonable assurance that the financial records are
reliable for preparing financial statements and maintaining accountability
for assets and that, in all material respects, assets are safeguarded against
loss from unauthorized use or disposition.  Qualified personnel throughout
the organization maintain and monitor these internal accounting controls on
an ongoing basis, and internal auditors systematically review the adequacy
and effectiveness of the controls.  Price Waterhouse LLP also studies and
evaluates internal controls for the purpose of establishing a basis for
reliance thereon relative to the scope of their audits of the financial
statements.  It is management's opinion that the Company has an effective
system of internal accounting controls.

      The Board of Directors, through its Audit Committee consisting solely of
non-management directors, meets periodically with management, the internal
auditors and Price Waterhouse LLP to discuss audit and financial reporting
matters.  Both the internal auditors and Price Waterhouse LLP have direct
access to the Audit Committee.



    /s/ William J. McKenna

    William J. McKenna
    Chairman



    /s/ Hal J. Upbin

    Hal J. Upbin
    President and Chief Executive Officer



    /s/ James C. Jacobsen

    James C. Jacobsen
    Vice Chairman

                                    2
<PAGE> 3

REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------

TO THE SHAREOWNERS AND BOARD OF DIRECTORS OF KELLWOOD COMPANY:

      In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of earnings, of cash flows and of
shareowners' equity present fairly, in all material respects, the financial
position of Kellwood Company and its subsidiaries at April 30, 1998 and 1997,
and the results of their operations and their cash flows for each of the
three years in the period ended April 30, 1998, in conformity with generally
accepted accounting principles.  These financial statements are the
responsibility of Kellwood's management; our responsibility is to express an
opinion on these financial statements based on our audits.  We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for the opinion expressed
above.


    /s/ Price Waterhouse LLP

    St. Louis, Missouri
    May 28, 1998

                                    3
<PAGE> 4

<TABLE>

Kellwood Company and Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in thousands except per share data)

<CAPTION>
                                                                         YEAR ENDED APRIL 30,
--------------------------------------------------------------------------------------------------------
                                                          1998                 1997              1996
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                  <C>               <C>
Net Sales                                              $1,781,582           $1,521,005        $1,466,036

Costs and Expenses:
     Cost of products sold                              1,428,812            1,211,548         1,175,139
     Selling, general and administrative
       expenses                                           235,961              209,371           206,058

     Amortization of intangible assets                     15,160               15,373            15,467
     Interest expense                                      28,874               21,566            22,937
     Interest income and other, net                        (1,172)              (1,679)           (2,089)
                                                       ----------           ----------        ----------

Earnings Before Income Taxes                               73,947               64,826            48,524

Income Taxes                                               31,200               27,230            20,500
                                                       ----------           ----------        ----------

Net Earnings                                           $   42,747           $   37,596        $   28,024
                                                       ==========           ==========        ==========

Earnings Per Share:

     Basic                                             $     2.00           $     1.78        $     1.32
                                                       ==========           ==========        ==========

     Diluted                                           $     1.95           $     1.75        $     1.31
                                                       ==========           ==========        ==========



See notes to consolidated financial statements.
</TABLE>

                                    4
<PAGE> 5

<TABLE>

Kellwood Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share data)

<CAPTION>
                                                                                    YEAR ENDED APRIL 30,
---------------------------------------------------------------------------------------------------------------
                                                                                 1998                     1997
---------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                       <C>
ASSETS

Current Assets:
   Cash, including time deposits of $22,628
    ($18,039 in 1997)                                                       $   31,752                $  22,513
   Receivables, net                                                            320,104                  271,629
   Inventories                                                                 374,472                  298,938
   Prepaid taxes and expenses                                                   32,655                   28,444
                                                                            ----------                ---------
      Total Current Assets                                                     758,983                  621,524

Property, Plant and Equipment                                                  190,425                  177,754
   Less accumulated depreciation and amortization                             (124,479)                (114,954)
                                                                            ----------                ---------

                                                                                65,946                   62,800

Intangible Assets, net                                                         105,425                  113,873
Other Assets                                                                    85,159                   76,390
                                                                            ----------                ---------

                                                                            $1,015,513                $ 874,587
                                                                            ==========                =========

LIABILITIES AND SHAREOWNERS' EQUITY

Current Liabilities:
   Current portion of long-term debt                                        $   15,298                $  15,409
   Notes payable                                                               141,736                  159,129
   Accounts payable                                                            110,725                  122,049
   Accrued expenses                                                             74,746                   77,823
                                                                            ----------                ---------

      Total Current Liabilities                                                342,505                  374,410

Long-Term Debt                                                                 242,720                  109,831
Deferred Income Taxes and Other                                                 46,123                   42,532

Shareowners' Equity:
   Common stock, par value $.01 per share, authorized
    50,000,000 shares; issued and outstanding 21,510,373
    shares (21,121,487 in 1997)                                                109,657                   99,077
   Retained earnings                                                           323,035                  293,986
   Cumulative translation adjustment                                            (8,542)                  (8,280)
                                                                            ----------                ---------

                                                                               424,150                  384,783
   Less treasury stock, at cost                                                (39,985)                 (36,969)
                                                                            ----------                ---------

                                                                               384,165                  347,814
                                                                            ----------                ---------

                                                                            $1,015,513                $ 874,587
                                                                            ==========                =========

See notes to consolidated financial statements.
</TABLE>

                                    5
<PAGE> 6

<TABLE>

Kellwood Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)

<CAPTION>
                                                                                        YEAR ENDED APRIL 30,
------------------------------------------------------------------------------------------------------------------------
                                                                           1998                 1997              1996
------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                  <C>               <C>
OPERATING ACTIVITIES:
   Net earnings                                                          $ 42,747             $ 37,596          $ 28,024
   Add (deduct) items not affecting operating
    cash flows:
     Depreciation and amortization                                         29,638               28,277            28,183
     Increase in prepaid pension costs                                     (7,860)              (8,100)           (7,597)
     Deferred income taxes                                                    342               (7,471)              794
     Other                                                                  2,538                  882               864
                                                                         --------             --------          --------
                                                                           67,405               51,184            50,268

Changes in noncash working capital components:
   Receivables,net                                                        (48,475)             (33,685)            4,937
   Inventories                                                            (75,534)             (32,061)          (25,122)
   Prepaid expenses                                                        (4,211)                 465               362
   Accounts payable and accrued expenses                                  (14,401)              37,898            17,517
                                                                         --------             --------          --------

      Net cash provided by (used for)
       operating activities                                               (75,216)              23,801            47,962
                                                                         --------             --------          --------

INVESTING ACTIVITIES:
   Additions to property, plant and equipment                             (18,403)             (11,644)          (16,411)
   Proceeds from disposal of assets                                             -                    -             2,750
   Investment in subsidiaries                                              (6,810)             (11,849)           (4,935)
   Other investing activities                                                 417                  693               615
                                                                         --------             --------          --------

      Net cash (used for) investing activities                            (24,796)             (22,800)          (17,981)
                                                                         --------             --------          --------

FINANCING ACTIVITIES:
   Net proceeds from (reduction of) notes payable                         (17,393)              30,364             4,498
   Proceeds from issuance of long-term debt                               148,327                    -                 -
   Reduction of long-term debt                                            (15,549)             (18,216)           (9,428)
   Stock transactions under incentive plans                                 7,564                2,771             1,610
   Purchase of treasury stock                                                   -               (5,780)                -
   Dividends paid                                                         (13,698)             (12,670)          (12,700)
                                                                         --------             --------          --------

      Net cash provided by (used for) financing
       activities                                                         109,251               (3,531)          (16,020)
                                                                         --------             --------          --------

Net increase (decrease) in cash and time deposits                           9,239               (2,530)           13,961
Cash and time deposits - beginning of year                                 22,513               25,043            11,082
                                                                         --------             --------          --------

Cash and time deposits - end of year                                     $ 31,752             $ 22,513          $ 25,043
                                                                         ========             ========          ========

See notes to consolidated financial statements.
</TABLE>

                                    6
<PAGE> 7

<TABLE>
Kellwood Company and Subsidiaries
CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY
(Dollars in thousands except per share data)

<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                        Common Stock              Treasury                   Cumulative
                                                        ------------               Stock          Retained   Translation
                                                   Shares           Amount         Amount         Earnings   Adjustment
----------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>              <C>            <C>               <C>              <C>
Balance, May 1, 1995........                     21,128,819       $ 93,400       $ (30,078)        $253,736         $(8,861)
   Net earnings................                                                                      28,024
   Cash dividends declared,
    $.60 per share.............                                                                     (12,700)
   Shares issued under stock
    plans......................                     112,782          1,127             752
   Treasury stock acquired in
    conjunction with incentive
    plans......................                     (17,894)                          (304)
   Debentures converted........                       4,892             35
   Currency translation
    adjustment.................                                                                                          61
                                                 ----------       --------       ---------         --------         -------
Balance, April 30, 1996........                  21,228,599         94,562         (29,630)         269,060          (8,800)
   Net earnings................                                                                      37,596
   Cash dividends declared,
    $.60 per share.............                                                                     (12,670)
   Shares issued under stock
    plans......................                     268,494          4,330             495
   Treasury stock acquired in
    conjunction with incentive
    plans......................                     (80,514)                        (2,068)
   Treasury stock acquired
    under repurchase program                       (324,300)                        (5,766)
   Debentures converted........                      29,208            185
   Currency translation
    adjustment.................                                                                                         520
                                                 ----------       --------       ---------         --------         -------

Balance, April 30, 1997........                  21,121,487         99,077         (36,969)         293,986          (8,280)
  Net earnings................                                                                       42,747
   Cash dividends declared,
    $.64 per share.............                                                                     (13,698)
   Shares issued under stock
    plans......................                     463,064         10,427             261
   Treasury stock acquired in
    conjunction with incentive
    plans......................                     (98,329)                        (3,277)
   Debentures converted........                      24,151            153
   Currency translation
    adjustment.................                                                                                        (262)
                                                 ----------       --------       ---------         --------         -------

Balance, April 30, 1998.......                   21,510,373       $109,657       $ (39,985)        $323,035         $(8,542)
                                                 ==========       ========       =========         ========         =======


See notes to consolidated financial statements.
</TABLE>

                                    7
<PAGE> 8

Kellwood Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 1.   PRINCIPLES OF CONSOLIDATION:

      The consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries.  Substantially all foreign
subsidiaries are consolidated based upon a fiscal year ending March 31.  All
significant intercompany accounts and transactions have been eliminated.

 2.   USE OF ESTIMATES:

      The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes.  Actual results may differ from those estimates and
assumptions.

 3.   INVENTORIES AND REVENUE RECOGNITION:

      Inventories are stated at the lower of cost or market.  The first-in,
first-out (FIFO) method is used to determine the value of 40% of the domestic
inventories, and the last-in, first-out (LIFO) method is used to value the
remaining domestic inventories.  Inventories of foreign subsidiaries are
valued using the specific identification method.  Sales are recognized when
goods are shipped.

 4.   PROPERTY, PLANT AND EQUIPMENT:

      Property, plant and equipment are stated at cost.  A significant portion
of domestic manufacturing facilities and some machinery and equipment are
leased under long-term capital leases which are recorded at the beginning of
the lease term at the present value of the minimum lease payments.

      Depreciation is computed generally on the declining balance method over
estimated useful lives of 15 to 20 years for buildings and of 3 to 10 years
for machinery and equipment.  Leasehold improvements are amortized
principally on the straight-line basis over the shorter of their estimated
useful lives or the remaining lease term.

 5.   INTANGIBLE ASSETS:

      The excess costs over net tangible assets of businesses acquired are
recorded as intangible assets.  These intangibles are amortized using the
straight-line method over their estimated useful lives which range from 1 to
20 years.

 6.   IMPAIRMENT OF ASSETS:

      The Company reviews long-lived assets, goodwill and other intangibles to
assess recoverability from future operations using expected undiscounted
future cash flows whenever events and circumstances indicate that the
carrying values may not be recoverable.  Impairment losses are recognized in
operating results when expected undiscounted future cash flows are less than
the carrying value of the asset.

                                    8
<PAGE> 9

 7.   INCOME TAXES:

      Income taxes are based upon income for financial reporting purposes.
Deferred income taxes are recognized for the effect of temporary differences
between financial and tax reporting in accordance with the requirements of
Statement of Financial Accounting Standards (SFAS) No. 109.

 8.   FOREIGN CURRENCY TRANSLATION:

      Foreign currency financial statements are translated into United States
dollars using period-end rates of exchange for assets and liabilities and
monthly average rates of exchange for income and expenses.  Adjustments
resulting from translation are accumulated in the Cumulative Translation
Adjustment component of Shareowners' Equity.  Gains or losses from foreign
currency transactions are included in income in the period in which they
occur.  The net foreign currency gains and losses recognized in 1998, 1997
and 1996 were not significant.

 9.   EARNINGS PER SHARE:

      In the fiscal year ended April 30, 1998, the Company adopted SFAS No.
128, "Earnings per Share" which establishes standards for computing and
presenting earnings per share.  Basic earnings per common share considers
only the weighted average of common shares outstanding while diluted earnings
per common share considers the dilutive effects of stock options, incentive
shares and convertible securities.  Previously reported earnings per share
are the same as the amounts computed pursuant to SFAS No. 128.  A
reconciliation of basic earnings per common share and diluted earnings per
common share follows (dollars and shares in thousands except per share
amounts):

<TABLE>
<CAPTION>

BASIC EARNINGS PER SHARE COMPUTATION                             1998                 1997                1996
                                                                 ----                 ----                ----
                                                               <C>                  <C>                 <C>
Numerator:
  Net earnings                                                 $ 42,747             $ 37,596            $ 28,024
                                                               --------             --------            --------
Denominator:
  Average common shares outstanding                              21,408               21,131              21,170

Basic Earnings Per Share                                       $   2.00             $   1.78            $   1.32
                                                               --------             --------            --------


DILUTED EARNINGS PER SHARE COMPUTATION
Numerator:
  Net earnings                                                 $ 42,747             $ 37,596            $ 28,024
  Impact of assumed conversions:
    debenture interest after-tax                                     37                   39                  44
                                                               --------             --------            --------
                                                               $ 42,784             $ 37,635            $ 28,068
                                                               --------             --------            --------

Denominator:
  Average common shares outstanding                              21,408               21,131              21,170
  Impact of assumed debenture conversions                            93                  118                 130
  Impact of stock options                                           445                  284                  80
                                                               --------             --------            --------
                                                                 21,946               21,533              21,380
                                                               --------             --------            --------

Diluted Earnings Per Share                                     $   1.95             $   1.75            $   1.31
                                                               --------             --------            --------
</TABLE>


                                    9
<PAGE> 10
10.   STOCK-BASED COMPENSATION:

      Kellwood Company uses the intrinsic value method for measuring
stock-based compensation cost.  Under this method, compensation cost is the
excess, if any, of the quoted market price of Kellwood's common stock at the
grant date over the amount the employee must pay for the stock.  Kellwood's
policy is to grant stock options at fair market value at the date of grant.


11.   NEW ACCOUNTING STANDARDS:

      In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information."  The Company is
evaluating the effects these statements will have on its financial reporting
and disclosures.  The statements will have no effect on the Company's results
of operations, financial position, capital resources or liquidity.  SFAS No.
130 will first be adopted in the Company's fiscal 1999 first quarter interim
financial report.  SFAS No. 131 will require additional segment disclosures
and will first be adopted in the Company's fiscal 1999 Annual Report.


ALLOWANCE FOR DOUBTFUL ACCOUNTS:

      The allowance for doubtful accounts at April 30, 1998, was $11,033
($5,536 at April 30, 1997).

INVENTORIES:

      Inventory valued under the LIFO method totaled $199,286 at April 30,
1998 ($144,801 at April 30, 1997).  The remainder of the inventory was valued
using the FIFO and specific identification methods.  If LIFO inventories had
been valued at current replacement costs, they would have totaled $209,529 at
April 30, 1998 ($153,564 at April 30, 1997).

<TABLE>
<CAPTION>
                                                                    April 30,
                                                      ----------------------------------
                                                         1998                    1997
                                                      ----------------------------------
<S>                                                    <C>                     <C>
Finished goods...................................      $ 175,953               $ 127,630
Work in process..................................        128,051                  98,607
Raw materials....................................         70,468                  72,701
                                                       ---------               ---------
                                                       $ 374,472               $ 298,938
                                                       =========               =========

PROPERTY, PLANT AND EQUIPMENT:

<CAPTION>
                                                                    April 30,
                                                      ----------------------------------
                                                         1998                    1997
                                                      ----------------------------------
<S>                                                    <C>                     <C>
Land                                                   $   3,528               $   3,520
Buildings and improvements                                84,269                  80,005
Machinery and equipment                                  102,628                  94,229
                                                       ---------               ---------
                                                         190,425                 177,754

Less accumulated depreciation
 and amortization                                       (124,479)               (114,954)
                                                       ---------               ---------
                                                       $  65,946               $  62,800
                                                       =========               =========
</TABLE>

      The amounts above include the cost and accumulated amortization of
assets under capital leases (primarily buildings) of $12,464 and $12,021,
respectively, at April 30, 1998, and $12,512 and $11,700, respectively, at
April 30, 1997.


                                    10
<PAGE> 11
      Certain machinery and equipment are leased under operating leases
having remaining terms ranging up to 6 years.  Rent expense under all operating
leases for the year ended April 30, 1998 totaled $18,276 ($16,035 for 1997
and $15,969 for 1996).

      The future minimum lease payments under capital and operating leases at
April 30, 1998, were as follows:

<TABLE>
<CAPTION>
                                                      ---------------------------------
                                                       Capital                Operating
                                                      ---------------------------------
<S>                                                   <C>                     <C>
1999                                                  $     397                $ 17,908
2000                                                        370                  13,546
2001                                                        585                  11,058
2002                                                        296                   8,751
2003                                                        296                   6,646
Later years                                                 338                  16,939
                                                      ---------                --------
Total minimum lease payments                              2,282                $ 74,848
                                                                               ========
Less amount representing interest                          (440)
                                                      ---------
Present value of net minimum lease payments           $   1,842
                                                      =========
</TABLE>

      Minimum lease payments were not reduced for future minimum sublease
rentals of $1,032.

INTANGIBLE ASSETS:

<TABLE>
<CAPTION>
                                                                   April 30,
                                                      ---------------------------------
                                                         1998                   1997
                                                      ---------------------------------
<S>                                                   <C>                     <C>
Goodwill                                              $ 116,301               $ 109,491
Other identifiable intangibles                           81,106                  81,446
                                                      ---------               ---------
                                                        197,407                 190,937
Less accumulated amortization                           (91,982)                (77,064)
                                                      ---------               ---------
                                                      $ 105,425               $ 113,873
                                                      =========               =========
</TABLE>

Other identifiable intangible assets consist primarily of trademarks,
customer lists, contractor networks and agreements not to compete.

NOTES PAYABLE AND LONG-TERM DEBT:

1.    NOTES PAYABLE:

      The Company entered into a credit facility agreement on May 31, 1996, in
the amount of $300,000, which expires October 30, 1999.  Under the agreement,
up to $200,000 can be utilized for short-term loans and up to $200,000 can be
utilized for letters of credit provided that the combined utilization does
not exceed $300,000.  Each borrowing under the agreement bears interest at
one of several specified rates dependent upon several factors including the
Company's leverage ratio, senior debt rating and the applicable Eurodollar
margin.  At April 30, 1998, outstanding short-term loans and letters of
credit under the agreement were $0 and $133,000 respectively.  Covenants are
less restrictive than those currently existing for Kellwood's notes due
insurance companies.


                                    11
<PAGE> 12
      During the year ended April 30, 1998, the highest level of borrowings
under all lines was $275,554 ($220,821 for 1997).  For the year, the average
daily short-term borrowings were $179,479 ($159,221 for 1997) and the
weighted average interest rate was 6.1% (5.8% for 1997).

2.    LONG-TERM DEBT:

<TABLE>
<CAPTION>
                                                                   April 30,
                                                      ---------------------------------
                                                         1998                   1997
                                                      ---------------------------------
<S>                                                   <C>                     <C>
7.625% Debentures due October 15, 2017                $ 148,371               $    -
Notes due insurance companies, 6.90% - 10.77%           107,323                 122,355
Capital lease obligations, 4.9% - 10.2%                   1,841                   2,249
9% convertible subordinated debentures                      483                     636
                                                      ---------               ---------
                                                        258,018                 125,240
Less current maturities                                 (15,298)                (15,409)
                                                      ---------               ---------
                                                      $ 242,720               $ 109,831
                                                      =========               =========
</TABLE>

      Aggregate maturities on long-term debt for the next five years are as
follows: 1999 - $15,298; 2000 - $16,256; 2001 - $10,532; 2002 - $15,272; 2003
- $38,167.

      The Company issued $150,000 of 20 year senior unsecured debentures in a
public debt offering on October 27, 1997.  The debentures, due October 15,
2017, have a coupon rate of 7.625% payable semi-annually.  Proceeds from the
sale of debentures were used to repay short-term bank borrowings.
Restrictive covenants of these debentures are less restrictive than the
covenants associated with the notes due insurance companies discussed below.

      Notes payable to insurance companies are due in quarterly and semiannual
installments from June 1998 through September 2005.  Restrictive covenants of
these notes include the maintenance of minimum working capital and certain
key ratios as well as a limitation on the payment of dividends and the
repurchase of Company stock.  Under the most restrictive covenants, future
dividends and purchases of Company stock are limited to $65,743 plus 45% of
net earnings after April 30, 1998, excluding gains and losses on the disposal
of capital assets.

      The 9% convertible subordinated debentures may be converted into common
stock by debenture holders at a rate of $6.33 per share at any time prior to
maturity on October 15, 1999, subject to certain restrictions.  Also, subject
to certain restrictions, the debentures are redeemable, in whole or in part,
at the option of the Company at predetermined redemption prices.

ACCRUED EXPENSES:

<TABLE>
<CAPTION>
                                                                   April 30,
                                                      ---------------------------------
                                                         1998                   1997
                                                      ---------------------------------
<S>                                                   <C>                     <C>
Salaries and employee benefits                        $  35,098               $  32,284
Income taxes                                              7,380                  13,814
Other accrued expenses                                   32,268                  31,725
                                                      ---------               ---------
                                                      $  74,746               $  77,823
                                                      =========               =========
</TABLE>

                                    12
<PAGE> 13

EMPLOYEE BENEFIT PLANS:

1.    RETIREMENT PLANS AND POST RETIREMENT BENEFITS:

      Various contributory and noncontributory retirement plans cover
substantially all domestic and certain foreign employees.  Benefits under
pension plans are generally based on years of service and compensation.
Pension plans are funded in accordance with the applicable laws and
regulations plus such amounts, if any, as the actuarial consultants advise to
be appropriate.  Company contributions under the contributory retirement plan
are determined based on formulas defined in the plan.

      The total credit under all retirement plans was $(1,777), $(3,318), and
$(3,626) in 1998, 1997, and 1996, respectively.  The total credits reflect
$(7,756), $(7,901), and $(7,240) for defined benefit plans.

      The net credit for defined benefit plans included the following
components:

<TABLE>
<CAPTION>
                                                                          Year ended April 30,
                                                      -----------------------------------------------------------
                                                         1998                     1997                      1996
                                                      -----------------------------------------------------------
<S>                                                   <C>                      <C>                      <C>
Current service cost                                  $   2,085                $  1,867                 $  1,790
Interest cost on projected benefit
 obligation                                               4,456                   4,244                    4,052
Return on assets:
   Actual return                                        (20,641)                 (9,923)                 (23,968)
   Deferred actuarial gain (loss)                        10,065                     (18)                  14,957
                                                      ---------                --------                 --------
     Assumed return                                     (10,576)                 (9,941)                  (9,011)
Amortization of transition asset and
 prior service costs                                     (3,721)                 (4,071)                  (4,071)
                                                      ---------                --------                 --------
      Net pension credit                              $  (7,756)               $ (7,901)                $ (7,240)
                                                      =========                ========                 ========
</TABLE>

The funded status of the defined benefit plans was as follows:

<TABLE>
<CAPTION>
                                                                            -----------------------------
                                                                               1998                1997
                                                                            -----------------------------
<S>                                                                         <C>                 <C>
Plan assets at fair value                                                   $ 158,373           $ 142,522
                                                                            ---------           ---------
Actuarial present value of benefit obligation:
      Vested benefits                                                          52,684              46,256
      Non vested benefits                                                       4,749               3,179
                                                                            ---------           ---------
      Accumulated benefit obligation                                           57,433              49,435
      Impact of future salary increases                                         5,179               4,915
                                                                            ---------           ---------
Projected benefit obligation                                                   62,612              54,350
                                                                            ---------           ---------
Plan assets in excess of projected benefit obligation                          95,761              88,172
Unamortized transition liability/(asset)                                           33              (3,496)
Unamortized prior service costs                                                   (95)               (321)
Unrecognized actuarial gains                                                  (15,798)            (14,195)
                                                                            ---------           ---------

         Prepaid pension costs included in other assets                     $  79,901           $  70,160
                                                                            =========           =========
</TABLE>

      The discount rate used in determining the projected benefit obligation
was 7.5% for 1998, 8.0% for 1997 and 8.0% for 1996.  The rate of increase in
future compensation levels was 4.5% for 1998,  5.0% for 1997 and 5.0% for
1996.  The assumed long-term rate of return on plan assets was 8.0% in each
year.  The assets of the retirement plans consist primarily of marketable

                                    13
<PAGE> 14

equity securities, U.S. Government obligations, corporate debt obligations
and short-term marketable debt securities.

      The Company provides health care insurance benefits to certain employees
upon retirement.  The annual costs of these benefits in 1998, 1997 and 1996
were not significant.


2.    INCENTIVE COMPENSATION PLANS:

      The amended Restricted Stock Compensation Plan of 1969 and the Corporate
Development Incentive Plan of 1986 provide for the granting of common stock
to key employees as performance and incentive bonuses.  The shares granted
may not be transferred, sold, pledged or otherwise disposed of prior to the
lapse of certain restrictions.  Under the plans, $2,129 was charged to
earnings in 1998 ($1,999 in 1997, and $112 in 1996).  At April 30, 1998,
299,881 shares were available to be granted under these plans to qualified
employees.

      Options to purchase common stock have been granted to key employees
under various plans at option prices not less than the fair market value on
the date of the grant.  At April 30, 1998, 135 officers and other key
employees held options to purchase shares.  The options expire 10 years after
grant on dates ranging from May 1998 to August 2007 and are exercisable in
cumulative installments only after stated intervals of time and are
conditional upon active employment, except for periods following disability
or retirement.

      The Company uses the intrinsic value method in accounting for its stock
option plans.  Had compensation cost for the Company's stock options been
recognized based upon the fair value on the grant date under the methodology
prescribed by SFAS 123, "Accounting for Stock-based Compensation," the
Company's net earnings and earnings per share for the years ended April 30,
1998,1997 and 1996 would have been impacted as indicated in the following
table:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------
     Year ended April 30,                    1998            1997             1996
------------------------------------------------------------------------------------
<S>                                        <C>             <C>              <C>
Reported net earnings                      $ 42,747        $ 37,596         $ 28,024
Pro forma net earnings                     $ 41,832        $ 37,078         $ 27,732
Reported diluted earnings per share        $   1.95           $1.75            $1.31
Pro forma diluted earnings per share       $   1.91           $1.73            $1.30

------------------------------------------------------------------------------------
</TABLE>

      The fair value of options granted (which is recorded as expense over the
option vesting period in determining the pro forma impact), is estimated on
the date of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------
     Year ended April 30,                    1998            1997             1996
------------------------------------------------------------------------------------
<S>                                        <C>             <C>              <C>
Expected life option                       5 years         5 years           5 years
                                              5.8%            6.3%              6.0%
Risk-free interest rate                    to 6.6%         to 6.4%           to 6.2%
Expected volatility of
 Kellwood stock                                36%             35%               35%
Expected dividend yield
 on Kellwood stock                           3.69%           3.69%             2.89%
------------------------------------------------------------------------------------
</TABLE>

      The weighted-average grant date fair value of options granted was $4.88
to $11.36 for 1998, $4.77 to $4.83 for 1997 and $6.45 to $6.63 for 1996.

                                    14
<PAGE> 15

      The pro forma effect on net earnings for 1998, 1997 and 1996 is not
representative of the pro forma effect on net earnings in future years
because it does not take into consideration pro forma compensation related to
grants made prior to 1996.

      Presented below is a summary of stock option plans' activity for the
years shown:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                                              Wtd. Avg.
                                                          Options           Exercise Price
                                                          -------           --------------
<S>                                                      <C>                     <C>
Balance, May 1, 1995                                     1,262,638               $17.58
      Granted                                              380,500               $20.32
      Exercised                                            (25,800)              $12.93
      Canceled                                                (225)              $10.75
                                                         ---------
Balance, April 30, 1996                                  1,617,113               $18.30
      Granted                                              408,000               $16.14
      Exercised                                           (210,573)              $14.33
      Canceled                                             (88,415)              $19.06
                                                         ---------
Balance, April 30, 1997                                  1,726,125               $18.23
      Granted                                              377,800               $26.40
      Exercised                                           (353,058)              $17.19
      Canceled                                             (14,210)              $21.32
                                                         ---------

Balance, April 30, 1998                                  1,736,657               $20.19
                                                         =========
------------------------------------------------------------------------------------------------
</TABLE>

The following summarizes options outstanding and exercisable at April 30,
1998:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                            Options Outstanding
---------------------------------------------------------------------------------------------------------------
    Range of                                                 Wtd. Avg.                        Wtd. Avg.
     Prices                Number                         Remaining Life                   Exercise Price
     ------                ------                         --------------                   --------------
<S>                     <C>                                   <C>                              <C>
$ 6.04 -  9.92             18,375                             3 yrs.                           $ 7.34
$12.29 - 12.75             62,530                             3 yrs.                           $12.38
$16.13 - 19.96            723,022                             7 yrs.                           $17.85
$20.31 - 25.31            885,730                             8 yrs.                           $22.19
$33.78 - 36.00             47,000                             10yrs.                           $34.11
                        ---------
$ 6.04 - 36.00          1,736,657                             7 yrs.                           $20.19
                        =========

<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                    Options Exercisable
---------------------------------------------------------------------------------------------------------------
    Range of                                                 Wtd. Avg.                        Wtd. Avg.
     Prices                Number                         Remaining Life                   Exercise Price
     ------                ------                         --------------                   --------------
<S>                       <C>                                 <C>                              <C>
$ 6.04 -  9.92             18,375                             3 yrs.                           $ 7.34
$12.29 - 12.75             62,530                             3 yrs.                           $12.38
$16.13 - 19.96            316,022                             5 yrs.                           $18.98
$20.31 - 25.31            249,990                             7 yrs.                           $20.45
                          -------
$ 6.04 - 25.31            646,917                             6 yrs.                           $18.58
                          =======
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                    15
<PAGE> 16

CAPITAL STOCK:

The reported outstanding shares of common stock have been reduced by treasury
stock totaling 3,575,572 shares at April 30, 1998 (3,499,326 at April 30,
1997, and 3,145,398 at April 30, 1996).  On September 30, 1996, Kellwood
Company adopted a common stock repurchase program.  The Company is authorized
to repurchase up to 10% of the approximately 21,000,000 shares of its common
stock outstanding at that date.  As of April 30, 1998, approximately 324,000
shares have been repurchased under this program.

Authorized capital includes 500,000 shares of preferred stock, none of which
have been issued.  Nonvoting share purchase rights, exercisable only upon
satisfaction of certain conditions, entitle the holder to purchase Series A
Junior Preferred Stock (160,000 shares reserved) or, under certain
conditions, common shares at prices specified in the rights agreement.  None
of the rights were exercisable as of April 30, 1998.

INTEREST INCOME AND OTHER, NET:

<TABLE>
<CAPTION>
                                                      Year ended April 30,
                                              ----------------------------------------
                                                 1998          1997             1996
                                              ----------------------------------------
<S>                                           <C>            <C>              <C>
Interest income                               $  1,134       $  1,066         $    412
Other, net                                          38            613            1,677
                                              --------       --------         --------
                                              $  1,172       $  1,679         $  2,089
                                              ========       ========         ========
</TABLE>

                                    16
<PAGE> 17

INCOME TAXES:

      The provision for income taxes consisted of:

<TABLE>
<CAPTION>
                                                      Year ended April 30,
                                              ----------------------------------------
                                                 1998          1997             1996
                                              ----------------------------------------
<S>                                           <C>            <C>              <C>
Current:
   Domestic:
      Federal                                 $ 25,046       $ 28,144         $ 15,521
      State                                      3,972          4,543            3,000
   Foreign                                       2,658          2,015              795
                                              --------       --------         --------
                                                31,676         34,702           19,316

Deferred (primarily federal)                      (476)        (7,472)           1,184
                                              --------       --------         --------

                                              $ 31,200       $ 27,230         $ 20,500
                                              ========       ========         ========
</TABLE>

      Current income taxes are the amounts payable under the respective tax
regulations on each year's earnings and on foreign earnings remitted during
the year.  Deferred income taxes included the following:

<TABLE>
<CAPTION>
                                                      Year ended April 30,
                                              ----------------------------------------
                                                 1998          1997             1996
                                              ----------------------------------------
<S>                                           <C>            <C>              <C>
Employee related costs                        $ 2,483        $  2,330         $  2,635
Depreciation and amortization                  (2,569)         (1,180)          (2,022)
Allowance for asset valuations.                    56          (9,130)             437
Other                                            (446)            508              134
                                              -------        --------         --------
                                              $  (476)       $ (7,472)        $  1,184
                                              =======        ========         ========
</TABLE>

      A reconciliation of the federal statutory income tax rate to the
effective tax rate (provision for taxes) was as follows:

<TABLE>
<CAPTION>
                                                      Year ended April 30,
                                              ----------------------------------------
                                                 1998          1997             1996
                                              ----------------------------------------
<S>                                           <C>            <C>              <C>
Statutory rate                                35.0%          35.0%            35.0%
Foreign tax differences                       (2.1)           1.4              (.8)
Amortization of intangible assets              4.0            4.3              5.7
State tax                                      3.6            3.5              4.0
Other                                          1.7           (2.2)            (1.7)
                                              ----           ----             ----
                                              42.2%          42.0%            42.2%
                                              ====           ====             ====
</TABLE>

                                    17
<PAGE> 18

      Deferred income tax liabilities and assets consisted of the following:

<TABLE>
<CAPTION>
                                                      Year ended April 30,
                                              ----------------------------------------
                                                 1998          1997             1996
                                              ----------------------------------------
<S>                                           <C>            <C>              <C>
Employee related costs                        $  22,976      $  20,494        $  17,871
Depreciation and amortization                    10,555         13,292           14,765
Allowance for asset valuations                  (17,163)       (17,221)          (8,091)
Other                                            (1,557)        (1,111)          (1,620)
                                              ---------      ---------        ---------
                                              $  14,811      $  15,454        $  22,925
                                              =========      =========        =========
Included in:
   Prepaid taxes and expenses.............    $ (24,779)     $ (24,437)       $ (15,166)
      Deferred income taxes and other......      39,590         39,891           38,091
                                              ---------      ---------        ---------
                                              $  14,811      $  15,454        $  22,925
                                              =========      =========        =========
</TABLE>

Earnings before income taxes included $10,773 and $6,465 of Far East earnings
in 1998 and 1997 respectively.  Earnings before income taxes included $802 of
Far East losses in 1996.

      Federal income taxes are provided on earnings of foreign subsidiaries
except to the extent that such earnings are expected to be indefinitely
reinvested abroad.  Undistributed foreign earnings considered to be
indefinitely reinvested abroad totaled $65,215 through April 30, 1998.

CASH FLOWS:

      For purposes of the Consolidated Statement of Cash Flows, all highly
liquid short-term time deposits maintained under cash management activities
are considered cash equivalents.  The effect of foreign currency exchange
rate fluctuations on cash and time deposits was not significant for the years
ended April 30, 1998, 1997 and 1996.

      Interest paid in 1998 was $29,092 ($22,108 in 1997 and $22,853 in 1996)
and income taxes paid were $37,588 ($22,443 in 1997 and $22,386 in 1996).

SIGNIFICANT CUSTOMERS:

      The Company has two customers whose sales represent 10% or more of
consolidated net sales in one or more of the fiscal years ended April 30,
1998, 1997 and 1996.  Sales to one of these customers [Wal-Mart Stores, Inc.]
totalled $192,940 in 1998, $120,094 in 1997 and $119,888 in 1996.
Receivables included $51,271 due from this customer at April 30, 1998
($40,004 at April 30, 1997).  Sales to the other of these customers [J. C.
Penney Company, Inc.] totalled $162,200 in 1998, $157,148 in 1997 and
$142,857 in 1996.  Receivables included $24,761 due from this customer at
April 30, 1998 ($37,065 at April 30, 1997).

COMMITMENTS AND CONTINGENCIES:

      There are various lawsuits and other legal proceedings against the
Company.  Management and general counsel are of the opinion that the ultimate
disposition of such litigation will have no material adverse effect on the
Company's financial position or results of operations.

                                    18
<PAGE> 19

SELECTED QUARTERLY DATA (UNAUDITED):

<TABLE>
<CAPTION>
                                                        ------------------------------------------------------
                                                           First          Second         Third        Fourth
                                                        ------------------------------------------------------
<S>                                                     <C>             <C>            <C>           <C>
Fiscal 1998:
   Net sales....................                        $ 400,604       $ 502,852      $ 373,680     $ 504,446
   Gross profit.................                           79,002          99,970         69,485       104,313
   Net earnings.................                            7,216          16,512          2,414        16,605
   Earnings per share:
      Basic...................                                .34             .77            .11           .78
      Diluted.............                                    .33             .75            .11           .76

Fiscal 1997:
   Net sales....................                        $ 327,435       $ 429,435      $ 315,791     $ 448,344
   Gross profit.................                           65,531          87,684         61,692        94,550
   Net earnings.................                            5,818          14,438          2,025        15,315
   Earnings per share:
      Basic...................                                .27             .68            .10           .73
      Diluted.............                                    .27             .67            .09           .72
</TABLE>

                                    19
<PAGE> 20

INDUSTRY SEGMENT AND GEOGRAPHIC AREA INFORMATION:

      All operations are in the apparel and related soft goods industry.  A
summary of operations by geographic area is presented below. Substantially all
Domestic and Far East sales are to U.S. customers. Sales and transfers between
geographic areas were not significant and intercompany accounts have been
eliminated.

<TABLE>
<CAPTION>
                                                                               Year ended April 30,
                                                             -----------------------------------------------------
                                                                 1998                  1997               1996
                                                             -----------------------------------------------------
<S>                                                          <C>                   <C>                 <C>
Net sales to customers:
     Domestic                                                $ 1,608,298           $ 1,367,810         $ 1,316,656
     Far East                                                    173,284               153,195             149,380
                                                             -----------           -----------         -----------
                                                             $ 1,781,582           $ 1,521,005         $ 1,466,036
                                                             ===========           ===========         ===========

Operating profit:
     Domestic                                                $   125,893           $   104,015         $    91,271
     Far East                                                     13,652                 9,286                 654
                                                             -----------           -----------         -----------

                                                                 139,545               113,301              91,925

Interest expense                                                 (28,874)              (21,566)            (22,937)
General corporate expense and other                              (36,724)              (26,909)            (20,464)
                                                             -----------           -----------         -----------

Earnings before income taxes                                 $    73,947           $    64,826         $    48,524
                                                             ===========           ===========         ===========

Assets at end of year:
     Domestic                                                $   807,841           $   684,504         $   627,253
     Far East                                                    108,722                93,210              89,225
     Corporate                                                    98,950                96,873              80,210
                                                             -----------           -----------         -----------

                                                             $ 1,015,513           $   874,587         $   796,688
                                                             ===========           ===========         ===========

Capital expenditures:
     Domestic                                                $    14,305           $     7,364         $    13,477
     Far East                                                      3,314                 4,051               2,296
     Corporate                                                       784                   229                 638
                                                             -----------           -----------         -----------

                                                             $    18,403           $    11,644         $    16,411
                                                             ===========           ===========         ===========

Depreciation and amortization:
     Domestic                                                $    24,937           $    23,767         $    23,085
     Far East                                                      3,108                 2,639               3,590
     Corporate                                                     1,593                 1,871               1,508
                                                             -----------           -----------         -----------

                                                             $    29,638           $    28,277         $    28,183
                                                             ===========           ===========         ===========
</TABLE>

                                    20
<PAGE> 21

Kellwood Company and Subsidiaries
SUPPLEMENTAL SELECTED FINANCIAL DATA
(Dollars in thousands except per share data)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                     1998               1997              1996             1995               1994
---------------------------------------------------------------------------------------------------------------------
<S>                             <C>                <C>               <C>              <C>                 <C>
Net sales                       $ 1,781,582        $ 1,521,005       $ 1,466,036      $ 1,364,766         $ 1,203,086

Net earnings                         42,747             37,596            28,024           11,096              35,614
Earnings per
 share:
   Basic                               2.00               1.78              1.32              .53                1.71
   Diluted                             1.95               1.75              1.31              .52                1.68
Cash dividends
 declared per
 share                                  .64                .60               .60              .60                 .55
Working capital                     416,478            247,114           238,068          236,922             262,406
Total assets                      1,015,513            874,587           796,688          768,137             641,857
Long-term debt                      242,720            109,831           125,443          144,793             153,014
Total debt                          399,754            284,369           272,406          277,336             170,940
Shareowners'
 equity                             384,165            347,814           325,192          308,197             306,956
Equity per
 share                                17.86              16.47             15.32            14.59               14.64


NOTE:  All per share data have been adjusted to reflect stock splits.
</TABLE>

                                    21
<PAGE> 22

SUPPLEMENTAL DATA:

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (UNAUDITED)

      Domestic operations include marketing-oriented branded businesses
offering apparel and camping soft goods, and manufacturing-oriented private
label units offering apparel products.  Domestic operations produce goods in
the United States, the Caribbean, and Canada.  Far East operations produce
high quality, competitively priced, private label cotton and cotton-blended
shirts and blouses in Hong Kong, China and Sri Lanka.  In addition to the
Company's owned and leased plants, products are sourced through contracting
relationships with other manufacturers in various countries.  The Company
sells its products through multiple channels of distribution, including
national retail chains, department stores, specialty stores, mass merchants,
mail order houses, sporting goods stores and other manufacturers.


RESULTS OF OPERATIONS

FISCAL 1998

      Sales reached record levels for fiscal 1998, increasing 17.1% vs. the
prior year.  Net earnings for the year increased 13.7% vs. the prior year.
Summarized comparative financial data for fiscal 1998 and 1997 are as follows
($ in millions; percentages are calculated based on actual data, but columns
may not add due to rounding):

<TABLE>
<CAPTION>
                                                                                 % of Net Sales
                                                                %             --------------------
                                   1998           1997        Change           1998          1997
                                  ------         ------       ------          ------        ------
<S>                              <C>            <C>            <C>            <C>           <C>
      Net Sales                  $ 1,782        $ 1,521        17.1%          100.0%        100.0%

      Cost of products sold        1,429          1,212        17.9%           80.2%         79.7%
      S, G & A                       236            209        12.7%           13.2%         13.8%
                                     ---            ---        -----           -----         -----

      Operating earnings             117            100        16.7%            6.6%          6.6%

      Amort. of intangibles           15             15        -1.4%            0.9%          1.0%
      Interest, net & other           28             20        39.3%            1.6%          1.3%
                                      --             --        -----            ----          ----
      Earnings before tax             74             65        14.1%            4.2%          4.3%
      Income Taxes                    31             27        14.6%            1.8%          1.8%
                                      --             --        -----            ----          ----

      Net Earnings                  $ 43           $ 38        13.7%            2.4%          2.5%
                                    ====           ====        =====            ====          ====
</TABLE>

      Sales increased in every channel of distribution, and the increase was
broad-based across each of our three business portfolios:

<TABLE>
<CAPTION>
                                                             %
                              1998           1997         Change
                             ------         ------        ------
<S>                         <C>
      Branded               $ 1,319        $ 1,104        19.5%
      Private Label             289            264         9.5%
      Far East                  173            153        13.1%
                                ---            ---        -----
      Total Net Sales       $ 1,782        $ 1,521        17.1%
                            =======        =======        =====
</TABLE>

                                    22
<PAGE> 23

      The business portfolios contributed 74% (Branded), 16% (Private Label),
and 10% (Far East) of sales, for fiscal 1998:

<TABLE>
<CAPTION>
                                   1998          1997
      As a % of total sales        ----          ----
      ---------------------
<S>                               <C>           <C>
      Branded                      74.0%         72.4%
      Private Label                16.2%         17.4%
      Far East                      9.7%         10.1%
                                    ----         -----
                                  100.0%        100.0%
                                  ------        ------
</TABLE>

      Branded sales for the year were up 19.5% on the strength of
Popular-to-Moderate women's sportswear, including the Sag Harbor(R), Kathie
Lee(R) and Cricket Lane(R) labels.  These gains were partially offset by a
drop in sales of Better-to-Bridge goods.  The Branded operations continue to
contribute significantly to total company earnings.

      Private Label sales for the fiscal year were up 9.5% vs. the prior year
due primarily to the strength of outerwear sales.  Operating profits in the
Private Label businesses remain strong.

      Far East sales for the fiscal year were up 13.1% vs. the prior year.
The major driver of this growth was the recently secured business with Polo
Ralph Lauren(R) which began shipping in the fourth quarter of fiscal 1997.
Due to the increased volumes and improved worker productivity, operating
profits for the Far East business have improved.

      Cost of products sold as a percent of sales increased primarily because
the majority of the Company's sales growth came from businesses and programs
yielding gross margins below the company average.

      Selling, General and Administrative expenses (S,G&A) increased $26.6
million or 12.7% to $236 million.  Approximately $11.1 million of the
year-to-year increase was due to spending on the Vision 2000 initiative.
Except for the Vision 2000 program, S,G&A increased $15.5 million or 7.5% on a
17.1% increase in sales as follows:

<TABLE>
<CAPTION>
                                  1998         1997       % Change
                                 ------       -----       --------
<S>                             <C>           <C>           <C>
      S, G & A excluding
            Vision 2000         $ 221.6       $ 206.1        7.5%
      Vision 2000 programs         14.4           3.3
                                   ----           ---
      Total S, G & A            $ 236.0       $ 209.4       12.7%
                                =======       =======       =====
</TABLE>

      Operating earnings (defined as net sales less cost of products sold and
S,G&A) increased 16.7% vs. the prior year due to the increased volume,
partially offset by increased spending this year on the Vision 2000 program.

      Last year's margins included the benefit of the $1.9 million (pretax)
sale of certain excess quota rights.  Operating earnings as a percent of net
sales for fiscal 1997 would have been 6.5% without this income, which
compares to the current year's operating earnings margin of 6.6%.

      The increase in interest expense is due primarily to the increase in
average debt and the higher interest rate that resulted from replacing short
term debt with the 20 year debentures (discussed further).

FISCAL 1997

      Sales by Domestic branded operations increased by $35 million or 3% for
the year.  The increase in branded sales was principally attributable to
growth in popular-to-moderately priced women's apparel as Kellwood continued
to gain market share in this segment with the leading retailers.  In
addition, the Company's new and expanding marketing initiatives contributed
to increased

                                    23
<PAGE> 24

Domestic branded sales.  Sales from the branded portfolio accounted for 73% of
Kellwood's total volume for the year ended April 30, 1997, which is consistent
with the prior year.  The Domestic branded operations have continued to
contribute significantly to total company earnings, and operating margins have
shown improvement as a result of more efficient overhead spending.

      Sales by Domestic private label operations increased by $16 million or
7% for the year.  Sales and operating profits for the Domestic private label
portfolio have increased during the year as a result of several successful
private label programs with key retailers and gains in efficiencies at
private label facilities.

      Sales by Far East operations increased by $4 million or 3% for the year.
Far East operations have continued to gain market share in the better dress
shirt and sport shirt categories while improving customer mix.  Operating
profits have also shown continued improvement as a result of the sale of the
Saipan plant in fiscal 1996 and continued movement of Far East resources and
operations to improve efficiencies.

      The Company achieved a 34% increase in net earnings on a 4% increase in
sales for the year primarily due to increased operating efficiencies and
several marketing initiatives.  The decrease in interest expense correlates
with a decrease in average outstanding debt for the year.

FISCAL 1996

      In a difficult retail apparel climate, Kellwood was able to grow its
business by $101 million, or 7%, to $1.466 billion.  Womenswear represents
82% of Kellwood's total apparel volume and grew at 11% in fiscal 1996.  Of
greater significance was a 16% growth in sales to the Company's top 20
accounts.  These accounts represent the retailers who dominate their
respective channels of distribution, and who are gaining market share as the
retail industry continues to consolidate.  Kellwood's top 20 customers
represent 63% of sales.

      Sales by Domestic branded operations increased 12% for the year.  The
increase in branded sales is principally attributable to the acquisitions of
Halmode Apparel and David Dart.  Sales from the branded portfolio accounted
for 73% of Kellwood's total volume for fiscal 1996.  This compares to 70% in
fiscal 1995 and moves the Company closer to achieving its goal of 75% from
the branded sector.  The Domestic branded operations, with their overall
higher margins, contributed significantly to total company earnings.

      Sales by Domestic private label operations declined 3% for the year.
Adjusting fiscal 1995's volume for the Home Fashions division which was sold
in December, 1994, Domestic private label sales were up 4%.  Operating
profits in the Domestic private label portfolio improved as a result of
several successful private label programs with key customers as well as from
the divestiture of the Home Fashions division.

      Sales by Far East operations were down 3% for the year due primarily to
the shut down of the Saipan and Costa Rica facilities. Despite the decline in
volume, operating profits improved as production shifted from the closed
plant in Saipan to more efficient plants in Hong Kong, China and Sri Lanka.
In October 1995, the Company received $2.7 million in proceeds from the sale
of assets in Saipan.  The costs of the divestiture have remained in line with
the provision established in fiscal 1995.

      After adjusting fiscal 1995 for the $14 million shutdown provision, the
Company achieved a 12% increase in consolidated net earnings on a 7% increase
in sales for the year because of changes in sourcing, leveraging overhead
spending and efficient operation of the private label facilities.  The
increase in interest expense correlates with the increase in average
outstanding debt.

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<PAGE> 25

FINANCIAL CONDITION
-------------------

      On October 27, 1997 the Company completed a public debt offering
totaling $150 million.  These debentures mature October 15, 2017 and carry a
7.625% coupon rate. They received investment grade ratings from Moody's and
S&P of Baa3/BBB.

      The current ratio increased from 1.7 to 1 at April 30, 1997 to 2.2 to 1
at April 30, 1998, primarily due to the use of debt proceeds to retire
short-term notes payable.  Accounts receivable increased 17.8% vs. April 30,
1997, which is slightly ahead of the 17.1% increase in sales.  This increase
was due principally to the growth in the volume of business the Company does
with certain customers which have terms of sale in excess of the company
average. Inventory levels have increased faster than sales (up 25.3% vs. April
30, 1997) because of a shift to more offshore sourcing which results in higher
inventories.

      Total debt represents 51% of capital at April 30, 1998 vs. 45% at April
30, 1997.  The increased leverage is due to increased working capital
requirements to support the sales growth of 17.1% vs. the prior year.

      In September 1996, the Board of Directors authorized the Company to
repurchase from time to time up to 10% of the outstanding shares of its
common stock (approximately 2 million shares) in the open market through
privately negotiated transactions at management's discretion and depending on
market conditions.  As of April 30, 1998 the Company had purchased
approximately 324,000 shares at a total cost of $5.8 million.  The most
recent share purchase under this authorization was in November 1996.

      Kellwood maintains a $300 million credit facility agreement of which up
to $200 million can be utilized for short-term loans and up to $200 million
can be utilized for letters of credit.  At April 30, 1998, $167 million was
available for future use.  Management believes that the combined operating,
cash and equity position of the Company will continue to provide the capital
flexibility necessary to fund future opportunities and to meet existing
obligations.

Year 2000 Compliance
--------------------

      In July 1996 the Company outsourced its Information Systems function to
EDS.  Together, EDS and Kellwood employees have completed an assessment of all
known potential year 2000 impacts.  The Company has developed, and is
continuing to develop, plans to make key operational and financial systems
compliant and to ensure uninterrupted functionality through the year 2000.  As
part of the Vision 2000 initiative, several new information technologies have
been and are being installed to implement a Consistent Office Environment and
to replace several legacy systems with an Integrated Business System.  These
new systems will be year 2000 compliant.  The Company believes that all systems
necessary to manage the business effectively will be replaced, modified or
upgraded before the year 2000.

      Key trading partners such as customers, suppliers, banks, shipping
companies and insurance companies have been contacted to ensure year 2000
compliance in all potentially impacted business relationships.  The Company
does not have control over these third parties and, as a result, the Company
cannot currently determine to what extent future operating results may be
adversely affected by the failure of these third parties to successfully
address their year 2000 issues.  However, the Company expects to develop
plans to attempt to minimize identified third party exposures.

      Based on the Company's efforts to date, management believes that it is
unlikely that the year 2000 problem will have a material adverse effect on
the Company's results of operations in the future.

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<PAGE> 26

      The Company is incurring significant business process reengineering and
system replacement expenses as part of the Vision 2000 initiative.  As a part
of this initiative, most of the Company's legacy software that is not
currently year 2000 compliant will be replaced with new systems that are year
2000 compliant.  The Company believes that the additional cost it will incur
to modify other systems that are not currently year 2000 compliant will not
be significant to the Company's financial results.

OUTLOOK
-------

      Kellwood is into a period of solid internal growth led by the Branded
and Far East businesses.  As the retail industry continues to consolidate,
Kellwood is increasingly becoming the vendor of choice for
popular-to-moderately priced women's sportswear, men's woven shirts and other
value priced categories of apparel.  Additionally, the Company is benefiting
from the turnaround of certain restructured divisions.

      The Private Label business experienced an exceptionally strong year in
outerwear.  Due to the warm winter season across much of the U.S., the
Company's customers have had to carry over a considerable amount of
inventory.  As a result, the Company expects fiscal 1999 sales of the Private
Label business to be down approximately 3% to 5% from fiscal 1998.  Branded
and Far East sales in fiscal 1999 are expected to be up approximately 8% to
9%, and 6% to 7%, respectively, compared to fiscal 1998.

      The Company is investing in its Vision 2000 initiative which will
further enhance the Company's competitive position and ability to continue to
gain market share and improve profitability in the future.

      Interest expense in the first half of fiscal 1999 will be higher due to
the recent $150 million twenty-year public debt offering.  Though management
believes that the rate on this debt (7.625%) is favorable, it is
approximately 1.5% higher than the Company was paying for short-term floating
rate debt.

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