> SECURITIES AND EXCHANGE COMMISSION
>   Washington, D.C.  20549

FORM 10-Q
               QUARTERLY REPORT UNDER SECTION 13 or 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001 
[] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from_____to______



> 

> 

|       | March 31,   |  | December 30,
|------ | ----------- |  | ------------
|       | 2001        |  | 2000        
|       | (Unaudited) |  |             
|ASSETS |             |  |             
|       |             |  |             

|Current Assets:                              |            |  |              
|-------------------------------------------- | ---------- |  | -------------
|Cash and Cash Equivalents                    | $   23,470 |  | $      24,644
|Short-Term Investments                       | 12,723     |  | 12,772       
|Accounts Receivable, Net                     | 380,951    |  | 372,971      
|Merchandise Inventory                        | 405,107    |  | 395,565      
|Prepaid Expenses and Other                   |            |  |              
|Current Assets                               | 14,871     |  | 15,105       
|                                             |            |  |              
|Total Current Assets                         | 837,122    |  | 821,057      
|                                             |            |  |              
|Property and Equipment, Net                  | 264,228    |  | 261,890      
|Other Assets                                 | 42,435     |  | 40,863       
|                                             |            |  |              
|Total Assets                                 | $1,143,785 |  | $   1,123,810
|                                             |            |  |              
|                                             |            |  |              
|Liabilities and Member Dealers' Equity       |            |  |              
|                                             |            |  |              
|Current Liabilities:                         |            |  |              
|Current Installment of Long-Term Debt        | $    6,834 |  | $       6,904
|Short-Term Borrowings                        | 119,500    |  | 81,500       
|Accounts Payable                             | 443,108    |  | 448,766      
|Patronage Dividends Payable in Cash          | 37,776     |  | 34,764       
|Patronage Refund Certificates Payable        | 9,121      |  | 4,795        
|Accrued Expenses                             | 58,048     |  | 63,224       
|                                             |            |  |              
|Total Current Liabilities                    | 674,387    |  | 639,953      
|                                             |            |  |              
|Long-Term Debt                               | 105,620    |  | 105,891      
|Patronage Refund Certificates Payable        | 60,705     |  | 68,385       
|Other Long-Term Liabilities                  | 25,934     |  | 24,923       
|                                             |            |  |              
|Total Liabilities                            | 866,646    |  | 839,152      
|                                             |            |  |              
|Member Dealers' Equity:                      |            |  |              
|Class A Stock of $1,000 Par Value            | 3,819      |  | 3,783        
|Class B Stock of $1,000 Par Value            | 6,499      |  | 6,499        
|Class C Stock of $100 Par Value              | 250,758    |  | 250,480      
|Class C Stock of $100 Par Value, Issuable    | 26,220     |  | 24,267       
|Additional Stock Subscribed, Net             |            |  |              
|Of Unpaid Portion                            | 345        |  | 351          
|Retained Deficit                             | (8,725)    |  | (5,551)      
|Contributed Capital                          | 13,485     |  | 13,485       
|Accumulated Other Comprehensive Income       | (1,003)    |  | (162)        
|                                             |            |  |              
|                                             | 291,398    |  | 293,152      
|Less: Treasury Stock, at Cost                | (14,259)   |  | (8,494)      
|                                             |            |  |              
|Total Member Dealers' Equity                 | 277,139    |  | 284,658      
|                                             |            |  |              
|Total Liabilities and Member Dealers' Equity | $1,143,785 |  | $   1,123,810
|                                             |            |  |              

| | Thirteen Weeks Ended
| | --------------------

| |  |  | 
| |  |  | 

|                                    | March 31,  |  | April 1,  
|----------------------------------- | ---------- |  | ----------
|                                    | 2001       |  | 2000      
|                                    |            |  |           
|Net Sales                           | $  659,595 |  | $  701,009
|Cost of Sales                       | 600,917    |  | 638,250   
|Gross Profit                        | 58,678     |  | 62,759    
|                                    |            |  |           
|Operating Expenses                  |            |  |           
|Warehouse and Distribution          | 9,598      |  | 7,974     
|Selling, General and Administrative | 23,304     |  | 23,385    
|Retail Success and Development      | 18,575     |  | 16,648    
|Total Operating Expenses            | 51,477     |  | 48,007    
|                                    |            |  |           
|Operating Income                    | 7,201      |  | 14,752    
|                                    |            |  |           
|Interest Expense                    | (5,603)    |  | (4,702)   
|Other Income, Net                   | 3,210      |  | 3,786     
|Income Taxes                        | 228        |  | 510       
|Net Earnings                        | $    5,036 |  | $   14,346
|                                    |            |  |           
|Distribution of Net Earnings        |            |  |           
|Patronage Dividends                 | $    8,210 |  | $   15,481
|Retained Earnings                   | (3,174)    |  | (1,135)   
|Net Earnings                        | $    5,036 |  | $   14,346
|                                    |            |  |           
|                                    |            |  |           
|                                    |            |  |           

|CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|---------------------------------------------------------
|000's Omitted                                            
|(Unaudited)                                              

| |  |  | 
| |  |  | 

| | Thirteen Weeks Ended
| | --------------------

|                                  |            |  |           
|--------------------------------- | ---------- |  | ----------
|                                  | March 31,  |  | April 1,  
|                                  | 2001       |  | 2000      
|                                  |            |  |           
|Net Earnings                      | $    5,036 |  | $   14,346
|Unrealized Gains on Securities    | 339        |  | -         
|Foreign Currency Translation, Net | (1,180)    |  | (56)      
|                                  |            |  |           
|Comprehensive Income              | $    4,195 |  | $   14,290
|                                  |            |  |           
|                                  |            |  |           

|See accompanying notes to condensed consolidated financial statements.
|----------------------------------------------------------------------

| | Thirteen Weeks Ended
| | --------------------

|                                         |            |  |           
|---------------------------------------- | ---------- |  | ----------
|                                         | March 31,  |  | April 1,  
|                                         | 2001       |  | 2000      
|                                         |            |  |           
|Operating Activities:                    |            |  |           
|Net Earnings                             | $    5,036 |  | $   14,346
|                                         |            |  |           
|Adjustments to reconcile net earnings to |            |  |           
|net cash used in operating activities:   |            |  |           

|Depriciation and amortization              | 6,788      |  | 6,116     
|------------------------------------------ | ---------- |  | ----------
|Increase in accounts receivable, net       | (9,726)    |  | (37,868)  
|Increase in inventories                    | (9,542)    |  | (42,064)  
|(Increase) decrease in other current       |            |  |           
|assets                                     | 234        |  | (679)     
|Increase (decrease) in accounts payable    |            |  |           
|And accrued expenses                       | (10,834)   |  | 39,280    
|Increase in other long-term liabilities    | 1,011      |  | 348       
|Net Cash Used in Operating Activities      | (17,033)   |  | (20,521)  
|                                           |            |  |           
|Investing Activities:                      |            |  |           
|Purchase of property and equipment         | (9,126)    |  | (8,811)   
|Increase in other assets                   | (2,364)    |  | (7,598)   
|Net Cash Used in Investing Activities      | (11,490)   |  | (16,409)  
|                                           |            |  |           
|Financiang Activities:                     |            |  |           
|Proceeds of short-term borrowings          | 38,000     |  | 38,971    
|Principal payments on long-term debt       | (341)      |  | (1,772)   
|Payment of patronage refund certificates   | (4,853)    |  | (89)      
|Proceeds from sale of common stock         | 308        |  | 477       
|Repurchase of common stock                 | (5,765)    |  | (4,055)   
|Net Cash Provided By Financing Activities  | 27,349     |  | 33,532    
|                                           |            |  |           
|Decrease in Cash and Cash Equivalents      | (1,174)    |  | (3,398)   
|                                           |            |  |           
|Cash and Cash Equivalents at Beginning of  |            |  |           
|Period                                     | 24,644     |  | 35,422    
|                                           |            |  |           
|Cash and Cash Equivalents at End of Period | $   23,470 |  | $   32,024
|                                           |            |  |           

|                                                                      
|----------------------------------------------------------------------
|See accompanying notes to condensed consolidated financial statements.

> NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

> 3)  Reclassifications
>       Certain financial statement reclassifications have been made to prior
>       year and prior quarter amounts to conform to comparable classifications 
>       followed in 2001.
>   4.  Segments
> The Company is principally engaged as a wholesaler of hardware and related
>     products and manufactures paint products.  The Company identifies
>     segments based on management responsibility and the nature of the
>     business activities of each component of the Company. The Company
>     measures segment earnings as operating earnings including an
>     allocation for administrative expenses, interest expense and income
>     taxes. Information regarding the identified segments and the related
>     reconciliation to consolidated information is as follows:
> Thirteen Weeks EndedMarch 31, 2001EliminationPaint
> 
> IntersegmentWholesale
> Manufacturing
> Other
> Activities
> ConsolidatedNet Sales from External
>   Customers
> $   644,030
> $       4,154
> $11,411
> $         -
> $   695,595Intersegment Sales
> 4,221
> 23,919
> -
> (28,140)
> -Segment Earnings (Loss)
> 3,999
> 2,362
> (1,325)
> -
> 5,036Thirteen Weeks EndedApril 1, 2000EliminationPaint
> 
> IntersegmentWholesale
> Manufacturing
> Other
> Activities
> ConsolidatedNet Sales from External
>   Customers
> $   686,781
> $       5,001
> $ 9,227
> $         -
> $   701,009Intersegment Sales
> 4,353
> 23,372
> -
> (27,725)
> -Segment Earnings (Loss)
> 13,123
> 2,171
> (893)
> (55)
> 14,346
> 5)  Subsequent Event
>        Subsequent to March 31, 2001 the Company entered into a
>        $100.0 million private placement Master Note Agreement of 
>        which $70.0 million was issued on April 26, 2001. These 
>        Senior Notes have an effective rate of 7.27% and
>   mature 
>        April 30, 2013.  Proceeds were used to
>   reduce 
>        short-term borrowings and for other general
>   corporate 
>        purposes.
>                    ACE
>   HARDWARE CORPORATION
>       PART I. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
>   OF
>          FINANCIAL CONDITION AND RESULTS OF
>   OPERATIONS
>   Thirteen Weeks Ended March 31, 2001 compared to Thirteen Weeks 
>  Ended April 1, 2000.
>   Results of Operations
>   Consolidated sales decreased 5.9%.  Domestic sales declined 4.0%
>   while International sales were affected by a sale of Ace stores 
>  and reduced sales in Canada.  The decline in domestic sales is 
>  primarily due to lower sales ro our existing retailer base due 
>  to the softening economy and later spring weather partially 
>  offset by conversions of new stores to the Ace program.
>   Gross profit decreased $4.1 million and decreased slightly as a 
>   percent of total sales from 8.95% in 2000 to 8.90% in 2001.  The
>   decrease resulted primarily from lower handling charges, lower 
>  cash discounts due to lower sales and merchandise purchases and 
>  higher warehousing costs absorbed into inventory.  Higher vendor 
>  rebates and margin from company-owned retail locations partially 
>  offset the gross profit decline.
>   Warehouse and distribution expenses increased $1.6 million over 
>  2000 and increased as apercent of total handled sales from 1.63% 
>  in 2000 to 2.05% in 2001.  Increased utilities and distribution 
>  expenses associated with the new Loxley, Alabama distribution 
>  facility and the start-up of the Prince George, Virginia 
>  facility drove the higher warehouse expenses.
>   Selling, general and administrative expenses remained flat due 
>  to continued cost control measures put in place.
>   Retail success and development expenses increased $1.9 million
>   primarily due to costs associated with operating additional 
>  company-owned retail locations and investments made at retail to 
>  support our Vision 21 strategy.  Increases in this category are 
>  directly related to retail support of the Ace retailer as the 
>  Company continues to make investments in our dealer base.
>   Internet expense increased $901,000 due to higher average 
>  borrowing levels.  The increased borrowing levels result from 
>  completion of the construction of the Loxley, Alabama 
>  distribution center, the expansion of our LaCrosse, Wisconsin 
>  facility and increased retailer dating programs.
>   Other income decreased $576,000 primarily due to lower income
>   realized on non-controlling investments in affiliates.Liquidity and Capital Resources
>   The Company expects that existing and internally generated funds,
>   along with new and established lines of credit and long-term
>   financing, will continue to be sufficient in the foreseeable 
>  future to finance the Company's working capital requirements and 
>  patronage dividend and capital expenditures programs.  The 
>  Company entered into a $100.0 million private placement Master 
>  Note Agreement.  Proceeds were used to reduce short-term 
>  borrowings and for other general corporate purposes.

Item 3.   Quantitative and Qualitative Disclosures About Market     
          Risk

> There have been no material changes in the Company's market risk during the thirteen week period ended March 31, 2001. For additional
> information, refer to Item 7a in the Company's Annual Report on Form 10-K for the year ended December 30, 2000.

> (b) A Form 8-K was filed on May 8, 2001 containing:
> Notice of Annual Meeting of Stockholders on June 4, 2001 and Proxy solicited by Board of Directors and related information.