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
 
 
 For Quarter ended March 31, 1997 Commission File Number  2-63880
 
 
                           ACE HARDWARE CORPORATION
          (Exact name of registrant as specified in its charter)
 
 
              DELAWARE                                       36-0700810
     (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                     Identification No.)
 
 
    2200 Kensington Court, Oak Brook, IL                 60521
   (Address of principal executive offices)            (Zip code)
 
 
 Registrant's telephone number, including area code    (630) 990-6600
 
 
                                  NONE
                   Former name, former address and former
                   fiscal year, if changed since last report.
 
 
 Indicate by check mark whether the registrant (1) has filed all reports
 required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
 1934 during the preceding 12 months (or for such shorter period that the
 registrant was required to file such reports), and (2) has been subject to
 such filing requirements for the past 90 days.  YES  XX  NO
 
 Indicate the number of shares outstanding of each of the issuer's classes of
 common stock, as of the close of the period covered by this report.
 
 
                  Class                  Outstanding at March 31, 1997
 Class A Voting Stock - $1,000 par value              3,940  shares
 Class B Stock        - $1,000 par value              2,840  shares
 Class C Stock        - $  100 par value          1,947,470  shares
 
 
 
 
 
 
 
 
 
                         ACE HARDWARE CORPORATION
 
                                  INDEX
 
 
 Part I. - Financial Information:                                  Page No.
 
 
     Consolidated Balance Sheets -
        March 31, 1997 and December 31, 1996                          1
 
 
     Consolidated Statements of Earnings - Three Months Ended
        March 31, 1997 and 1996                                       2
 
 
     Consolidated Statements of Cash Flows - Three Months Ended
        March 31, 1997 and 1996                                       3
 
 
     Notes to Consolidated Financial Statements                       4
 
 
     Management's Discussion and Analysis of Financial
        Condition and Results of Operations                           5
 
 
 Part II. - Other Information                                         6
 
 
 
 
                         PART I.  FINANCIAL INFORMATION
                            ACE HARDWARE CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                                March 31,      December 31,
                                                  1997             1996
                                                     (000's omitted)

 ASSETS

Current Assets:
Cash                                        $       8,871    $      12,657
Accounts Receivable, Net                          371,499          347,248
Merchandise Inventory                             317,325          327,145
Prepaid Expenses and Other Current Assets          12,250           11,880
                                            --------------   --------------  
Total Current Assets                              709,945          698,930

Property and Equipment, Net                       220,905          213,534
Other Assets                                        6,324            3,911
                                            --------------   --------------
Total Assets                                $     937,174    $     916,375
                                            ==============   ==============

LIABILITIES AND MEMBER DEALERS' EQUITY

Current Liabilities:
Current Installment of Long-Term Debt       $       6,953    $       6,727
Short-Term Borrowings                              86,968           71,000
Accounts Payable                                  369,506          394,070
Patronage Dividends Payable in Cash                30,783           28,178
Patronage Refund Certificates Payable              13,748           14,138
Accrued Expenses                                   46,173           36,349
                                            --------------   --------------
Total Current Liabilities                         554,131          550,462

Notes Payable                                     100,556           71,837
Patronage Refund Certificates Payable              36,612           49,639
Other Long-Term Liabilities                        12,115           11,074
                                            --------------   --------------     
Total Liabilities                                 703,414          683,012
                                            
Member Dealers' Equity:
Class A Stock of $1,000  Par Value                  3,990            3,937
Class B Stock of $1,000  Par Value                  6,499            6,499
Class C Stock of $100  Par Value                  197,150          196,742
Class C Stock of $100  Par Value, Issuable         28,902           26,474
Additional Stock Subscribed,
     Net of Unpaid Portion                            515              502
Retained Earnings and Contributed Capital           6,496            6,415
                                            --------------   --------------
Total Member Dealers' Equity                      243,552          240,569
Less: Treasury Stock, at Cost                       9,792            7,206
                                            --------------   --------------
Total Member Dealers' Equity                      233,760          233,363

Total Liabilities and
     Member Dealers' Equity                 $     937,174    $     916,375
                                            ==============   ==============

See accompanying notes to consolidated financial statements.


 
 
                            ACE HARDWARE CORPORATION
                       CONSOLIDATED STATEMENTS OF EARNINGS


                                               Three Months Ended March 31,
                                                   1997             1996
                                                      (000's omitted)

Net Sales                                   $     642,137    $     593,186
Cost of Sales                                     595,858          551,741
                                            --------------   --------------
     Gross Profit                                  46,279           41,445

Operating Expenses:
     Warehouse and Distribution                    11,468            8,506
     Selling, General and Administrative           18,241           15,792
     Retail Success and Development                 5,555            5,908
                                            --------------   --------------
     Total Operating Expenses                      35,264           30,206
                                            --------------   --------------
 
     Operating Income                              11,015           11,239

     Interest Expense                              (3,607)          (2,472)
     Other Income, Net                              1,204            1,167
     Income Taxes                                    (310)            (355)
                                            --------------   --------------
Net Earnings                                $       8,302    $       9,579
                                            ==============   ==============

Distribution of Net Earnings:
     Patronage Dividends                    $       8,221    $      10,467
     Retained Earnings                                 81             (888)
                                            --------------   --------------
Net Earnings                                $       8,302    $       9,579
                                            ==============   ============== 

See accompanying notes to consolidated financial statements.

 

 
                            ACE HARDWARE CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                THREE MONTHS ENDED MARCH 31,
                                                   1997              1996
                                                       (000's omitted)
Operating Activities:
      Net Earnings                          $       8,302    $       9,579

   Adjustments to reconcile net earnings
   to net cash provided by operating
   activities:
      Depreciation                                  4,620             4,051
      Loss on sale of property and equipment          113                 0
      Increase in accounts receivable, net        (24,251)          (38,893)
      Decrease (Increase) in
          merchandise inventory                     9,820           (23,877)
      Increase in prepaid expenses and
          other current assets                       (370)           (1,904)
      Increase (Decrease) in accounts
          payable and accrued expenses            (14,740)           41,900
      Increase (Decrease) in other
          long-term liabilities                     1,041                 6
                                            --------------   ---------------
   Net Cash Used In Operating Activities          (15,465)           (9,138)

Investing Activities:
      Purchases of property and equipment         (12,239)           (8,894)
      Proceeds from sale of
          property and equipment                      135                 0
      Increase in other assets                     (2,413)             (149)
                                            --------------   ---------------
   Net Cash Used In Investing Activities          (14,517)           (9,043)

Financing Activities:
      Proceeds from short-term borrowings          15,968            22,500
      Proceeds from notes payable                  30,000                 0
      Principal payments on long-term debt         (1,055)           (1,437)
      Payments on refund certificates and
         patronage financing programs             (16,605)          (14,163)
      Proceeds from sale of common stock              474               382
      Repurchase of common stock                   (2,586)           (1,853)
                                            --------------   ---------------
   Net Cash Provided by Financing Activities       26,196             5,429
                                            --------------   ---------------

   Decrease in Cash and Cash Equivalents           (3,786)          (12,752)

   Cash and Cash Equivalents at
      Beginning of Period                          12,657            12,853
                                            --------------   ---------------
   Cash and Cash Equivalents at
      End of Period                         $       8,871    $          101
                                            ==============   ===============

See accompanying notes to consolidated financial statements.



 
 
 

                         ACE HARDWARE CORPORATION
     
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     
     
     1)   General
     
          The accompanying consolidated financial statements have not been
          examined by independent public accountants except for the December
          31, 1996 balance sheet but in the opinion of the Company reflect all
          adjustments necessary to present fairly the financial position as of
          March 31, 1997 and 1996 and the results of operations and cash flows
          for the three months then ended.  These interim figures are not
          necessarily indicative of the results to be expected for the full
          year.
     
     2)   Patronage Dividends
     
          The Company operates as a cooperative organization and will pay
          patronage dividends to consenting member dealers based on the earnings
          derived from business done with such dealers.  It has been the
          practice of the Company to distribute substantially all patronage
          sourced earnings in the form of patronage dividends.
     
          Net earnings and patronage dividends will normally be similar since
          patronage sourced net earnings is paid to consenting member dealers.
          International dealers signed under a Retail Merchant Agreement are not
          eligible for patronage dividends and related earnings or loss are not
          included in patronage sourced earnings.
     
     3)   Reclassifications
     
          Certain financial statement reclassifications have been made to prior
          year and prior quarter amounts to conform to comparable
          classifications followed in 1997.
     
     
     4)     Notes Payable
     
          In March 1997, the Company entered into a $30,000,000 loan agreement
          due March 25, 2009.  The note bears interest at 7.55% per annum,
          payable quarterly. Annual principle payments commence on March 25,
          2005 and continue through 2009.
          



                                        
                            ACE HARDWARE CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Three Months Ended March 31, 1997 compared to Three Months Ended March 31, 1996.

Results of Operations

Net  sales  increased  8.3% in 1997 primarily due to increased  existing  dealer
volume,  targeted efforts on new store development and conversions  to  the  Ace
program and the June 1996 start-up of Canada operations.

Gross  profit increased 11.7% vs. 1996, and increased as a percent of sales  due
to  increased cash and vendor discounts, improved manufacturing gross profit and
gross profit from the Canadian operation.

Warehouse  and distribution expenses increased $3.0 million and as a percent  of
sales versus 1996 due to costs for the operation of one additional domestic  and
two  Canadian  facilities  opened in mid 1996 and wages  to  support  the  sales
increase.   Lower traffic and freight consolidations income also contributed  to
the 1997 expense increase.

Selling, general and administrative expenses increased $2.5 million or 15.5% and
as  a  percent of sales due to costs associated with the Canadian operation  and
increased data processing expenses.

Retail  success and development expenses decreased $353,000 or 6.0%,  and  as  a
percent  of  sales  primarily  due to increased advertising  income.   Increased
retail  investments  partially  offset  the  first  quarter  advertising  income
increase.

Interest  expense  increased 45.9% or $1.1 million vs. 1996  due  to  increased
inventory  levels, additional dealer dating programs and higher interest  rates.
Additional  long-term  debt was issued in the first quarter  to  fund  long-term
capital investments.

Liquidity and Capital Resources

The  company  expects  that  internally generated  funds,  along  with  new  and
established  lines  of  credit  and long-term financing,  will  be  the  primary
financing sources for capital expenditures in the future.





                           PART II. OTHER INFORMATION

                            ACE HARDWARE CORPORATION
                                        
                                        
Item 6. Exhibits and Reports on From 8-K.

          (b)  There were no reports on Form 8-K filed for the three month
               period ended March 31, 1997.


                                   SIGNATURE







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









    ACE HARDWARE CORPORATION




       RITA D. KAHLE                    DATE MAY 13, 1997
       Rita D. Kahle
  Vice President, Finance

(Principal Financial and Accounting Officer,
 and duly authorized Officer of the registrant)