FORM 10-Q
                                     





                       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 26 Weeks Ended: July 30, 1998       Commission File Number: 1-6187



                                ALBERTSON'S, INC.
              -----------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                Delaware                                 82-0184434
      -------------------------------      -----------------------------------
      (State or other jurisdiction of      (I.R.S. Employer Identification No.)
       incorporation or organization)


           250 Parkcenter Blvd., P.O. Box 20, Boise, Idaho      83726
           -------------------------------------------------------------
                              (Address)                       (Zip Code)


       Registrant's telephone number, including area code: (208) 395-6200
                                                           --------------


     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.   Yes  X     No
                                                ----      ----

     Number of Registrant's $1.00 par value
     common shares outstanding at August 27, 1998:         245,518,775


                                       Page 1
<PAGE>



                          PART I. FINANCIAL INFORMATION



                                ALBERTSON'S, INC.
                              CONSOLIDATED EARNINGS
                      (in thousands except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                              13 WEEKS ENDED                      26 WEEKS ENDED
                                                   ----------------------------------    ----------------------------------
                                                          July 30,          July 31,             July 30,         July 31,
                                                              1998              1997                 1998             1997
                                                   ---------------- -----------------    ----------------- ----------------
<S>                                                <C>              <C>                  <C>               <C> 

Sales                                                   $3,995,052       $3,680,509           $7,843,305        $7,288,050
Cost of sales                                            2,925,708        2,748,549            5,749,491         5,427,384
                                                   ---------------- -----------------    ----------------- ----------------
Gross profit                                             1,069,344          931,960            2,093,814         1,860,666

Selling, general and
  administrative expenses                                  842,119          746,344            1,645,627         1,478,332
Impairment - store closures                                                                       29,423
                                                   ---------------- -----------------    ----------------- ----------------
Operating profit                                           227,225          185,616              418,764           382,334

Other (expenses) income:
  Interest, net                                            (27,606)         (19,541)             (51,110)          (38,855)
  Other, net                                                 5,850            9,356               14,777             9,045
                                                   ---------------- -----------------    ----------------- ----------------
Earnings before income taxes                               205,469          175,431              382,431           352,524
Income taxes                                                77,051           65,991              143,412           133,818
                                                   ---------------- -----------------    ----------------- ----------------

NET EARNINGS                                            $  128,418       $  109,440           $  239,019        $  218,706
                                                   ================ =================    ================= ================

EARNINGS PER SHARE:
  Basic                                                      $0.52            $0.44                $0.97             $0.88
  Diluted                                                    $0.52            $0.44                $0.97             $0.87

WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING:
  Basic                                                    245,623          249,021              245,716           249,827
  Diluted                                                  246,668          249,750              246,798           250,524

DIVIDENDS DECLARED PER SHARE                                 $0.17            $0.16                $0.34             $0.32
</TABLE>




















See Notes to Consolidated Financial Statements.

                                     Page 2
<PAGE>


                                ALBERTSON'S, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                                July 30, 1998
                                                                                  (unaudited)             January 29, 1998
                                                                    --------------------------    -------------------------
                   ASSETS
                   ------
<S>                                                                 <C>                           <C>              
CURRENT ASSETS:
  Cash and cash equivalents                                                         $   50,462                   $  108,083
  Accounts and notes receivable                                                        123,752                      121,023
  Inventories                                                                        1,295,697                    1,308,578
  Prepaid expenses                                                                      56,751                       44,426
  Deferred income taxes                                                                 53,064                       45,747
                                                                    --------------------------    -------------------------
           TOTAL CURRENT ASSETS                                                      1,579,726                    1,627,857

OTHER ASSETS                                                                           250,004                      207,360

GOODWILL (net of accumulated amortization
  of $1,077)                                                                            91,991

LAND, BUILDINGS AND EQUIPMENT (net of
  accumulated depreciation and amortization
  of $2,000,714 and $1,822,263,
  respectively)                                                                      3,631,321                    3,383,373
                                                                    --------------------------   --------------------------
                                                                                    $5,553,042                   $5,218,590
                                                                    ==========================    =========================

     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------

CURRENT LIABILITIES:
  Accounts payable                                                                  $  748,011                   $  742,557
  Salaries and related liabilities                                                     152,877                      149,898
  Taxes other than income taxes                                                         86,587                       80,842
  Income taxes                                                                           1,948                       37,657
  Self-insurance                                                                        70,236                       69,982
  Unearned income                                                                       60,260                       46,069
  Other current liabilities                                                             58,521                       52,395
  Current maturities of long-term debt                                                   5,640                       86,511
  Current capitalized lease obligations                                                  9,968                        9,608
                                                                    --------------------------    -------------------------
           TOTAL CURRENT LIABILITIES                                                 1,194,048                    1,275,519

LONG-TERM DEBT                                                                       1,272,221                      989,650

CAPITALIZED LEASE OBLIGATIONS                                                          138,540                      140,957

OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS                                       387,132                      393,008

STOCKHOLDERS' EQUITY:
  Preferred stock - $1 par value; authorized
    - 10,000,000 shares; issued - none
  Common stock - $1 par  value;  authorized
    -  1,200,000,000  shares;  issued -
    245,507,844 shares and 245,735,633
    shares, respectively                                                               245,508                      245,736
  Capital in excess of par value                                                           696                        4,271
  Retained earnings                                                                  2,314,897                    2,169,449
                                                                    --------------------------    -------------------------
                                                                                     2,561,101                    2,419,456
                                                                    --------------------------    -------------------------
                                                                                    $5,553,042                   $5,218,590
                                                                    ==========================    =========================
</TABLE>



See Notes to Consolidated Financial Statements.

                                     Page 3
<PAGE>


                                ALBERTSON'S, INC.
                             CONSOLIDATED CASH FLOWS
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                            26 WEEKS ENDED
                                                                            -----------------------------------------------
                                                                                         July 30,                  July 31,
                                                                                             1998                      1997
                                                                            ----------------------    ----------------------
<S>                                                                         <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings                                                                         $ 239,019                 $ 218,706
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
       Depreciation and amortization                                                      179,333                   160,276
       Net deferred income taxes                                                          (12,217)                  (11,047)
       Increase in cash surrender value of
         Company-owned life insurance                                                     (11,282)                  (11,000)
       Impairment - store closures                                                         29,423
       Changes in operating assets and
         liabilities:
           Receivables and prepaid expenses                                               (30,402)                   (5,126)
           Inventories                                                                     30,296                    49,147
           Accounts payable                                                                (9,766)                    8,255
           Other current liabilities                                                      (28,853)                    1,468
           Self-insurance                                                                     410                     7,257
           Unearned income                                                                 (4,109)                     (161)
           Other long-term liabilities                                                      5,352                     4,316
                                                                            ----------------------    ----------------------
       Net cash provided by operating activities                                          387,204                   422,091

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net capital expenditures excluding
     noncash activities                                                                  (375,025)                 (281,393)
   Business acquisitions, net of cash acquired                                           (121,348)                           
   Increase in other assets                                                                (7,675)                   (9,664)
                                                                            ----------------------    ----------------------
       Net cash used in investing activities                                             (504,048)                 (291,057)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term borrowings                                                     317,000                   200,000
   Payments on long-term borrowings                                                      (122,490)                   (4,068)
   Net commercial paper activity                                                          (38,881)                 (149,365)
   Proceeds from stock options exercised                                                    1,216                     1,474
   Cash dividends                                                                         (81,104)                  (77,622)
   Stock purchased and retired                                                            (16,518)                 (176,162)
                                                                            ----------------------    ----------------------
       Net cash provided by (used in)
       financing activities                                                                59,223                  (205,743)
                                                                            ----------------------    ----------------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                 (57,621)                  (74,709)

CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                                                               108,083                    90,865
                                                                            ----------------------    ----------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $  50,462                 $  16,156
                                                                            ======================    ======================
</TABLE>





See notes to Consolidated Financial Statements

                                     Page 4
<PAGE>


                                ALBERTSON'S, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

Basis of Presentation
---------------------
   The accompanying  unaudited  consolidated  financial  statements  include the
results of  operations,  account  balances and cash flows of the Company and its
wholly  owned  subsidiaries.   All  material  intercompany  balances  have  been
eliminated.

   In  the  opinion  of  management,  the  accompanying  unaudited  consolidated
financial statements include all adjustments necessary to present fairly, in all
material  respects,  the  results of  operations  of the Company for the periods
presented.  Such adjustments consisted only of normal recurring items except for
the impairment  charge discussed under  "Impairment - Store Closures" below. The
statements  have  been  prepared  by  the  Company  pursuant  to the  rules  and
regulations of the Securities and Exchange  Commission.  Certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant  to such rules and  regulations.  It is  suggested  that these
consolidated  financial  statements be read in conjunction with the consolidated
financial  statements and the accompanying  notes included in the Company's 1997
Annual Report.

   The  balance  sheet at  January  29,  1998,  has  been taken from the audited
financial statements at that date.

   The  preparation  of the  Company's  consolidated  financial  statements,  in
conformity with generally accepted accounting principles, requires management to
make  estimates and  assumptions.  These  estimates and  assumptions  affect the
reported  amounts of assets and  liabilities  and the  disclosure  of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses  during the reporting  period.  Actual  results
could differ from these estimates.

   Historical  operating  results  are  not  necessarily  indicative  of  future
results.

Reclassifications
-----------------
   Certain  reclassifications  have  been  made in the  prior  year's  financial
statements to conform to classifications used in the current year.

Impairment - Store Closures
---------------------------
   The  Company  recorded  a charge to  earnings  in the first  quarter  of 1998
related to management's decision to close 16 underperforming  stores in 8 states
during the fiscal year. The charge includes  impaired real estate and equipment,
as well as the present  value of  remaining  liabilities  under  leases,  net of
expected sublease  recoveries.  As of July 30, 1998, 10 of these stores had been
closed.

                                     Page 5
<PAGE>


Supplemental Cash Flow Information
----------------------------------
   Selected cash payments and noncash activities were as follows (in thousands):
<TABLE>
<CAPTION>

                                                                         26 Weeks Ended                26 Weeks Ended
                                                                          July 30, 1998                 July 31, 1997

                                                               -------------------------    --------------------------
<S>                                                            <C>                          <C>   
   Cash payments for:
     Income taxes                                                              $189,322                      $148,926
     Interest, net of amounts
       capitalized                                                               40,308                        30,828
   Noncash activities:
     Capitalized leases incurred                                                  8,049                         3,069
     Capitalized leases terminated                                                5,509                           361
     Note payable related to
       business acquisition                                                       8,000
     Tax benefits related to stock
       options                                                                    1,450                           842
     Liabilities assumed in connection
       with asset acquisition                                                        90
</TABLE>


Business Acquisitions
---------------------
   On January 30, 1998, the Company  acquired all of the  outstanding  shares of
Seessel's  Holdings,  Inc., a wholly owned subsidiary of Bruno's,  Inc. for cash
consideration of approximately $88 million. This acquisition included 10 grocery
stores in the Memphis,  Tennessee, area and a central bakery and central kitchen
which  manufacture  fresh  bakery and  prepared  foods for  distribution  to the
Seessel's  stores.  The Company is  continuing to operate these stores under the
Seessel's name.

   On April 20, 1998, the Company acquired Smitty's Super Markets, Inc. for cash
consideration  of approximately  $36 million plus an $8 million  unsecured note.
This  acquisition  included  10  combination  stores  and 3  fuel  centers  with
convenience stores in the Springfield and Joplin,  Missouri,  areas. The Company
is continuing to operate these stores under the Smitty's name.

   Both acquisitions were accounted for using the purchase method of accounting.
The results of operations of the acquired  businesses  have been included in the
consolidated  financial  statements  from their date of  acquisition.  Pro forma
results of operations  have not been presented due to the immaterial  effects of
these acquisitions on the Company's consolidated  operations.  The excess of the
purchase  price over the fair market value of net assets  acquired was allocated
to  goodwill  which  is being  amortized  over 40  years.  The  Company  has not
finalized its purchase price allocation relative to either acquisition, however,
the final purchase price  allocation  should not differ  significantly  from the
preliminary purchase price allocations recorded as of July 30, 1998.

Indebtedness
------------
   The Company  issued  medium term notes of $84 million in February  1998,  $77
million in April 1998 and $156  million in June 1998 under a shelf  registration
statement filed with the Securities and Exchange Commission in 1997.

   The $84  million of  medium-term  notes  issued in  February  1998  mature at
various  dates  between  February  2013  and  February  2028.  Interest  is paid
semiannually at rates ranging from 6.34% to 6.57%. The weighted average interest
rate is 6.47%.

                                     Page 6
<PAGE>



   The $77  million of  medium-term  notes  issued in April 1998 mature in April
2028, of which $50 million  contain a put option which would require the Company
to repay the notes in April 2008,  if the holder of the note so elects by giving
the Company a 60 day notice. Interest is paid semiannually at rates ranging from
6.10% to 6.53%. The weighted average interest rate is 6.25%.

   The $156  million of  medium-term  notes  issued in June 1998  mature in June
2028. Interest is paid semiannually at a rate of 6.63%.

   Proceeds from these issuances were used primarily to repay  borrowings  under
the Company's  commercial  paper program.  Medium-term  notes up to $183 million
remain available for issuance under the 1997 registration statement.

Capital Stock
-------------
   Since  1987 the  Board of  Directors  had  continuously  adopted  or  renewed
programs under which the Company was authorized,  but not required,  to purchase
and retire shares of its common stock.  The  remaining  authorization  under the
program adopted by the Board on March 2, 1998,  which  authorized the Company to
purchase and retire up to 5 million shares through March 31, 1999, was rescinded
in connection with the proposed merger with American Stores Company.

Subsequent Events
-----------------
   On August 2, 1998,  the Company  entered into a definitive  merger  agreement
with  American  Stores  Company  (ASC).  The  agreement  provides for a business
combination  between the Company and ASC in which ASC will  ultimately  become a
wholly owned  subsidiary of the Company.  Under the terms of the agreement,  the
holders of ASC Common  Stock will be issued  0.63  shares of  Albertson's,  Inc.
Common Stock in exchange for each share of ASC Common Stock ("Exchange  Ratio"),
with cash being paid in lieu of fractional  shares (the  "Consideration"),  in a
transaction  intended  to  qualify  as a pooling  of  interests  for  accounting
purposes and as a tax-free  reorganization  for federal income tax purposes.  On
July 31,  1998,  the last  trading day prior to the public  announcement  of the
merger,  the closing price on the New York Stock  Exchange  Composite  Tape of a
share of Albertson's Common Stock was $48.00 and of ASC Common Stock was $23.19.
Based upon such closing prices and the Exchange Ratio, the  Consideration  had a
value of $30.24 which  represented  a 30.4%  premium  over the  pre-announcement
closing price of the ASC Common Stock. At closing,  the Consideration may have a
market value that is greater or lesser than this amount  depending on the market
price of Albertson's Common Stock.

   As  a  result  of  the  merger,   former  stockholders  of   ASC  will   hold
approximately  41.3% of the  outstanding  Albertson's  Common Stock (assuming no
conversion  of  outstanding  options).  The  transaction  is  subject to certain
regulatory clearance and is expected to close in early 1999.

   On August 25, 1998,  the Company  completed  its purchase of the assets of 15
Bruno's,  Inc. stores. The transaction  included 14 operating stores and 1 store
under  construction  which,  when  completed,  will  replace  a store  currently
operating.  The stores are located in the Nashville and Chattanooga,  Tennessee,
metropolitan  areas.  The  Chattanooga  area stores  include a store in northern
Georgia.

                                     Page 7
<PAGE>


   On August 26, 1998,  the Company  announced the extension of its tender offer
for all  outstanding  shares of common  stock of  Buttrey  Food and Drug  Stores
Company until 12:00 midnight New York City time on September 30, 1998. All terms
and  conditions of its tender offer,  including the purchase price of $15.50 per
share, remain unchanged.  The Company has reached a tentative agreement with the
Federal Trade  Commission (FTC) staff and the staff has submitted that agreement
for approval by the FTC Commissioners with a favorable recommendation.


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations
---------------------
Results for the quarter:

   The following table sets forth certain income statement  components expressed
as a percent to sales and the  percentage  change from the previous  year in the
amounts of such components:
<TABLE>
<CAPTION>

                                                     Percent to Sales                      Percentage
                                             ----------------------------------
                                                      13 weeks ended                         Increase
                                             ----------------------------------
                                                     7-30-98           7-31-97             (Decrease)
                                             ----------------- ----------------     ------------------

<S>                                          <C>               <C>                  <C> 
   Sales                                            100.00%           100.00%                   8.5%
   Gross profit                                      26.77             25.32                   14.7
   Selling, general and
     administrative
     expenses                                        21.08             20.28                   12.8
   Operating profit                                   5.69              5.04                   22.4
   Net interest expense                               0.69              0.53                   41.3
   Other income                                       0.15              0.25                  (37.5)
   Earnings before
     income taxes                                     5.14              4.77                   17.1
   Net earnings                                       3.21              2.97                   17.3
</TABLE>


   Sales  increased  primarily  as a result of the  continued  expansion  of net
retail square footage. Identical store sales increased 0.6% and comparable store
sales (which include  replacement stores) increased 0.8%.  Management  estimates
that there was  inflation in products the Company  sells of  approximately  0.4%
(annualized).  During the 13 weeks, 18 stores were opened, 12 stores were closed
and 5 store remodels were  completed.  Included in store openings are 4 acquired
stores.  Retail  square  footage  increased to 45.2  million  square feet, a net
increase of 10.4% from July 31, 1997.

   In addition to new store  development,  the Company  plans to increase  sales
through its continued  investment  in programs  initiated in 1997 and 1996 which
are designed to provide solutions to customer needs. These programs include: the
Front End Manager program;  the home meal solutions process called "Quick Fixin'
Ideas;"  special   destination   categories  such  as  Albertson's  Better  Care
pharmacies and baby care, pet care,  snack and beverage  centers;  and increased
emphasis on training  programs  utilizing  Computer Guided Training.  To provide
additional   solutions   to   customer   needs,   the  Company  has  added  new,
gourmet-quality  bakery  products and organic  grocery and produce items.  Other
solutions include neighborhood marketing, targeted advertising, and exciting new
and remodeled stores.

                                     Page 8
<PAGE>


   Gross  profit,  as a percent  to sales,  increased  primarily  as a result of
improvements made in retail stores. Gross profit improvements were also realized
through the continued utilization of Company-owned  distribution  facilities and
increased  buying  efficiencies.  The Company's  distribution  centers  provided
approximately  75% of  retail  store  purchases.  Utilization  of the  Company's
distribution centers has enabled the Company to improve its control over product
costs and product distribution.  The pre-tax LIFO charge reduced gross profit by
$5.2 million  (0.13% to sales) for the 13 weeks ended July 30, 1998, as compared
to $10.9 million (0.30% to sales) for the 13 weeks ended July 31, 1997.

   Selling,  general  and  administrative  expenses,  as  a  percent  to  sales,
increased due primarily to increased  labor and related  benefit costs resulting
from the Company's  initiatives  to increase  sales and  increased  depreciation
expense associated with the Company's expansion program.

   The increase in net interest expense  resulted  primarily from higher average
outstanding  debt during the 13 weeks ended July 30, 1998, as compared to the 13
weeks ended July 31,  1997.  The average  outstanding  debt has  increased  as a
result of the Company's continued investment in new and acquired stores.

   Other income for the 13 weeks ended July 30, 1998, included noncash income of
$2.0  million for the increase in cash  surrender  value of  Company-owned  life
insurance as compared to income of $10.4 million for the 13 weeks ended July 31,
1997.


Year-to-date results:

   The following table sets forth certain income statement  components expressed
as a percent to sales and the  percentage  change from the previous  year in the
amounts of such components:
<TABLE>
<CAPTION>

                                                    Percent to Sales
                                             ----------------------------------
                                                      26 weeks ended                     Percentage
                                             ----------------------------------
                                                      7-30-98          7-31-97             Increase
                                             ----------------- ----------------     ----------------

<S>                                          <C>               <C>                  <C> 
   Sales                                            100.00%           100.00%                  7.6%
   Gross profit                                      26.70             25.53                  12.5
   Selling, general and
     administrative
     expenses                                        20.98             20.28                  11.3
   Impairment - store
     closures                                         0.38                                     N.A.
   Operating profit                                   5.34              5.25                   9.5
   Net interest
     expense                                          0.65              0.53                  31.5
   Other income                                       0.19              0.12                  63.4
   Earnings before
     income taxes                                     4.88              4.84                   8.5
   Net earnings                                       3.05              3.00                   9.3
</TABLE>


                                     Page 9
<PAGE>



   Sales  increased  primarily  as a result of the  continued  expansion  of net
retail square footage. Identical store sales increased 0.1% and comparable store
sales (which include  replacement stores) increased 0.3%.  Management  estimates
that there was  inflation in products the Company  sells of  approximately  0.4%
(annualized).  During the 26 weeks, 53 stores were opened, 15 stores were closed
and 7 store remodels were completed.  Included in store openings are 24 acquired
stores.  Retail  square  footage  increased to 45.2  million  square feet, a net
increase of 10.4% from July 31, 1997.

   In addition to new store  development,  the Company  plans to increase  sales
through its continued  investment  in programs  initiated in 1997 and 1996 which
are designed to provide solutions to customer needs. These programs include: the
Front End Manager program;  the home meal solutions process called "Quick Fixin'
Ideas;"  special   destination   categories  such  as  Albertson's  Better  Care
pharmacies and baby care, pet care,  snack and beverage  centers;  and increased
emphasis on training  programs  utilizing  Computer Guided Training.  To provide
additional   solutions   to   customer   needs,   the  Company  has  added  new,
gourmet-quality  bakery  products and organic  grocery and produce items.  Other
solutions include neighborhood marketing, targeted advertising, and exciting new
and remodeled stores.

   Gross  profit,  as a percent  to sales,  increased  primarily  as a result of
improvements made in retail stores. Gross profit improvements were also realized
through the continued utilization of Company-owned  distribution  facilities and
increased  buying  efficiencies.  The Company's  distribution  centers  provided
approximately  75% of  retail  store  purchases.  Utilization  of the  Company's
distribution centers has enabled the Company to improve its control over product
costs and product distribution.  The pre-tax LIFO charge reduced gross profit by
$13.2 million (0.17% to sales) for the 26 weeks ended July 30, 1998, as compared
to $21.8 million (0.30% to sales) for the 26 weeks ended July 31, 1997.

   Selling,  general  and  administrative  expenses,  as  a  percent  to  sales,
increased due primarily to increased  labor and related  benefit costs resulting
from the Company's  initiatives  to increase  sales and  increased  depreciation
expense associated with the Company's expansion program.

   The Company  recorded a charge to earnings  (Impairment - store  closures) in
the  first  quarter  of 1998  related  to  management's  decision  to  close  16
underperforming  stores in 8 states during the fiscal year. The charge  includes
impaired  real estate and  equipment,  as well as the present value of remaining
liabilities under leases,  net of expected sublease  recoveries.  As of July 30,
1998, 10 of these stores had been closed.

   The increase in net interest expense  resulted  primarily from higher average
outstanding  debt  during the 26 weeks ended July 30,  1998,  as compared to the
prior  year.  The  average  outstanding  debt has  increased  as a result of the
Company's continued investment in new and acquired stores.

   Other income for the 26 weeks ended July 30, 1998, included noncash income of
$11.3 million for the increase in cash  surrender  value of  Company-owned  life
insurance as compared to income of $11.0 million for the 26 weeks ended July 31,
1997.


                                    Page 10
<PAGE>


Liquidity and Capital Resources
-------------------------------

   The Company's  operating  results continue to enhance its financial  position
and  ability to  continue  its  planned  expansion  program.  Cash  provided  by
operating  activities  during the 26 weeks ended July 30, 1998, was $387 million
compared to $422  million in the prior year.  During the 26 weeks ended July 30,
1998, the Company  invested $375 million for net capital  expenditures  and $121
million acquiring two businesses.  The Company's  financing  activity for the 26
weeks  ended  July 30,  1998,  included  net new  long-term  borrowings  of $195
million, a reduction of commercial paper borrowings of $39 million,  $81 million
for the payment of dividends and $17 million for the purchase and  retirement of
the Company's common stock.

   The Company  utilizes its  commercial  paper program  primarily to supplement
cash requirements  from seasonal  fluctuations in working capital resulting from
operations  and  the  Company's  capital   expenditure   program.   Accordingly,
commercial  paper  borrowings  will  fluctuate  between the Company's  quarterly
reporting  periods.  The Company had $244 million of commercial paper borrowings
outstanding at July 30, 1998,  compared to $283 million at January 29, 1998, and
$180 million at July 31, 1997.

   The Company  issued $317  million of  medium-term  notes  during the 26 weeks
ended July 30, 1998. The notes were issued under a shelf registration  statement
filed with the  Securities  and Exchange  Commission in 1997.  Proceeds from the
issuances were primarily used to repay borrowings under the Company's commercial
paper  program.  Medium-term  notes  up to $183  million  remain  available  for
issuance under the 1997 shelf registration statement.

   Since  1987 the  Board of  Directors  had  continuously  adopted  or  renewed
programs under which the Company was authorized,  but not required,  to purchase
and retire shares of its common stock.  The  remaining  authorization  under the
program adopted by the Board on March 2, 1998,  which  authorized the Company to
purchase and retire up to 5 million shares through March 31, 1999, was rescinded
in connection with the proposed merger with American Stores Company.  During the
26 weeks ended July 30, 1998, 349,300 shares were purchased and retired prior to
the authorization being rescinded.

Year 2000 Compliance
--------------------
   The Year 2000 issue  results from computer  programs  being written using two
digits  rather  than  four to  define  the  applicable  year.  As the year  2000
approaches,  systems  using such  programs may be unable to  accurately  process
certain  date-based  information.  Like many  other  companies,  the  Company is
continuing to assess and modify its computer applications and business processes
to provide for their continued functionality. The Company is also continuing its
assessment  of the  readiness  of  external  entities,  such as  vendors,  which
interface with the Company.

   In addition, the Company is addressing the Year 2000 issue both by augmenting
previously scheduled computer maintenance with procedures designed to locate and
correct Year 2000 problems and by slightly accelerating its normal equipment and
software replacement schedules. The Company does not expect the costs associated
with these procedures to be material.


                                    Page 11
<PAGE>


   The Company  believes  that its efforts will result in Year 2000  compliance.
However,  the impact on business operations of failure by the Company to achieve
compliance or failure by external  entities  which the Company  cannot  control,
such as vendors,  to achieve  compliance,  could be  material  to the  Company's
consolidated results of operations.

Cautionary Statement for Purposes of "Safe Harbor Provisions"
of the Private Securities Litigation Reform Act of 1995
-------------------------------------------------------------
   From time to time, information provided by the Company,  including written or
oral  statements  made  by  its  representatives,  may  contain  forward-looking
information as defined in the Private Securities  Litigation Reform Act of 1995.
All  statements,  other than  statements  of  historical  facts,  which  address
activities,  events or developments that the Company expects or anticipates will
or may occur in the future, including such things as expansion and growth of the
Company's  business,  future  capital  expenditures  and the Company's  business
strategy, contain forward-looking  information. In reviewing such information it
should be kept in mind that  actual  results  may differ  materially  from those
projected or suggested in such forward-looking information. This forward-looking
information  is based on various  factors  and was  derived  utilizing  numerous
assumptions. Many of these factors have previously been identified in filings or
statements made by or on behalf of the Company.

   Important  assumptions  and other  important  factors that could cause actual
results  to  differ  materially  from  those  set  forth in the  forward-looking
information  include:  changes  in the  general  economy,  changes  in  consumer
spending, competitive factors and other factors affecting the Company's business
in or beyond the Company's control. These factors include changes in the rate of
inflation,  changes  in state or  federal  legislation  or  regulation,  adverse
determinations   with  respect  to   litigation   or  other  claims   (including
environmental  matters),  labor  negotiations,  adverse  effects  of  failure to
achieve  Year 2000  compliance,  the  Company's  ability to recruit  and develop
employees,  its ability to develop new stores or complete remodels as rapidly as
planned,  its ability to successfully  implement new technology and stability of
product costs.

   Other  factors  and  assumptions  not  identified  above could also cause the
actual results to differ materially from those set forth in the  forward-looking
information.   The  Company  does  not   undertake  to  update   forward-looking
information contained herein or elsewhere to reflect actual results,  changes in
assumptions  or  changes  in  other  factors   affecting  such   forward-looking
information.


                       PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

   Three civil lawsuits filed in  September 1996 as  purported  statewide  class
actions in  Washington,  California  and Florida and two civil lawsuits filed in
April 1997 in federal  court in Boise,  Idaho,  as purported  multi-state  class
actions  (including  the remaining  states in which the Company  operated at the
time) have been brought against the Company raising various issues that include:
(i)  allegations  that the Company has a widespread  practice of permitting  its
employees  to work  "off-the-clock"  without  being paid for their work and (ii)
allegations  that the  Company's  bonus  and  workers'  compensation  plans  are
unlawful.  Four of these suits are being  sponsored  and  financed by the United
Food and Commercial Workers (UFCW) International Union. The five suits have been
consolidated in Boise,  Idaho. In addition,  three other similar suits have been
filed as purported  class actions in Colorado,  New Mexico and Nevada which,  in
effect,  duplicate the coverage of the  UFCW-sponsored  suits. These three cases
have been transferred to the federal court in Boise, Idaho.

                                    Page 12
<PAGE>

   The  Company  is  committed  to full  compliance  with all  applicable  laws.
Consistent with this commitment, the Company has firm and long-standing policies
in  place  prohibiting  off-the-clock  work and has  structured  its  bonus  and
workers'  compensation plans to comply with applicable law. The Company believes
that the UFCW-sponsored suits are part of a broader and continuing effort by the
UFCW and some of its locals to pressure  the Company to unionize  employees  who
have not expressed a desire to be represented by a union. The Company intends to
vigorously  defend  against  all of these  lawsuits,  and,  at this stage of the
litigation, the Company believes that it has strong defenses against them.

   Although  these  lawsuits  are subject to the  uncertainties  inherent in the
litigation process, based on the information presently available to the Company,
management  does not expect the ultimate  resolution  of these actions to have a
material  adverse  effect  on the  Company's  financial  condition,  results  of
operations or cash flows.

   The Company is also involved in routine litigation  incidental to operations.
In the opinion of management, the ultimate resolution of these legal proceedings
will not have a material  adverse effect on the Company's  financial  condition,
results of operations or cash flows.

Item 2.  Changes in Securities
------------------------------
   In accordance with the Company's $600 million revolving credit agreement, the
Company's  consolidated  tangible net worth, as defined,  shall not be less than
$750 million.

Item 3.  Defaults upon Senior Securities
----------------------------------------
   Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
   Information  regarding the Company's  Annual meeting of Stockholders  held on
May 22,  1998,  was  included  under Item 4 of the  Company's  Form 10-Q for the
quarter ended April 30, 1998.

Item 5.  Other Information
--------------------------
   On August 31, 1998, the Board of Directors of the Company was reduced from 15
to 14 members,  with the designation of Kathryn Albertson as a Director Emeritus
of the  Company  for the  rest  of her  life.  As a  Director  Emeritus,  she is
entitled,  but not  required,  to attend  Board  meetings,  shall not vote or be
counted  in the  quorum for Board  meetings  and shall  receive an annual fee of
$35,000 for her services as Director Emeritus.

                                    Page 13
<PAGE>



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

        2    Agreement  and Plan of Merger,  dated as of August 2,  1998,
             among Albertson's, Inc., Abacus Holdings, Inc. and American
             Stores Company

        2.1  Stock Option Agreement,  dated as of August 2, 1998, between
             Albertson's,  Inc. and American Stores Company (American Stores
             Company as Issuer)

        2.2  Stock Option Agreement,  dated as of August 2, 1998, between
             Albertson's, Inc. and American Stores Company (Albertson's, Inc.
             as Issuer)

       27    Financial data schedule for the 26 weeks ended July 30, 1998

     b. The following  reports on Form 8-K were filed  subsequent to the quarter
        ended July 30, 1998:

             Current Report on Form 8-K dated August 5, 1998,  regarding the
             announcement of Albertson's, Inc. and American Stores Company
             Definitive Merger Agreement.





                                    Page 14
<PAGE>

                               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.



                                                ALBERTSON'S, INC.
                                       ---------------------------------
                                                  (Registrant)



Date:    September 2, 1998              /S/ A. Craig Olson
       ---------------------           ---------------------------------
                                        A. Craig Olson
                                        Senior Vice President, Finance
                                        and Chief Financial Officer



                                    Page 15