SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q




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


For the quarterly period ended     May 2, 1998
                               ----------------------


[   ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

For the transition period from                      to
                               --------------------    -------------------


                          AMES DEPARTMENT STORES, INC.
             (Exact name of registrant as specified in its charter)


            Delaware                              04-2269444
(State or other jurisdiction of      (I.R.S. Employer Identification Number)
 incorporation or organization)


2418 Main Street, Rocky Hill, Connecticut                    06067
(Address of principal executive offices)                   (Zip Code)


Registrant's telephone number including area code:      (860) 257-2000





     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
                                    -----      ----- 



     22,800,249 shares of Common Stock were outstanding on May 15, 1998.


                            Exhibit Index on page 11

                        Page 1 of 13 (including exhibits)

<PAGE> 

                  AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES

                                    FORM 10-Q

                        FOR THE QUARTER ENDED MAY 2, 1998




                                    I N D E X




                                                                      Page

Part I:         Financial Information

                Consolidated Condensed Statements of Operations         3
                    for the Thirteen Weeks ended May 2, 1998 and
                    April 26, 1997

                Consolidated Condensed Balance Sheets as of             4
                    May 2, 1998, January 31, 1998, and April 26,
                    1997

                Consolidated  Condensed  Statements  of  Cash  Flows    5
                    for  the Thirteen Weeks ended May 2, 1998 and
                    April 26, 1997

                Notes to Consolidated Condensed Financial Statements    6

                Management's Discussion and Analysis of Financial       8
                    Condition and Results of Operations


Part II:        Other Information

                Submission of Matters to a Vote of Security Holders    11
                    and Exhibits and Reports on Form 8-K

<PAGE>

<TABLE>                                                        
                                     PART I
                              FINANCIAL INFORMATION

                  AMES DEPARTMENT STORES, INC. AND SUSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (In Thousands, Except Per Share Amounts)
                                   (Unaudited)

<CAPTION>                                                    For the Thirteen 
                                                               Weeks Ended      
                                                         -----------------------
                                                           May 2,      April 26,
                                                            1998         1997   
                                                         ----------   ----------
<S>                                                   <C>          <C>          
TOTAL SALES                                               $518,223     $448,575 
 Less: Leased department sales                              19,175       15,974 
                                                         ----------   ----------
NET SALES                                                  499,048      432,601
COSTS, EXPENSES AND (INCOME):
 Cost of merchandise sold                                  360,614      313,617
 Selling, general and administrative expenses              143,632      128,885
 Leased department and other operating income               (6,186)      (4,687)
 Depreciation and amortization expense                       3,816        2,923
 Amortization of the excess of revalued net assets
  over equity under fresh-start reporting                   (1,538)      (1,538)
 Interest and debt expense, net                              2,054        2,392
                                                         ----------   ----------
INCOME (LOSS) BEFORE INCOME TAXES                           (3,344)      (8,991)
 Income tax benefit                                          1,226        3,061 
                                                         ----------   ----------
NET INCOME (LOSS)                                          ($2,118)     ($5,930)
                                                         ==========   ==========
 

Weighted average number of common shares outstanding        22,640       20,912 
                                                         ==========   ==========

NET INCOME (LOSS) PER SHARE                                 ($0.09)      ($0.28)
                                                         ==========   ==========





<FN>
       (The accompanying notes are an integral part of these consolidated
                        condensed financial statements.)
</FN>
</TABLE>

<PAGE> 

<TABLE>
                            AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
                                CONSOLIDATED CONDENSED BALANCE SHEETS
                                            (In Thousands)
                                              (Unaudited)
<CAPTION>
                                                                   May 2,    January 31,  April 26,
                                                                    1998        1998        1997
                      ASSETS                                    ------------------------------------
<S>                                                             <C>         <C>         <C>
Current Assets:
 Cash and short-term investments                                  $22,348     $57,828     $17,214
 Receivables                                                       26,713      18,922      26,228
 Merchandise inventories                                          499,911     423,836     461,796
 Prepaid expenses and other current assets                         15,069      12,060      14,259
                                                                ------------------------------------
       Total current assets                                       564,041     512,646     519,497
                                                                ------------------------------------
Fixed Assets                                                      141,887     128,790     103,451
 Less - Accumulated depreciation and amortization                 (49,065)    (45,457)    (34,931)
                                                                ------------------------------------
       Net fixed assets                                            92,822      83,333      68,520
                                                                ------------------------------------
Other assets and deferred charges                                  13,675      14,063       7,271
                                                                ------------------------------------
                                                                 $670,538    $610,042    $595,288
                                                                ====================================
               LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Accounts payable:
    Trade                                                        $182,258    $180,971    $154,153
    Other                                                          50,782      42,185      47,109
                                                               ------------------------------------
       Total accounts payable                                     233,040     223,156     201,262
 Note payable - revolver                                           54,256        -         73,107
 Current portion of long-term debt and capital lease obligations   12,306       4,177       8,182
 Self-insurance reserves                                           30,886      31,657      33,507
 Accrued expenses and other current liabilities                    69,870      73,437      61,659
 Store closing reserves                                            10,946      12,050      19,560
                                                               ------------------------------------
       Total current liabilities                                  411,304     344,477     397,277

Long-term debt                                                       -          9,340       9,192
Capital lease obligations                                          29,823      26,393      26,347
Other long-term liabilities                                        13,425      10,943       7,366

Unfavorable lease liability                                        14,975      15,333      16,668
Excess of revalued net assets over equity under fresh-start
  reporting                                                        28,636      30,174      34,789

Stockholders' Equity:
 Common stock                                                         227         225         213
 Additional paid-in capital                                       120,080     118,971      89,726
 Retained earnings                                                 52,068      54,186      13,710
                                                               ------------------------------------
       Total stockholders' equity                                 172,375     173,382     103,649
                                                               ------------------------------------
                                                                 $670,538    $610,042    $595,288
                                                               ====================================
<FN>
  (The accompanying notes are an integral part of these consolidated condensed
                             financial statements.)
</FN>
</TABLE>

<PAGE>

<TABLE>
                    AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                    (In Thousands)
                                      (Unaudited)
<CAPTION>
                                                              For the Thirteen
                                                                 Weeks Ended
                                                           ---------------------
                                                             May 2,    April 26,
                                                              1998       1997
                                                           ---------- ----------
<S>                                                        <C>        <C>
Cash flows from operating activities:
 Net income (loss)                                           ($2,118)   ($5,930)
 Adjustments to reconcile net loss to net cash
     used for operating activities:
 Income tax benefit                                           (1,226)    (3,061)
 Depreciation and amortization of fixed and other assets       3,999      3,064
 Amortization of the excess of revalued net assets
     over equity                                              (1,538)    (1,538)
 Increase in accounts receivable                              (7,791)    (7,157)
 Increase in merchandise inventories                         (76,075)   (70,720)
 Increase in accounts payable                                  9,884     12,345
 Decrease in accrued expenses and other current liabilities   (3,684)    (5,367)
 Decrease in other working capital and other, net                629        717
                                                           ---------- ----------
Cash used for operations before store closing items          (77,920)   (77,647)
Payments of store closing costs                                 (710)    (3,980)
                                                           ---------- ----------
Net cash used for operating activities                       (78,630)   (81,627)
                                                           ---------- ----------
Cash flows from investing activities:
 Purchases of fixed assets                                    (8,957)    (8,806)
 Purchase of leases                                              -       (2,826)
                                                           ---------- ----------
Net cash used for investing activities                        (8,957)   (11,632)
                                                           ---------- ----------
Cash flows from financing activities:
 Payments of debt and capital lease obligations               (2,606)   (10,146)
 Short-term borrowings under the revolver, net                54,256     73,107
 Proceeds from the exercise of options and warrants              457      1,393
                                                           ---------- ----------
Net cash provided by financing activities                     52,107     64,354
                                                           ---------- ----------
Decrease in cash and short-term investments                  (35,480)   (28,905)
Cash and short-term investments, beginning of period          57,828     46,119
                                                           ---------- ----------
Cash and short-term investments, end of period               $22,348    $17,214
                                                           ========== ==========
Supplemental  disclosures of cash flow information:
  Cash paid during the period for:
    Interest and debt fees not capitalized                    $1,661     $1,987
    Income taxes                                                  10          2


<FN>
  (The accompanying notes are an integral part of these consolidated condensed
                             financial statements.)
</FN>
</TABLE>

<PAGE>

                  AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)


1.     Basis of Presentation:

              In  the  opinion  of  management,   the   accompanying   unaudited
       consolidated  condensed  financial  statements of Ames Department Stores,
       Inc. (a Delaware  Corporation) and subsidiaries  (collectively  "Ames" or
       the "Company")  contain all adjustments  (consisting of normal  recurring
       adjustments)   necessary  for  a  fair  presentation  of  such  financial
       statements  for  the  interim  periods.  Due  to the  seasonality  of the
       Company's  operations,  the  results of its  operations  for the  interim
       period ended May 2, 1998 may not be  indicative  of total results for the
       full year. 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 the
       rules  and  regulations   promulgated  by  the  Securities  and  Exchange
       Commission (the "SEC"). Certain prior year amounts have been reclassified
       to  conform  to  the   presentation   used  for  the  current  year.  The
       consolidated  condensed  balance  sheet at January 31, 1998 was  obtained
       from audited  financial  statements  previously filed with the SEC in the
       Company's  latest  Form 10-K.  The  accompanying  unaudited  consolidated
       condensed  financial  statements  should be read in conjunction  with the
       financial  statements and notes thereto  included in the Company's latest
       Form 10-K.

2.     Net Income (loss) Per Common Share:

              Net income  (loss)  per share was  determined  using the  weighted
       average  number of  common  shares  outstanding.  188,135  warrants  were
       converted and 61,760 options were exercised  during the quarter ended May
       2, 1998.  During the quarter ended April 26, 1997,  646,581 warrants were
       converted and 158,750  options were exercised.  Common stock  equivalents
       were  excluded  for the  thirteen  weeks  ended May 2, 1998 and April 26,
       1997, as their  inclusion  would have reduced the reported loss per share
       and,  therefore,  diluted net income  (loss) per share was equal to basic
       net income (loss) per share for both periods presented.

3.     Inventories:

              Inventories  are valued at the lower of cost or market.  Effective
       October 25, 1997, the Company changed from the retail last-in,  first-out
       (LIFO) method of accounting for  inventories  to the first-in,  first-out
       (FIFO) method and restated all prior  periods for the change.  The change
       had no impact on the historical results of operations of the Company.

4.     Debt:

              On December 27, 1996,  the Company  entered into an agreement with
       BankAmerica Business Credit,  Inc., as agent, two financial  institutions
       as co-agents  (together with the agent,  the  "Agents"),  and a syndicate
       consisting of five other banks and financial institutions,  for a secured
       revolving credit facility of up to $320 million,  with a sublimit of $100
       million  for  letters  of credit  and a $20  million  term  loan  portion
       available for capital expenditures (the "Credit Agreement").

              The Credit  Agreement is in effect until June 30, 2000, is secured
       by  substantially  all of the assets of the  Company,  and  requires  the
       Company to meet  certain  financial  covenants.  In  addition,  each year
       outstanding  borrowings  under the  Credit  Agreement  may not exceed any
       balance  due  under  the term  loan  portion  plus up to $20  million  in
       revolver loans for a consecutive  30-day period between November 15th and
       February 15th of the following  year.  The Company is in compliance  with
       the financial covenants through the quarter ended May 2, 1998.

<PAGE>

              As of May 2, 1998,  borrowings of $54.3  million were  outstanding
       under the  Credit  Agreement.  In  addition,  $21.0 and $5.9  million  of
       standby and trade letters of credit, respectively, were outstanding under
       the  Credit  Agreement.   The  weighted  average  interest  rate  on  the
       borrowings  for the thirteen  weeks ended May 2, 1998 was 8.2%.  The peak
       borrowing level through May 2, 1998 was $54.3 million.

              The  amount of  borrowing  under the  Credit  Agreement  shall not
       exceed the sum of (i) an amount equal to 60% of inventory  not covered by
       any  outstanding  letter  of credit  plus (ii) an amount  equal to 50% of
       inventory covered by any outstanding  letter of credit. In addition,  the
       Credit  Agreement  provides  for the  potential  establishment  of  other
       reserves contingent upon the Company's financial performance. Each Agent,
       in  addition,  reserves  the right to adjust  the total  available  to be
       borrowed by  establishing  reserves,  making  determinations  of eligible
       inventory,  revising  standards of eligibility or decreasing from time to
       time the percentages set forth above. Reference can be made to the latest
       Form  10-K for  further  descriptions  of the  Credit  Agreement  and for
       descriptions of the Company's other obligations not discussed herein.

 5.    Stock Options:

              The Company  has  granted  stock  options  under two stock  option
       plans, the 1994 Management Stock Plan and the 1994 Non-Employee Directors
       Stock Option Plan. The Company accounts for these plans under APB Opinion
       No. 25, under which no compensation cost has been recognized.  The impact
       of applying  SFAS  Statement No. 123 to the Company's net income and loss
       per share would have been immaterial for all periods presented.

              A third  plan,  the 1998  Management  Stock  Incentive  Plan,  was
       subject to  shareholder  approval at the Annual  Meeting of  Stockholders
       held May 27, 1998. For further description of the above, reference can be
       made to the  Company's  definitive  proxy  statement as filed on April 8,
       1998.  The results of the  stockholder  vote  will  be  reported  in  the
       Quarterly Report for the Company's fiscal quarter ending August 1, 1998. 

 6.    Income Taxes:

              The Company's  estimated annual effective income tax rate for each
       year was  applied  to the  income  (loss)  before  income  taxes  for the
       thirteen weeks ended May 2, 1998 and April 26, 1997 to compute a non-cash
       income tax benefit.  The income tax benefit is included in other  current
       assets in the accompanying  balance sheet as of May 2, 1998 and April 26,
       1997.

 7.    Litigation:

              Reference  can be made to the  latest  Form  10-K  (Note 12 to the
       Consolidated  Financial  Statements) for various litigation involving the
       Company,  for which there were no material  changes since the filing date
       of the Form 10-K.

<PAGE>

                  AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
                        FISCAL QUARTER ENDED MAY 2, 1998
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



Results of Operations
----------------------
  The  following  table sets forth the number of stores in  operation  as of the
dates indicated:

                                           Number of Stores in Operation
                                   ---------------------------------------------
                                     May 2,        January 31,        April 26,
                                      1998            1998               1997
                                   ---------       -----------       -----------
                                      298              298               294


  The following discussion and analysis is based on the  results  of  operations
for the thirteen weeks ended May 2, 1998 and April 26, 1997.  During the quarter
ended  May 2,  1998,  two (2) stores were opened and two (2) stores were closed.
During the quarter  ended April 26,  1997,  four (4) stores were opened,  twelve
(12) stores were closed and the Company  determined that it would  not re-open a
store  previously  closed as a result of flooding.


  The following table sets forth the operating results expressed as a percentage
of net sales for the periods indicated:


                                                         Thirteen            
                                                        Weeks Ended          
                                                     ------------------      
                                                      May 2,   April 26,     
                                                       1998      1997        
                                                     -------   --------      
  Net sales                                           100.0 %    100.0 %  
  Cost of merchandise sold                             72.3       72.5    
                                                     -------    -------   
     Gross margin                                      27.7       27.5    
  Expenses and (income):
  Selling, general and administrative expenses         28.8       29.8    
  Leased department and other operating income         (1.2)      (1.1)   
  Depreciation and amortization expense                 0.7        0.7    
  Amortization of the excess of revalued net
     assets over equity under fresh-start reporting    (0.3)      (0.4)   
  Interest and debt expense, net                        0.4        0.6    
                                                     -------    -------   
  Income (loss) before income taxes                    (0.7)      (2.1)    
  Income tax benefit                                    0.3        0.7    
                                                     -------    -------   
  Net income (loss)                                    (0.4) %    (1.4) %  
                                                     =======    =======   

<PAGE>

       Net sales for the  thirteen  weeks  ended  May 2,  1998  increased  $66.4
million or 15.4% from the prior-year's first quarter and comparable-store  sales
increased  12.9%.  These  sales  increases  were   attributable,   in  part,  to
unseasonably warm weather and a successful 40th Anniversary  promotion in March,
1998.

       Gross margin for the first quarter increased $19.5 million,  or 0.2% as a
percentage of net sales.  The improvement in first quarter gross margin rate was
primarily attributable to lower markdowns.

       Selling,  general  and  administrative  expenses  for the  first  quarter
increased  $14.7 million,  but decreased 1.0% as a percentage of net sales.  The
Company  experienced  percentage  reductions  in store and  advertising expenses
partially  offset  by  an increase  in  compensation related expenses during the
quarter.

       Depreciation  and  amortization  expense  increased by $0.9 million,  but
remained unchanged as a percentage of net sales, in the thirteen weeks ended May
2, 1998,  compared to the same prior-year  period.  The  adoption of fresh-start
reporting  as of December  26,  1992  resulted  in the  write-off  of all of the
Company's  non-current  assets at that  date,  and  therefore  depreciation  and
amortization expense results only from capital additions after that date.

       The  amortization  of the excess of revalued net assets over equity under
fresh-start  reporting  remained  the same in the current  periods  presented as
compared  to the prior  year.  The  Company is  amortizing  this  amount  over a
ten-year period.

       Interest  and debt  expense,  net of  interest  income,  declined by $0.3
million,  or 0.2% as a percentage of net sales,  in the thirteen weeks ended May
2, 1998.  This decrease was due primarily to a reduction in short-term  interest
expense  as a result of lower  average  outstanding  balances  under the  Credit
Agreement (from $34.1 to $18.4 million during the thirteen-week period).

       The Company's  estimated  annual  effective income tax rate for each year
was  applied  to the loss  before  income  taxes for each  period  to  compute a
non-cash  income tax  benefit.  The income tax  benefits  are  included in other
current assets in the balance sheet as of May 2, 1998 and April 26, 1997.

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

        On  December  27,  1996,  the Company  entered  into an  agreement  with
BankAmerica  Business  Credit,  Inc., as agent,  two financial  institutions  as
co-agents (together with the agent, the "Agents"), and a syndicate consisting of
five other banks and  financial  institutions,  for a secured  revolving  credit
facility of up to $320  million,  with a sublimit of $100 million for letters of
credit (the "Credit Agreement").

       The Credit Agreement is in effect until June 30, 2000. The Company was in
compliance  with the  financial  covenants of the Credit  Agreement  through the
quarter  ended May 2, 1998.  Reference  can be made to Note 4 of this  Quarterly
Report  and  the  latest  Form  10-K  for  further  descriptions  of the  Credit
Agreement.

       Merchandise  inventories,  increased $38.1 million from April 26, 1997 to
May 2, 1998 due to planned increases and special buy opportunities  available in
connection with the 40th Anniversary promotion.  The  increase in inventories of
$76.1 million from January 31, 1998 to May 2, 1998 was principally the result of
a normal seasonal build-up of inventories  and  the  special  buy  opportunities
referenced above.

       Trade accounts payable increased $28.1 million from April 26, 1997 to May
2, 1998 primarily due to the merchandise  inventory increases  referenced above.
The  increase  of  $1.3  million  from  January  31,  1998  to May 2,  1998  was
principally  the  result  of  seasonal   build-up  of  merchandise   inventories
referenced  above,  partially  offset by seasonal dating in effect as of January
31, 1998.

       Capital  expenditures  for the  thirteen  weeks ended May 2, 1998 totaled
$9.0 million and for the balance of the year are  estimated to be  approximately
$76  million.  The  Company  adjusts  its plans  for  making  such  expenditures
depending on the amount of internally generated funds.

       The net  operating  loss  carryovers  remaining  after  fiscal year 1997,
subject to any  limitations  pursuant to Internal  Revenue Code Sec. 382, should
offset income on which taxes would otherwise be payable in future years.

       The Company believes that available cash and expected cash flows from the
current  fiscal  year's  operations  and  beyond,  and the  availability  of its
financing  facilities,  will enable the Company to fund its  expected  needs for
working capital, capital expenditures and debt service requirements.

<PAGE>

                                     Part II

                                OTHER INFORMATION


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

                      Reference  can be  made  to  Note  12 to the  Consolidated
               Financial  Statements  included in the Company's most recent Form
               10-K for various  litigation  involving  the  Company,  for which
               there were no material  changes since the filing date of the Form
               10-K.


Item 4.        Submission of Matters to a Vote of Security Holders
               ---------------------------------------------------

                      On April 13, 1998, the Company sent a notice of the annual
               meeting and a proxy statement to its stockholders.  The notice of
               meeting  announced that the Annual Meeting of Stockholders  would
               be held  Wednesday,  May 27,  1998,  to consider and act upon the
               following matters:  (a) the election of seven (7) directors for a
               term of one year or until their  successor(s)  have been  elected
               and  qualified;   (b)  the   ratification  and  approval  of  the
               appointment  of  Arthur  Andersen  LLP as  independent  certified
               public  accountants  and  auditors for the Company for the fiscal
               year  ending  January  30,  1999;  (c) the  approval  of the Ames
               Department Stores,  Inc. 1998 Management Stock Incentive Plan, as
               described in the Company's  Proxy  Statement filed April 8, 1998;
               (d) the approval of an amendment to the Ames  Department  Stores,
               Inc. 1994  Non-Employee  Directors  Stock Option Plan to increase
               the number of shares  included in each option grant;  and (e) the
               transaction  of such other  business as may properly  come before
               the meeting or any adjournment(s) thereof.

                      The  results  of  the  meeting  will  be  reported  in the
               Quarterly  Report for the Company's  fiscal quarter ending August
               1, 1998.


Item 6.        Exhibits and Reports on Form 8-K
               --------------------------------
          
    (a)   Index to Exhibits
               
               Exhibit No.              Exhibit                         Page No.
               -----------              -------                         --------

                   11          Schedule of computation of basic            13
                               and diluted net income (loss) per
                               share


    (b)   Reports on Form 8-K:


               The following  report on Form 8-K  was  filed with the Securities
               and Exchange Commission during the first quarter:


     Date of Report   Date of Filing   Item #             Description
     --------------   --------------   ------    -----------------------------
     April 9, 1998    April 9, 1998       5      Disclosure of the Employment
                                                 Agreement dated April 1, 1998
                                                 between Ames Department Stores,
                                                 Inc. and Rolando de Aguiar.

<PAGE>

                                   SIGNATURES





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




                                            AMES DEPARTMENT STORES, INC.
                                                   (Registrant)




     Dated:     June 2, 1998              /s/ Joseph R. Ettore
                                          --------------------------------------
                                          Joseph R. Ettore, President, Director,
                                          and Chief Executive Officer






     Dated:     June 2, 1998              /s/ Rolando de Aguiar
                                          --------------------------------------
                                          Rolando de Aguiar, Executive Vice
                                          President and Chief Financial Officer






     Dated:     June 2, 1998              /s/ Gregory D. Lambert
                                          --------------------------------------
                                          Gregory D. Lambert
                                          Senior Vice President - Finance

<PAGE>

<TABLE>
                                                                                                                  Exhibit 11

                                         AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
                                SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE
                                        (Amounts in thousands except per share amounts)


<CAPTION>
                                                                                                 For the Thirteen
                                                                                                    Weeks Ended
                                                                                         -----------------------------------
                                                                                             May 2,              April 26,
                                                                                              1998                 1997
                                                                                         --------------       --------------
<S>                                                                                      <C>                  <C> 
       Net income (loss)                                                                     ($2,118)             ($5,930)
                                                                                         ==============       ==============





       For Basic Net Income (Loss) Per Share

          Weighted average number of common shares
                 outstanding during the period                                               22,640               20,912
                                                                                         ==============       ==============

               Basic net income (loss) per share                                             ($0.09)              ($0.28)
                                                                                         ==============       ==============




       For Diluted Net Income (Loss) Per Share

          Weighted average number of common shares
                 outstanding during the period                                               22,640               20,912

          Add:   Common stock equivalent shares represented by
                               - Series B Warrants                                             (a)                  (a)
                               - Series C Warrants                                             (a)                  (a)
                               - Options under 1994 Management Stock Option Plan               (a)                  (a)
                               - Options under 1994 Non-Employee Directors
                                       Stock Option Plan                                       (a)                  (a)

                                                                                         --------------       --------------
          Weighted average number of common and common equivalent
                 shares used in the calculation of diluted earnings per share                22,640               20,912
                                                                                         ==============       ==============

               Diluted net income (loss) per share                                           ($0.09)              ($0.28)
                                                                                         ==============       ==============



<FN>
             (a) Common stock equivalents have not been included because the effect would be anti-dilutive.
</FN>
</TABLE>