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 quarterly period ended August 30, 1997

Commission File No.  0-19369


                            LITTLE SWITZERLAND, INC.

    (Exact name of registrant as specified in its charter)

Delaware                            66-0476514
(State of Incorporation)            (I.R.S Employer
                                    Identification No.)

161-B Crown Bay Cruise Ship Port
St. Thomas U.S.V.I.                             00802
(Address of Principal Executive Offices)   (Zip Code)

(809) 776-2010
(Registrant's Telephone Number, Including Area Code)


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 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  [  ]



At October 10,  1997,  8,462,359  shares of $.01 par value  common  stock of the
registrant were outstanding.




<PAGE>





                            LITTLE SWITZERLAND, INC.

                               INDEX TO FORM 10-Q

                      FOR THE QUARTER ENDED August 30, 1997


                                                                  PAGE
PART I.         FINANCIAL INFORMATION

Item 1.         Financial Statements

      Consolidated Balance Sheets as of
      August 30, 1997 (unaudited) and
      May 31, 1997                                                  3

      Consolidated Statements of Income
      for the three months ended
   August 30, 1997 and August 31,
      1996                                                          4


      Consolidated Statements of Cash Flows
      for the three months ended August 30,
      1997 and August 31, 1996 (unaudited)                          5

      Notes to Consolidated Financial
      Statements (unaudited)                                        6-10


Item 2.         Management's Discussion and Analysis
                of Financial Condition and Results
                of Operations                                      11-13


Item 3.  Quantitative and Qualitative Disclosures
                about Market Risk                                  14


PART II. OTHER INFORMATION

Item 5.  Other Information                                         14

Item 6.         Exhibits and Reports on Form 8-K                   15

Signature Page                                                     16

<PAGE>


PART I.  FINANCIAL INFORMATION                                     FORM 10-Q
Item 1.  Financial Statements                                      Page 3

                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                      (in thousands except per share data)

                                                     August 30,      May 31,
                          ASSETS                        1997          1997
                                                       ------        ------
Current assets:                                     (unaudited)
   Cash and cash equivalents........................$    952        $  1,710
   Accounts receivable..............................   2,881           2,083
   Inventory........................................  49,062          44,728
   Prepaid expenses and other current assets........   3,726           2,172
                                                      ------          ------
         Total current assets.......................  56,621          50,693
                                                      ------          ------

Property, plant and equipment, at cost..............  38,854          38,565    
   Less -- Accumulated depreciation................. (15,842)        (15,201)
                                                      ------          ------
                                                      23,012          23,364
                                                      ------          ------

Other assets........................................   3,250           3,334
                                                      ------          ------

         Total assets...............................$ 82,883        $ 77,391
                                                      ======          ======

               LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
   Current portion of long term debt................$  2,225        $  2,225
   Unsecured notes payable..........................  10,025           8,100
   Accounts payable.................................  11,447           7,002
   Accrued and currently deferred income taxes......     364             429
   Other accrued expenses and deferred income.......   2,327           2,431
                                                      ------          ------

         Total current liabilities..................  26,388          20,187

Long term debt......................................   5,563           6,119

Deferred income taxes...............................     186             186
                                                      ------          ------

         Total liabilities..........................  32,137          26,492
                                                      ------          ------

Commitments and contingencies.......................     ---             ---

Minority interest...................................   1,619           1,619
                                                      ------          ------
Stockholders' equity:
  Preferred stock, $.01 par value--
    Authorized--5,000 shares
    Issued and outstanding--none....................     ---             ---
  Common stock, $.01 par value--
    Authorized--20,000 shares
    Issued and outstanding--8,462 shares
      at August 30, 1997 and at May 31, 1997 .......      85              85
Capital in excess of par............................  14,814          14,811
Retained earnings...................................  34,228          34,384
                                                      ------          ------

      Total stockholders' equity....................  49,127          49,280
                                                      ------          ------
      Total liabilities, minority interest
         and stockholders' equity...................$ 82,883        $ 77,391
                                                      ======          ======

           See accompanying notes to consolidated financial statements

<PAGE>

PART I. FINANCIAL INFORMATION                                       FORM 10-Q
Item 1. Financial statements                                        Page 4


                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                      (in thousands except per share data)
                                   (unaudited)



                                                For the three
                                                months ended
                                           August 30,     August 31,
                                              1997           1996
                                             ------         ------

Net sales..................................$ 20,370       $ 15,868
Cost of sales..............................  11,713          8,972
                                             ------         ------

Gross profit...............................   8,657          6,896

Selling, general and
administrative expenses....................   8,479          7,929

Business interruption
insurance (proceeds).......................     ---           (428)
                                              ------         ------

   Operating income (loss).................     178           (605)

Interest expense, net......................     370            332
                                             ------         ------
   (Loss) before
      income taxes.........................    (192)          (937)

(Benefit) for
income taxes...............................     (35)          (168)
                                             ------         ------

Net (loss).................................$   (157)      $   (769)
                                             ======         ======

Net (loss)
   Per share...............................$  (0.02)      $  (0.09)
                                             ======         ======
Weighted average shares
   outstanding.............................   8,682          8,458
                                             ======         ======



            See accompany notes to consolidated financial statements




<PAGE>

PART I. FINANCIAL INFORMATION                                      FORM 10-Q
Item 1. Financial statements                                       Page 5

                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)

                                                     For the three months ended
                                                       August 30,   August 31,
                                                          1997         1996
Cash flows from operating activities:                   -------       -------
Net (loss)............................................$   (157)    $   (769)
     Adjustments to reconcile net (loss) to net cash
       provided by (used in) operating activities--
       Depreciation...................................     641          828
       Changes in assets and liabilities:
         (Increase) decrease in accounts receivable...    (798)         276
         (Increase) in inventory......................  (4,334)      (5,830)
         (Increase) in prepaid expenses
           and other current assets...................  (1,554)      (1,217)
          Decrease in other assets....................      84           48
          Increase in accounts payable................   4,445        5,097
         (Decrease) in other accrued
            expenses and deferred income..............    (103)        (332)
         (Decrease) in accrued and currently
           deferred income taxes......................     (65)      (1,036)
                                                        -------      -------
   Net cash (used in) operating activities............  (1,841)      (2,935)
                                                        -------      -------
Cash flows from investing activities:
     Capital expenditures.............................    (289)        (856)
                                                        -------      -------
   Net cash (used in) investing activities............    (289)        (856)
                                                        -------      -------
Cash flows from financing activities:
     Proceeds from unsecured notes payable............   3,825        5,700
     Repayments of unsecured notes payable............  (1,900)      (3,600)
     Repayments of long term borrowings...............    (556)         --
     Issuance of common stock.........................       3            9
                                                        -------      -------
Net cash provided by financing activities.............   1,372        2,109
                                                        -------      -------

Net decrease in cash and cash equivalents.............    (758)      (1,682)

Cash and cash equivalents, beginning of period........   1,710         5,393
                                                        -------      -------
Cash and cash equivalents, end of period..............$    952     $  3,711
                                                        =======      =======

During the three months ended August 30, 1997 and August 31, 1996, the Company
paid income taxes of $29 and $837, respectively, and paid interest of $415 and
$259, respectively.

           See accompanying notes to consolidated financial statements

<PAGE>

FINANCIAL INFORMATION                                              FORM 10-Q
Item 1.  Financial statements                                      Page 6


                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

                                   (unaudited)


1. CONSOLIDATED FINANCIAL STATEMENTS

     The accompanying  consolidated  financial statements include the operations
of Little  Switzerland,  Inc. (the "Company") and its wholly owned subsidiaries,
L.S.  Holding,  Inc.  and L.S.  Wholesale,  Inc.  All  significant  intercompany
balances have been eliminated in consolidation. The interim financial statements
are  unaudited  and,  in the  opinion of  management,  contain  all  adjustments
necessary to present  fairly the Company's  financial  position as of August 30,
1997 and August 31,  1996 and the results of its  operations  and cash flows for
the interim  periods  presented.  It is suggested  that these interim  financial
statements be read in  conjunction  with the financial  statements and the notes
thereto included in the Company's latest report on Form 10-K.

     The  results  of  operations  for the  interim  periods  presented  are not
necessarily indicative of the results to be expected for a full fiscal year, due
to the seasonal nature of the Company's operations.


2. USE OF ESTIMATES

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
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 those estimates.

3. TRANSACTIONS WITH AFFILIATES

     The  Company  enters  into a number  of  transactions  with  Town & Country
Corporation and its affiliates ("Town & Country"), of which one of the Company's
Directors  is an  Executive  Officer.  The  Company  purchases  a portion of its
merchandise  from  Town &  Country  at  prices  which  approximate  arm's-length
transactions.


<PAGE>

                                                                   FORM 10-Q
                                                                   Page 7


                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


4. CREDIT ARRANGEMENTS

     The Company  has  available a total of $19.7  million in  unsecured  credit
facilities, of which $5.5 million is available for borrowing. Approximately $4.2
million of the credit  facilities is utilized to secure  customs bonds and other
bank guarantees required in the normal course of business.  Any unfunded portion
of  the  facilities  can be  withdrawn  at the  bank's  discretion.  Outstanding
borrowings against these credit facilities totaled  approximately  $10.0 million
as of August 30, 1997. Additionally,  in February 1996, the Company secured term
debt of  approximately  $8.9  million  from its two lead  banks to  finance  the
acquisition of the fixtures,  leasehold  rights and inventories of two stores in
Barbados.  Interest  on  this  debt  accrues  at  an  annual  interest  rate  of
approximately  7.25%, and is payable monthly.  The principal is payable in equal
quarterly payments over a four year period,  commencing March 1997. As of August
30,  1997,  the Company  had $7.8  million of term debt  outstanding  and was in
compliance with all restrictive covenants related to its unsecured and term debt
agreements.  Additionally,  the Company has available  separate  facilities  for
foreign exchange contracts.


5. EARNINGS PER SHARE

     Earnings  per share is based on the weighted  average  number of common and
dilutive  common  equivalent  shares  (stock  options)  outstanding  during each
period.


6. ACCOUNTING FOR INCOME TAXES

     The Company follows the liability  method of accounting for income taxes as
set forth in SFAS No.  109,  Accounting  for Income  Taxes.  Under SFAS No. 109,
deferred tax assets and  liabilities  are recognized for the expected future tax
consequences  of events that have been included in the  financial  statements or
tax  returns.  The amount of  deferred  tax asset or  liability  is based on the
difference  between  the  financial  statement  and  tax  bases  of  assets  and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences are expected to reverse.


<PAGE>

                                                                   FORM 10-Q
                                                                   Page 8


                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


7.  OTHER ASSETS


     Other  assets  consist  primarily  of amounts  related to non-  competition
agreements, rental deposits and the excess of cost over the fair market value of
the  net  assets  of  the  business  acquired  (goodwill).  Amounts  related  to
non-competition  agreements  are  amortized  over the  lives  of the  respective
agreements.  Amounts  related to goodwill are being amortized over periods of up
to  10  years.  Accumulated  amortization  totaled  approximately  $418,000  and
$110,000 at August 30, 1997 and August 31, 1996, respectively.

     The Company  accounts for long-lived  and  intangible  assets in accordance
with SFAS No. 121,  Accounting for the  Impairment of Long-lived  Assets and for
Long-lived Assets to be Disposed of. The Company  continually reviews applicable
assets for events or changes in circumstances  which might indicate the carrying
amount  of  the  assets  may  not  be  recoverable.  The  Company  assesses  the
recoverability  of these assets by  determining  whether the  amortization  over
their remaining lives can be recovered  through  projected  undiscounted  future
results.  The amount of  impairment,  if any,  is  measured  based on  projected
discounted  future  results  using a discount rate  commensurate  with the risks
involved. No such impairment existed as of August 30, 1997.


8.  STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128 - EARNINGS
       PER SHARE


     In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS No. 128), Earnings per Share, which
supersedes  Accounting  Principles Board Opinion 15, the existing  authoritative
guidance. SFAS No. 128 is designed to improve the earnings per share information
provided in the financial  statements by simplifying the existing  computational
guidelines,   revising  the   disclosure   requirements,   and   increasing  the
comparability of earnings per share on an international  basis.  SFAS No. 128 is
effective for financial  statements  for both interim and annual  periods ending
after December 15, 1997 and requires  restatement of all  prior-period  earnings
per share data presented.

<PAGE>

                                                                    FORM 10-Q
                                                                    Page 9

                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


The new  statement  modifies  the  calculations  of  primary  and fully  diluted
earnings per share and replaces them with basic and diluted  earnings per share.
Basic  earnings per share includes no dilution and is calculated by dividing net
income by the  weighted  average  number of common  shares  outstanding  for the
period.  Diluted  earnings per share  reflects the  potential  dilution of stock
options that could share in the earnings of an entity,  similar to fully diluted
earnings per share.  Earnings per share in these financial  statements would not
be affected under the new pronouncement.


9.  STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123 -
          ACCOUNTING FOR STOCK-BASED COMPENSATION

     In December 1995, the Financial  Accounting Standards Board issued SFAS No.
123, Accounting for Stock-Based  Compensation,  which is to become effective for
fiscal years beginning  after December 15, 1995. SFAS No. 123 requires  employee
stock-based  compensation  to be either recorded or disclosed at its fair value.
Management  continues to account for  employee  stock-based  compensation  under
Accounting Principles Board Opinion No. 25 and will not adopt the new accounting
provision  for employee  stock-based  compensation  under SFAS No. 123, but will
include the  additional  required  disclosures  in its fiscal year end financial
statements.


10.  ADVERTISING

     The Company expenses the costs of advertising as advertisements are printed
and distributed.  The Company's advertising consists primarily of advertisements
with local and national travel  magazines which are produced on a periodic basis
and  distributed  to  visiting  tourists,  and fees paid for  promotional  "port
lecturer" programs directed primarily at cruise ship passengers.








<PAGE>

                                                                    FORM 10-Q
                                                                    Page 10


                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

                                   (unaudited)


11.  COMMITMENTS AND CONTINGENCIES

     In September 1995,  Hurricanes Luis and Marilyn inflicted damage to several
of the  Company's  stores and  caused  significant  damage to  various  islands'
infrastructures,  including hotels and other tourist facilities.  As of November
20, 1996, all stores had reopened.

     The Company has settled all  outstanding  claims  related to the hurricanes
with its  insurance  carrier.  In  connection  with this final  settlement,  the
Company   received   approximately   $13.4  million  in  property  and  business
interruption  proceeds.  The Company recorded a net gain of  approximately  $4.7
million  in  fiscal  1996,  after  write-offs   related  to  damaged  assets  of
approximately  $8.1 million,  including  furniture  and fixtures,  inventory and
other  assets  related  to  stores  affected  by the  hurricanes.  In  addition,
approximately  $560,000,  representing  fiscal 1997 lost  profits for a store in
Marigot not reopened until November 1996, was recorded as deferred income on the
Company's  consolidated  balance  sheet as of June 1, 1996.  In the three  month
period ended August 31, 1996,  the Company  recorded  $428,000 of that amount as
business interruption insurance proceeds.

     In July 1997 management  disclosed to its independent auditors that certain
transactions may have been recorded in error on the books of the Company for the
fiscal  year  ended  May 31,  1997.  As a result,  the  Company  engaged  Arthur
Andersen,  LLP to evaluate the matter and determine  the impact,  if any, on the
Company's previously and currently reported  consolidated  financial statements.
After  extensive  review,  analysis and  evaluation,  which focused on unlocated
differences in cash balances,  management believes that an employee  defalcation
occurred during the 1997 fiscal year. The estimated loss of  approximately  $2.4
million  was  classified  as  a  general  and  administrative   expense  in  the
consolidated  financial  statements  for the fiscal year ended May 31, 1997. The
Company is in the process of reviewing its insurance  coverage which calls for a
maximum  claim  limitation of  $1,000,000,  and intends to submit a claim to its
fidelity bond carrier and seek full restitution from the employee. The amount of
insurance recovery from its insurance carrier,  if any, relating to these losses
has not been reflected in the accompanying financial statements.

<PAGE>

                                                                  FORM 10-Q
                                                                  Page 11


PART I. FINANCIAL INFORMATION

ITEM 2.            Management's Discussion and Analysis
               of Financial Condition and Results of Operations


RESULTS OF OPERATIONS


NET SALES

     Net sales for the first quarter ended August 30, 1997 were $20.4 million or
28.4%  higher  than net sales of $15.9  million  for the same  period last year.
Sales for the stores  which were open for the full three month  period this year
and last year improved to $18.0 million or 18.5% from $15.2 million last year.

     Management  attributes  both  improvements  to strong  sales in Alaska,  an
increase in tourism in the Caribbean resulting from an increase in the number of
hotel rooms available, concentration on core product lines and suppliers and the
Company's  aggressive  promotional programs directed toward Caribbean hotels and
resorts.


GROSS PROFIT

     Gross  profit as a percentage  of net sales during the three month  periods
ended  August 30, 1997 and August 31,  1996 were 42.5% and 43.5%,  respectively.
Management  attributes  the  decline in gross  margin  percentage  to  clearance
markdowns to liquidate discontinued product lines.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, General and Administrative expenses ("SG&A") for the first quarter
were $8.5  million or 6.9%  higher than  expenses  of $7.9  million in the first
quarter last year.  The increase of  approximately  $550,000 is primarily due to
$280,000  associated  with new stores in  Skagway,  Alaska and in St.  Lucia and
incremental  expenses directly  associated with sales. As a percentage of sales,
SG&A expenses improved from 50.0% to 41.6%, reflecting the effect of an increase
in sales on non-variable expenses.







<PAGE>

                                                                   FORM 10-Q
                                                                   Page 12


PART I. FINANCIAL INFORMATION


ITEM 2.            Management's Discussion and Analysis
               of Financial Condition and Results of Operations


OTHER

     In July 1997 management  disclosed to its independent auditors that certain
transactions  may have been recorded in error on the books of the Company.  As a
result,  the Company  engaged  Arthur  Andersen,  LLP to evaluate the matter and
determine  the  impact,  if  any,  on  the  Company's   consolidated   financial
statements.  After extensive review,  analysis and evaluation,  which focused on
unlocated  differences in cash balances,  management determined that an employee
theft occurred  during the fiscal year ended May 31, 1997. The estimated loss of
approximately $2.4 million was charged to general and administrative expense for
the fiscal year ended May 31, 1997. As a result of the charge, the Company filed
amended  financial  statements on Form 10-Q for each of the quarters  within the
fiscal year. Accordingly,  the comparative  consolidated Statement of Income for
the three month period ended August 31, 1996  reflects a net loss of $769,000 or
$0.09 per share,  including  a charge to general and  administrative  expense of
$277,000 which, after tax, negatively impacted net income and earnings per share
by $227,000 and $0.03, respectively.

     Net interest  expense for the quarter was $370,000  compared to $332,000 in
the same  period  last year.  The  increase  reflects  slightly  higher  average
borrowings.

     The Company's  effective tax rates for the three month periods ended August
30, 1997 and August 31, 1996 was approximately 18%.

     This quarterly  report on Form 10-Q contains  certain  statements  that are
"forward-looking   statements"  as  that  term  is  defined  under  the  Private
Securities  Litigation  Reform Act of 1995 and releases issued by the Securities
and Exchange Commission.  The words "believe," "expect," "anticipate," "intend,"
"estimate" and other  expressions  which are  predictions of or indicate  future
events  and  trends  and which do not  relate  to  historical  matters  identify
forward-looking statements. Forward-looking statements involve known and unknown
risks,  uncertainties  and other  factors,  which may cause the actual  results,
performance or achievements of the Company to differ materially from anticipated


<PAGE>

                                                                   FORM 10-Q
                                                                   Page 13


PART I. FINANCIAL INFORMATION


ITEM 2.            Management's Discussion and Analysis
               of Financial Condition and Results of Operations



future  results,  performance  or  achievements  expressed  or  implied  by such
forward- looking  statements.  The Company  undertakes no obligation to publicly
update or  revise  any  forward-looking  statement,  whether  as a result of new
information, future events or otherwise.

     The future operating  results and performance  trends of the Company may be
affected by a number of factors,  including,  without limitation, the following:
(i) the frequency of tourist visits to the locations where the Company maintains
retail stores (ii) the Company's ability to retain  relationships with its major
suppliers  of product for resale  (iii)  weather in the  Company's  markets (iv)
actions of the Company's  competitors  and the  Company's  ability to respond to
such  actions (v)  economic  conditions  that affect the buying  patterns of the
Company's  customers (vi)  availability of new tourist markets for expansion and
(vii) the continued  success of the  Company's  efforts to implement its planned
strategic initiatives.


LIQUIDITY AND CAPITAL RESOURCES

     Net cash used in operations  during the three month period ended August 30,
1997 was $1.8 million,  compared to $2.9 million for the same three month period
last year.  The  decrease in net cash used in  operations  primarily  reflects a
smaller increase in inventory balances during the current quarter.

     The  Company's  working  capital  position as of August 30, 1997  decreased
slightly to $30.2  million from $30.5  million at May 31, 1997.  Current  ratios
were 2.1 and 2.5 as of the same periods, respectively. Capital expenditures were
approximately  $289,000  during the three month  period  ended  August 30, 1997,
compared to $856,000 during the same period last year.

     The Company  has  available a total of $19.7  million in  unsecured  credit
facilities, of which $5.5 million is available for borrowing. Approximately $4.2
million of the credit  facilities is utilized to secure  customs bonds and other


<PAGE>

                                                                     FORM 10-Q
                                                                     Page 14



PART I. FINANCIAL INFORMATION

ITEM 2.            Management's Discussion and Analysis
               of Financial Condition and Results of Operations



bank guarantees required in the normal course of business.  Any unfunded portion
of  the  facilities  can be  withdrawn  at the  bank's  discretion.  Outstanding
borrowings against these credit facilities totaled  approximately  $10.0 million
as of August 30, 1997. Additionally,  in February 1996, the Company secured term
debt of  approximately  $8.9  million  from its two lead  banks to  finance  the
acquisition of the fixtures,  leasehold  rights and inventories of two stores in
Barbados.  Interest  on  this  debt  accrues  at  an  annual  interest  rate  of
approximately  7.25%, and is payable monthly.  The principal is payable in equal
quarterly payments over a four year period,  commencing March 1997. As of August
30,  1997,  the Company  had $7.8  million of term debt  outstanding  and was in
compliance with all restrictive covenants related to its unsecured and term debt
agreements.  Additionally,  the Company has available  separate  facilities  for
foreign  exchange  contracts.  It remains  management's  expectation  that funds
available  from  operations  and  bank  financing  will  be  sufficient  to fund
operations and expansion for at least the next three years.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

             None.


PART II.  OTHER INFORMATION


Item 5.  OTHER INFORMATION

     During  fiscal 1997,  the Company  received  inquiries  from third  parties
regarding a possible strategic transaction with the Company. After completing an
operational and strategic review of the Company, Little Switzerland announced in
August 1997 that it was pursuing  various  strategic  alternatives  and that its
financial  advisor,  Wasserstein  Perella & Co.,  Inc.,  would discuss  possible
business combinations with certain third parties.


<PAGE>

                                                                   FORM 10-Q
                                                                   Page 15




Item 6.  Exhibits and Reports of Form 8-K

(a)      Exhibits

                  3.1      The Amended and Restated Certificate of Incorpo-
                           ration of the Company is incorporated herein by
                           reference to Exhibit 3.3 to Amendment No. 1 to
                           the Company's Registration Statement on Form
                           S-1, Registration No. 33-40907, files with the
                           Securities and Exchange Commission on July 10,
                           1992 ("Amendment No. 1 to the Form S-1").


                  3.2      The Amended and Restated By-Laws of the Company
                           are incorporated herein by reference to Exhibit
                           3.4 to Amendment No. 1 to the Form S-1/


(b)      Reports on Form 8-K

     No Form 8-K was  issued by the  registrant  during the three  month  period
ended August 30, 1997.























<PAGE>

                                                                   FORM 10-Q
                                                                   Page 16


                 LITTLE SWITZERLAND, INC. AND SUBSIDIARIES


                                 SIGNATURES


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


                                                LITTLE SWITZERLAND, INC.


Date: October 14, 1997                         /s/ Ronald J. Lataille
      ----------------                         ----------------------

                                               Ronald J. Lataille
                                               Vice President, Treasurer
                                               and Chief Financial Officer