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 31, 1996

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  7,  1996,  8,458,294  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 31, 1996

                                          
                                                           PAGE
PART I.  FINANCIAL INFORMATION                          

Item 1.  Financial Statements

      Consolidated Balance Sheets as of
      August 31, 1996 (unaudited) and
      June 1, 1996                                           3

      Consolidated Statements of Income
      for the three months ended August 31,
      1996 and 1995 (unaudited)                              4


      Consolidated Statements of Cash Flows
      for the three months ended August 31,
      1996 and 1995 (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
                                            

PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                   13

Signature Page                                              14












<PAGE>



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

<TABLE>
<CAPTION>
                    LITTLE SWITZERLAND, INC. AND SUBSIDIARIES
                   Consolidated Balance Sheets (in thousands)

                                                        August 31,   June 1,
                          ASSETS                           1996       1996
                                                        ---------  --------- 
<S>                                                    <C>         <C>
Current assets:                                                    (unaudited)
   Cash and cash equivalents...........................$  3,988    $  5,393
   Accounts receivable.................................   1,616       1,892
   Inventory...........................................  49,508      43,678
   Prepaid expenses and other current assets...........   2,824       1,607
                                                       ---------   ---------
      Total current assets.............................  57,936      52,570
                                                       ---------   ---------

Property, plant and equipment, at cost.................  35,103      34,247
   Less -- Accumulated depreciation.................... (13,350)    (12,522)
                                                       ---------   ---------
                                                         21,753      21,725
Other assets...........................................   3,534       3,582
                                                       ---------   ---------

         Total assets..................................$ 83,223    $ 77,877
                                                       =========   =========
               LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
   Current portion of long term debt...................$  1,113    $    832
   Unsecured notes payable.............................   9,200       7,100
   Accounts payable....................................  11,935       6,839
   Accrued and currently deferred income taxes.........   1,016       2,002
   Other accrued expenses and deferred income..........   2,893       3,225
                                                       ---------   ---------

Total current liabilities                                26,157      19,998

Long term debt.........................................   7,788       8,068

Deferred income taxes..................................      90          90
                                                       ---------   ---------

Total liabilities......................................  34,035      28,156
                                                       ---------   ---------

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--8,458 shares at
      August 31, 1996 and 8,457 at June 1, 1996........      85          85
Capital in excess of par...............................  14,801      14,792
Retained earnings......................................  32,683      33,225
                                                       ---------   ---------

      Total stockholders' equity.......................  47,569      48,102
                                                       ---------   ---------

      Total liabilities, minority interest

         and stockholders' equity......................$ 83,223    $ 77,877
                                                       =========   =========
<FN>
           See accompanying notes to consolidated financial statements
</FN>
</TABLE>



<PAGE>



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

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



                                            For the three months
                                              ended August 31,
                                             1996          1995
                                           --------       ------
<S>                                        <C>           <C>
Net sales..................................$15,868       $14,068
Cost of sales..............................  8,972         7,977
                                           --------       -------

Gross profit...............................  6,896         6,091

Selling, general and
administrative expenses....................  7,652         6,333

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

     Operating (loss)......................   (328)         (242)

Interest expense, net......................    332            74
                                           --------       -------


     (Loss) before benefit
        for income taxes...................   (660)          (316)

(Benefit) for income taxes.................   (118)           (66)
                                           --------       --------

Net (loss).................................$  (542)       $  (250)
                                           ========       ========

Net (loss) per share.......................$ (0.06)       $ (0.03)
                                           ========       ========

Weighted average shares
    outstanding............................  8,458          8,454
                                           ========       ========









<FN>
            See accompany notes to consolidated financial statements
</FN>
</TABLE>






<PAGE>



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

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

                                                      For the three months
                                                        ended August 31,
                                                        1996        1995
                                                       -------     -------
<S>                                                  <C>         <C> 
Cash flows from operating activities:   
   Net (loss)........................................$   (542)   $   (250)
     Adjustments to reconcile net loss to
       net cash provided by operating activities--
       Depreciation and amortization.................     828         581
       Changes in assets and liabilities:
         Decrease in accounts receivable.............     276         406
        (Increase) in inventory......................  (5,830)     (3,291)
        (Increase) in prepaid expenses
           and other current assets..................  (1,217)       (782)
         Decrease in other assets....................      48          11
         Increase (decrease) in accounts payable.....   5,097      (1,789)
        (Decrease) in other accrued expenses and
           deferred income...........................    (332)       (161)
        (Decrease) in accrued and currently
           deferred income taxes.....................    (986)       (168)
                                                       -------     -------
   Net cash (used in) operating activities...........  (2,647)     (5,443)
                                                       -------     -------

Cash flows from investing activities:
     Capital expenditures............................    (856)     (1,312)
                                                       -------     -------
   Net cash (used in) investing activities...........    (856)     (1,312)
                                                       -------     -------
Cash flows from financing activities:
     Increase in unsecured notes payable.............   2,100       5,500
     Issuance of common stock........................       9           9
                                                       -------     -------
Net cash provided by financing activities............   2,109       5,509
                                                       -------     -------

Net (decrease) in cash and cash equivalents..........  (1,405)     (1,246)

Cash and cash equivalents, beginning of period.......   5,393      (2,899)
                                                       -------     -------
Cash and cash equivalents, end of period.............$  3,988    $  1,653
                                                       =======     =======


<FN>
During the three months ended August 31, 1996 and 1995,  the Company paid income
taxes  of $837  and  $102,  respectively,  and  paid  interest  of $259 and $62,
respectively.





           See accompanying notes to consolidated financial statements
</FN>
</TABLE>


<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 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 31, 1996 and 1995 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.

Effective  with the second  quarter of fiscal year 1996,  the Company  adopted a
"4-5-4"  fiscal  calendar  wherein  each fiscal  quarter  contains two four week
periods and one five week  period,  with each period  beginning  on a Sunday and
ending on a Saturday.  Previously,  the  Company  used  calendar  months for its
fiscal  periods.  The  purpose  of this  change is to  provide  more  consistent
comparability  between fiscal periods. The change in fiscal calendar resulted in
one less day in the first  quarter of the current year, as compared to the prior
year.  Management  estimates  that the one day lost  from this  fiscal  calendar
change had no material  effect on the reported  net loss for the current  fiscal
quarter.

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. RISKS AND UNCERTAINTIES

     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.






<PAGE>



                                                                      FORM 10-Q
                                                                      Page 7


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

3. TRANSACTIONS WITH AFFILIATES

The  Company  enters  into  a  number  of  transactions   with  Town  &  Country
Corporation, of which two of the Company's Directors are Executive Officers. The
Company  purchases  a portion  of its  merchandise  from Town & Country  and its
affiliated companies at prices which approximate arm's-length transactions.


4. CREDIT ARRANGEMENTS

     The Company  has  available a total of $19.6  million in  unsecured  credit
facilities,  of which $10.4 million is available for borrowing  with  maturities
ranging  from one to three years from August 31, 1996.  Any unfunded  portion of
the facilities can be withdrawn at the bank's discretion. Outstanding borrowings
against  these  credit  facilities  totaled  $9.2 million as of August 31, 1996.
Additionally,  in February 1996, the Company secured term debt of  approximately
$8.9 million from its two lead banks to finance its 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 31,  1996,  the  Company  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 shares outstanding
during each period.  Primary and fully diluted  earnings per share have not been
presented as they are within three percent of simple earnings per share.


6. ACCOUNTING FOR INCOME TAXES

The  Company  uses the  Liability  method  in  accounting  for  income  taxes in
accordance  with SFAS No. 109. This standard  determines  deferred  income taxes
based on the  estimated  future  tax  effects  of any  differences  between  the
financial  statement  and the tax basis of  assets  and  liabilities,  given the
provisions of the enacted tax laws.



<PAGE>



                                                                      FORM 10-Q
                                                                      Page 8


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

7.  INTANGIBLE ASSETS

         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  its
intangible  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 the assets by determining whether the amortization of such
intangibles  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  reflecting  the
Company's average cost of funds.


8.  ACCOUNTING FOR STOCK-BASED COMPENSATION

         SFAS No. 123,  which is  effective  for fiscal  years  beginning  after
December 15, 1995,  requires pro forma disclosure but only encourages  companies
to change  their  accounting  for  stock-based  compensation.  Adoption  of this
standard is required for fiscal 1997. The Company is currently in the process of
determining how it will implement this standard.


9.  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.


10.  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
August 31, 1996,  all stores have  reopened  with the  exception of one store in
Marigot, St. Martin which is scheduled to reopen in the fall of 1996.




<PAGE>



                                                                      FORM 10-Q
                                                                      Page 9

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

                                   (unaudited)


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 the as yet to be  reopened  Marigot
store,  was recorded as deferred  income on the Company's  consolidated  balance
sheet as of June 1, 1996. In the current fiscal  quarter,  the Company  recorded
$428,000  of that  amount as  Business  interruption  insurance  proceeds  which
represented lost profits for the closed Marigot store.

The Company is insured for  property  losses and related  business  interruption
losses in excess of 5% of the insured value of the property  subject to a claim.
For fiscal  years 1995 and 1996,  the Company was only  insured for wind related
losses in excess of $5 million, subject to certain deductibles.


11.  ACQUISITION

On February 16, 1996,  World Gift Imports  (Barbados),  Inc., a subsidiary of LS
Holding, Inc. which is a subsidiary of Little Switzerland, Inc. (the "Company"),
purchased the leasehold  rights,  fixtures and  inventories of two retail stores
located in Barbados,  West Indies,  from Dacosta  Mannings Inc., a subsidiary of
Barbados  Shipping & Trading  Company  Limited.  The two stores were  previously
operated  under the name of Louis  Bayley and sold  merchandise  similar to that
carried in the  Company's  retail  stores such as name brand  watches,  jewelry,
china,  crystal and gift items at duty free prices.  The Company began operating
the two stores as "Little Switzerland" stores on February 19, 1996.

      The purchase  price of  approximately  $10.6  million was financed by bank
borrowing  provided by the Company's two primary  banks,  Chase Bank and Bank of
Nova Scotia,  of approximately  $8.9 million and the issuance of preferred stock
of  approximately  $1.6  million by World Gift Imports  (Barbados),  Inc. to the
seller.  The purchase price is subject to adjustment  three and four years after
the closing date, based on the sales performance of the two purchased stores and
any additional  stores that may be opened by the Company in Barbados during that
period.  As a part of the purchase  agreement,  the Company pays to the seller a
management fee


<PAGE>



                                                                      FORM 10-Q
                                                                      Page 10


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

                                   (unaudited)

of 2.5% of its  Barbados  stores  annual  sales up to $15  million  and 1.25% of
annual  sales  in  excess  of $15  million,  so long as the  preferred  stock is
unredeemed.  The preferred stock may be redeemed by the Company at face value at
any time after  three years from the date of close  through  nine years from the
date of close.  Following  that period,  the Company  retains the right of first
refusal  to match  any bona  fide  offer  from a third  party  to  purchase  the
preferred stock.

The Acquisition has been accounted for as a purchase transaction effective as of
February 16, 1996, in accordance  with Accounting  Principles  Board Opinion No.
16,  "Business  Combinations",   and  accordingly,  the  consolidated  financial
statements  for the period  subsequent to February 16, 1996 reflect the purchase
price  allocated  to tangible and  intangible  assets  acquired,  based on their
estimated  fair values as of February 16, 1996,  which may be revised at a later
date. However, the Company does not expect material changes to the allocation of
the purchase price.

     Unaudited pro forma  operating  results of the Company for the three months
ended August 31, 1995 as adjusted for the debt  financing and estimated  effects
of the acquisition as if it had occurred on June 1, 1995, are as follows:

<TABLE>
<S>                                             <C>

Net sales.....................................  $15,245,000
Net (loss)....................................     (445,000)
Net (loss) per share..........................         (.05)

Weighted average shares outstanding...........    8,454,000
</TABLE>


















<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 31,  1996 were $15.9  million or
12.8% higher than net sales of $14.1 million for the same period last year.  The
increase in net sales is  primarily  the result of sales  generated  by four new
stores,  the Royal  Plaza  store in Aruba,  the  Juneau  store in Alaska and two
stores in Barbados.

Net sales of $11.7  million for stores  which were open for the full three month
period this year and last year  decreased  12.0% from net sales of $13.3 million
for the same period last year.  This was primarily due to decreased sales in the
U.S. Virgin Islands,  St. Maarten/St.  Martin and Antigua stores.  Lower tourist
and cruise ship visits to these islands  occurred due to damaged  infrastructure
and tourist  facilities  on these  islands from  Hurricanes  Luis and Marilyn in
September 1995 and the active hurricane season experienced in the Caribbean this
year,  including  Hurricane Bertha in July, which caused the diversion of cruise
ships from the region.

GROSS PROFIT

Gross profit as a percentage  of net sales during the three month  periods ended
August 31, 1996 and 1995 were 43.5% and 43.3%, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

First quarter selling,  general and  administrative  expenses ("SG&A") increased
20.8% to $7.7 million for the three month period ended August 31, 1996 from $6.3
million for the same period last year. As a percent to net sales,  SG&A expenses
increased to 48.2% for the quarter ended August 31, 1996 from 45.0% for the same
quarter last year.  The increase in SG&A expenses this year is due mostly to new
stores opened since the first three months of last fiscal year.  The increase in
SG&A  expenses  as a  percentage  of net sales is due to the decline in sales of
comparable stores this year.







<PAGE>



                                                                      FORM 10-Q
                                                                      Page 12




PART I. FINANCIAL INFORMATION

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


BUSINESS INTERRUPTION INSURANCE PROCEEDS

For the three month period ended August 31, 1996 the Company  recorded  $428,000
as Business  interruption  insurance  proceeds  which  represents  the insurance
recovery for lost profits from its closed Marigot store during the period.


OTHER

Net  interest  expense for the three month period ended August 31, 1996 and 1995
totaled  $332,000  and  $74,000,  respectively.  The  increase  is due to higher
average borrowings this year to support increased inventories for new stores and
the  interest on long term debt  utilized in the  acquisition  of the  fixtures,
leasehold rights and inventories of two stores in Barbados in February 1996.

The Company's effective income tax rates for the three month period ended August
31,  1996  and  1995  consisted  of a  benefit  of  approximately  18% and  21%,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operations  during the three month period ended August 31, 1996
was $2.7 million  compared to $5.5 million used in operations for the same three
month period last year.  The decrease in net cash used in  operations  primarily
reflects an increase in accounts  payable of $5.1 million  offset by an increase
in  inventories  of $2.5  million  this  year,  a $436,000  increase  in prepaid
expenses  and other  current  assets and a  $986,000  decrease  in  accrued  and
currently  deferred  income  taxes,  as compared to the same period in the prior
year.

The Company's  working capital position as of August 31, 1996 decreased to $31.8
million from $32.6 million at June 1, 1996. Current ratios were 2.21 and 2.63 as
of the same  periods,  respectively.  Capital  expenditures  were  approximately
$856,000  during the three  month  period  ended  August 31,  1996,  compared to
approximately  $1.3  million  during the same  period last year.  Major  capital
expenditures  this year  include new  in-store  merchandise  systems and related
hardware,  upgrade of the  Company's  central  computer  system,  a new store in
Juneau,  Alaska  and the  refurbishment  of stores in St.  Thomas,  Marigot  and
Antigua.


<PAGE>



                                                                      FORM 10-Q
                                                                      Page 13


PART I. FINANCIAL INFORMATION

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




The Company has total unsecured  credit  facilities of $19.6 million provided by
its two lead banks. As of August 31, 1996, short-term borrowings of $9.2 million
were outstanding against these facilities. Additionally, the Company has secured
facilities  through  its two lead  banks for the  acquisition  of the  leasehold
rights,  fixed  assets  and  inventory  of two  stores  in  Barbados.  The total
borrowing provided for the acquisition was $8.9 million at an approximate 7 1/4%
interest  rate,  with  terms of  interest  only,  for the  first  year and equal
principal  payments due  quarterly  over the following  three years.  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.



PART II.  OTHER INFORMATION


Item 6.  Exhibits and Reports of Form 8-K

(a)   Exhibits--Not Applicable

(b)   Reports on Form 8-K

      No Form 8-K was issued by the  registrant  during the three  month  period
ended August 31, 1996.


















<PAGE>



                                                                      FORM 10-Q
                                                                      Page 14

                 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 its  behalf by the
undersigned thereunto duly authorized.


                                  LITTLE SWITZERLAND, INC.


Date:  October 7, 1996           /s/ Ronald J. Lataille
       ---------------           ----------------------

                                 Ronald J. Lataille
                                 Vice President and
                                 Chief Financial Officer