UNITED STATES 
                     SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, DC  20549

                                   FORM 10-Q

          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the quarterly period ended March 31, 1998

                       Commission File No. 0-19305

                         CALLOWAY'S NURSERY, INC.
            (Exact name of registrant as specified in its charter)

          	Texas                                    	75-2092519
	(State or other jurisdiction of	                   (IRS Employer
	incorporation or organization)                	Identification Number)

                          4200 Airport Freeway
                       Fort Worth, Texas  76117-6200
                              817.222.1122

           (Address, including zip code, of principal executive
      offices and 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 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 _

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
                                           		Shares Outstanding as
             	Title	                            of May 13, 1998

	Common Stock, par value $.01 per share            	5,410,725
                          CALLOWAY'S NURSERY, INC.

                                FORM 10-Q

                             MARCH 31, 1998

PART I - FINANCIAL INFORMATION                         	Page

	Item 1

	Index to Condensed Consolidated Financial Statements

    	Condensed Consolidated Balance Sheets                	3

    	Condensed Consolidated Statements of Operations      	4

    	Condensed Consolidated Statements of Cash Flows      	5

    	Notes to Condensed Consolidated Financial Statements 	6
				
	Item 2

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

PART II - OTHER INFORMATION

	Items 1-6                                               	11
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
                         CALLOWAY'S NURSERY, INC.
            CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                  (In thousands, except share amounts)

                                    ASSETS
                              	      March 31,    	September 30,	  	March 31,
                                       1998            1997           1997
Cash and cash equivalents	              $ 242	       	 $ 3,688       	$ 2,826	
Accounts receivable	                      655	            	132	          	611	
Inventories                            	3,642		          1,533		        1,912	
Deferred income taxes	                  1,150		            428	           	--	
Prepaids and other assets	                 24	             	60	           	29	
	Total current assets                 	$5,713 		        $5,841 		      $5,378 	
Property and equipment, net	            8,317		          5,466		        4,687	
Goodwill, net	                          1,119		          1,173		        1,227	
Deferred income taxes                    	581		            581		           34	
Other assets	                              49		             50		           37	
	Total assets	                       $ 15,779	       	$ 13,111	     	$ 11,363	

                     LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable                     	$ 4,522	        	$ 1,745	      	$ 4,431	
Accrued expenses                         	578	            	880	          	675	
Current portion of long-term debt         	97		             97	           	35	
	Total current liabilities	             5,197	          	2,722	        	5,141	
Deferred rent payable	                  1,077          		1,098	        	1,196	
Long-term debt, net of current portion
                                       	2,908	          	1,803	          	519	
	Total liabilities	                     9,182	          	5,623        		6,856	
Commitments						
Shareholders equity:						
Voting convertible preferred stock; par value
 $.625 per share; 3,200,000 shares authorized;
 no shares issued or outstanding	  --		  --		  --	
Preferred stock; par value $.01 per share;
 10,000,000 shares authorized; no shares
 issued or outstanding		  --		 --		  --	
Common stock; par value $.01 per share;
 30,000,000 shares authorized; 5,660,725,
 5,582,364 and 5,503,284 shares issued,
 respectively, 5,410,725, 5,332,364 and    56                55          55
 5,253,284 shares outstanding, respectively	  
Additional paid-in capital             	8,537		           8,406	      	8,343	
Retained earnings (accumulated deficit)	(600)	             	423		    (2,495)	
                                       	7,993	           	8,884 	     	5,903	
Less: Treasury stock, at cost
                 (250,000 shares)    	(1,396	          	(1,396) 	   	(1,396)	
	Total shareholders' equity            	6,597	           	7,488	      	4,507	
		Total liabilities and shareholders'
              equity                	$ 15,779	        	$ 13,111	   	$ 11,363	
                          CALLOWAY'S NURSERY, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
               (amounts in thousands, except per share amounts)

                              	Three Months Ended          	Six Months Ended
                                     	March 31                  March 31
                                	1998	     	1997	           	1998	     	1997	
								
Net sales                     	$4,227	  	$5,303	            	$8,722   	$9,564	
Cost of goods sold             	2,105	   	2,642	             	4,571	   	5,130	
Gross profit                   	2,122	   	2,661		             4,151	   	4,434	
Operating expenses             	1,756	   	1,646	             	3,651	   	3,327	
Occupancy expenses               	727     		736	             	1,405	   	1,498	
Advertising expenses             	278	     	284	               	601     		628	
Other, net                       	121     		103	               	232	     	172	
 Total expenses	                2,882	  	 2,769		             5,889 	 	 5,625	
 Loss before provision for
                  income taxes	  (760)	    (108	             (1,738)		 (1,191)	
 Income tax benefit	             (324)	    	 --		              (715)	     	 --	
 Net loss	                     ($ 436)		 ($ 108)		          ($1,023)		 ($1,191)	
								
 Net loss per common share
       	Basic         	         ($.08)		  ($.02)		            ($.19)	   ($.23)
								Diluted                 ($.08)    ($.02)              ($.19)    ($.23)
  
Weighted average number of common
   shares outstanding	          5,393		   5,222            		 5,372	  	 5,195	

                              CALLOWAY'S NURSERY, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                    (In thousands)
	                                                            Six Months Ended
                                                                   	March 31,
                                                             	1998	     	1997	
Cash flows from operating activities:				
Net loss                                                  	$ (1,023)		$ (1,191)	
Adjustments to reconcile net income to net cash
 provided by (used for) operating activities:				
   Depreciation and amortization                               	194		      197	
Net change in assets and liabilities	                          (863)	   	1,698	
				
Net cash provided by (used for) operating activities	        (1,692)	     	704	
				
Cash flows from investing activities:				
Additions to property and equipment                         	(2,991)	    	(882)	
				
Net cash used for investing activities	                      (2,991)    		(882)	
				
Cash flows from financing activities:				
Proceeds from issuance of common stock                         	132	       	92	
Net borrowings of debt	                                       1,105 		     554	
				
Net cash provided by financing activities                    	1,237	      	646	
				
Net increase (decrease) in cash and cash equivalents        	(3,446)	     	468	
				
Cash and cash equivalents at beginning of period             	3,688    		2,358	
 Cash and cash equivalents at end of period	                  $ 242	 	 $ 2,826
                            CALLOWAY'S NURSERY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

	The interim financial statements contained herein have been prepared by
 Calloway's Nursery, Inc. (the "Company") pursuant to the rules and
 regulations of the Securities and Exchange Commission. In the opinion
 of management, all adjustments considered necessary for a fair presentation
 of the financial position at March 31, 1998, and the results of operations
 and cash flows for the six-month and three-month periods ended March 31,
 1998 and 1997 have been made. Such adjustments are of a normal recurring
 nature.

	Because of seasonal and other factors, the results of operations for the
 six-month and three-month periods ended March 31, 1998 and cash flows for
 the six-month period ended March 31, 1998 are not necessarily indicative
 of expected results of operations and cash flows for the fiscal year ending
 September 30, 1998.

	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 of the Securities and Exchange Commission. Accordingly, these
 financial statements should be read in conjunction with the audited
 financial statements and related notes of the Company for the fiscal year
 ended September 30, 1997 included in the Company's Form 10-K.

2. Earnings Per Share

	In February 1997 the Financial Accounting Standards Board issued Statement
 of Financial Accounting Standards No. 128 Earnings Per Share, ("SFAS 128").
 SFAS 128 simplifies the standards for computing earnings per share ("EPS")
 previously found in Accounting Principles Board Opinion No. 15, Earnings Per
 Share, ("APB 15"), and make them comparable to international EPS standards.
 SFAS 128 replaces the presentation of primary EPS with a presentation of
 basic EPS. Basic EPS excludes dilution and is computed by dividing income
 available to common shareholders by the weighted average number of shares
 outstanding for the period. Diluted EPS reflects the potential dilution that
 could occur if securities or other contracts to issue common stock were
 exercised or converted into common stock or resulted in the issuance of
 common stock that then shared in the earnings of the entity. Diluted EPS is
 computed similarly to fully diluted EPS pursuant to APB 15. SFAS 128 also
 requires presentation of both basic and diluted EPS on the face of the
 income statement for entities with complex capital structures and a
 reconciliation of the numerator and denominator of the basic EPS
 computation to the numerator and denominator of the diluted EPS computation.
 SFAS 128 is effective for financial statements issued for periods ending
 after December 15, 1997, including interim periods; earlier application is
 not permitted. SFAS 128 requires restatement of all prior-period EPS data
 presented. 

	Under SFAS 128, a potentially dilutive security is actually dilutive if its
 inclusion in the computation reduces EPS or increases a loss per share. If
 the inclusion of the security increases earnings per share or decreases a
 loss per share, then the security is considered anti-dilutive.  Anti-dilutive
 securities are not reflected in EPS computations.  For each of the quarters
 and six month periods ended March 31, 1998 and 1997, respectively, the
 Company incurred a loss from continuing operations.   Therefore, none of its
 potentially dilutive securites are considered actually dilutive for such 
 periods, and the basic EPS and diluted EPS are the same. 

	EPS for the quarters and six month periods ended March 31, 1998 and 1997 is
 computed as follows (amounts, except per share amounts, in thousands):

                                      	Three Months Ended    	Six Months Ended
	                                     	March 31 	March 31  	March 31 	March 31
Basic EPS                                	1998     	1997 	     1998	    1997	
	Net loss                               	$(436)   	$(108)  	$(1,023) 	$(1,191)	
	Weighted average number of shares
   outstanding                          	 5,393	    5,222 	    5,372   	 5,195	
	Net loss per common share              	$(.08)   	$(.02)    	$(.19)   	$(.23)	
					
Diluted EPS                              	1998     	1997      	1998    	1997	
	Net loss                               	$(436)   	$(108)	  $(1,023) 	$(1,191)	
	Weighted average number of shares
   outstanding                         	 5,393	    5,222	     5,372	    5,195	
	Net loss per common share              	$(.08)	   $(.02)    	$(.19)   	$(.23)	

	The Company had 941,500 and 636,000 outstanding stock options at March 31,
 1998 and 1997, respectively. Such stock options are not included in the
 above EPS computations since they were anti-dilutive. Such stock options
 could potentially dilute EPS in a future period.

3. New store construction

	In October 1997 the Company purchased land and began construction of a new
 retail store location in Fort Worth, Texas. The purchase and construction
 are being financed with an interim construction loan from a financial
 institution. The Company has obtained a commitment from the financial
 institution to provide permanent financing with a long-term note payable.
 At March 31, 1998 the outstanding balance of the interim construction loan
 was $1,125,000. The interest rate is variable (9.5% at March 31, 1998).

4. Inventories

	Inventories consist of the following (amounts in thousands):
                                	March 31,   		September 30,   		March 31, 	
                                    1998             1997           1997
Finished goods                   	$ 2,546       		$ 1,197	      	$ 1,912	
Work in process                      	857           		294          	 	--	
Supplies                             	239	            	42           		--	
	                                  $3,642	        	$1,533	       	$1,912	
Item 2.	Management's Discussion and Analysis of Financial Condition and
 Results of Operations

Results of Operations 

General

	The information presented below sets forth, for the periods indicated, the
 amounts of certain items derived from the statements of operations and the
 relative percentages that they bear to net sales of the Company (amounts in
 thousands):

              	Three Months Ended March 31,      	Six Months Ended March 31,	
                      	1998           	1997           	1998	         1997	
              	    Amount	  %     	Amount 	 %       	Amount   	%   	Amount 	%	
Net sales	          4,227	 100     	5,303 	100       	8,722	  100	  9,564 	100	
Gross profit	       2,122  	50     	2,661   5         4,151    48	  4,434  	46	
Operating expenses	 1,756  	41	     1,646	 31        	3,651	   42  	3,327 	 35	
Occupancy expenses	   727	  17       	736 	14        	1,405   	16  	1,498  	16	
Advertising expenses 	278	   7	       284  	5          	601    	7	    628   	7	
Other, net	           121	   3       	103  	2          	232	    3	    172   	2	
Total expenses	     2,882  	68     	2,769 	52	        5,889   	68  	5,625  	59	
Loss before provision for
 income taxes	       (760) (18) 	    (108) (2)     	 (1,738)	 (20) (1,191	 (13)	
Provision for income
 taxes             	 (324)	 (8)	       --	 --	         (715)	  (8)	    --	  --	
Net loss            	(436)	(10)     	(108)	(2)	      (1,023) 	(12)	(1,191)	(13)	

Quarter Ended March 31, 1998 Compared with Quarter Ended March 31, 1997

	This year's spring selling season occurred later and, therefore, led to
 reductions in net sales and an increased pre-tax loss and an increased net 
 loss for the quarter ended March 31, 1998. Income tax benefits of $324,000
 offset part of the pre-tax loss in 1998 quarter; no tax benefits were
 recorded for the 1997 quarter. The tax benefits in 1998 were recorded due
 to the adjustment of the valuation allowance recorded during the fourth
 quarter of fiscal 1997. 


	Net sales decreased by 20% to $4,227,000 for the quarter ended March 31,
 1998 from $5,303,000 for the quarter ended March 31, 1997. Early-season
 demand for garden products in the Dallas-Fort Worth market was weaker during
 March in 1998 compared to relatively strong demand during March of 1997.

	Gross profit decreased by 20% from $2,661,000 for the quarter ended March
 31, 1997 to $2,122,000 for the quarter ended March 31, 1998. Gross margins
 were steady at 50% for the both of the quarters ended March 31, 1998 and
 1997. Execution of the Company's merchandising programs, which provide fresh
 inventory to the Company's retail stores based on actual rates of sale, and
 reduce stock loss, caused gross margins to hold steady.

	Operating expenses increased by 7% from $1,646,000 for the quarter ended
 March 31, 1997 to $1,756,000 for the quarter ended March 31, 1998, primarily
 due to increased payroll and related expenses.

	Occupancy expenses decreased by 1% from $736,000 for the quarter ended March
 31, 1997 to $727,000 for the quarter ended March 31, 1998, primarily due to
 reduced rents at certain of the Company's retail stores.

	Advertising expenses decreased by 2% from $284,000 for the quarter ended
 March 31, 1997 to $278,000 for the quarter ended March 31, 1998. The
 decrease was primarily due to reduced costs associated with the Company's
 in-store visual marketing programs, offset somewhat by increased advertising
 in newspapers and on radio.
 
	Other (net) expenses increased by 19% from $102,000 for the quarter ended
 March 31, 1997 to $121,000 for the quarter ended March 31, 1998. The
 increase was primarily due to interest expense on the increased long term
 debt in 1998 as compared to 1997, partially offset by slightly lower
 depreciation expense for the three months ended March 31, 1998 than for the
 three months ended March 31, 1997.

Six Months Ended March 31, 1998 Compared with Six Months Ended March 31, 1997

	This year's spring selling season occurred later and, therefore, led to
reductions in net sales and an increased pre-tax loss for the six months
 ended March 31, 1998. The net loss for the six months ended March 31, 1998
 was smaller than the net loss for the same period in 1997, because income
 tax benefits of $715,000 offset part of the pre-tax loss in 1998 period; no
 tax benefits were recorded for the 1997 period. The tax benefits in 1998
 were recorded due to the adjustment of the valuation allowance recor
rth quarter of fiscal 1997. 

	Net sales decreased by 9% to $8,722,000 for the six months ended March 31,
 1998 from $9,564,000 for the six months ended March 31, 1997. Early-season
 demand for garden products in the Dallas-Fort Worth market was weaker during
 the transitional month of March in 1998 compared to relatively strong demand
 during March of 1997.

	Gross profit decreased by 6% from $4,434,000 for the six months ended March
 31, 1997 to $4,151,000 for the six months ended March 31, 1998. Gross
 margins improved to 48% for the six months ended March 31, 1998 from 46% for
 the six months ended March 31, 1997. The increased gross margins were a
 result of execution of the Company's merchandising programs, which provide
 fresh inventory to the Company's retail stores based on actual rates of
 sale, and have been demonstrated to improve gross margins by reducing stock
 loss.

	Operating expenses increased by 10% from $3,327,000 for the six months ended
 March 31, 1997 to $3,650,000 for the six months ended March 31, 1998
 primarily due to increased payroll expenses.

	Occupancy expenses decreased by 6% from $1,497,000 for the six months ended
 March 31, 1997 to $1,404,000 for the six months ended March 31, 1998,
 primarily due to reduced rents at certain of the Company's retail stores.

	Advertising expenses decreased by 4% from $628,000 for the six months ended
 March 31, 1997 to $601,000 for the six months ended March 31, 1998. The
 decrease was primarily due to reduced costs associated with the Company's
 in-store visual marketing programs, offset somewhat by increased advertising
 in newspapers and on radio.

	Other (net) expenses increased by 36% from $171,000 for the six months ended
 March 31, 1997 to $232,000 for the six months ended March 31, 1998 The
 increase was primarily due to interest expense on the mortgage debt entered
 into during fiscal 1997.
Capital Resources and Liquidity

	Cash flows used by operating activities were $1,692,000, compared to cash 
 flows provided by operations of $704,000 for the six months ended March 31,
 1998. The change from positive cash flows from operations for the six-month
 period to negative cash flows from operations resulted from:

1.Reduced early-season sales volumes and the accompanying larger pre-tax loss
  for the period;
2.Reduced early-season sales volumes that led to increased inventory levels
  in the retail stores at the end of the period, leading into the Company's
  peak selling period;
3.Investment in work-in-process and supplies inventories at Miller Plant
  Farms, the Company's newly acquired nursery production facility. Shipments
  of finished goods merchandise to the retail stores from Miller Plant Farms
  are expected to peak during the months of April and May. 

	In October 1997 the Company purchased land and constructed a new retail
 store location in Fort Worth, Texas. The purchase and construction were
 partially financed with an interim construction loan from a financial
 institution. The Company has obtained a commitment from the financial
 institution to provide permanent financing with a long-term note payable,
 and expects to convert the interim construction loan into a permanent loan
 during the third quarter of fiscal 1998. The new store opened on April 10,
 1998.

The Company believes it has adequate working capital and lines of credit to
 provide liquidity during future off-seasons.

Balance Sheet

	Cash and cash equivalents at March 31, 1998 were $242,000, compared to
 $2,826,000 at March 31, 1997. The decrease was due to the factors noted
 above (See "Capital Resources and Liquidity").

	Inventories at March 31, 1998 were $3,642,000, compared to $1,912,000 at
 March 31, 1997. The increase was due to the factors noted above (See
 "Capital Resources and Liquidity").

	Deferred income taxes (current and long-term) at March 31, 1998 totaled
 $1,731,000 compared to $34,000 at March 31, 1997. The increase was due to
 the Company's recognition, in the fourth quarter of fiscal 1997, of the tax
 benefits associated with net operating loss carryforwards generated in prior
 years and a change in the valuation allowance for deferred tax assets.

	Property and equipment at March 31, 1998 was $8,317,000 compared to
 $4,687,000 at March 31, 1997. The increase was due to the new store
 construction noted above (See "Capital Resources and Liquidity"), as well
 as the implementation of a new merchandising computer system and acquisition
 of a nursery production facility during 1997.

	Accounts receivable, accounts payable, and accrued expenses vary seasonally.
 The amounts at March 31, 1998 were not significantly changed from the 
 comparable period in 1997.

	Prepaids and other assets (current and long-term), goodwill, and deferred
 rent payable do not typically fluctuate seasonally. The amounts at March 31,
 1998 were not significantly changed from the comparable period in 1997.

	Long-term debt (including current portion) at March 31, 1998 was $3,005,000
 compared to $519,000 at March 31, 1997. The increase was due to long-term
 debt incurred during 1997 and the new store construction noted above (See
 "Capital Resources and Liquidity").
Part 2. OTHER INFORMATION

Item 1. Legal Proceedings.

	None.

Item 2. Changes in Securities.

	None.

Item 3. Defaults Upon Senior Securities.

	None.

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

	The Annual Meeting of the shareholders of the Company was held on February
 11, 1998. The voting results at that meeting were as follows:

     Election of Directors:
	          Nominee	         For	      Withheld	         Broker Non-Votes
    	James C. Estill    	4,562,798     	25,389	                -0-
	    John T. Cosby	      4,562,798     	25,389                	-0-
	    John S. Peters     	4,562,798     	25,389                	-0-
	    Robert E. Glaze    	4,562,798     	25,389                	-0-
	    Dr. Stanley Block	  4,562,798     	25,389                	-0-

     Approval of Calloway's Nursery, Inc. 1997 Stock Option Plan:
          	For          	Against      	Abstain          Broker Non-Votes
	      4,414,202	        67,848        	17,125              	89,012

     Appointment of Coopers & Lybrand, LLP as auditors for fiscal year 1998:
          	For          	Against      	Abstain         	Broker Non-Votes
	      4,558,386        	22,701        	7,100                  	-0-

Item 5. Other Information.

	None.

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

	(a) Exhibits:

		None.

	(b) Reports on Form 8-K:

None.
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.

Dated: May 13, 1998

			CALLOWAY'S NURSERY, INC.



			By /s/ James C. Estill
			James C. Estill, President and 
			Chief Executive Officer

			
			By /s/ Daniel G. Reynolds
			Daniel G. Reynolds, Vice President
			and Chief Financial Officer