SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                                                  

                                 FORM 10-K

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



      For Fiscal Year Ended                     Commission File Number
          November 1, 1997                             1-12353


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


              DELAWARE                                     94-3220603
       (State or  other jurisdiction of               (I.R.S. Employer
       incorporation or organization)              Identification Number)


          505 Railroad Avenue                              60164
          Northlake, Illinois                            (Zip code)
(Address of principal executive offices)


                               (708) 562-1000
           (Registrant's telephone number, including area code)


                     Securities registered pursuant to
                         Section 12(b) of the Act:

     Title of each class:           Name of each exchange on which registered:
     Common stock, $.01 par value               New York Stock Exchange
     Non-Voting Common Stock, $.01 par value    Chicago  Stock Exchange

                     Securities registered pursuant to
                      Section 12(g) of the Act:  None



       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
   report(s)), and (2) has been subject to such filing requirements  for
   the past 90 days.  Yes   X     No       .

   Indicate by check mark if disclosure of delinquent filers to Item 405
   of Regulation S-K is not contained herein, and will not be contained,
   to  the best of the registrant's  knowledge, in definitive  proxy  or     
   information statements incorporated by reference in Part III of  this
   Form 10-K or any amendment to this Form 10-K.    
   
       Aggregate market value of voting stock held by non-affiliates  of
   the registrant,   9,472,824  common shares,  based  on  the   $38.675     
   closing stock price on January 23, 1998 was $366,361,468.

       At January 23, 1998 there were 18,483,007 shares of Common  Stock
   outstanding   and 2,884,326   shares of   Non-Voting   Common   Stock 
   outstanding.

<PAGE>

                                PART I

   ITEM 1.   BUSINESS

   Introduction

       Dominick's  Supermarkets,  Inc. (together with its  subsidiaries,
   the "Company")  is the  second largest  supermarket operator  in  the
   greater Chicago metropolitan area with 107 stores operated under  the
   Dominick'sR name.  Through its 72 years of operation, the Company has
   developed a  valuable and  strategically located  store base,  strong
   name recognition, customer loyalty and a reputation as a quality  and
   service leader among Chicago-area supermarket chains.  The  Company's
   store base consists of  20 conventional   stores and 87  full-service
   combination food and  drug stores, including  37 Fresh  Stores.   The
   Company's  store   base   is   modern   and   well-maintained,   with
   approximately 78% of its  stores new or remodeled  in the past  seven
   years.  The Company also owns  and operates two primary  distribution
   facilities totaling approximately 1.4 million square feet,  including
   a satellite facility of approximately 285,000 square feet and a dairy
   processing plant.   In addition,  the Company's  management team  has
   proven  experience   in   successfully   developing   and   operating
   full-service supermarkets.  The  Company believes these factors  have
   helped  it   to  increase   its  market   share  among   Chicago-area
   supermarkets from 20.4% in 1990 to 26.5% in 1996.

       The Company was incorporated in Delaware in January 1995 and  its
   principal executive  offices  are  located  at  505 Railroad  Avenue,
   Northlake, Illinois 60164, telephone (708) 562-1000.

   Acquisition

       The Company acquired Dominick's Finer Foods, Inc.  ("Dominick's")
   on March  22,  1995 for  total  consideration of  approximately  $693
   million, excluding  fees and  expenses of  approximately $41  million
   (the  "Acquisition").    The  Company  effected  the  Acquisition  by
   acquiring 100%  of  the capital  stock  of Dominick's    parent,  DFF
   Supermarkets, Inc.  ("DFF"),  for  $346.6 million  in  cash  and  $40
   million of  the  Company's  15%  Redeemable  Exchangeable  Cumulative
   Preferred  Stock.   DFF  was  subsequently  merged  into  Dominick's.   
   In  addition, the  Company  repaid  certain  indebtedness  and  other 
   liabilities  of  Dominick's  of  approximately  $181.8  million   and 
   assumed  $124.5  million  of  existing  capital  leases  and    other 
   indebtedness.     For    purposes  of financial presentation,     the
   "Predecessor Company"  refers to Dominick's prior to the Acquisition.

   Store Types

        The Company's stores are full-service supermarkets that emphasize
   quality,  freshness  and  service,  and  are  classified  into   three
   categories:
<PAGE>
            Conventional Stores.  Dominick's 20 conventional stores  are
       typically  located in  higher density  population areas,  average
       approximately   42,700    square   feet   in   size    (including
       approximately  28,200 square  feet of  selling space)  and  offer
       approximately 35,000  SKUs.   All of  the Company's  conventional
       stores include a  variety of service departments typically  found
       in full-service supermarkets  such as delicatessen, bakery,  meat
       and seafood  departments and a  limited selection  of health  and
       beauty care products.  In addition, many stores also offer  salad
       bars,  prepared foods,  floral departments,  film processing  and
       liquor.   In fiscal 1991,  the Company began  to rationalize  its
       base of 53 conventional supermarkets. Since that time,in addition
       to  the Fresh  Store  conversions  (see  below), the  Company has  
       closed certain under-performing  conventional supermarkets.   The
       Company's  20  remaining  conventional  supermarkets  are  stores
       which are primarily  in locations where either replacement  sites
       are not available or the demographics of the area do not  justify
       a conversion to a different format.


            Combination   Food  and   Drug   Stores.     Dominick's   50
       combination  food  and drug  stores,  including  17  former  Omni
       stores  (discussed below),  average approximately  68,900  square
       feet  (including  approximately 48,500  square  feet  of  selling
       space) and  offer approximately  60,000 SKUs.   Combination  food
       and drug  stores offer all  the products  and services  typically
       found  in a  conventional store  and, by  virtue of  their  large
       size,  include  a   full-service  drug  store  complete  with   a
       pharmacy, a broader line  of health and beauty care products  and
       an expanded selection of seasonal merchandise.


            Fresh  Stores.   Dominick's  37  Fresh Stores  are  enhanced
       combination  food   and  drug   stores  designed   to  create   a
       European-style fresh market atmosphere and emphasize the  store's
       visual appeal and  quality merchandise perception. The  Company's
       Fresh Stores  feature significant  upgrades in  store design  and
       fixtures in  order to emphasize  an expanded  assortment of  high
       quality fresh  produce and other  perishables, a large  selection
       of restaurant-quality prepared  foods for carry-out and  in-store
       dining and  a superior  line of  freshly baked  goods and  pastry
       items.  Fresh Stores also typically offer expanded  delicatessen,
       bakery,  meat,  seafood and  floral  departments  and  additional
       service departments  such as a  gourmet coffee cafe.   The  first
       Fresh Store was introduced in fiscal 1994 through the  conversion
       of an  existing conventional store.   A total  of 19 stores  have
       been  converted to  date, resulting  in  an average  increase  in
       customer counts,  sales per  square foot  and store  contribution
       margins for  the converted  stores over  pre-conversion levels.  
       Fresh Stores  average approximately  61,500 square  feet in  size
       (including approximately 45,700  square feet of selling space).  
       New Fresh  Stores are  expected to  average approximately  70,000
       square  feet  (including  approximately  53,000  square  feet  of
       selling space).  In addition  to the 19 converted stores, 18  new
       Fresh Stores have been  opened and more than 25 additional  Fresh
       Stores  are expected  to be  opened or  converted by  the end  of
       fiscal 1998.
<PAGE>

       Omni.   In  fiscal  1997,  the Company  announced   a   strategic
   restructuring program that will  result in the  conversion of its  17
   Omni stores to the Dominick's format.   Under the Omni banner,  these
   stores were operated  as high volume,  price impact combination  food
   and drug stores.  At the end of fiscal 1997, initial steps to convert
   these stores had  been completed,  although major  remodels of  those
   stores, including 13 conversions to Fresh Stores, are expected to  be
   completed in fiscal 1998.

   Store Development

       The  Company's 72 years  of operation  in the  Chicago area  have
   allowed it to build its  store locations selectively, and  management
   believes that  the Company's  current  locations include  many  prime
   store sites  in developed  urban and  suburban areas  which would  be
   difficult to  replicate.   In addition  to upgrading  its store  base
   through  capital  expenditures,  the   Company  began  to  focus   on
   rationalizing its conventional  store base in  fiscal 1991.   Between
   November 1990  and October  1995, 15 conventional  supermarkets  were
   closed.    This  store  rationalization  program  also  included   an
   evaluation of  the Company's  perishable departments.   In  order  to
   maximize the effectiveness of  the remaining conventional stores, the
   Company began to focus on upgrading their perishable departments  and
   developing new  prototypes to  convey a  stronger image  of  quality,
   selection and  freshness to  the customer.   Capital  investment  was
   directed   toward   selectively    adding   improvements   such    as
   European-style bakeries  and enhanced  deli departments  to  existing
   Dominick's stores.   These  efforts led  to the  introduction of  the
   Fresh Store concept at the beginning  of fiscal 1994.  Following  the
   Acquisition in fiscal  1995, the  company accelerated  its new  store
   program.   From fiscal 1996 through  fiscal 1997,  the Company opened
   18 newly constructed Fresh Stores. 

       The following table sets forth additional information  concerning
   changes in the Company's store base.
                                                                    
                                             Fiscal Year        
                                         
                                 1997   1996    1995    1994    1993

   Total Stores:
     Beginning of period          100     97     101     101     101
       Opened                      10      8       0       1       1
       Closed                      (3)    (5)     (4)     (1)     (1)
     End of period                107    100      97     101     101
   Remodels and Conversions:
     Major remodels                 5      9       4       1       1
     Fresh Store conversions        5      0       8       6       0
   Stores by format
     (end of period):
     Dominick's:
       Conventional                20     23      27      38      45
       Combination food and drug   50     38      39      40      40
       Fresh Stores                37     22      14       6       0
         Subtotal                 107     83      80      84      85
       Omni                        --     17      17      17      16
         Total                    107    100      97     101     101
<PAGE>

   Market Area

        Chicago  is  the  nation's  third  largest  metropolitan   area,
   with  a  population  of  approximately  7.8  million   people     and
   approximately 2.8 million  households.    Chicago has  a  stable  and
   diverse   economic   base   which   includes   major   manufacturing,
   transportation, finance and other  business centers.  The  population
   base of  Chicago is  relatively young  and affluent  compared to  the
   national average and compared with other leading population  centers.
    In addition to its attractive demographics, the Chicago metropolitan
   area has  had  a relatively  stable  economic environment  with  more
   stable inflation and unemployment rates  than many other major  urban
   markets.   The Illinois  Department of  Employment Security  reported
   that employment reached record levels in 1997, while the unemployment
   rate fell to  a 20-year low.   According to  a report  issued by  the
   U.S. Department of Commerce,  by the year  2005 the  Chicago area  is
   also expected to have a population  of 8.3 million residents and  the
   largest increase in jobs  of all of  the nation's major  metropolitan
   areas.  The Company believes that  its existing market share and  its
   plans to add new stores will allow it to benefit from the  continuing
   growth of the Chicago area.


   Warehousing, Distribution and Purchasing

                 The  Company currently  owns and  operates two  primary
   distribution  facilities   with   an   aggregate   of   approximately
   1.4 million  square   feet,  including   a  satellite   facility   of
   approximately  285,000  square  feet  for  storage  of  forward   buy
   inventory.  Each store submits orders to the distribution  facilities
   through a centralized processing system, and merchandise ordered from
   the warehouses is normally received at the stores the next day.

       The   Company's  primary   warehouse  facility   is  located   in
   Northlake,  Illinois  and  handles   dry  grocery,  produce,   dairy,
   delicatessen, meat and frozen  foods.    The Company's other  primary
   distribution facility, a general merchandise facility located on  the
   south side  of  Chicago approximately  15  miles from  the  Company's
   Northlake facility, handles health and beauty care products and other
   general merchandise.    The Company  also  owns and  operates  Ludwig
   Dairy, a  dairy processing  plant in  Dixon, Illinois  (approximately
   100 miles west of Chicago) that manufactures cultured dairy  products
   and ice cream.   A satellite  facility also located  in Northlake  is
   currently used only for the storage of forward buy inventory.

       The  stores receive  prepared foods,  such as  salads and  cooked
   meats,  from  the   Company's  commissary.     The  commissary   also
   distributes  "Chef's  Collection"  products,  which  offer  customers
   restaurant-quality,  fully  prepared  entrees  for  carry-out.    The
   commissary is  operated as  a profit  center and  charges  individual
   stores for its services.  Management believes that the Company is the
   only Chicago-area supermarket  chain to operate  its own  commissary,
   which gives it certain competitive advantages, such as higher margins
   on prepared  food,  increased  quality control  and  the  ability  to
   develop "signature items" not found in other supermarkets.
<PAGE>
       Distribution is accomplished through a Company-operated fleet  of
   tractors and trailers.   Stores are  located an average  of 15  miles
   from the  principal  distribution  center, with  the  furthest  store
   located approximately 35 miles away.  Management believes this  close
   proximity of the  stores to  the distribution  facilities results  in
   lower distribution costs  and enables the  Company to maintain  lower
   levels of inventory and achieve more efficient warehousing than would
   otherwise be possible.

       The Company has  historically purchased merchandise from a  large
   number of third party  suppliers, none of  which supplies a  material
   portion of the Company's goods and services.  The Company is a  party
   to certain exclusivity  contracts for the  purchase of products  from
   vendors.   While  these contracts  have  become common  in  the  food
   retailing industry,  the Company  did  not emphasize  such  contracts
   prior to the  Acquisition.  The  Company has begun  to focus on  such
   agreements more aggressively since  the  Acquisition and participates 
   in a Best Practices program  with other  supermarket  chains  managed
   by  the  Yucaipa  Companies ("Yucaipa"),  a private  investment group
   specializing in the acquistion and management of supermarket  chains,
   in an effor to reduce its product costs. The Company is also pursuing
   forward buying and secondary sourcing opportunities.

   Advertising and Promotion

       The Company  advertises primarily through  direct mail  circulars
   distributed every Thursday, in addition to Sunday newspaper and radio
   advertisements.   Television  advertising  is used  to  reaffirm  the
   Company's reputation for high-quality perishables.

       The  Company's advertising  and promotion  strategy stresses  the
   quality, assortment  of products,  customer service  and  competitive
   prices.  Since  1990, the Company  has focused  its Dominick's  print
   media advertising  on  direct  mail,  which  supports  the  Company's
   store-specific merchandising goals.  The Company typically circulates
   several versions of its  circular each week,  including two to  three
   versions for stores which incorporate the Fresh Store concept.  While
   all store  departments share  portions of  the weekly  circular,  the
   Company may tailor its advertisements  to a particular store's  trade
   area and  store type.   Management  believes direct  mail allows  for
   distribution of the weekly advertising circular  at a lower cost  and
   provides more complete coverage than newspaper inserts.
<PAGE>
       The Company also employs point-of-sale couponing in which coupons  
   are  printed with  the  customer's  receipt upon purchase of selected 
   items.   Manufacturers pay  the  Company  to  print  a coupon for one 
   product  when  another  product  is  purchased  in  order  to promote 
   complementary  or  substitute  products.   The  Company's  stores may 
   utilize  this  type of targeted  marketing  to promote  items  of its  
   choice. To better facilitate the Company's target marketing programs, 
   the   Company developed the  "Fresh  Values"  frequent  shopper  card 
   program,  which  was  introduced in its Dominick's stores in December 
   1996. The information generated by customers' use of the Fresh Values  
   card enhances the  Company's ability to  develop  programs  that  are  
   more   specifically  targeted  than   previously possible.

   Private Label Program

       The Company's private  label program represented 13.2% of  fiscal
   1997 sales (excluding meats, service delicatessen and produce items),
   which is significantly below the national average.  One component  of
   management's operating strategy is to increase private label sales to
   a level closer  to the  national average,  which management  believes
   will have a favorable impact on future gross margins.  Gross  margins
   on private label goods are generally eight to ten percent higher than
   on national brands, while offering comparable quality at prices  that
   are approximately 25% lower.  Through its private label program,  the
   Company currently offers approximately 1,800 private label items. The  
   Company procures grocery, deli, meat and health  and  beauty  private  
   label products  through  Topco  Associates, Inc. ("Topco"),  a large,  
   national  food  buying  cooperative.  In addition to its "Dominick's" 
   brand names, the Company features Topco-branded products  under   the
   "Valutime" and "Top Care" brand names at all of its stores.

   Management Information and Training Systems

       For  several  years,   the Company   has  been  modernizing   its 
   management  information  systems  by  adopting  a    "multi-platform" 
   strategy. This entailed upgrading or moving certain applications from 
   the  mainframe  to a mid-range or a micro format. The upgrade  of the  
   Company's financial software is substantially complete.  The  Company 
   has  also  initiated  an upgrade of its purchasing  and   warehousing 
   system and plans to install radio frequency technology,  which   will  
   enhance warehouse space  utilization,   manpower planning  and  store  
   service levels. Completion of this system is expected in fiscal 1999.   
   At the store level,  all  point-of-sale  equipment  has been upgraded 
   since fiscal 1993.  Pharmacy terminals  that  keep  detailed  patient  
   records  and  handle  third  party  billing  adjudication  have  been 
   installed and direct store delivery receiving and time-and-attendance 
   systems  have  been largely  implemented  at  the  store  level.   In  
   addition,  new  PC-based  store-level  training  systems  have   been  
   configured in the Company's stores.
<PAGE>
   Competition

       The supermarket industry is highly competitive and  characterized
   by narrow profit  margins.  Supermarket  chains generally compete  on
   the basis of location, quality  of products, service, price,  product
   variety and  store  condition.   The  Company's  competitors  include
   national and regional supermarket  chains, independent and  specialty
   grocers, drug  and convenience  stores, warehouse  club stores,  deep
   discount  drug  stores  and  supercenters.    The  Company  regularly
   monitors its competitors' prices and adjusts its prices and marketing
   strategy  as  management  deems  appropriate  in  light  of  existing
   conditions.

       In 1996,  the Company had a  market share of approximately  26.5%
   among Chicago-area  supermarkets, compared  to Jewel  Food Stores,  a
   subsidiary of  American Stores,  Inc., which  had a  market share  of
   approximately 35.7%.  The majority of the Company's other supermarket
   competitors are  regional  supermarket chains  or  small  independent
   operators, none of which has greater than a 5% market share.  Through
   its efforts to build new stores and replace older stores, the Company
   has increased its market share from approximately 20.4% in the early-
   to-mid 1990's  to  approximately  26.5%  in  1996,  (including a 6.4% 
   market  share  held  by  the Omni Format), despite the  fact  that  a
   substantial number  of competitive  store  openings occurred  in  the
   Chicago metropolitan area between 1990 and 1996.

       Beginning in the late 1980's  and peaking in the early 1990's,  a
   number of non-traditional competitors opened locations in the Chicago
   metropolitan area.   These  competitors introduced  a number  of  new
   formats to  the Chicago  consumer, including  warehouse club  stores,
   mass  merchants   and  supercenters.      Though  the   Company   has
   traditionally competed primarily with  other supermarket chains,  the
   Company's business  strategy  had  been to  compete  with  these  new
   entrants through the  introduction of its  Omni format and  continued
   growth of the  Dominick's combination  food and  drug stores  through
   1997.  The Company believes the  strength of its Fresh Store  concept
   should    enable  it   to  compete   successfully   against     these
   non-traditional competitors in the future, as the market  penetration  
   of its Fresh Stores increases as  a result of  its ongoing new  store 
   opening  and conversion program.

   Employees and Labor Relations

       As of  November 1, 1997, the  Company employed 19,449 people,  of
   whom approximately 25% were  full-time and 75%  were part-time.   The
   following table  sets  forth additional  information  concerning  the
   Company's employees.

                                  Union   Non-Union       Total 

      Salaried                         86       925          1,011
      Hourly:
        Full-time                   3,420       439          3,859
        Part-time                  14,332       247         14,579
              Total                17,838     1,611         19,449
<PAGE>
       Substantially   all  of   the  Company's   store  employees   are
   unionized.  Employees covered by  union contracts are represented  by
   six major  unions:  (i) United  Food  and  Commercial  Workers  Union
   ("UFCW"),  (ii) UFCW   Union,  Meat   Division,   (iii) International
   Brotherhood   of   Teamsters,   (iv) International   Brotherhood   of
   Electrical Workers,  (v) Automobile  Mechanics  Union  (International
   Association of Machinists and Aerospace Workers) and (vi) Chicago and
   Northeast Illinois District Council of Carpenters.

       The Company has  never experienced a work stoppage and  considers
   its relations  with its  employees to  be good.   Pursuant  to  their
   collective bargaining agreements,  Dominick's contributes to  various
   union-sponsored, multi-employer pension plans.


   Trade Names, Service Marks and Trademarks

       The Company  uses a  variety of  trade names,  service marks  and
   trademarks.  The  Company believes  that its  more significant  trade
   names, service marks and trademarks include "Dominick's," "Dominick's
   Finer Foods," and "Fresh Values."

   Government Regulation

       The  Company   is  subject  to   regulation  by   a  variety   of
   governmental agencies, including but not limited to, the U.S. Food  &
   Drug Administration, the U.S. Department of Agriculture, the Illinois
   Department of Alcoholic Beverage Control, the Illinois Department  of
   Agriculture, the Illinois Department  of Professional Regulation  and
   state and local health departments and  other agencies.  At  present,
   local regulations prevent the Company from selling liquor, or certain
   types of liquor, at certain of its stores.

   Environmental Matters

       The Company is subject to federal, state and local  environmental
   laws that (i) govern activities or  operations that may have  adverse
   environmental effects, such as discharges to  air and water, as  well
   as handling and disposal practices for solid and hazardous wastes and
   (ii) impose liability for  the costs of  cleaning up certain  damages
   resulting from sites of past spills,  disposals or other releases  of
   hazardous materials.  The Company believes that it currently conducts
   its operations,  and  in  the past  has  operated  its  business,  in
   substantial compliance with applicable environmental laws.  From time
   to time, operations of the Company have resulted, or  may result,  in
   noncompliance with or liability for cleanup pursuant to environmental
   laws.  However, the Company believes  that any such noncompliance  or
   liability under current environmental laws would not have a  material
   adverse effect on its results of operations and financial  condition.
   The  Company  has not  incurred  material  capital  expenditures  for
   environmental controls during the previous three years.
<PAGE>
       In connection  with the Acquisition,  the Company and  Dominick's
   conducted certain investigations (including in some cases,  reviewing
   environmental reports prepared by others) of the Company's operations
   and  its  compliance  with   applicable  environmental  laws.     The
   investigations, which included Phase I  and Phase II assessments  and
   subsequent studies  by independent  consultants, found  that  certain
   facilities have had or may have  had releases of hazardous  materials
   associated with Dominick's operations or  those  of  other   current,  
   prior adjacent occupants that may  require remediation,  particularly 
   due to releases of hazardous materials from underground storage tanks  
   and hydraulic equipment. The  costs to  remediate such  environmental
   contamination are  currently estimated  to range  from  approximately
   $4 million to $6 million.  Pursuant  to the stock purchase  agreement
   related to  the  Acquisition, the  prior  owners of  Dominick's  have
   agreed to pay one-half  of such remediation  costs up to  $10 million
   and  75%   of  such   remediation  costs   between  $10 million   and
   $20 million.  Based in part on  the investigations conducted and  the
   cost-sharing provisions of such stock purchase agreement with respect
   to environmental matters, the  Company believes that its  liabilities
   relating to  these environmental  matters will  not have  a  material
   adverse effect  on  its  future  financial  position  or  results  of
   operations.  See "Management's  Discussion and Analysis of  Financial
   Condition  and   Results   of   Operations--Liquidity   and   Capital
   Resources."

   Risk Factors

   Leverage; Potential Inability to Service or Refinance Debt

       At   November  1,   1997,   the  Company's   consolidated   total
   indebtedness and total  stockholders' equity  was approximately  $601
   million and $117  million, respectively. In  addition, the  Company's
   balance  sheet   at  November   2,   1996,  reflected   goodwill   of
   approximately $375 million.  As of November 1, 1997, the Company  had
   approximately  $122  million  available   for  borrowing  under   the
   Company's revolving credit  facility  (the "1997  Credit  Facility").  
   The Company's ability to make scheduled payments of the principal of,
   or interest  on,  or  to refinance,  its  indebtedness  and  to  make
   scheduled payments under its operating  leases depends on its  future
   performance, which  to  a  certain extent  is  subject  to  economic,
   financial, competitive and other factors  beyond its control.   Based
   upon the  current  level  of  operations,  management  believes  that
   available cash flow, with available borrowings under the 1997  Credit
   Facility (as defined below) and other sources of liquidity, including
   proceeds from sale-leaseback transactions,  will be adequate to  meet
   the Company's anticipated requirements  for working capital,  capital
   expenditures, interest  payments  and  scheduled  principal  payments
   under the 1997 Credit Facility and the Company's other  indebtedness.
   There can be no assurance, however, that the Company's business  will
   continue to generate  cash flow at  or above current  levels or  that
   anticipated growth will  materialize.  If  the Company  is unable  to
   meet its obligations from such sources,  the Company may be  required
   to refinance  all or  a portion  of its  existing indebtedness,  sell
   assets or obtain  additional financing.   There can  be no  assurance
   that any such refinancing would be possible or that any such sales of
   assets or additional financing could be completed.  See "Management's
   Discussion   and    Analysis    of Financial Condition and Results of
   Operations--Liquidity and Capital Resources."
<PAGE>
   Potential Adverse Effects of Pending Litigation

                On  March 16, 1995,  a lawsuit was  filed in the  United
   States District Court for the  Northern District of Illinois  against
   Dominick's by two employees of Dominick's.  The plaintiffs'  original
   complaint asserted allegations  of gender  discrimination and  sought
   compensatory and  punitive damages  in an  unspecified amount.    The
   plaintiffs filed an amended  complaint on May 1,  1995.  The  amended
   complaint added four additional  plaintiffs and asserted  allegations
   of gender and national origin discrimination.  The plaintiffs filed a
   second amended complaint on August  16, 1996 adding three  additional
   plaintiffs.   On April  8, 1997,  the  plaintiffs' motion  for  class
   certification was granted by the court as to the female subclass  but
   was denied as to the national origin subclass.  The Company plans  to
   vigorously defend  this  lawsuit.   Due  to the  numerous  legal  and
   factual issues  which must  be resolved  during  the course  of  this
   litigation, the Company is unable to predict the ultimate outcome  of
   this lawsuit.    If  Dominick's were  held  liable  for  the  alleged
   discrimination (or otherwise concludes that is in the Company's  best
   interest to settle the matter), it could be required to pay  monetary
   damages (or settlement  payments) which, depending  on the theory  of
   recovery or the resolution of the plaintiffs' claims for compensatory
   and punitive damages, could be substantial and could have a  material
   adverse effect on the Company.   Based upon the current state of  the
   proceedings, the  Company's   assessment to  date of  the  underlying
   facts  and  circumstances   and  the   other  information   currently
   available, and although no assurances can be given, the Company  does
   not believe that the resolution of this litigation will have material
   adverse effect on  the Company's  overall liquidity.   As  additional
   information is gathered and the litigation proceeds, the Company will
   continue to assess its potential impact.  See "Legal Proceedings."
   
   Risk of Benefits of Conversions of Omni Stores to Dominick's  Stores.    
       
       On  October   9,  1997,   the  Company   announced  a   strategic
   restructuring program that will result in the conversion of all 17 of
   its existing Omni  stores to the  Dominick's format. As  a result  of
   this  strategic  change,  the   Company  recorded  a  $74.4   million
   restructuring charge  (See  Note  1  to  the  consolidated  financial
   statements).  The conversions are expected to result in substantially
   lower sales  levels at  these stores  as a  result of  shifting  from
   Omni's high volume,  price impact format  to Dominick's  full-service
   format. The Company expects such sales declines to  be  substantially 
   offset by the sales on new stores, which are  predominantly  expected
   to open in the second half of fiscal 1998. The Company  also  expects 
   that  the  former  Omni  stores  will  ultimately  be able to achieve  
   average volumes and  profit  margins  consistent with  its   existing  
   Dominick's  stores  after  remodeling  activities  are completed.  In  
   addition,  the Company expects to eliminate approximately $12 million 
   of advertising and overhead costs that were dedicated   to  operating 
   the Omni format.  Although the Company expects that the  former  Omni 
   stores   will be able to achieve average volumes and profit   margins 
   consistent  with  its   existing  Dominick's stores after  remodeling 
   activities are completed, there can be no assurance that such savings 
   and other benefits will ultimately be realized and that  new entrants  
   into the  market, aggressive  actions  by   existing  price    impact 
   competitors,    unexpected construction  delays, or  other unforeseen 
   factors   will not  offset  or adversely  impact  such  savings   and 
   improved profit levels.

   Highly Competitive Industry

       The supermarket industry is highly competitive and  characterized
   by narrow profit margins.  The Company's competitors include national
   and regional supermarket chains,  independent and specialty  grocers,
   drug and  convenience stores,  warehouse club  stores, deep  discount
   drug stores and supercenters.   Supermarket chains generally  compete
   on the  basis  of  location, quality  of  products,  service,  price,
   product variety and store condition.  The Company regularly  monitors
   its competitors' prices and adjusts its prices and marketing strategy
   as management deems  appropriate  in  light  of  existing conditions.  
   There can be  no assurance that  new competitors will  not enter  the
   supermarket industry or  that the  Company can  maintain its  current
   market share.  See "Business--Competition."

    Exposure to Regional Economic Trends due to the Company's Geographic
   Concentration

       All of  the Company's stores are  located in the greater  Chicago
   metropolitan area and  thus the performance  of the  Company will  be
   particularly influenced by developments in this area.  A  significant
   economic downturn  in  the Chicago  metropolitan  area could  have  a
   material  adverse  effect  on   the  Company's  business,   financial
   condition or results of operations.

    Limitations on Access to Cash Flow of Dominick's
<PAGE>
       The  Company is  a holding  company which  conducts its  business
   through    its    wholly     owned subsidiary,  Dominick's,  and  its
   subsidiaries.  Under the terms of  the 1997 Credit Facility, and  the
   other instruments  governing  its indebtedness, there are limitations
   ability to pay dividends or otherwise  distribute cash to the Company.

   Cost of Compliance with Environmental Regulations

       The  Company  is  subject  to  federal,  state  and  local  laws,
   regulations and ordinances that  (i) govern activities or  operations
   that may have  adverse environmental effects,  such as discharges  to
   air and water, as well as  handling and disposal practices for  solid
   and hazardous  wastes and  (ii) impose  liability  for the  costs  of
   cleaning up,  and  certain  damages resulting  from,  sites  of  past
   spills, disposals or other releases of hazardous materials (together,
   "Environmental Laws").  From time to time, operations of the  Company
   have resulted or may  result in noncompliance  with or liability  for
   cleanup pursuant  to  Environmental  Laws.    Certain  investigations
   conducted in connection  with the Acquisition  found that certain  of
   the Company's  facilities  have  had or  may  have  had  releases  of
   hazardous materials associated with Dominick's operations or those of
   other current and prior occupants that may require remediation.   The
   costs to  remediate such  environmental contamination  are  currently
   estimated to  range from  approximately $4  million  to  $6  million.  
   Pursuant to the terms of the stock purchase agreement associated with
   the Acquisition, the prior  owners of Dominick's  have agreed to  pay
   one-half of such remediation costs up to $10 million and 75% of  such
   remediation costs between $10 million and $20 million.  Giving effect
   to such contribution,  the Company's net  share  of such  remediation 
   costs is  current ly esti mated a t appro ximately  $3.4 million.  To
   the extent that the prior owners of Dominick's fail to reimburse  the
   Company for such remediation costs as  they have agreed, the  Company
   would be required to bear this entire expense and pursue its remedies
   against such former owners.  See "Business--Environmental Matters."

   Dependence upon Key Personnel

       The  Company's success  depends, in  part, upon  the services  of
   Ronald W. Burkle, the Company's Chairman  of the Board of  Directors,
   Robert A.  Mariano,  the  Company's  President  and  Chief  Executive
   Officer, and other key  personnel.  The loss  of the services of  Mr.
   Burkle, Mr. Mariano or other key  management personnel could have  an
   adverse effect upon the Company's business, results of operations  or
   financial condition.    Dominick's  has entered  into  an  employment
   agreement with  Mr. Mariano.   There  can be  no assurance  that  the
   Company will be able to retain its existing management personnel.
<PAGE>
   



   Forward-Looking Statements

       When  used  in  this  report,  the  words  "estimate,"  "expect,"
   "project," and similar expressions are intended to identify  forward-
   looking  statements  within  the  meaning  of  Section  27A  of   the
   Securities Act of 1933, as amended, and Section 21E of the Securities
   Exchange Act of  1934, as amended.   Such statements  are subject  to
   certain risks and uncertainties, including, but not limited to  those
   discussed above, that could cause actual results to differ materially
   from those projected.  These forward-looking statements speak only as
   of the  date hereof.   All  of these  forward-looking statements  are
   based on estimates and assumptions made by management of the Company,
   which although believed  to be reasonable,  are inherently  uncertain
   and difficult to  predict; therefore,  undue reliance  should not  be
   placed upon  such estimates.   There  can be  no assurance  that  the
   growth, savings  or  other  benefits anticipated  in  these  forward-
   looking statements will be  achieved.  In addition,  there can be  no
   assurance that unforeseen  costs and expenses  or other factors  will
   not offset or adversely affect the  expected growth, cost savings  or
   other benefits in whole or in part.
<PAGE>
   ITEM 2.  PROPERTIES

       The  Company  operates a  total  of  107 stores  in  the  Chicago
   metropolitan area, as described in the following table:

                                                            Average
                                  Number of Stores       Square Footage
                               Owned   Leased   Total   Total    Selling

   Dominick's:
    Conventional                  1       19     20     42,700    28,200
    Combination food and drug    11       39     50     68,900    48,500
    Fresh Stores                  2       35     37     61,500    45,700
    Company total                14       93    107     61,500    43,700


       At  its  leased   stores,  the  Company  generally  enters   into
   long-term  net  leases  which  obligate   the  Company  to  pay   its
   proportionate share  of real  estate taxes,  common area  maintenance
   charges and  insurance costs.   In  addition, such  leases  generally
   provide for contingent  rent based upon  a percentage  of sales  when
   sales from the  store exceed a  certain dollar amount.   The  average
   remaining term (including renewal  options with increasing rents)  of
   the Company's  supermarket leases  is  approximately 30 years.    Two
   stores owned by the Company  are subject to long-term  ground leases.  
   There  are  mortgages   on  the  Company's   owned  stores   totaling
   approximately $3.4 million at November 1, 1997.


       The  Company's administrative  offices currently  occupy a  small
   portion  of  an  approximately   285,000  square  foot  facility   at
   505 Railroad Avenue  (which also  includes a  satellite  distribution
   facility)  and   approximately  171,300   square  feet  of  space  at
   333 N. Northwest Avenue  in Northlake,  Illinois.   The Company  also
   owns and operates two  primary warehouse and distribution  facilities
   totaling  approximately  1.4 million   square  feet  (including   the
   satellite warehouse  facility)  and  the Ludwig  Dairy  plant.    See
   "Business--Warehousing, Distribution and Purchasing."
<PAGE>
   ITEM 3.  LEGAL PROCEEDINGS

       On  March 16, 1995,  a lawsuit  was filed  in the  United  States
   District  Court  for  the  Northern  District  of  Illinois   against
   Dominick's by two employees of Dominick's.  The plaintiffs'  original
   complaint asserted allegations  of gender  discrimination and  sought
   compensatory and  punitive damages  in an  unspecified amount.    The
   plaintiffs filed an amended  complaint on May 1,  1995.  The  amended
   complaint added four additional  plaintiffs and asserted  allegations
   of gender and national origin discrimination.  The plaintiffs filed a
   second amended complaint on  August 16, 1996 adding three  additional
   plaintiffs.   On April  8, 1997,  the  plaintiffs' motion  for  class
   certification was granted by the court as to the female subclass  but
   was denied as to the national origin subclass.  The Company plans  to
   vigorously defend  this  lawsuit.   Due  to the  numerous  legal  and
   factual issues  which must  be resolved  during  the course  of  this
   litigation, the Company is unable to predict the ultimate outcome  of
   this lawsuit.    If  Dominick's were  held  liable  for  the  alleged
   discrimination (or otherwise concludes that is in the Company's  best
   interest to settle the matter), it could be required to pay  monetary
   damages (or settlement  payments) which, depending  on the theory  of
   recovery or the resolution of the plaintiffs' claims for compensatory
   and punitive damages, could be substantial and could have a  material
   adverse effect on the Company.   Based upon the current state of  the
   proceedings, the Company's assessment to date of the underlying facts
   and circumstances and the other information currently available,  and
   although no assurances  can be given,  the Company  does not  believe
   that the resolution of this litigation  will have a material  adverse
   effect on the Company's overall liquidity.  As additional information
   is gathered and the litigation proceeds, the Company will continue to
   assess its potential impact.

       The Company,  in its  ordinary course  of business,  is party  to
   various other legal actions.   Management believes these are  routine
   in nature and incidental to its operations.  Management believes that
   the outcome  of  any such  other  proceedings to  which  the  Company
   currently is a party will not have a material adverse effect upon its
   business, financial  condition or  results of  operations.   However,
   adverse developments with respect to any pending or future litigation
   could adversely affect the market price of the Company's Common Stock
   (defined below).


   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       On March  4, 1997, the  stockholders of the  Company (i)  elected
   four directors of the Company to  a three-year term expiring in  2000
   and (ii) approved the Directors Deferred Compensation and  Restricted
   Stock Plan.  On September 10,  1997, the Board of Directors  approved
   the  1997  Employee  Stock  Purchase  Plan,  subject  to  stockholder
   approval at the 1998 Annual Meeting  of Stockholders.  Except as  set
   forth above, there were  no matters submitted to  a vote of  security
   holders during  fiscal  1997.   See  the Company's  definitive  proxy
   statement for  the  1998 Annual  Meeting  of Stockholders  under  the
   captions "1997 Employee Stock Purchase Plan."
<PAGE>
   ITEM  5.      MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED
   STOCKHOLDER MATTERS

       The Company's Common Stock, $.01 par value (the "Common  Stock"),
   is listed  on the  New  York Stock  Exchange  and the  Chicago  Stock
   Exchange  (symbol:  DFF).  The  Company  had   stockholders of record
   as of  January 23,  1998.   Prior  to  the Company's  initial  public
   offering on November 1, 1996 (the "IPO"), there was no public trading
   market for the Company's Common Stock.

       The Company has not paid any dividends on its Common Stock  since
   the Acquisition  and does  not expect  to pay  any dividends  on  its
   Common Stock in the foreseeable future.  The Company's principal debt
   instruments contain  certain  restrictions  on the  payment  of  cash
   dividends  with  respect  to  the   Company's  Common  Stock.     
                                                                     
   ITEM 6.  SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

       The  following table  sets  forth selected  historical  financial
   data of the Company and the Predecessor Company as of and for the  52
   weeks ended November 1,  1997, the 53 weeks  ended November 2,  1996,
   the 32 weeks  ended October 28, 1995,  the 20 weeks  ended March  21,
   1995, the 52  weeks ended October 29,  1994, and the  52 weeks  ended
   October 30, 1993 together with the operating and other financial data
   which have  been derived  from the  financial statements  audited  by
   Ernst & Young LLP, independent auditors.   The pro forma  information
   set forth below for the 52 weeks ended October 28, 1995 gives  effect
   to the  Acquisition and  certain related  events as  though they  had
   occurred on October 30,  1994.  The  following information should  be
   read in  conjunction with  "Management's Discussion  and Analysis  of
   Financial Condition  and Results  of Operations"  and the  historical
   consolidated financial statements of the Company and the  Predecessor
   Company, together with the related notes thereto.


       Dominick's was  acquired by the Company  on March 22, 1995.   The
   historical financial statements for the 20 weeks ended March 21, 1995
   and all  prior periods  reflect the  Predecessor Company  results  of
   operations.  The historical  results of operations  for the 32  weeks
   ended October 28, 1995 and  all subsequent periods  are those of  the
   Company following the Acquisition.
<PAGE>
<TABLE>
                                              Company                           Predecessor Company            
                                                       Pro Forma
                                 52 Weeks  53 Weeks    52 Weeks   32 Weeks      20 Weeks  
                                   Ended     Ended       Ended     Ended         Ended     52 Weeks Ended
                                  Nov. 1,   Nov. 2,     Oct. 28,  Oct. 28,      Mar. 21, Oct. 29,  Oct. 30,
                                    1997      1996        1995      1995          1995     1994      1993
                                          (dollars in millions, except share and store data)
<S>                              <C>       <C>         <C>        <C>           <C>      <C>       <C>
Operating Results:
Sales                            $2,584.9  $2,512.0    $2,433.8   $1,475.0      $ 958.8  $2,409.9  $2,330.2
Cost of sales                     1,960.8   1,933.0     1,881.7    1,136.6        747.6   1,871.5   1,815.0
Gross profit                        624.1     579.0       552.1      338.4        211.2     538.4     515.2
Selling, general and                                             
  administrative expenses           526.1     491.4       482.2      293.9        191.9     484.3     469.4
Restructuring charge (a)             74.4        --          --         --           --        --        --
Termination of consulting
  agreement (b)                        --      10.5          --         --           --        --        --
SARs termination costs (c)             --       --           --         --         26.2        --        --
Operating income (loss)              23.6      77.1        69.9       44.5         (6.9)     54.1      45.8
Interest expense                     58.9      70.3        72.4       46.0         11.3      30.0      34.1
Income tax expense (benefit)          3.6       7.4         3.5        1.9         (7.1)      9.3       4.1
Extraordinary item(d)                23.6       6.3         4.6        4.6           --       6.3        --
Cumulative effect of 
  accounting change.                   --        --          --         --           --       1.0        --
Net income (loss) (d)            $  (62.5)  $  (6.9)   $  (10.6)  $   (8.0)     $ (11.1) $    7.5  $    7.6
Preferred stock dividend
 and accretion                         --       7.9         6.3        3.7              
Net loss available to
 common stockholders             $  (62.5)  $ (14.8)   $  (16.9)  $  (11.7)       
Per Share:
Loss per common share(e)         $  (2.93)  $ (0.96)   $  (1.10)  $  (0.76)
Average number of common
 shares outstanding(e)           21,361,147 15,571,339 15,441,324 15,411,793
Other Financial Data:                                                        
Depreciation and amortization    $   60.0   $  45.9               $   25.4      $  20.5  $   52.9  $   51.1
Capital expenditures                100.0      49.6                   23.1         22.4      60.1      31.1
EBITDA (as adjusted)(f)             158.5     134.9                   71.7         43.2     112.0      98.3
Cash flow from operating
 activities                          63.2      41.1                   61.8         20.0      73.2      89.9
Cash flow from investing
 activities                          99.7     (48.6)                (464.6)       (14.6)    (55.5)    (27.9)
Cash flow from financing
 activities                          25.0     (15.4)                 441.1          6.2     (29.4)    (50.6)
Store Data:
  Fresh Store conversions               5         0                      3            5         6         0
  Stores opened during the period      10         8                      0            0         1         1
  Stores closed during the period      (3)       (5)                     0           (4)       (1)       (1)
  Stores open at end of period        107       100                     97           97       101       101
  Comparable store sales growth      (0.1)%     1.2%                   1.5%         2.4%      2.9%     (1.6)%
  Average weekly sales per
   store  (000's)                $    510   $   491               $    480      $   484  $    466  $    448
  Average sales per selling
    square foot                  $    619   $   614               $    606      $   627  $    610  $    601
Total selling square feet at
  end of period (000's)             4,681     4,244                  4,008        3,976     4,039     3,969
</TABLE>
<PAGE>
<TABLE>
                                              Company                                       Predecessor Company            
                                                       Pro Forma
                                 52 Weeks  53 Weeks    52 Weeks   32 Weeks      20 Weeks  
                                   Ended     Ended       Ended     Ended         Ended     52 Weeks Ended
                                  Nov. 1,   Nov. 2,     Oct. 28,  Oct. 28,      Mar. 21, Oct. 29,  Oct. 30,
                                    1997      1996        1995      1995          1995     1994      1993
                                          (dollars in millions, except share and store data)
<S>                              <C>       <C>         <C>        <C>           <C>      <C>       <C>
Balance Sheet Data (end
    of period):
  Working capital surplus
    (deficit)                    $  (62.0) $   17.1               $  (34.2)     $ (21.5) $ (22.3)  $    2.0
  Total assets                    1,148.8   1,153.0                1,100.1        653.2     669.0     676.6
  Total goodwill                    375.3     420.2                  419.3           --        --        --
  Total debt                        601.3     540.7                  599.4        250.3     255.7     283.6
  Redeemable preferred stock           --      50.8                   43.7           --       --         --
  Stockholders' equity              116.6     179.1                   96.1        104.7     116.7     110.2

</TABLE>
<PAGE>

   (a) On  October   9,  1997,   the  Company   announced  a   strategic
       restructuring program that  will result in the conversion of  all
       of its 17  existing Omni stores to the  Dominick's format.  As  a
       result of this program,  the Company recorded a $74.4 million  of
       pre-tax restructuring charge.

   (b) On  November  1,  1996,  the  Company  terminated  a   consulting
       agreement  with  Yucaipa,   resulting  in  the  payment  of  a   
       termination fee of $10.5 million.

   (c) In  connection  with  the  Acquisition,  the  Company  discharged
       certain obligations  under its SARs  plan by  making payments  to
       plan participants.


   (d) Net loss  for the  52 weeks ended  November 1,  1997 reflects  an
       extraordinary  loss  of $23.6  million,  net  of  applicable  tax
       benefit of $15.6  million, resulting from the retirement of  $200
       million  of Dominick's  Senior  Subordinated Notes  and  the  re-
       financing  of its  1996 Credit  Facility.   Net loss  for the  53
       weeks ended  November 2, 1996 reflects  an extraordinary loss  of
       $6.3  million, net  of applicable  tax benefit  of $4.2  million,
       resulting from  the refinancing of  the 1995  Credit Facility  in
       connection  with the  IPO.  Net income  for  the 32  weeks  ended
       October 28, 1995 reflects an extraordinary loss of  $4.6 million,
       net of applicable  income tax benefit of $2.8 million,  resulting
       from the  repayment of $150 million  under a senior  subordinated
       credit facility  and the partial  repayment of $50 million  under
       the Company's 1995 Credit Facility.  Net income for the 52  weeks
       ended  October 29,  1994   reflects  an  extraordinary  loss   of
       $6.3 million,   net  of   applicable   income  tax   benefit   of
       $3.9 million,  resulting  from  the  retirement  of   $60 million
       principal amount of Dominick's 11.78% Senior Notes.

   (e) Loss  per   common  share   is computed based  upon the  weighted
       average  number  of shares  outstanding  during  the  period.  In
       accordance  with  the  rules  of  the  Securities  and   Exchange
       Commission, 85,998 shares of common stock issued after  March 22,
       1995  and  32,750 equivalent  shares  using  the  treasury  stock
       method  for outstanding  stock  options granted  after  March 22,
       1995 have  been treated as  outstanding for fiscal  1996 and  all
       prior  periods in  calculating earnings  per share  because  such
       shares were  issued and such  options are  exercisable at  prices
       below  the initial  public offering  price. Per  share data  have
       been adjusted  to reflect a  14.638 for 1  stock split  effective
       October 24, 1996.

<PAGE>

   (f) EBITDA  (as adjusted)  represents income  (loss) before  interest
       expense,  income  taxes, depreciation  and  amortization,  seller
       transaction  expenses, SARs  termination  costs,  pre-Acquisition
       equipment write-offs related to closed stores and remodels,  LIFO
       charge,   restructuring  charges,   termination   of   consulting
       agreement charge, extraordinary losses on extinguishment of  debt
       and  cumulative  effect  of  accounting  change.    The   Company
       believes   that   EBITDA  (as   adjusted)   provides   meaningful
       information regarding  the Company's ability  to service debt  by
       eliminating  certain  non-cash and  unusual  charges.    However,
       EBITDA (as  adjusted) should not be  construed as an  alternative
       to  operating income,  net income  or  cash flow  from  operating
       activities (as determined  in accordance with generally  accepted
       accounting  principles)  and  should  not  be  construed  as   an
       indication  of  the  Company's  operating  performance  or  as  a
       measure of liquidity.  See "Management's Discussion and  Analysis
       of Financial Condition and Results of Operations."
<PAGE>
<TABLE>

The computation of EBITDA (as adjusted) for the periods presented is as follows:

                                              Company                           Predecessor Company
                                                       Pro Forma
                                 52 Weeks  53 Weeks    52 Weeks   32 Weeks      20 Weeks  
                                   Ended     Ended       Ended     Ended         Ended     52 Weeks Ended
                                  Nov. 1,   Nov. 2,     Oct. 28,  Oct. 28,      Mar. 21, Oct. 29,  Oct. 30,
                                    1997      1996        1995      1995          1995     1994      1993
                                          (dollars in millions)
<S>                              <C>       <C>         <C>        <C>           <C>      <C>       <C>
Operating Results:
Sales                            $2,584.9  $2,512.0    $2,433.8   $1,475.0      $ 958.8  $2,409.9  $2,330.2
  Net income (loss)              $  (62.5) $  (6.9)    $  (10.6)  $  (8.0)      $ (11.1) $    7.5  $    7.6
  Interest expense                   58.9     70.3         72.4      46.0          11.3      30.0      34.1
  Income tax expense (benefit)        3.6      7.4          3.5       1.9          (7.1)      9.3       4.1
  Depreciation and amortization      60.0     45.9         41.3      25.4          20.5      52.9      51.1
  Restructuring charge               74.4       --           --        --            --        --        --
  Termination of consulting
    agreement charge                  --      10.5           --        --            --        --        --
  LIFO charge                         0.5      1.4          2.4       1.7           0.7       1.1       0.4
  Extraordinary loss on
   extinguishment of debt,
   net of tax benefit                23.6      6.3          4.6       4.6            --       6.3        --
  Pre-Acquisition equipment
    write-offs                        --        --          1.3        --           1.3       1.7       0.6
  SARs expenses                       --        --           --        --           0.6       2.0       0.4
  SARs termination costs              --        --           --        --          26.2        --        --
  Seller transaction expenses         --        --           --        --           0.8       0.2        --
  Cumulative effect of
   accounting change                  --        --           --        --            --       1.0        --
  EBITDA (as adjusted)           $  158.5  $ 134.9     $  114.9   $  71.6       $  43.2  $  112.0  $   98.3

</TABLE>
<PAGE>

   ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
   AND RESULTS OF OPERATIONS

   General

       The   Company's   sales  increased   approximately   10.9%   from
   $2.3 billion in fiscal  1993 to $2.6 billion  in fiscal  1997.   This
   growth has occurred  in part  because of  the increase  in the  total
   number of stores operated by the Company, which increased from 101 at
   the end  of fiscal  1993  to 107  at  the end  of  fiscal 1997.    In
   addition, management  believes that  this sales  growth reflects  the
   substantial steps the Company has taken to strengthen its store  base
   over this  period  by  remodeling existing  stores,  closing  certain
   under-performing  stores  and selectively  replacing existing stores.  
   Through  fiscal  1991,  the  Company's  capital  expenditure  program
   focused on developing  combination food  and drug  stores and  adding
   pharmacies and expanded health and beauty care product lines to  many
   stores which were previously classified  as conventional stores.   In
   addition to upgrading  its store base  through capital  expenditures,
   the Company began to focus on "rationalizing" its conventional  store
   base (closing,  converting or  replacing under-performing  stores).  
   Seven under-performing  stores  were closed  in  fiscal 1991  and  an
   additional 15 were closed through the  end of fiscal 1997.  In  order
   to maximize the effectiveness  of the remaining conventional  stores,
   the Company began to focus on upgrading their perishable  departments
   and developed new prototypes to convey  a stronger image of  quality,
   selection and freshness to  the customer.  These  efforts led to  the
   introduction of the Fresh  Store concept at  the beginning of  fiscal
   1994.   During  the five-year  period  ended November  1,  1997,  the
   Company  completed  39  major  remodels  (including  19  Fresh  Store
   conversions).     In   addition   to   its   remodeling   and   store
   rationalization initiatives, the  Company accelerated  its new  store
   program after the Acquisition in fiscal 1995.  From the beginning  of
   fiscal 1996 through  the end of  fiscal 1997, the  Company opened  18
   Dominick's Fresh Stores, including 5 replacement stores.

       Store Mix.  As a result of its store rationalization and  capital
   expenditure program, the  Company's store mix  (by number of  stores)
   changed from 45% conventional, 39% combination food and drug and  16%
   Omni  at  the  end  of  fiscal  1993  to  19%  conventional  and  81%
   combination food and drug (including 35% Fresh Stores) at November 1,
   1997.    This  store  mix  change,   along  with  the  remodels   and
   departmental improvements discussed above, resulted in a  significant
   increase in total sales, as average weekly sales per store  increased
   from $448,000  in  fiscal  1993  to $510,000  in  fiscal  1997.    In
   addition, gross margins improved slightly from fiscal 1993 to  fiscal
   1997 due to an  increase in the number  of combination food and  drug
   stores   (which   generally   have higher margins  than  conventional
   stores  due  to  their  product   mix  and  increased  offerings   of
   higher-margin perishables).   This  margin increase  was realized  in
   spite of  the negative  impact on  gross margins  resulting from  the
   store disruptions during the Fresh  Store conversions in fiscal  1994
   and 1995.    Management  believes  that as  a  result  of  its  store
   rationalization and capital  expenditure programs  and its  continued
   emphasis on opening new Fresh Stores, the Company is well  positioned
   for future growth.
<PAGE>

       Fresh  Store Concept.   One  key aspect  of the  Company's  store
   rationalization  and  capital  expenditure  programs  has  been   the
   implementation of  the  Fresh Store  concept.   Dominick's  37  Fresh
   Stores are  enhanced  combination  food and  drug  stores  which  are
   designed to  create  a  European-style fresh  market  atmosphere  and
   emphasize  the  store's   visual  appeal   and  quality   merchandise
   perception.  The Company's Fresh Stores feature significant  upgrades
   in store  design and  offer an  expanded assortment  of high  quality
   fresh  produce   and  other   perishables,  a   large  selection   of
   restaurant-quality prepared foods for  carry-out and in-store  dining
   and a superior line of freshly  baked goods and pastry items.   Fresh
   Stores also offer  expanded delicatessen, bakery,  meat, seafood  and
   floral departments,  and additional  service  departments such  as  a
   gourmet coffee  cafe.    The first  Fresh  Store  was  introduced  in
   November 1993  through the  conversion  of an  existing  conventional
   store.  A total of 19 stores have now been converted, resulting in an
   average increase in customer counts, sales per square foot and  store
   contribution margins  for the  converted stores  over  pre-conversion
   levels.    In  addition,  by  focusing  customers  on  the  increased
   offerings of  higher-margin perishables  and prepared  products,  the
   Fresh Store  concept  has  produced  a  more  favorable  margin  mix.  
   Although the converted stores have generally achieved increased sales
   levels relatively  quickly following  their grand  openings as  Fresh
   Stores, their profitability  has been adversely  affected during  the
   six-month ramp-up period following such grand openings as a result of
   increased  promotional   costs  and   other  non-recurring   start-up
   expenses.  The Company  held grand openings for  six Fresh Stores  in
   fiscal 1994, eight Fresh Stores in fiscal 1995, eight Fresh Stores in
   fiscal 1996 and 15 Fresh Stores in fiscal 1997.  By the end of fiscal
   1998, planned  new  stores  and conversion  of  existing  stores  are
   expected to increase the number of  Fresh Stores to 65,  representing
   56% of the Company's store base.

       Omni  conversions.     The  broad  customer  appeal  and   strong
   financial performance  of  the  Dominick's Fresh  Store  led  to  the
   decision to convert the 17 Omni  stores to Dominick's stores.   These
   conversions represent an opportunity to rapidly accelerate the market
   penetration of Dominick's Fresh Stores.   The former Omni stores  are
   in attractive locations throughout the Chicago metropolitan area that
   are well suited for Dominick's Fresh Stores.  Remodeling efforts  are
   anticipated to  begin in  early calendar  1998 and  are targeted  for
   completion in mid-calendar 1998. See "Business--Risk Factors."
<PAGE>
       Acquisition Accounting.   The Company  acquired Dominick's  Finer
   Foods, Inc. ("Dominick's") on  March 22, 1995  in a transaction  that
   was accounted for  as a purchase  of Dominick's by  the Company  (the
   "Acquisition").  As a result, Dominick's assets and liabilities  were
   recorded at their estimated fair market values as of March 22,  1995.
   The purchase  price in excess of the fair market value of  Dominick's
   assets was recorded as goodwill and is being amortized over a 40-year
   period.   The  Company's  purchase price  allocation  resulted  in  a
   reduction in  the  carrying  value  of  Dominick's  fixed  assets  of
   approximately  $83 million   and   in   goodwill   of   approximately
   $438 million.    Dominick's  total debt also increased  substantially
   from approximately $250 million  at March 21,  1995 to  approximately
   $603 million on the date  of the Acquisition.   As a result of  these
   changes, the Company's results of operations in periods subsequent to
   the  Acquisition   reflect  reduced   levels  of   depreciation   and
   significantly increased levels of amortization and interest  expense.

   Results of Operations

       The following table  sets forth the historical operating  results
   of the Company for the 52 weeks ended November 1, 1997, the 53  weeks
   ended November 2, 1996,  and the pro forma  operating results of  the
   Company for the 52 weeks ended October 28, 1995 which give effect  to
   the Acquisition and certain related  transactions as though they  had
   occurred at October 30, 1994, expressed in millions of dollars and as
   a percentage of sales:

                                      Company                   Proforma

                             52 Weeks          53 Weeks         52 Weeks
                              Ended             Ended            Ended
                           Nov. 1, 1997      Nov. 2, 1996     Oct. 28, 1995

Sales                    $2,584.9 100.0%   $2,512.0 100.0%   $2,433.8 100.0%
Gross profit                624.1  24.1       579.0   23.0      552.1  22.7
Selling, general and
 administrative espenses    526.1  20.4       491.4   19.5      482.2  19.8
Restructuring charge         74.4   2.9          --     --         --    --
Termination of                 --    --        10.5    0.4         --    --
 consulting agreement
Operating income             23.6   0.9        77.1    3.1       69.9   2.9
Interest expense             58.9   2.3        70.3    2.8       72.4   3.0
Income tax expense            3.6    .1         7.4     0.3       3.5   0.1
Extraordinary loss on
 extinguishment of debt,
 net of tax benefit          23.6   0.9         6.3     0.3       4.6   0.2
Net loss                    (62.5) (2.4)       (6.9)   (0.3)    (10.6) (0.4)
Preferred stock dividend
 and accretion                 --    --         7.9     0.3       6.3   0.3
Net loss attributable to
 common stockholders     $  (62.5) (2.4%)  $  (14.8)   (0.6%) $ (16.9) (0.7%)
   


       The following discussion  of the Company's results of  operations
   should  be  read  in  conjunction  with  the  consolidated  financial
   statements of the Company together with the related notes thereto and
   other information included elsewhere herein.
<PAGE>
   Comparison of Results of Operations for  the 52 Weeks Ended  November
   1, 1997 with the 53 Weeks Ended November 2,  1996

       Sales:      Sales  increased   $72.9 million,   or   2.9%,   from
   $2,512.0 million  in  the  53  weeks   ended  November  2,  1996   to
   $2,584.9 million in  the 52  weeks ended November 1, 1997.  Excluding
   the additional week in  fiscal 1996, sales  increased 4.9% in  fiscal
   1997.    The  increase  in  sales   in  fiscal  1997  was   primarily
   attributable to  the  opening  of 10  new  Dominick's  Fresh  Stores,
   partially offset by the impact of three store closures during  fiscal
   1997 and one closure in fiscal 1996.

       Gross Profit:   Gross  profit increased  $45.1 million, or  7.8%,
   from $579.0 million  in  the  53 weeks  ended  November  2,  1996  to
   $624.1 million in the 52 weeks ended November 1, 1997.  Gross  profit
   as a percentage of sales increased from 23.0% in -the 53 weeks  ended
   November 2, 1996 to 24.1% in the 52 weeks ended November 1, 1997, due
   primarily to the reduction of product costs resulting from purchasing
   improvements  and  improved  perishable  and  drug  department  gross
   profit.   The increase  in gross  profit from  perishables  primarily
   reflects the improved  sales mix  and maturing  profitability of  the
   Company's Fresh Stores.

       Selling, General and  Administrative Expenses:  Selling,  general
   and administrative  expenses  ("SG&A")  increased  $34.7 million,  or
   7.1%, from $491.4 million in the 53  weeks ended November 2, 1996  to
   $526.1 million in  the  52  weeks  ended  November  1,  1997.    SG&A
   increased from 19.5% of sales in the 53 weeks ended November 2,  1996
   to 20.4%  of sales  in the  52 weeks  ended November  1, 1997.    The
   increase in SG&A as a percentage of sales reflects planned  increases
   in occupancy  costs  and  depreciation expense  associated  with  the
   Company's new store and remodel program.

        Restructuring Charge:  On October 9, 1997, the Company announced
   a strategic restructuring program that will result in the  conversion
   of all of its 17 existing Omni stores to the Dominick's format.  As a
   result of this program, the Company recorded a $74.4 million  pre-tax
   restructuring  charge,  including  a  $34.0  million  write-down   of
   goodwill attributable to the Omni format; a $14.9 million  write-down
   of certain assets to be disposed of resulting from the conversion  of
   the stores to the  Dominick's format; a  $14.0 million write-down  of
   certain inventories to  net realizable  value; and  an $11.5  million
   provision  for  costs  associated   with  store  closings,   employee
   severance and  certain  other  expenses.   The  restructuring  charge
   reduced net income by $58.3 million or $2.73 per share.

       Operating  Income:   Operating  income  for the  52  weeks  ended
   November  1,   1997   decreased   $53.5 million,   or   69.4%,   from
   $77.1 million in the 53 weeks ended November 2, 1996 to $23.6 million
   in the 52 weeks  ended November 1,  1997 as a  result of the  factors
   discussed above.  Excluding the impact of the restructuring charge in
   fiscal 1997 and  the termination  of consulting  agreement in  fiscal
   1996, operating income  increased $10.4  million or  11.9% in  fiscal
   1997.
<PAGE>
       Interest Expense:  Interest expense decreased from  $70.3 million
   in the 53  weeks ended November  2, 1996 to  $58.9 million in the  52
   weeks ended November 1,  1997 primarily due  to lower interest  rates
   and borrowing levels.

       Net Loss:   Net loss increased $55.6 million  from a net loss  of
   $6.9 million in the 53 weeks ended November 2, 1996 to a net loss  of
   $62.5 million in the 52 weeks ended  November 1, 1997 as a result  of
   the  factors  discussed  above.    After  deducting  preferred  stock
   dividend and accretion of $7.9 million in the 53 weeks ended November
   2, 1996, net loss attributable to common stockholders increased  from
   $14.8 million in the  53 weeks ended November  2, 1996 to  a loss  of
   $62.5 million in the 52 weeks ended November 1, 1997.

   Comparison of Results of Operations for the 53 Weeks Ended November 2,
   1996 (Historical) with the 52 Weeks Ended October 28, 1995 (Pro Forma)

       Sales:      Sales  increased   $78.2 million,   or   3.2%,   from
   $2,433.8 million  in  the  52  weeks   ended  October  28,  1995   to
   $2,512.0 million in  the  53  weeks ended  November  2,  1996.    The
   increase in sales in fiscal 1996 was primarily attributable to a 1.2%
   increase  in  comparable  store  sales,  the  opening  of  four   new
   Dominick's Fresh  Stores  and the  additional  week in  fiscal  1996,
   partially offset by the impact of  the closure of four stores  during
   fiscal 1995 and one store in fiscal 1996.

       Gross Profit:   Gross  profit increased  $26.9 million, or  4.9%,
   from $552.1 million  in  the  52 weeks  ended  October  28,  1995  to
   $579.0 million in the 53 weeks ended November 2, 1996.  Gross  profit
   as a percentage of sales increased  from 22.7% in the 52 weeks  ended
   October 28, 1995 to 23.0% in the 53 weeks ended November 2, 1996, due
   primarily to the reduction of product costs resulting from purchasing
   improvements  and  improved  perishable  and  drug  department  gross
   profit.  The increase in gross  profit from perishables reflects  the
   maturing profitability of the converted Fresh Stores.

       Selling,  General and  Administrative Expenses:   SG&A  increased
   $9.2 million, or  1.9%, from  $482.2 million in  the 52  weeks  ended
   October 28, 1995 to $491.4 million in the 53 weeks ended November  2,
   1996.   SG&A decreased  from 19.8%  of sales  in the  52 weeks  ended
   October 28, 1995 to 19.5% of sales in the 53 weeks ended November  2,
   1996.   The  decrease in  SG&A  as  a percentage  of  sales  reflects
   improved labor productivity and reduced overhead costs.

       Termination of  Consulting Agreement:  On  November 1, 1996,  the
   Company terminated  a  previous  consulting  agreement  with  Yucaipa
   resulting in the payment of a termination fee of $10.5 million.

       Operating  Income:   Operating  income  for the  53  weeks  ended
   November 2, 1996 increased $7.2 million, or 10.3%, from $69.9 million
   in the 52 weeks ended October  28, 1995 to $77.1 million as a  result
   of the factors discussed above.

       Interest Expense:  Interest expense decreased from  $72.4 million
   in the 52  weeks ended October  28, 1995 to  $70.3 million in the  53
   weeks ended November 2, 1996 primarily due to slightly lower interest
   rates and borrowing levels.
<PAGE>
       Net Loss:   Net loss decreased  $3.7 million from  a net loss  of
   $10.6 million in the 52 weeks ended October 28, 1995 to a net loss of
   $6.9 million in the 53  weeks ended November 2,  1996 as a result  of
   the  factors  discussed  above.    After  deducting  preferred  stock
   dividend and accretion of $6.3 million in the 52 weeks ended  October
   28, 1995 and $7.9 million in the 53 weeks ended November 2, 1996, net
   loss attributable  to common  stockholders improved  from a  loss  of
   $16.9 million in the  52 weeks ended  October 28, 1995  to a loss  of
   $14.8 million in the 53 weeks ended November 2, 1996.


   Liquidity and Capital Resources

       The Company's principal  sources of liquidity are cash flow  from
   operations, borrowings under its 1997 Credit Facility (defined below)
   and capital and operating  leases.  The  Company's principal uses  of
   liquidity  are   to   provide  working   capital,   finance   capital
   expenditures and meet debt service requirements.

        On  October  28,  1997,   the Company entered  into a  revolving
   credit facility with a syndicate of financial institutions (the "1997
   Credit Facility")  which  provides  borrowing  availability  of  $575
   million for general corporate and working capital purposes  including
   up to $50 million for letters of credit.  The Company uses letters of
   credit to cover workers' compensation self-insurance liabilities  and
   for other general purposes.   As of November 1, 1997 the Company  had
   approximately $ 11.8 million of outstanding  letters of credit.   The
   1997 Credit Facility  matures on  April 28, 2004.     The Company  is
   required to make  prepayments or reduce  availability under the  1997
   Credit Facility, subject  to certain exceptions,   with the  proceeds
   from certain  asset  sales,  issuances of  debt  securities  and  any
   pension plan reversions.

        On November 1,  1996, the Company  completed its initial  public
   offering of Common Stock (the "IPO")  which resulted in the  issuance
   of 5.9 million additional  shares of Common Stock.   Net proceeds  to
   the Company from the IPO, after deducting issuance costs, were  $97.7
   million.   The  Company  used  $50.8 million  of    the  proceeds  to
   repurchase  all  of  the  outstanding  15%  Redeemable   Exchangeable
   Cumulative Preferred  Stock  (the "Redeemable  Preferred  Stock")  on
   January 2, 1997 (and paid a $0.9 million of preferred stock  dividend
   on November 1, 1996). The $50.8 million of net proceeds was  invested
   in  short-term  interest  bearing  securities  until  the  Redeemable
   Preferred Stock repurchase occurred.  Additionally, $35.9 million  of
   the proceeds, together  with $45.0  million  of  available  cash  and 
   $193.6 million of proceeds under its  $325  million  credit  facility
   ( the  "1996  Credit  Facility" )  was  used  to  repay  all  of  the
   outstanding  borrowings  under  the  Company's  then  existing credit
   facility.  The remaining  proceeds from  the  IPO  were  used  to pay
   expenses and  terminate a  consulting  agreement  with  The   Yucaipa
   Companies.  See "Certain  Relationships  and  Related  Transactions."
<PAGE>
       The Company  generated approximately $63.2 million  of cash  from
   operating activities  during fiscal  1997 compared  to $41.1  million
   during fiscal 1996.   The increase in  cash generated from  operating
   activities is attributable to an increase in operating income,  lower
   interest expense resulting from the lower borrowing levels and  lower
   interest rates throughout  1997, and  the effect  of increased  trade
   leverage.   One  of the  principal  uses  of cash  in  the  Company's
   operating activities is  inventory purchases.   However,  supermarket
   operators typically require  small amounts of  working capital  since
   inventory is  generally  sold prior  to  the time  that  payments  to
   suppliers are due.  This reduces  the need for short-term  borrowings
   and allows cash from operations to  be used for non-current  purposes
   such  as   financing  capital   expenditures  and   other   investing
   activities.  Consistent with this pattern, the Company had a  working
   capital  deficit   of  $62.0 million   at   November  1,   1997   and
   $33.7 million at November 2, 1996 (after adjusting for the impact  of
   cash reserved for stock redemption).

       The Company  used $99.7  million in  investing activities  during
   fiscal 1997.   Investing  activities consisted  primarily of  capital
   expenditures of $100.0 million offset somewhat  by  sales  of assets.  
   Capital expenditures were made for store remodels, new store openings
   and, to a lesser extent, expenditures for warehousing,  distribution,
   and manufacturing facilities and equipment, including data processing
   and computer systems.  The Company financed a portion of its  capital
   expenditures through capital  leases of  certain equipment  purchases
   which amounted to $25.1 million in fiscal 1997.

       The  Company  plans   to  make  gross  capital  expenditures   of
   approximately   $140   million  (or   $80  million  net  of  expected
   capital  leases)  in  fiscal  1998.  Such  expenditures   consist  of
   approximately $55 million for the conversion of the Company's 17 Omni
   stores  to  the  Dominick's  format,  $65 million  related  to  other
   remodels and new stores,  as well as  ongoing store expenditures  for
   equipment and maintenance, and  approximately $20 million related  to
   warehousing, distribution and manufacturing facilities and equipment,
   including data processing and computer equipment.  Management expects
   that these capital  expenditures will be  financed primarily  through
   cash   flow   from  operations,   capital  leases   and   a     $75.0
   million real  property lease  financing  facility which  the  Company
   entered into  in fiscal   1997. See  Note 4 in "Notes to Consolidated
   Financial  Statements."   The  capital  expenditure budget for fiscal 
   1998  does  not include  certain  environmental  remediation    costs
   which are expected to be incurred over the next several years in  the
   range of approximately  $4 million to $6 million  (the Company's  net
   share of which is currently estimated at approximately  $3.4 million,
   after contributions by  the prior owners  of the Predecessor  Company
   pursuant to the terms of the stock purchase agreement associated with
   the Acquisition, and for  which an accrual has  been provided in  the
   Company's financial statements). See "Business-Environmental Matters."

       The  Company  has historically  utilized  leasing  facilities  to
   finance the cost of  new store equipment and  fixtures.  The  Company
   anticipates that  it will  continue  to secure  additional  equipment
   lease facilities  as  required  to support  its  capital  expenditure
   program.   As  such  lease facilities  are  utilized,  the  Company's
   capital lease indebtedness will increase by a comparable amount.  See
   Note 4 in "Notes to Consolidated Financial Statements."
<PAGE>
       The  capital expenditure  plans discussed  above do  not  include
   potential acquisitions which the Company could make to expand  within
   its existing market or contiguous markets.  The Company may  consider
   such acquisition opportunities from  time to time.   Any such  future
   acquisition may require the Company to seek additional debt or equity
   financing.

       The Company is a holding company that has no material  operations
   other than its ownership  of the capital stock  of Dominick's.  As  a
   result, the Company is dependent upon distributions or advances  from
   Dominick's to obtain  cash to pay  dividends or  for other  corporate
   purposes.    The  Company   and  its  subsidiaries'  principal   debt
   instruments generally restrict  Dominick's from  paying dividends  or
   otherwise distributing  cash to  the  Company, except  under  certain
   limited circumstances,  including  for  the  payment  of  taxes  and,
   subject to limitations, for general administrative purposes.

       The Company, in the ordinary course of its business, is party  to
   various legal actions.   One  case currently  pending alleges  gender
   discrimination by  Dominick's  and seeks  compensatory  and  punitive
   damages in an unspecified amount.   The plaintiffs' motion for  class
   certification was granted by the Court as to the female subclass  but
   was denied as to the national origin subclass in fiscal 1997.  Due to
   the numerous legal and factual issues  which must be resolved  during
   the course of this litigation, the  Company is unable to predict  the
   ultimate outcome of this lawsuit.  If Dominick's were held liable for
   the alleged discrimination (or otherwise concludes that it is in  the
   Company's best interest to settle the  matter), it could be  required
   to pay monetary damages (or settlement payments) which, depending  on
   the theory of recovery  or the resolution  of the plaintiffs'  claims
   for compensatory and punitive damages, could be substantial and could
   have a material adverse effect on the Company. Based upon the current
   state of the  proceedings, the Company's  assessment to  date of  the
   underlying  facts  and  circumstances   and  the  other   information
   currently available, and  although no  assurances can  be given,  the
   Company does not believe that the resolution of this litigation  will
   have a material adverse effect  on  the  Company's overall liquidity.
   As additional information  is gathered and  the litigation  proceeds,
   the Company will continue to assess its potential impact.  See "Legal
   Proceedings."

       Certain of  the Company's  computer programs  were written  using
   two digits to define the applicable year. Consequently, such programs
   may recognize a date using "00" as the year 1900 rather than the year
   2000 (the "Year 2000 Issue").   The Company's management has made  an
   assessment of the Year 2000 Issue and its overall information  system
   requirements and has commenced an action plan which includes  program
   and system conversions as well as modifications of existing programs.
   The  Company has been replacing a substantial number of its  computer
   systems  and   related  programs   over   the  past   several  years.   
   Accordingly,  the  Company's  management  estimates  that  the  costs
   associated with correcting the Year 2000  Issue will not be  material
   and that the Year  2000 Issue will  not pose significant  operational
   problems for its computer systems.
<PAGE>
       The Company  is highly leveraged.   Based upon current levels  of
   operations and  anticipated  cost  savings  and  future  growth,  the
   Company believes that  its cash flow  from operations, together  with
   available borrowings under  the 1997  Credit Facility  and its  other
   sources of liquidity (including leases) will be adequate to meet  its
   anticipated  requirements  for  working  capital,  debt  service  and
   capital expenditures over the next few years.

   Effects of Inflation

       The  Company  does  not  believe  that  inflation  has  had   any
   significant impact  on  the  Company's  operations.    The  Company's
   primary costs,  inventory and  labor, are  affected  by a  number  of
   factors that  are  beyond  its control,  including,  in  addition  to
   inflation, the availability and price of merchandise, the competitive
   climate and general and regional economic conditions.  As is  typical
   of the supermarket industry, the Company  has generally been able  to
   maintain gross profit  margins by  adjusting its  retail prices,  but
   competitive conditions may from time to  time render it unable to  do
   so while maintaining its market share.


   ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       See Index to Consolidated Financial Statements on page 21.


   ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON  ACCOUNTING
   AND FINANCIAL DISCLOSURE

       Not applicable.

<PAGE>

                                 PART III


   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

       Incorporated  by reference  to the  information included  in  the
   Company's definitive proxy statement for  the 1998 Annual Meeting  of
   Stockholders (the "Proxy Statement") under the captions "Election  of
   Directors" and "Executive Officers."

   ITEM 11.  EXECUTIVE COMPENSATION

       Incorporated  by reference  to the  information included  in  the
   Company's   Proxy   Statement    under   the   captions    "Executive
   Compensation," "1996 Equity  Participation Plan"  and "Restated  1995
   Stock Option Plan."


   ITEM 12.    SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
   MANAGEMENT

       Incorporated  by reference  to the  information included  in  the
   Company's Proxy Statement  under the caption  "Security Ownership  of
   Certain Beneficial Owners and Management."


   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       Incorporated  by reference  to the  information included  in  the
   Company's Proxy Statement  under the  caption "Certain  Relationships
   and Related Transactions."


<PAGE>

                                  PART IV


   ITEM 14.   EXHIBITS, FINANCIAL  STATEMENT SCHEDULES,  AND REPORTS  ON
   FORM 8-K

   (a)  1.   Financial Statements
             Financial Statements required to be filed hereunder
             are indexed on page 21.

        2.   Financial Statement Schedules

             All schedules are omitted because they are not required,
             are not applicable, or the information is included in
             the Financial Statements or notes thereto.

        3.   Exhibits


      Exhibit     Description
      Number

        3.1       Amended and Restated  Certificate of Incorporation  of
             the Company.   (Incorporated by  reference  to Exhibit  3.1
             to  the  Company's  1996 Annual Report on Form 10-K, Number
             1-12353).

        3.2       Amended  and  Restated   Bylaws  of   the  Company.   
             (Incorporated by reference to Exhibit 3.2 to the  Company's
             1996 Annual Report on Form 10-K, Number 1-12353).

        4.1       Warrant dated  as  of March  22,  1995 issued  by  the
             Company  to   The  Yucaipa   Companies,  as   supplemented.   
             (Incorporated by reference to Exhibit 4.1 to the  Company's
             1996 Annual Report on Form 10-K, Number 1-12353).

        10.1      Credit Agreement dated as of  October 28, 1997 by  and
             among  Dominick's  Finer  Foods,  Inc.,  as  Borrower,  the
             Company, as Guarantor, the lenders listed therein,  Bankers
             Trust Company and  Chase Securities Inc., as  Co-Arrangers,
             Bankers  Trust  Company, as  Administrative  Agent, and The
             Chase Manhattan Bank as Syndication Agent.

        10.2      Stock Purchase Agreement dated as of January 17,  1995
             by and  among  DFF  Holdings, Inc.,  DFF  Sub,  Inc.,  Dodi
             L.L.C.,  Dodi  Family  L.L.C. and Dodi  Developments L.L.C.  
             (Incorporated by reference to Exhibit 10.2 to the Company's
             Registration Statement on Form S-1, No. 333-14995).
<PAGE>
        10.3      Tax Matters Agreement  dated as of  March 22, 1995  by
             and among the Company,  DFF Supermarkets, Inc.,  Dominick's
             Finer Foods, Inc.,  Dodi L.L.C., Dodi  Family L.L.C.,  Dodi
             Developments L.L.C.,  Dodi, Inc.,  Blackhawk  Developments,
             Inc., Blackhawk Properties,  Inc., Dominick's Finer  Foods,
             Inc.,  of  Illinois,  Dodi  Hazelcrest,  Inc.,  Kohl's   of
             Bloomingdale, Inc., Jerry's Deep Discount Centers, Inc. and
             Save-It  Discount  Foods  Corporation.    (Incorporated  by
             reference to  Exhibit 10.3  to the  Company's  Registration
             Statement on Form S-1, Number 333- 14995).

        10.4      Employment  Agreement  dated  as  of  March  22,  1995
             between  Dominick's Finer Foods, Inc. and Robert A. Mariano.
             (Incorporated  by   reference  to   Exhibit  10.4  to   the
             Company's Registration   Statement on Form S-1, Number 333-
             14995).

        10.5      Employment  Agreement  dated  as  of  March  22,  1995
             between Dominick's  Finer  Foods, Inc. and Robert E. McCoy.  
             (Incorporated by reference to Exhibit 10.5 to the Company's
             Registration Statement on Form S-1, Number 333-14995).

        10.6      Employment  Agreement  dated  as  of  March  22,  1995
             between Dominick's Finer Foods, Inc. and Herbert R.  Young.
             (Incorporated  by  reference  to   Exhibit  10.6   to   the
             Company's Registration Statement on  Form S-1, Number  333-
             14995).

        10.7      Management Agreement  dated  as of  November  1,  1996
             among The  Yucaipa Companies,  the Company  and  Dominick's
             Finer Foods,  Inc. (Incorporated  by reference  to  Exhibit
             10.7 to  the Company's  1996 Annual  Report on  Form  10-K,
             Number 1-12353).

        10.8      Amended and Restated  Stockholders Agreement dated  as
             of  November  1,  1996  by  and  among  the  Company,   DFF
             Supermarkets, Inc., Dominick's  Finer Foods,  Inc. and  the
             stockholders of the Company named therein. (Incorporated by
             reference to  Exhibit 10.8  to  the Company's  1996  Annual
             Report on Form 10-K, Number 1-12353).

        10.9      Registration Rights Agreement  dated as  of March  22,
             1995 by  and among  the  Company, DFF  Supermarkets,  Inc.,
             Dominick's Finer Foods,  Inc. and the  stockholders of  the
             Company named  therein.    (Incorporated  by  reference  to
             Exhibit 10.9  to the  Company's Registration  Statement  on
             Form S-1, Number 333-14995).

        10.10          Registration  Rights   Agreement  dated   as   of
             November 1, 1996  by and  between the  Company and  Yucaipa
             Blackhawk Partners,  L.P., Yucaipa  Chicago Partners,  L.P.
             and Yucaipa  Dominick's Partners,  L. P.  (Incorporated  by
             reference to  Exhibit 10.10  to the  Company's 1996  Annual
             Report on Form 10-K, Number 1-12353).
<PAGE>
        10.11         Dominick's Supermarkets, Inc.  Directors  Deferred
              Compensation and Restricted Stock  Plan  (Incorporated  by
              reference to the information  included  in  the  Company's
              definitve proxy statement for the 1997 Annual meeting   of 
              Stockholders.)

        10.12         Dominick's Supermarkets, Inc. Amended and Restated
             1995  Stock Option  Plan.  (Incorporated  by  reference  to
             Exhibit 10.12 to  the Company's 1996 Annual Report  on Form
             10-K, Number 1-12353).

        10.13          Dominick's   Supermarkets,   Inc.   1996   Equity
             Participation Plan. (Incorporated  by reference to  Exhibit
             10.13  to  the  Company's 1996 Annual  Report on Form 10-K,
             Number 1-12353).

        10.14          Lease between Dominick's  Realty  Trust  1997  as 
             lessor and Dominick's Finer Foods, Inc. as lessee dated  as 
             of August 19, 1997.

        21.1      Subsidiaries  of   the   Company.   (Incorporated   by
             reference  to  Exhibit  21.1 to  the Company's Registration
             Statement on Form S-1, Number 333-14995).

        27.1      Financial Data Schedule.

   (b)  Reports on Form 8-K

        There were no reports  on Form 8-K filed  by the Company  during
        the fourth quarter of fiscal 1998.


<PAGE>
                                SIGNATURES

       Pursuant  to the  requirements  of Section  13  or 15(d)  of  the
   Securities Exchange Act of 1934, as amended, Dominick's Supermarkets,
   Inc. has duly caused this  report to be signed  on its behalf by  the
   undersigned, thereunto  duly authorized,  in the  City of  Northlake,
   State of Illinois, on January 28, 1998.

                             DOMINICK'S SUPERMARKETS, INC.

                             By:
                             /s/  DARREN W. KARST
                             Darren W. Karst
                             Executive  Vice President, Finance and
                             Administration, and Chief Financial Officer

       Pursuant to  the requirements of the  Securities Exchange Act  of
   1934, as  amended,  this report  has  been signed  by  the  following
   persons in the capacities and on the dates indicated.

       Signature                    Title                      Date

   /s/  RONALD W. BURKLE
   Ronald W. Burkle          Chairman of the Board       January 28, 1998

   /s/  ROBERT A. MARIANO
   Robert A. Mariano       President, Chief Executive
                               Officer, Director         January 28, 1998

   /s/  DARREN W. KARST
   Darren W. Karst         Executive Vice President,
                          Finance and Administration,
                            Chief Financial Officer
                        (Principal Accounting Officer),
                                  Director               January 28, 1998

   /s/  GRACE BARRY
   Grace Barry                      Director             January 28, 1998

   /s/  EVAN BAYH
   Evan Bayh                        Director             January 28, 1998

   /s/  LINDA McLOUGHLIN FIGEL
   Linda McLoughlin Figel           Director             January 28, 1998

   /s/  PETER P. COPSES
   Peter P. Copses                  Director             January 28, 1998

   /s/  PATRICK L. GRAHAM
   Patrick L. Graham                Director             January 28, 1998

   /s/  DAVID B. KAPLAN
   David B. Kaplan                  Director             January 28, 1998

   /s/  ANTONY P. RESSLER
   Antony P. Ressler                Director             January 28, 1998

   /s/  IRA L. TOCHNER
   Ira Tochner                      Director             January 28, 1998
<PAGE>


                INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                    Page

   Report of Independent Auditors                                    22

   Consolidated Balance Sheets as of November 1, 1997 and
      November 2, 1996                                               23

   Consolidated Statements of Operations for the 52 weeks
      ended November 1, 1997, the 53 weeks  ended November
      2, 1996, the 32 weeks ended  October 28, 1995, and the
      20 weeks ended March 21, 1995 (Predecessor Company)            24

   Consolidated Statements  of Stockholders'  Equity  for
      the 52 weeks ended November 1, 1997, the 53 weeks
      ended November 2, 1996,  the 32 weeks ended  October
      28, 1995, and the 20 weeks ended March 21, 1995
      (Predecessor Company)                                          25

   Consolidated Statements of Cash Flows for the 52 weeks
      ended November 1, 1997, the 53 weeks  ended November
      2, 1996, the 32 weeks ended October 28, 1995, and
      the 20 weeks ended March 21, 1995 (Predecessor Company)        26

   Notes to Consolidated Financial Statements                        27
<PAGE>

                      REPORT OF INDEPENDENT AUDITORS

   The Board of Directors
   Dominick's Supermarkets, Inc.

       We have audited  the accompanying consolidated balance sheets  of
   Dominick's Supermarkets, Inc. as of November 1, 1997 and November  2,
   1996,  and  the  related   consolidated  statements  of   operations,
   stockholders' equity,  and  cash flows  for  the fiscal  years  ended
   November 1,  1997 and  November 2,  1996, the  period March 22,  1995
   through October 28, 1995, and for the period October 30, 1994 through
   March 21, 1995 (Predecessor Company).  These financial statements are
   the responsibility of the  Company's management.  Our  responsibility
   is to express an opinion on  these financial statements based on  our
   audits.

       We conducted  our audits  in accordance  with generally  accepted
   auditing standards.  Those standards require that we plan and perform
   the audit to obtain reasonable assurance about whether the  financial
   statements are  free of  material misstatement.   An  audit  includes
   examining, on  a  test basis,  evidence  supporting the  amounts  and
   disclosures in  the financial  statements.   An audit  also  includes
   assessing the accounting  principles used  and significant  estimates
   made by  management,  as well  as  evaluating the  overall  financial
   statement presentation.    We  believe  that  our  audits  provide  a
   reasonable basis for our opinion.

       In  our  opinion, the  financial  statements  referred  to  above
   present fairly, in all material respects, the consolidated  financial
   position of Dominick's  Supermarkets, Inc.  at November  1, 1997  and
   November 2, 1996 and the results of its operations and its cash flows
   for the fiscal years ended November 1, 1997 and November 2, 1996, the
   period March 22,  1995  through  October 28,  1995,  and  the  period
   October 30, 1994  through March 21,  1995 (Predecessor  Company),  in
   conformity with generally accepted accounting principles.


                                     /s/ ERNST & YOUNG LLP



   Chicago, Illinois
   December 16, 1997

<PAGE>
<TABLE>
                       DOMINICK'S SUPERMARKETS, INC.

                        CONSOLIDATED BALANCE SHEETS
                 (dollars in thousands, except share data)

                                               Nov. 1,          Nov. 2,
                                                1997              1996
   <S>                                           <C>           <C>
   ASSETS
   Current assets:
     Cash and cash equivalents...............    $   22,034    $   32,735
     Cash reserved for stock redemption .....            --        50,780
     Receivables, net .......................        18,241        11,065          
   Inventories...............................       240,575       203,411
     Prepaid expenses and other..............        39,656        27,518
               Total current assets..........       320,506       325,509
     Property and equipment, net.............       418,158       368,224
   Other assets:
     Deferred financing costs, net...........         3,694        11,524
     Goodwill, net...........................       375,312       420,182
     Other...................................        31,090        27,546
               Total other assets............       410,096       459,252
   Total assets                                  $1,148,760    $1,152,985

   LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
     Accounts payable........................    $  228,969    $  187,787
     Accrued payroll and related liabilities.        35,906        30,896
     Taxes payable...........................        20,852        18,234
     Other accrued liabilities...............        82,274        61,465
     Current portion of long-term debt.......           377           376
     Current portion of capital
       lease obligations.....................        14,147         9,676
                Total current liabilities....       382,525       308,434
   Long-term debt:
     Bank credit facilities and other........       446,767       200,644
     Senior Subordinated Notes...............            10       200,000
   Capital lease obligations.................       140,032       130,052
   Deferred income taxes and other liabilities       62,795        84,004
   Redeemable Exchangeable Cumulative
     Preferred Stock, Series A, $.01 par value,
      40,000 shares authorized, issued and
      outstanding at November 2, 1996;
      liquidation and redemption at $1,000
      per share plus accumulated and unpaid
      dividends...............................        --           50,780
   Stockholders' equity:
     Common Stock, $.01 par value, 50,000,000
      shares authorized, 17,851,891 shares
      issued and outstanding at November 1, 1997
      and 16,080,074 issued and outstanding at
      November 2, 1996 .......................          178           161
       Non-Voting Common Stock, $.01 par value,
        10,000,000  shares authorized, 3,515,168
        shares issued and outstanding at November
        1, 1997 and 5,278,962 shares issued and
        outstanding at November 2, 1996 .......          35            52
     Additional paid-in capital................     205,464       205,394
     Retained deficit..........................     (89,046)      (26,536)
                  Total stockholders' equity.       116,631       179,071
   Total liabilities and stockholders' equity    $1,148,760    $1,152,985

                          See accompanying notes.
<PAGE>

</TABLE>
<TABLE>
                       DOMINICK'S SUPERMARKETS, INC.

                   CONSOLIDATED STATEMENTS OF OPERATIONS
                 (dollars in thousands, except share data)


                                                                        
                                             Company        Predecessor
                                   52 Weeks  53 Weeks     32 Weeks      20 Weeks
                                      Ended     Ended     Ended    Ended
                                     Nov. 1,    Nov. 2,  Oct. 28,   March 21,   
                                     1997      1996         1995        1995     
<S>                            <C>          <C>          <C>          <C>
Sales                          $ 2,584,889  $ 2,511,962  $ 1,474,982  $ 958,742
Cost of sales                    1,960,816    1,932,994    1,136,600    747,561
Gross profit                       624,073      578,968      338,382    211,181
Selling, general and
 administrative expenses           526,041      491,359      293,872    191,999
Restructuring charge                74,400           --           --         --
Termination of consulting
 agreement                              --       10,500           --         --
SARs termination costs                  --           --           --     26,152
Operating income (loss)             23,632       77,109       44,510     (6,970)
Interest expense:
  Interest expense                  57,787       67,555       44,480     11,238
  Amortization of deferred
   financing costs                   1,165        2,741        1,460         69
                                    58,952       70,296       45,940     11,307
Income (loss) before income
 taxes and extraordinary loss      (35,320)       6,813       (1,430)   (18,277)

Income tax expense (benefit)         3,606        7,385        1,933     (7,135)
Loss before extraordinary loss     (38,926)        (572)      (3,363)   (11,142)
Extraordinary loss on
 extinguishment of debt, net
 of applicable tax benefit of
 $15,557 in fiscal 1997,
 $4,195 in fiscal 1996, and
 $2,824 in the 32 weeks ended
 October 28, 1995                  (23,584)      (6,360)      (4,585)        --
Net loss                           (62,510)      (6,932)      (7,948) $ (11,142)

Preferred stock dividend
 and accretion                          --        7,934        3,722
Net loss attributable to
 common stockholders           $   (62,510) $   (14,866) $   (11,670)

Per Share
Loss before extraordinary loss $     (1.83) $     (0.55) $     (0.46)
Extraordinary loss                   (1.10)       (0.41)       (0.30)
Loss per common share          $     (2.93) $     (0.96) $     (0.76)
Average number of shares
 outstanding                    21,361,147   15,571,339   15,411,793

                          See accompanying notes.
</TABLE>
<PAGE>
<TABLE>

                       DOMINICK'S SUPERMARKETS, INC.

              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 (dollars in thousands, except share data)



                                                     Additional       Retained
                                   Common Stock        Paid-In        Earnings
   Predecessor Company            Shares     Amount    Capital        (Deficit)        Total

   <S>                            <C>          <C>      <C>           <C>            <C>
   Balance at October 29, 1994       263,600   $  26    $    334      $ 116,313      $ 116,673
   Net loss                               --      --          --        (11,142)       (11,142)
   Cash dividend--$3.00 per share         --      --          --           (791)          (791)

   Balance at March 21, 1995         263,600   $  26    $    334      $ 104,380      $ 104,740
                                                       
   Company

   Balance at March 22, 1995              --   $  --    $     --      $      --      $      --
   Issuance of common stock       14,985,610     150     104,850             --        105,000
   Net loss                               --      --          --         (7,948)        (7,948)
   Preferred stock accretion              --      --          --         (3,722)        (3,722)
   Other                             445,287       4       2,794             --          2,798

   Balance at October 28, 1995    15,430,897     154     107,644        (11,670)        96,128
   Net loss                               --      --          --         (6,932)        (6,932)
   Initial Public Offering         5,900,000      59      97,642             --         97,701
   Preferred stock accretion              --      --          --         (7,059)        (7,059)
   Preferred stock dividend               --      --          --           (875)          (875)
   Other                              28,139      --         108             --            108

   Balance at November 2, 1996    21,359,036     213     205,394        (26,536)       179,071
   Net loss                               --      --          --        (62,510)       (62,510)
   Other                               8,023      --          70             --             70

   Balance at November 1, 1997    21,367,059   $ 213   $ 205,464      $ (89,046)     $ 116,631

                          See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
                       DOMINICK'S SUPERMARKETS, INC.

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (dollars in thousands)

                                                            Company           Predecessor Company
                                                   52 Weeks    53 Weeks    32 Weeks     20 Weeks
                                                     Ended       Ended       Ended     Ended
                                                    Nov. 1,     Nov. 2,     Oct. 28,March  21,
                                                     1997        1996        1995       1995
 <S>                                              <C>         <C>       <C>            <C>
 Cash flows from operating activities
 Net loss                                         $(62,510)   $ (6,932) $   (7,948)    $ (11,142)
   Adjustments to reconcile net loss to net
     cash provided by operating activities:
     Extraordinary loss on debt extinguishment      39,141      10,555       7,409            --
     Depreciation and amortization                  59,982      45,924      25,364        20,499
     Amortization of deferred financing costs        1,165       2,741       1,460            69
     Restructuring charge                           48,887          --          --            --
     Stock appreciation rights                          --          --          --        26,825
     Deferred income taxes                         (11,013)      4,315       7,625        (3,890)
     Loss (gain) on disposal of capital assets          (8)     (1,224)        (25)        1,149
     Changes in operating assets and liabilities,
       net of Acquisition in 1995:
       Receivables                                  (7,176)      8,491      (5,218)        2,546
       Inventories                                 (37,164)    (20,531)       (683)        7,209
       Prepaid expenses and other                  (19,340)     (6,952)      2,783        (1,890)
       Accounts payable                             41,182      16,464      31,246       (10,217)
       Accrued liabilities and taxes payable        10,064     (11,731)       (241)      (11,147)
       Total adjustments                           125,720      48,052      69,720        31,153
   Net cash provided by operating activities        63,210      41,120      61,772        20,011
   Cash flows from investing activities
   Capital expenditures                            (99,988)    (49,588)    (23,125)      (22,423)
   Proceeds from sale of capital assets                294       1,287       1,317           380
   Proceeds from sale of investments                    --          --          --         7,300
   Business acquisition cost, net of
     cash acquired                                      --          --    (442,777)           --
   Other--net                                           --        (260)        (31)          116
   Net cash used in investing activities           (99,694)    (48,561)   (464,616)      (14,627)
   Cash flows from financing activities
   Principal payments for long-term debt
     and capital lease obligations                (113,647)   (291,517)   (131,145)       (5,363)
   Retirement of Senior Subordinated Notes        (228,710)         --          --
   Proceeds from debt issuances                    346,500     195,000     480,000            --
   Proceeds from sale-leaseback of assets           25,057      37,307          --            --
   Proceeds from issuance of capital stock              --      97,809     100,000            --
   Debt issuance costs and other                    (3,417)     (3,194)     (7,784)         (791)
   Cash reserved for stock redemption                   --     (50,780)         --            --
   Net cash provided by (used in)
     financing activities                           25,783     (15,375)    441,071       ( 6,154)
   Net increase (decrease) in cash and
     cash equivalents                              (10,701)    (22,816)     38,227          (770)
   Cash and cash equivalents at beginning
     of period                                      32,735      55,551      17,324         18,094
   Cash and cash equivalents at end of period     $ 22,034    $ 32,735  $   55,551     $   17,324
   Supplemental schedule of non-cash           
     investing and financing activities
   Acquisition of business:
     Fair value of assets acquired, net
       of cash acquired                                                 $1,056,627
     Net cash paid in acquisition                                         (442,777)
     Exchange of capital stock                                             (40,000)
     Management equity investment                                           (5,000)
     Liabilities assumed                                                $  568,850
   Contribution of capital in exchange
     for debt financing fees                                            $    2,647
   Preferred stock accretion                                  $  7,059  $    3,722


                          See accompanying notes.
</TABLE>
<PAGE>


                       DOMINICK'S SUPERMARKETS, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   1.  Summary of Significant Accounting Policies

     Basis of Presentation

       Dominick's  Supermarkets, Inc.  ("Supermarkets")  (together  with
   its subsidiaries,  the "Company")  acquired Dominick's  Finer  Foods,
   Inc. ("Dominick's")  on March 22,  1995  for total  consideration  of
   approximately  $692.9 million,   excluding  fees   and  expenses   of
   approximately  $41.2  million  (the  "Acquisition").    The   Company
   effected the Acquisition by  acquiring 100% of  the capital stock  of
   Dominick's parent, DFF Supermarkets, Inc. ("DFF"), formerly known  as
   Dodi Inc.    for  $346.6 million  in  cash  and  $40 million  of  the
   Company's 15%  Redeemable  Exchangeable  Cumulative  Preferred  Stock
   ("Redeemable Preferred  Stock").  DFF was  subsequently  merged  into
   Dominick's.  In addition, the Company repaid certain indebtedness and
   other liabilities of Dominick's  of approximately $181.8 million  and
   assumed  $124.5 million  of   existing  capital   leases  and   other
   indebtedness.  The Acquisition  was accounted  for as  a purchase  of
   Dominick's by  the  Company.   As  a result,  Dominick's  assets  and
   liabilities were recorded at their estimated fair market values as of
   March 22, 1995.   The purchase  price in  excess of  the fair  market
   value of the Dominick's assets was recorded as goodwill and is  being
   amortized over  40  years.    For  purposes  of  financial  statement
   presentation, the Predecessor Company  refers to Dominick's prior  to
   the Acquisition.

       A summary  of the assets acquired  and liabilities assumed as  of
   March 22, 1995 is as follows (dollars in thousands):

      Assets
        Inventory                             $    182,439
        Other current assets                        37,632
        Property and equipment, net                345,303
        Goodwill                                   438,150
        Deferred financing costs                    22,722
        Other intangible assets                     30,381

          Total assets                         $ 1,056,627

      Liabilities
        Accounts payable and accrued expenses  $   299,198
        Long-term debt                             237,511
        Other liabilities                           32,141

          Total liabilities                    $   568,850

<PAGE>
       The Company uses a 52-53 week fiscal year ending on the  Saturday
   closest to  October 31.   Fiscal 1997  and fiscal  1995 were  52-week
   periods while  fiscal  1996 was  a  53-week  period.   Fiscal    1995
   consists of a  20-week Predecessor  Company period  ending March  21,
   1995  and  a   32-week  Company  period   ending  October  28,   1995
   (collectively "fiscal 1995").   The Company operates supermarkets  in
   Chicago, Illinois,  and  its  suburbs.   The  consolidated  financial
   statements include the accounts of  Supermarkets and its wholly owned
   subsidiaries.  Supermarkets has no other operations other than  those
   of its subsidiaries.

    Cash Equivalents

       The  Company considers  all highly  liquid investments  purchased
   with an  original  maturity  of  three months  or  less  to  be  cash
   equivalents.

   Cash Reserved for Stock Redemption

       Cash reserved for  stock redemption represents proceeds from  the
   Company's  initial  public  offering  of  Common  Stock  (the  "IPO")
   completed on November 1, 1996 which were set aside by Supermarkets to
   repurchase all  of  the  outstanding Redeemable  Preferred  Stock  on
   January 2, 1997 (see Note 6).

   Inventories

       Inventories are stated at the lower of cost, primarily using  the
   last-in, first-out (LIFO) method, or market.  If inventories had been
   valued using replacement cost, inventories would have been higher  by
   $3,855,000 at November 1, 1997 and $3,355,000 at November 2, 1996 and
   gross profit and operating income would have been greater by $500,000
   $1,418,000, $1,694,000 and $750,000 for fiscal 1997, fiscal 1996, the
   32 weeks  ended October 28,  1995 and  the 20  weeks ended  March 21,
   1995, respectively.

     Pre-Opening Costs

       The costs  associated with opening new  and remodeled stores  are
   deferred and amortized over  one year following  the opening of  each
   store.


     Property and Equipment

       Property  and equipment,  including buildings  capitalized  under
   capital leases, are recorded at cost.  Depreciation and  amortization
   are computed on the straight-line method over the following estimated
   useful lives:

      Buildings and improvements                       10-33 years
      Fixtures and equipment                            3-12 years
      Property under capital leases and lease rights    5-25 years

     Deferred Financing Costs

       Costs  incurred in  connection  with  the issuance  of  debt  are
   amortized over the term of the related debt.
<PAGE>
     Goodwill and Trademarks

       The excess of the purchase price  over the fair value of the  net
   assets acquired is amortized on  a straight-line basis over  40 years
   beginning at the date of acquisition.  Trademarks, which are included
   in  other  assets,  are  amortized  on  a  straight-line  basis  over
   40 years.    Accumulated   amortization  related   to  goodwill   and
   trademarks at November 1, 1997 and  November 2, 1996 was  $30,107,000
   and $18,587,000,  respectively.    During fiscal  1997,  the  Company
   recorded a $34.0 million  write-down of goodwill  and a $1.0  million
   write-down  of  trademarks,  in  connection  with  its  restructuring
   program (see "Restructuring Charge" below).
                                                       
     Long-Lived Assets

       In   accordance  with   Financial  Accounting   Standards   Board
   Statement No. 121, Accounting for the Impairment of Long-Lived Assets
   and for  Long-Lived Assets  to be  Disposed of,  the Company  records
   impairment losses  on  long-lived  assets  used  in  operations  when
   indicators of impairment are present and the undiscounted cash  flows
   estimated to be generated by those  assets are less than the  assets'
   carrying amounts.

     Income Taxes

       The Company accounts for income taxes using the liability  method
   as required by the Financial Accounting Standards Board Statement No.
   109,  Accounting  for  Income Taxes.  Under Statement  109,  deferred
   income taxes  reflect the  net tax  effect of  temporary  differences
   between the  carrying  amounts of  assets  and liabilities  used  for
   financial reporting  purposes and  the amounts  used for  income  tax
   purposes.

     Closed Store Reserves

       The Company  provides a  reserve for the  net book  value of  any
   store assets, net of salvage value, and the net present value of  the
   remaining lease  obligation, net  of estimated  sublease income,  for
   stores that have closed or are planned to be closed.  Total  reserves
   for closed stores were $25.6 million at November 1, 1997.

     Self-Insurance Reserves

       The Company  is self-insured  for its  workers' compensation  and
   general liability claims.  The Company establishes reserves based  on
   an independent actuary's review  of claims filed  and an estimate  of
   claims incurred but not yet filed.

     Discounts and Promotional Allowances

       Promotional allowances  and vendor  discounts are  recorded as  a
   reduction  of  cost  of   sales  in  the  accompanying   consolidated
   statements of operations.  Allowance proceeds received in advance are
   deferred and recognized over the period earned.
<PAGE>

    Extraordinary Loss

       On October  28, 1997,  the Company  entered into  a $575  million
   revolving credit facility with a syndicate of financial  institutions
   (the "1997  Credit  Facility"),  retired  substantially  all  of  its
   10.875% Senior Subordinated Notes due 2005 (the "Senior  Subordinated
   Notes") and, repaid it's then  existing $325 million credit  facility
   (the "1996 Credit Facility"), which resulted in an extraordinary loss
   on extinguishment  of debt  of $23,584,000,  net  of tax  benefit  of
   $15,557,000 (see Note 3). On November 1, 1996, the Company repaid its
   then existing credit facility (the "1995 Credit Facility") using  the
   proceeds  of   the   1996   Credit Facility,  which  resulted  in  an
   extraordinary loss on early extinguishment of debt of $6,360,000, net
   of tax benefit of $4,195,000.  During the 32 weeks ended October  28,
   1995, the Company used the proceeds  from the offering of its  Senior
   Subordinated  Notes  to  repay   in  full  the  $150 million   senior
   subordinated credit facility  and to prepay  $50 million of its  1995
   Credit Facility  which resulted  in an  extraordinary loss  on  early
   extinguishment  of  debt  of  $4,585,000,  net  of  tax  benefit   of
   $2,824,000.   The  accompanying financial  statements  reflect  these
   charges as extraordinary items.

   Restructuring Charge

        On  October  9,   1997,  the  Company   announced  a   strategic
   restructuring program.  Under the  program, the Company will  convert
   all of its 17 existing  Omni stores to the  Dominick's format.  As  a
   result of this strategic change the Company recorded a $74.4  million
   restructuring charge (the "Restructuring Charge"), including a  $34.0
   million write-down of  goodwill attributable  to the  Omni format;  a
   $14.9  million  write-down  of  certain  assets  to  be  disposed  of
   resulting from the conversion of the stores to the Dominick's format;
   a $14.0 million write-down of  certain inventories to net  realizable
   value; and an $11.5 million provision for costs associated with store
   closings,  employee  severance  and  certain  other  expenses.    The
   Restructuring Charge reduced net income by $58.3 million or $2.73 per
   share.

     Advertising

       The  Company  expenses  its   advertising   costs   as  incurred.   
   Advertising expenses were $30,298,000, $29,864,000, $16,540,000,  and
   $11,472,000  for  fiscal  1997,  fiscal  1996,  the  32  weeks  ended
   October 28,  1995,   and  the   20   weeks  ended   March 21,   1995,
   respectively.

     Income (Loss) Per Common Share

        Income (loss)  per  common  share is  computed  based  upon  the
   weighted average number of shares  outstanding during the period  and
   is computed  based upon  net income  or loss  adjusted for  preferred
   stock dividends  and accretion.   On  October 24,  1996, the  Company
   declared a 14.638-for-1 stock split for each outstanding share of its
   Common Stock and Class B Common Stock.   All per share data has  been
   adjusted to reflect the stock split.
<PAGE>
       In  accordance with  the rules  of  the Securities  and  Exchange
   Commission,  85,998  shares  of   common  stock  issued  and   32,750
   equivalent shares  using the  treasury stock  method for  outstanding
   stock options  granted  after March 22,  1995  have been  treated  as
   outstanding for all periods prior to the IPO in calculating  earnings
   per share  because  such shares  were  issued and  such  options  are
   exercisable at prices below the initial public offering price.

     Supplemental Cash Flow Disclosure

       Cash paid for  income taxes was $3,761,000, $110,000,  $4,230,000
   and $3,115,000  for fiscal  1997, fiscal  1996,  the 32  weeks  ended
   October 28,  1995,   and  the   20   weeks  ended   March 21,   1995,
   respectively.  Cash paid  for interest was $54,469,000,  $76,563,000,
   $35,638,000 and  $15,835,000 for  fiscal 1997,  fiscal 1996,  the  32
   weeks  ended  October  28, 1995  and  the  20  weeks  ended March 21,
   1995,  respectively.  Capital  lease obligations  of $27,500,000  and
   $37,900,000 were entered  into during  fiscal 1997  and fiscal  1996,
   respectively.   No capital  lease obligations  were entered  into  in
   fiscal 1995. 

     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 amounts  reported in  the
   financial statements and  accompanying notes.   Actual results  could
   differ from those estimates.

     Reclassifications

       Certain prior  period amounts  in the  financial statements  have
   been reclassified to conform with the November 1, 1997 presentation.

     New Accounting Pronouncements

       In  February  1997,  the  Financial  Accounting  Standards  Board
   issued Statement  No. 128,  Earnings per  Share, which  requires  the
   presentation of both  Basic and Diluted  earnings per  share.   Under
   Statement 128, the dilutive effect of stock options are excluded from
   the calculation of Basic earnings per  share but will continue to  be
   included in  the calculation  of Diluted  earnings  per share.    The
   Company does not expect  Statement 128 to have  a material impact  on
   earnings per  share. The  Company will  adopt this  reporting in  the
   first quarter of fiscal 1998.

       In June  1997, the  Financial Accounting  Standards Board  issued
   Statement No. 130, Reporting Comprehensive Income, which requires the
   presentation of Comprehensive  Income in  the  financial  statements.  
   The Company will adopt  this reporting in  its fiscal 1998  financial
   statements.
<PAGE>

   2.  Property, Equipment and Capital Leases

       Property, equipment and  capital leases consist of the  following
   (dollars in thousands):

                                                       Nov. 1,    Nov. 2, 
                                                        1997       1996   

   Property and equipment
   Land ............................................ $  35,956  $  35,952
   Buildings and leasehold improvements.............    90,489     76,387
   Fixtures and equipment...........................   139,202    104,391
   Construction in progress.........................    31,600     20,667
   Lease rights.....................................    46,465     46,465

   Capital leases
   Buildings........................................    94,951     94,501
   Fixtures and equipment...........................    65,379     38,340
       Total  ......................................   504,042    416,703

   Less:  Accumulated depreciation and amortization
      Property and equipment........................   (53,791)   (32,734)
      Capital leases................................   (32,093)   (15,745)
                                                                        
                                                     $  418,158 $ 368,224

   3.  Long-Term Debt

       Long-term  senior debt  consists  of the  following  (dollars  in
   thousands):

                                                    Nov. 1,      Nov. 2, 
                                                     1997         1996   

   Revolving credit facilities  ..............   $  441,500   $   95,000
   Term loan ..................................          --      100,000
   Other.......................................       5,644        6,020
                                                    447,144      201,020
   Less: Current portion.......................         377          376
                                                 $  446,767     $200,644

        On October 28, 1997,  the Company entered  into the 1997  Credit
   Facility which provides  borrowing availability of  $575 million  for
   general corporate and  working capital purposes  including up to  $50
   million for letters of credit.  The Company uses letters of credit to
   cover workers' compensation self-insurance liabilities and for  other
   general  purposes.     As  of  November  1,  1997,  the  Company  had
   approximately $11.8 million  of outstanding letters  of  credit.  The
   facility matures on April 28, 2004.  The Company is required to  make
   prepayments or reduce  availability under the  1997 Credit  Facility,
   subject to certain exceptions, with  the proceeds from certain  asset
   sales, issuances of debt securities and any pension plan reversions.
<PAGE>
        On November 1, 1996,  the Company entered  into the 1996  Credit
   Facility with a  syndicate of financial  institutions and  refinanced
   its indebtedness under its then existing  1995 Credit  Facility.  The
   1996 Credit Facility provided for (i) a $100 million amortizing  term
   loan, (ii) a $105  million revolving term facility  and (iii) a  $120
   million revolving  facility.   The 1996  Credit Facility  was  repaid
   using proceeds from borrowings under the 1997 Credit Facility.

       Borrowings  under the  1997 Credit  Facility bear  interest at  a
   rate equal  to, at  the option  of  the Company,  the Base  Rate  (as
   defined)   per annum  or the  reserve adjusted  Euro-Dollar Rate  (as
   defined) plus a maximum .875% per  annum (subject to  reduction).  Up
   to $50 million of the facility  is available as a swingline  facility
   and  loans  outstanding  under  the  swingline  facility  shall  bear
   interest at the Base Rate.  The  Company will pay the issuing bank  a
   fee of .25%  per annum  on each  letter of  credit and  will pay  the
   lenders under  the facility  a  letter of  credit  fee equal  to  the
   applicable  margin  for  Euro-Dollar loans  under  the  facility.  In
   addition, the Company will pay a commitment fee on the unused portion
   of the facility.  The 1997 Credit Facility may be prepaid in whole or
   in part without premium or penalty.

       The  1997  Credit Facility,  among  other  things,  requires  the
   Company  and  its   subsidiaries  to  maintain   minimum  levels   of
   Consolidated Net  Worth  (as defined),  and  to comply  with  certain
   ratios related  to  Fixed  Charges  (as  defined)  and  Leverage  (as
   defined).  In addition, the 1997 Credit Facility limits, among  other
   things,  additional  borrowings,  dividends  on,  and  redemption  of
   capital stock, certain other payments from Dominick's to the Company,
   capital expenditures, and the acquisition and disposition of  assets.
   At November 1, 1997, the Company was in compliance with the financial
   covenants of its debt agreements.

       Substantially  all  of   the  assets  of  the  Company  and   its
   subsidiaries are pledged as security  under the 1997 Credit  Facility
   or other long-term debt.

        On May 4, 1995, Dominick's issued $200 million principal  amount
   of Senior Subordinated Notes in connection with the Acquisition.   On
   October 31,  1997, the  Company retired  substantially  all of    the
   Senior Subordinated Notes at 114%  of the principal amount  resulting
   in  an  aggregate  redemption  premium  of  $28,310,000.    The  note
   redemption was prepaid using proceeds from the 1997 Credit  Facility.
   The  aggregate  premium redemption  and certain  other related  costs
   have been included  in the  accompanying financial  statements as  an
   extraordinary item.

       Aggregate maturities  of long-term debt as  of November 1,  1997,
   excluding capital lease obligations, for each of the next five fiscal
   years are as follows (dollars in thousands):

           1998  ................................    $   377
           1999  ................................        318
           2000  ................................        347
           2001  ................................        363
           2002  ................................      2,775

       During fiscal 1997 the Company's effective interest rate was 8.8%.
<PAGE>
   4.  Leases

       The Company leases land,  retail stores, and equipment.  Many  of
   the property leases obligate  the Company to  pay real estate  taxes,
   insurance, and maintenance costs and contain multiple renewal options
   generally covering additional periods ranging  from 15 to 30 years.  
   Certain of the leases require  contingent rental payments, which  are
   based primarily upon sales at the various retail stores, adjusted for
   certain  expenses  paid  by  the  Company.    Rent  expense   totaled
   $19,001,000 including  $487,000  for contingent  rentals  for  fiscal
   1997,  $17,710,000  and  $525,000,  respectively,  for  fiscal  1996,
   $10,419,000 and  $271,000,  respectively,  for  the  32  weeks  ended
   October 28, 1995, and $6,511,000 and $167,000, respectively, for  the
   20 weeks ended March 21, 1995.

       The future minimum  lease payments under noncancelable  operating
   and capital leases as of November 1,  1997 for each of the next  five
   fiscal years and thereafter are as follows (dollars in thousands):

                                                Operating     Capital 
                                                  Leases      Leases 

       1998  ................................  $   30,923   $  30,454
       1999  ................................      30,976      30,378
       2000  ................................      31,159      29,935
       2001  ................................      30,964      29,307
       2002  ................................      30,103      30,723
       Thereafter ...........................     304,395     106,589
       Total minimum lease payments .........   $ 458,520     257,386
       Less: Amount representing interest                    (103,207)
       Present value of net minimum lease payments          $ 154,179

       During  fiscal 1997,  the Company  entered into  a $75.0  million
   master lease financing agreement for the construction and leasing  of
   new   stores.  The  Company  guarantees  a  substantial  portion   of
   the  residual  value of the leased property.  As of November 1, 1997
   $3.3 million was utilized under the  agreement.   Under the terms  of
   the agreement the  Company's management anticipates  that all  leases
   under the facility will be accounted for as operating leases.   After
   the initial noncancelable  lease term, which  expires in April  2004,
   the lease may be extended by agreement of the parties or the  Company
   may purchase the properties or arrange for the sale of the properties
   to a third party.

   5.  Capital Stock

       The  authorized  capital   stock  of  the  Company  consists   of
   50,000,000 shares  of  Common  Stock, $.01  par  value    per  share,
   10,000,000 shares  of Non-Voting  Common Stock,  $.01 par  value  per
   share (of which 8,500,000 shares have been designated Class B  Common
   Stock) and 4,000,000 shares  of preferred stock,  $.01 par value  per
   share, the  "Preferred  Stock".   All  common stock  is  entitled  to
   dividends, if any,  as may be  declared by the  Board  of  Directors.  
   Certain dividend  restrictions  exist  as  more  fully  described  in
   Note 3.  The Common Stock is voting, and the Class B Common Stock  is
   non-voting.  Additionally, the Class B Common Stock is convertible at
   the option of  the holder, on  a share-for-share  basis, into  Common
   Stock if certain conditions are met.
<PAGE>

   Initial Public Offering

        On November  1,  1996,  the  Company  completed  the  IPO  which
   resulted in the issuance of 5.9  million additional shares of  Common
   Stock.  Net  proceeds to the  Company from the  IPO, after  deducting
   issuance costs, were $97.7 million.   The Company used $50.8  million
   of   the proceeds  to repurchase  all of  its outstanding  Redeemable
   Preferred Stock on January 2, 1997 and paid a $0.9 million  preferred
   stock dividend on November 1, 1996.   Had the IPO and the  Redeemable
   Preferred Stock  repurchase  occurred as  of  October 29,  1995,  net
   income available for common shareholders  for fiscal 1996 would  have
   been $532,000 (or $.02 per share) reflecting lower interest  expense,
   preferred stock accretion  and related dividends.   Cash raised  from
   the IPO was invested in short-term interest bearing securities  until
   the Redeemable  Preferred Stock  repurchase occurred.   The  invested
   cash balance of $50.8 million at November 2, 1996 has been  presented
   on the accompanying 1996 Consolidated Balance Sheet as Cash  reserved
   for stock redemption.

        Additionally, $35.9 million of  the IPO proceeds, together  with
   $45.0 million of available cash and $193.6 million of proceeds  under
   the 1996 Credit Facility were used   to repay all of the  outstanding
   borrowings under  the  1995 Credit  Facility    (see Note  3).    The
   remaining proceeds  were  used   to  pay  expenses  and  terminate  a
   consulting agreement with The Yucaipa Companies ("Yucaipa").

   Equity Participation Plans

       The Company  maintains a  number of  equity participation  plans,
   including its  1996  Equity  Participation Plan  (the  "1996  Plan"),
   Restated 1995  Stock  Option Plan  (the  "1995 Plan")  and  Directors
   Deferred Compensation  and  Restricted  Stock  Plan  (the  "Directors
   Plan"), to  enable  key  executive  officers,  other  key  employees,
   independent directors and consultants  of the Company to  participate
   in the ownership of the Company.  The plans provide for the award  to
   executive officers, other  key employees,  independent directors  and
   consultants  of  the  Company  of  a  broad  variety  of  stock-based
   compensation  alternatives   such  as  non-qualified  stock  options,
   incentive stock options, restricted stock, stock appreciation rights,
   performance awards, dividend equivalents and stock payments.

       A maximum  of 1,000,000 shares  have been  reserved for  issuance
   under the 1996 Plan.  As of November 1, 1997, awards covering 253,609
   shares of Common Stock have been granted under the 1996 Plan.  As  of
   November 1, 1997, awards  covering  948,692 shares have been  granted
   under the 1995  plan and there  were no shares  available for  future
   grants under the 1995  Plan.  A maximum  of 100,000 shares have  been
   reserved for issuance under the Directors Plan and as of November  1,
   1997 3,490 shares have been issued under the Directors Plan.
<PAGE>
       A summary of stock option activity is as follows:
                                                          Average  
                                         Number of        Exercise
                                           Shares          price    
       Outstanding at March 22, 1995        --
         Granted                           970,387         $4.28
         Exercised                           -- 
         Canceled                            --    
       Outstanding at October 28, 1995     970,387
         Granted                            16,468        $13.66
         Exercised                           --
         Canceled                          (20,020)
       Outstanding at November 2, 1996     966,835
         Granted                           253,609        $24.45
         Exercised                          (4,535)
         Canceled                          (13,608)
       Outstanding at November 1, 1997   1,202,301


       At November  1, 1997, 737,031 of  the options were  non-qualified
   options and 465,270  were incentive options.   The incentive  options
   have an  exercise  prices  per  share of  $6.83  to  $13.66  and  the
   non-qualified options have an  exercise price per  share of $1.71  to
   $26.56.  As  of November 1,  1997, 639,532  options were  exercisable
   under the 1995 Plan.

        Statement of Financial Accounting Standards No. 123,  Accounting
   for Stock-Based  Compensation,  establishes  a fair  value  basis  of
   accounting for stock-based compensation under  which the value of  an
   option is measured  at the  date of grant  and is  expensed over  the
   vesting period of the option.    Under Statement 123, the fair  value
   of the option  can be  measured using  alternative valuation  models.
   Such valuation  models  require management  assumptions  about  stock
   price performance and volatility as well as certain other  judgmental
   factors which  can cause  large  fluctuations  in  option  valuation.  
   Accordingly  the  Company's  management   has  elected  to   continue
   accounting for    stock  options under  accounting  principles  board
   opinion no. 25, Accounting for Stock  Issued to Employees.  Had  such
   valuation methods under  Statement 123 been  used the  pro forma  net
   loss for fiscal 1997, fiscal 1996 and the 32 weeks ended October  28,
   1995 would have been $64.1 million, $14.9 million and $12.4  million,
   respectively and net loss per share for fiscal 1997, fiscal 1996  and
   the 32 weeks ended October 28,  1995 would have been $3.00, $.96  and
   $.80 respectively.


   Warrant

       At the time of the  Acquisition, the Company issued to Yucaipa  a
   warrant (the "Warrant") to purchase up to 3,874,492 shares of  Common
   Stock at an exercise price of $20.732 per share.  The Warrant expires
   on March 22,  2000. In  the  event that certain financial performance
   conditions are met, however, the expiration  date may be extended  to
   March 22, 2002.  Additionally, at the option of Yucaipa, the  Warrant
   is exercisable without the payment of cash consideration, pursuant to
   which the Company  will withhold from  the shares otherwise  issuable
   upon exercise thereof the number of  shares having a market value  as
   of the exercise date equal to the aggregate exercise price.
<PAGE>
    Stock Appreciation Rights Plan (Predecessor Company)

       The  Predecessor  Company  had  a  Stock  Appreciation  Rights   
   ("SARs") plan for certain officers and key management employees.  The
   plan provided  for  additional  compensation to  be  accrued  on  the
   difference between the book  value per share of  common stock at  the
   end of each fiscal year and the book value per share at the later  of
   the grant date or the last day of the prior fiscal year.  As a result
   of the Acquisition, the SARs became  fully vested and were valued  at
   market value.   Compensation  expense incurred  related to  all  SARs
   outstanding  was  $673,000 during the 20  weeks ended March 21, 1995.  
   In  connection  with  the  Acquisition,  all  obligations  under  the
   Predecessor Company's  SARs plan  were discharged  and the  plan  was
   terminated.  As a result of the Acquisition, the Predecessor  Company
   recorded a charge of $26,152,000,  reflecting the difference in  fair
   market value and book value of the SARs at March 21, 1995.

   6.  Redeemable Exchangeable Cumulative Preferred Stock

       As  of November  1, 1997,  the Company  had 4,000,000  shares  of
   Preferred  Stock   authorized,  none   of  which   were  issued   and
   outstanding.  In connection with the IPO, the Company entered into an
   agreement  to  repurchase  the  40,000  shares  of  then  outstanding
   Redeemable Preferred Stock.  Such repurchase was completed on January
   2, 1997.


   7.  Income Taxes

       The  provision  (benefit)  for  income  taxes  consists  of   the
   following (dollars in thousands):
                                                              Predecessor 
                                         Company                Company   
                                52 Weeks 53 Weeks   32 Weeks    20 Weeks
                                 Ended     Ended     Ended       Ended  
                                 Nov. 1,   Nov. 2,  Oct. 28,    March 21,
                                  1997      1996      1995        1995

   Current:
     Federal................ $  12,385   $  2,238  $ (4,539)  $  (2,543)
     State..................     2,234        833    (1,153)       (702)
                                                                        
                                14,619      3,071    (5,692)     (3,245) 
   Deferred:
     Federal................    (9,587)     3,573     6,214      (3,027)
     State..................    (1,426)       741     1,411        (863)
                               (11,013)     4,314     7,625      (3,890)
                             $   3,606   $  7,385  $  1,933   $  (7,135)

<PAGE>
   A reconciliation  of  the provision  (benefit)  for income  taxes  to
   amounts computed at the federal statutory rate of  35% is as  follows
   (dollars in thousands):

                                                                        
                                                                     Predecessor
                                                Company                Company
       
                                     52 Weeks   53 Weeks  32 Weeks     20 Weeks
                                      Ended      Ended     Ended        Ended
                                     Nov. 1,     Nov. 2,   Oct. 28,   March 21,
                                       1997        1996      1995        1995
Federal income taxes (benefit) at
  statutory rate on income before
  provision for income taxes and
  extraordinary loss ........       $ (12,362)   $  2,385  $  (501)  $ (6,397)
Non-tax deductible goodwill            15,704       4,450    2,417        --
State income taxes, net of federal
  income tax benefit.........             525         324       10       (828)
Other, net...................            (261)        226        7         90
                                    $   3,606    $  7,385  $ 1,933   $ (7,135)

       Significant  components  of the  Company's  deferred  income  tax
   liabilities and assets are as follows (dollars in thousands):

                                                    Nov. 1,    Nov. 2,
                                                     1997       1996  
    
   Deferred income tax liabilities:
     Inventory...................................  $ 10,688   $ 10,688
     Property and equipment......................    30,265     27,031
     State income taxes..........................       260      1,696
     Trademarks..................................     8,506      8,733
   Other.........................................     4,530      2,462
   Total deferred income tax liabilities.........    54,249     50,610
   Deferred income tax assets:
     Accrued vacation............................     3,389      3,079
     Omni restructuring reserve..................    13,028         --
     Capital leases..............................     7,385      5,305
     Net operating losses........................    10,414         --
     Alternative minimum tax.....................     8,269      6,385
     Accrued self-insurance......................    16,201     16,864
     Capitalized inventory.......................     2,795      2,377
     Other accrued liabilities...................    14,980     19,958
     Other.......................................     5,216      5,897
   Total deferred income tax assets..............    81,677     59,865
   Net deferred income tax assets................    27,428      9,255 
     Less:  Valuation allowance..................    11,120     11,120
   Net deferred income tax assets (liabilities)..  $ 16,308   $ (1,865)

       As  of November  1, 1997  net  operating losses  and  alternative
   minimum tax ("AMT") credit carryforwards of   $29.8 million and  $8.3
   million  respectively,  have  been recorded by the Company.   The net
   operating loss  carryforwards  expire  through 2012,  while  the  AMT
   credits can be carried forward indefinitely.   A valuation  allowance
   has been established  to reduce the  deferred tax assets  to a  level
   which, more likely than not, will be realized.
<PAGE>
    8.  Profit-Sharing and Retirement Plans

       The Company has trusteed, contributory profit-sharing plans  (the
   "Plans")  covering  substantially  all  full-time  employees.    Plan
   participants are  allowed to  contribute  a specified  percentage  of
   their compensation  into the  Plans.   The  amount of  the  Company's
   contribution is at the discretion of the Board of Directors,  subject
   to limitations of the Plans.

       Under the provisions of several collective bargaining  agreements
   covering hourly  paid  employees, the  Company  is required  to  make
   pension  contributions  to  multi-employer  retirement  plans   based
   primarily on hours worked by such employees.

       Retirement  and  profit-sharing plan  expenses  included  in  the
   Consolidated Statements of Operations were $13,511,000,  $14,408,000,
   $8,638,000 and $5,950,000 for fiscal 1997, fiscal 1996, the 32  weeks
   ended October 28, 1995 and  the 20 weeks ended March 21, 1995.

    9.  Related Party Transactions

       The Company  has a  five-year management  agreement with  Yucaipa
   for  management   and  financial   services.     The   agreement   is
   automatically renewed on April 1  of each year  for a five-year  term
   unless 90  days notice  is  given by  either  party.   The  agreement
   provides for  annual  management fees  equal  to $1.0  million.    In
   addition, the Company may retain Yucaipa  in an advisory capacity  in
   connection with certain acquisition or sale transactions and in  such
   case will pay an advisory fee equal to 1% of the transaction value. 

       On  November   1,  1996,  the   Company  terminated  a   previous
   consulting agreement with  Yucaipa, which agreement  called for  fees
   equal to 2% of EBITDA (as defined).   A fee of $10.5 million  related
   to such termination  was paid  to Yucaipa on  November 1,  1996.   In
   addition, pursuant  to  the previous  consulting  agreement,  Yucaipa
   received a  fee  of  $14 million  for  advisory  and  other  services
   provided in connection with the Acquisition.  Other fees  related  to
   the Yucaipa  agreements were  $1,249,000, $2,636,000  and  $1,490,000
   during fiscal 1997, fiscal  1996 and the  32 weeks ended  October 28,
   1995, resectively.
<PAGE>
   10.  Commitments and Contingencies

       The Company, in the ordinary course of its business, is party  to
   various legal actions.   One  case currently  pending alleges  gender
   discrimination by  Dominick's  and seeks  compensatory  and  punitive
   damages in an unspecified amount.   The plaintiffs' motion for  class
   certification was  recently granted  by the  Court as  to the  female
   subclass but was denied as to the national origin subclass in  fiscal
   1997.  Due  to the numerous  legal and factual  issues which must  be
   resolved during the course of this litigation, the Company is  unable
   to predict the ultimate outcome of this lawsuit.  If Dominick's  were
   held liable for  the alleged discrimination  (or otherwise  concludes
   that it is in the Company's  best interest to settle the matter),  it
   could be required  to pay monetary  damages (or settlement  payments)
   which, depending on the theory of  recovery or the resolution of  the
   plaintiffs' claims for  compensatory and punitive  damages, could  be
   substantial and could have a material adverse effect on the  Company.
   Based upon  the current state  of  the  proceedings,  the   Company's
   assessment to date of the underlying facts and circumstances and  the
   other information currently available, and although no assurances can
   be given, the Company  does not believe that  the resolution of  this
   litigation will  have  a material  adverse  effect on  the  Company's
   overall liquidity.   As additional  information is  gathered and  the
   litigation  proceeds,  the  Company  will  continue  to  assess   its
   potential impact.

       The  Company is  also a  defendant in  other cases  currently  in
   litigation or potential  claims encountered in  the normal course  of
   business which  are being  vigorously defended.   In  the opinion  of
   management, the resolution of these matters will not have a  material
   adverse effect  on the  Company's financial  position or  results  of
   operations.

       Certain of  the Company's  facilities have  had or  may have  had
   releases of hazardous materials associated with Dominick's operations
   or those of  current, prior or  adjacent occupants  that may  require
   remediation.  The costs to remediate such environmental contamination
   are currently estimated to range from approximately $4 million to  $6
   million.  Pursuant to the stock purchase agreement in connection with
   the Acquisition, one-half of such remediation costs up to $10 million
   and 75% of such remediation costs between $10 million and $20 million
   will be  paid by  the prior  owners of  Dominick's. Accordingly,  the
   Company has accrued $3.4 million  to reflect its estimated  liability
   for environmental remediation.  The Company does not believe that the
   ultimate liability  related  to  remediation  will  have  a  material
   adverse affect  on the  Company's financial  position or  results  of
   operations.
<PAGE>
       The  Company  self-insures  workers'  compensation  and   general
   liability claims.   During the 20  weeks ended March 21,  1995,   the
   Predecessor Company  discounted its  workers' compensation  liability
   using a 7.5% discount rate. During  fiscal 1997, fiscal 1996 and  the
   32 weeks ended October 28,  1995 all self-insurance liabilities  were
   discounted using a 7.5% discount rate.  Management believes that this
   rate approximates the time value of money over the anticipated payout
   period   (approximately   12 years)    for   essentially    risk-free
   investments.  Self-insurance  liability  information  is  as  follows
   (dollars in thousands):

                                                  Nov. 1,      Nov. 2,  
                                                   1997         1996    

       Self-insurance liability ...........  $    53,477   $   57,157
       Less: Discount .....................       (8,165)      (8,727)
       Net self-insurance liability .......  $    45,312   $   48,430   

       The   estimated  cash   payments   for  claims   will   aggregate
   approximately $16 million,  $11 million, $8 million,  $6 million  and
   $4 million  for  fiscal  years  1998,  1999,  2000,  2001  and  2002,
   respectively.

   11.  Fair Value of Financial Instruments

       The estimated fair values of the Company's financial  instruments
   are as follows (dollars in thousands):

                                                   November  1, 1997
                                                  Carrying
                                                   Amount    Fair Value
   Cash and cash equivalents...................  $  22,034     $  22,034
   Short-term notes and other receivables......     18,241        18,241
   1997 Credit Facility........................    441,500       441,500
   Other.......................................      5,644         5,644
<PAGE>

   12.  Quarterly Data (Unaudited) (dollars in thousands, except share
   data)

                                           Fiscal 1997                 
                       
                              First       Second      Third       Fourth  
                             Quarter     Quarter     Quarter     Quarter 
                            12 Weeks    12 Weeks    16 Weeks    12 Weeks

   Sales                    $ 602,923   $ 583,455   $ 813,690   $ 584,821
   Gross profit               142,307     141,028     195,135     145,603
   Operating income (loss)     23,295      21,809      29,676     (51,148) 
   Net income (loss) before
    extraordinary loss          5,185       3,881      5,640      (53,632)
   Extraordinary loss              --          --         --      (23,584)
   Net income (loss)            5,185       3,881      5,640      (77,216)
   Net income (loss) per
    common share                  .23         .18        .25        (3.61)


                                           Fiscal 1996               
                         
                              First       Second      Third       Fourth  
                             Quarter     Quarter     Quarter     Quarter 
                            12 Weeks    12 Weeks    16 Weeks    13 Weeks

   Sales                    $ 584,362   $ 556,880   $ 759,309   $ 611,411
   Gross profit               131,954     129,008     176,074     141,932
   Operating income            19,330      18,886      26,443      12,450
   Net income (loss) before
    extraordinary loss            669         728       1,716      (3,685)
   Extraordinary loss              --          --          --      (6,360)
   Net income (loss)              669         728       1,716     (10,045)
   Net loss per common share     (.05)       (.06)       (.03)       (.82)


   Comments on Quarterly Data:

        During the fourth quarter of fiscal 1997, the Company  announced
   a strategic restructuring program, as more fully  discussed  in  Note
   1, which resulted in a $74.4 million charge (or $58.3 million net  of
   tax benefit of $16.1 million).

        Per share  data have  been adjusted  to reflect  a  14.638-for-1
   stock split effective October 24, 1996.

        The termination  of  the  Company's  consulting  agreement  with
        Yucaipa during the fourth  quarter of 1996  resulted in a  $10.5
        million charge  (or $6.3  million net  of  tax benefit  of  $4.2
        million).