<PAGE> 1

                           UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-Q


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

   For the quarterly period ended September 28, 1996   or

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

   For the transition period from                       to


   Commission file number                        2-20910

                                 
                         COTTER & COMPANY
(Exact  name  of  registrant as specified  in  its charter)

               DELAWARE                                 36-2099896
   (State   or   other  jurisdiction   of              (I.R.S. Employer
   incorporation  or organization)                      Identification No.)

   8600 West Bryn Mawr Avenue
   Chicago, Illinois                                 60631-3505
  (Address of principal executive offices)           (Zip Code)

                            (773) 695-5000
       (Registrant's telephone number, including area code)

                          not applicable
       (Former name, former address and former fiscal year,
                   if changed since last report)

   Indicate by check mark whether the registrant (1) has filed  all
   reports  required  to be filed by Section 13  or  15(d)  of  the
   Securities Exchange Act of 1934 during the preceding  12  months
   (or for such shorter period that the registrant was required  to
   file  such  reports), and (2) has been subject  to  such  filing
   requirements for the past 90 days.
   Yes   X   No


   The number of shares outstanding of each of the issuer's classes
   of common stock, as of October 26, 1996.

      Class A Common Stock, $100 Par Value.      48,660 Shares.
      Class B Common Stock, $100 Par Value.   1,053,052 Shares.


<PAGE> 2

                 PART I - FINANCIAL INFORMATION



Item 1.     FINANCIAL STATEMENTS



                        COTTER & COMPANY

              CONDENSED CONSOLIDATED BALANCE SHEET

                        (000's Omitted)



<TABLE>
                                         September 28,    December 30,
                                             1996             1995
                                         -------------    ------------
                                          (UNAUDITED)

ASSETS

Current assets:
 <S>                                     <C>            <C>

 Cash and cash equivalents                $  1,570           $ 22,473

 Accounts and notes receivable             302,196            287,888
 Inventories                               368,612            315,311
 Prepaid expenses                           16,796             11,180
                                           -------            ------- 
 Total current assets                      689,174            636,852

Properties owned,
 less accumulated depreciation             167,811            165,683

Properties under capital leases,
 less accumulated amortization               4,026              5,393

Other assets                                 7,675             11,648
                                           -------            -------
TOTAL ASSETS                              $868,686           $819,576
                                          ========           ======== 
</TABLE>                    




   See Notes to Condensed Consolidated Financial Statements.

<PAGE> 3
                        COTTER & COMPANY

              CONDENSED CONSOLIDATED BALANCE SHEET

                        (000's Omitted)

<TABLE>
                                            September 28,    December 30,
                                               1996              1995
                                            -------------    ------------
                                             (UNAUDITED)


LIABILITIES AND CAPITALIZATION
 <S>                                            <C>           <C>
Current liabilities:
 Accounts payable and accrued expenses          $340,190      $351,247
 Short-term borrowings                            78,039         2,657
 Current maturities of notes,
   long-term debt and lease obligations           61,198        61,634
 Patronage dividends payable in cash
   (Estimated at September 28, 1996)               7,075        18,315
                                                 -------       -------
 Total current liabilities                       486,502       433,853
                                                 -------       -------
Long-term debt and obligations under
 capital leases                                   75,551        79,213
                                                 -------       -------
Capitalization:
 Estimated patronage dividends to be
   distributed principally by the
   issuance of promissory (subordinated)
   notes and redeemable Class B nonvoting
   common stock                                   13,642          --
 Promissory (subordinated) and
   installment notes                             179,124      186,335
 Redeemable Class A common stock and
   partially paid subscriptions
   (Authorized 100,000 shares; issued
   and fully paid, 48,810 and 52,710 shares)       4,902        5,294
 Redeemable Class B nonvoting common stock
   and paid-in capital (Authorized
   2,000,000 shares; issued and fully paid,
   1,059,707 and 1,055,700 shares;
   issuable as partial payment of patronage
   dividends, 62,005 shares as of
   December 30, 1995)                            107,072      113,062
 Retained earnings                                 2,712        2,661
                                                 -------      -------
                                                 307,452      307,352
 Foreign currency translation adjustment            (819)        (842)
                                                 -------      -------
 Total capitalization                            306,633      306,510
                                                 -------      -------
TOTAL LIABILITIES AND CAPITALIZATION            $868,686     $819,576
                                                ========     ========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE> 4
                          COTTER & COMPANY

           CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                           (000's Omitted)

                             (UNAUDITED)





<TABLE>
                                 FOR THE THIRTEEN       FOR THE THIRTY-NINE
                                    WEEKS ENDED           WEEKS ENDED
                               --------------------    ----------------------
                               September  September    September   September
                                  28,        30,          28,         30,
                                 1996       1995         1996        1995
                               ---------  ---------    ---------   ----------
<S>                            <C>        <C>         <C>         <C>
Revenues                       $599,893   $594,808    $1,822,901  $1,840,663
                               --------   --------    ----------  ----------
Cost and expenses:

  Cost of revenues              548,983    544,407     1,673,480   1,686,660
  Warehouse, general and
   administrative                31,773     29,676       103,787      96,680
  Interest paid to Members        4,393      5,047        13,778      15,476
  Other interest expense          2,721      2,083         7,606       7,362
  Other income, net                 311         18           135        (466)
  Income  tax  expense              160        130           480         360
                                -------   --------     ---------   ---------
                                588,341    581,361     1,799,266   1,806,072
                                -------   --------     ---------   ---------
Net margins                    $ 11,552  $  13,447    $   23,635  $   34,591
                               ========  =========    ==========  ==========
</TABLE>


      See Notes to Condensed Consolidated Financial Statements.


<PAGE> 5
                         COTTER & COMPANY

          CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                  FOR THE THIRTY-NINE WEEKS ENDED

                          (000's Omitted)

                            (UNAUDITED)

<TABLE>
                                               September 28,    September 30,
                                                   1996            1995

  <S>                                             <C>             <C>
Operating activities:
  Net margins                                   $  23,635       $  34,591
   Adjustments to reconcile net margins
    to cash and cash equivalents from
    operating activities:
    Statement of operations components
    not affecting cash and cash equivalents        18,828          18,475
   Net change in working capital components      (100,410)         (9,856)
                                                 --------         -------       
  Net cash and cash equivalents provided by
   (used for) operating activities                (57,947)         43,210
                                                 --------         -------      
Investing activities:
  Additions to properties owned                   (16,487)        (15,998)
  Proceeds from sale of properties owned              210           4,160
  Changes in other assets                           3,973          (1,042)
                                                 --------         -------  
  Net cash and cash equivalents used for
   investing activities                           (12,304)        (12,880)
                                                 --------         ------- 
Financing activities:
  Proceeds (payments) of short-term borrowings     75,382          (1,287)
  Payment of annual patronage dividend            (18,315)        (18,383)
  Payment of notes, long term debts,
  lease obligations and Class A common stock       (7,719)        (10,933)
                                                  -------         -------
  Net cash and cash equivalents provided by
   (used for) financing activities                 49,348         (30,603)
                                                  -------         ------- 

Net decrease in cash and cash equivalents         (20,903)           (273)

Cash and cash equivalents at beginning
 of the year                                       22,473           1,831
                                                  -------         -------
Cash and cash equivalents at end of the period   $  1,570       $   1,558
                                                 ========       =========

</TABLE>

     See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
                         COTTER & COMPANY

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                          (UNAUDITED)



NOTE 1 - GENERAL

The  condensed consolidated balance sheet, statement of  operations
and  statement of cash flows at and for the period ended  September
28,  1996  and the condensed  consolidated statement of  operations
and statement of cash flows for the period ended September 30, 1995
are  unaudited and, in the opinion of the management  of  Cotter  &
Company (the Company), include all adjustments, consisting only  of
normal recurring adjustments, necessary for a fair presentation  of
financial  position, results of operations and cash flows  for  the
respective  interim periods.  The accompanying unaudited  condensed
consolidated financial statements have been prepared in  accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and  Article  10
of  Regulation S-X.  Accordingly, they do not include  all  of  the
information and footnotes required by generally accepted accounting
principles  for  complete  financial  statements.   This  financial
information  should  be read in conjunction with  the  consolidated
financial statements for the year ended December 30, 1995  included
in   the  Company's  Post-Effective  Amendment  No.5  to  Form  S-2
Registration  Statement (No. 33-39477) and in  the  Company's  1995
Annual Report on Form 10-K.


NOTE 2 - ESTIMATED PATRONAGE DIVIDENDS

Patronage dividends are declared and paid by the Company after  the
close  of each fiscal year. The 1995 annual patronage dividend  was
distributed  through a payment of 30% of the total distribution  in
cash,  with  the  balance being paid through the  issuance  of  the
Company's  Class B nonvoting common stock and five-year  promissory
(subordinated)  notes.  Such  patronage  dividends,  consisting  of
substantially  all of the Company's patronage source  income,  have
been paid since 1949.  Annually, the Board of Directors reviews the
annual  patronage dividend to ensure that the Company is adequately
capitalized.  The estimated patronage dividend for the  thirty-nine
weeks  ended  September  28,   1996  is  $23,584,000  compared   to
$35,009,000 for the corresponding period in 1995.


NOTE 3 - INVENTORIES

<TABLE>
   Inventories consisted of:             September 28,    December 30,
                                             1996             1995
                                         -------------    ------------ 
                                         (UNAUDITED)
                                               (000's Omitted)

     <S>                                 <C>                <C>
   Manufacturing inventories:
     Raw materials                       $  3,126           $  2,139
     Work-in-process and finished goods    21,942             19,407
                                         --------           --------    
                                           25,068             21,546
   Merchandise inventories                343,544            293,765
                                         --------           --------   
                                         $368,612           $315,311
                                         ========           ========
</TABLE>

<PAGE> 7
Item 2.MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF   FINANCIAL
       CONDITION AND RESULTS OF OPERATIONS

THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1996 COMPARED TO THIRTY-NINE
WEEKS ENDED SEPTEMBER 30, 1995

RESULTS OF OPERATIONS:

Revenues  decreased  by $17,762,000 or 1.0% compared  to  the  same
period  last year.  The decrease was attributable to the phase  out
of  the  V&S  Variety division and the sale of the  General  Power
Equipment  manufacturing division.  Comparable shipments to  Member
stores increased 3.6% compared with the prior year.

Gross margins decreased by $4,582,000 or 3.0%.  Gross margins as  a
percentage  of  revenues declined to 8.2% from 8.4%  for  the  same
period  last  year.   The decrease in gross  margin  was  primarily
attributable  to  the  expanded Pinpoint Pricing  program  and  the
resigned business of the V&S Variety division and the General Power
Equipment manufacturing division.

Warehouse,   general  and  administrative  expenses  increased   by
$7,107,000  or  7.4%  and  as a percentage  of  revenues  was  5.7%
compared  to 5.3% for the same period last year.  The increase  was
primarily   the   result   of   moving   expenses,   organizational
improvements in the area of management information services and
member incentives connected with the trueAdvantage program.

Interest paid to Members decreased by $1,698,000 or 11.0% primarily
due to a lower principal balance and lower average interest rates.

Other  interest expense increased by $244,000 or 3.3%  compared  to
the  same  period  last  year primarily due  to  higher  short-term
borrowings partially offset by a lower average interest rate.

Net  margins were $23,635,000 compared to $34,591,000 for the  same
period last year.


THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1996 COMPARED WITH THE YEAR  ENDED
DECEMBER 30, 1995

LIQUIDITY AND CAPITAL RESOURCES:

The  Company has a seasonal need for cash.  During the  first  nine
months  of  the  year, as seasonal inventories  are  purchased  for
resale  or manufacture and shipment, cash and cash equivalents  are
used  for operating activities.  The Company anticipates that  cash
and  cash equivalents will be provided by operating activities  and
financing activities, if necessary, for the remainder of the year.

At  the end of the third quarter of 1996, inventories increased  by
$53,301,000  to  support  anticipated  future  orders  of  seasonal
merchandise.    Accounts   and  notes   receivable   increased   by
$14,308,000  due  to  the seasonal payment terms  extended  to  the
Company's  Members.  Short-term borrowings increased by $75,382,000
in support of the increased inventories and accounts receivables
combined with a decrease  of $11,057,000 in accounts payable and
accrued expenses.

At  September 28, 1996, net working capital remained comparable  at
$202,672,000  compared to $203,000,000 at December 30,  1995.   The
current  ratio decreased to 1.42 at September 28, 1996 compared  to
1.47 at December 30, 1995.

The  Company has various short-term lines of credit available under
informal agreements with lending banks, cancelable by either  party
under  specific circumstances. The Company has also  established  a
$125,000,000 five-year revolving credit facility with  a  group  of
banks.  Borrowings  under  these  agreements  were  $78,039,000  at
September  28, 1996.

<PAGE> 8

The Company's capital is primarily derived from redeemable Class  A
common  stock  and  retained  earnings,  together  with  promissory
(subordinated) notes and redeemable nonvoting Class B common  stock
issued  in connection with the Company's annual patronage dividend.
The   Company  believes  the  funds  derived  from  these   capital
resources,  as  well as operations and the credit facilities  noted
above, will be sufficient to satisfy capital needs.

Total  capital  expenditures, including those  made  under  capital
leases,  were $16,487,000 for the thirty-nine weeks ended September
28,  1996  compared to $15,998,000 during the comparable period  in
1995.   These  capital expenditures relate to additional  equipment
and technological improvements at the regional distribution centers
and  the  National  Headquarters.  Funding of any  additional  1996
capital  expenditures is anticipated to come  from  operations  and
external sources, if necessary.


THIRTEEN  WEEKS ENDED SEPTEMBER 28, 1996 COMPARED TO THIRTEEN WEEKS  ENDED
SEPTEMBER 30, 1995

RESULTS OF OPERATIONS:

Revenues  increased  by $5,085,000 or 0.9%  compared  to  the  same
period  last  year.   This  increase was the  result  of  increased
merchandise  shipments  to existing True  Value  Members  from  the
Company's   regional   distribution   network   and   manufacturing
facilities.

Gross  margins increased by $509,000 or 1.0% and as a percentage of
revenues  remained  comparable with the same period  last  year  at
8.5%.  The increase in gross margin was the result of the increased
sales and change in product mix.

Warehouse,   general  and  administrative  expenses  increased   by
$2,097,000 or 7.1% and as a percentage of revenues, increased to  5.3%
compared  to  5.0% for the same period last year. The increase  was
primarily   the   result   of improvements in the area of management
information services and member incentives connected with the
trueAdvantage program.

Interest  paid to Members decreased by $654,000 or 13.0%  primarily
due to a lower principal balance and lower average interest rates.

Other  interest expense increased by $638,000 or 30.6% compared  to
the same period last year due to higher short-term borrowings.

Net  margins were $11,552,000 compared to $13,447,000 for the  same
period last year.



                    PART II - OTHER INFORMATION

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

             Exhibit 4. Instruments defining the rights of security
       holders,   including  indentures;  incorporated  herein   by
       reference  those items included as Exhibits 4A  through  4G,
       inclusive, in the Company's Post-Effective Amendment  No.  5
       to Form S-2 Registration Statement (No. 33-39477) filed with
       the Securities and Exchange Commission on March 21, 1996.

     (b)  Reports on Form 8-K

       No reports on Form 8-K have been filed during the period for
     which this report is filed.


<PAGE> 9


                             SIGNATURE






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




                                        COTTER & COMPANY




Date:November 12, 1996                    By /s/ KERRY J. KIRBY
                                             Kerry J. Kirby
                                             Vice President, Treasurer
                                              and  Chief  Financial Officer



(Mr.  Kirby is the principal accounting officer and has  been  duly
authorized to sign on behalf of the Registrant.)