United States
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                                        
                                    FORM 10-K
                                        
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the Fiscal Year Ended December 27, 1997
                                       or
[   ]  Annual Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934 for the Transition Period From ______ To ______

                           Commission File No. 0-22468
                                        
                                   WICKES INC.
                                   -----------
             (Exact name of registrant as specified in its charter)
                                        
          Delaware                             36-3554758
          --------                             ----------
     (State of Incorporation)           (IRS Employer Identification No.)

             706 North Deerpath Drive, Vernon Hills, Illinois  60061
             -------------------------------------------------------
                    (Address of principal executive offices)
                                        
                                 (847) 367-3400
                                 --------------
              (Registrant's telephone number, including area code)
                                        
          Securities Registered Pursuant to Section 12 (b) of the Act:
                                      None
                                        
          Securities Registered Pursuant to Section 12 (g) of the Act:
                    Common Stock, par value of $.01 per share
                    -----------------------------------------

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

  Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of  Regulation  S-K is not contained herein, and will not be contained,  to  the
best  of  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.  [  ]

   As of February 28, 1998, the Registrant had 7,682,666 shares of Common Stock,
par value $.01 per share, and 499,768 shares of Class B Non-Voting Common Stock,
par  value  $.01  per  share,  outstanding, and the aggregate  market  value  of
outstanding  voting stock (based on the last sale price on the  NASDAQ  National
Market  System  of  Common  Stock  on  that  date)  held  by  nonaffiliates  was
approximately  $16,500,000 (includes the market value of all  such  stock  other
than  shares  beneficially  owned by 10% stockholders,  executive  officers  and
directors).

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

   Portions  of the Registrant's Proxy Statement in connection with  its  Annual
Meeting  of Shareholders tentatively scheduled to be held on May 18,  1998,  are
incorporated  by reference into Part III hereof, as more specifically  described
herein.
                                                                                
<PAGE> 2

                                                                                
                                                                                
                                 TABLE OF CONTENTS
                                                            Page No.
                                     PART I
<TABLE>
<CAPTION>

<S>        <C>                                                <C>
Item 1.    Business                                             3
Item 2.    Properties                                          19
Item 3.    Legal Proceedings                                   20
Item 4.    Submission of Matters To a Vote
            of Security Holders                                21


                                     PART II
                                        
Item 5.    Market For Registrant's Common Equity
            and Related Stockholder Matters                    22
Item 6.    Selected Financial Data                             22
Item 7.    Management's Discussion and Analysis
            of Financial Condition and Results
            of Operations                                      26
Item 7A.   Quantitative and Qualitative Disclosures
            about Market Risk                                  40
Item 8.    Financial Statements and Supplementary Data         40
Item 9.    Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosure             40


                                    PART III
                                        
Item 10.   Directors and Executive Officers
            of the Registrant                                  41
Item 11.   Executive Compensation                              41
Item 12.   Security Ownership of Certain
           Beneficial Owners and Management                    41
Item 13.   Certain Relationships and Related Transactions      41


                                    PART IV
                                        
Item 14.   Exhibits, Financial Statement Schedules,
            and Reports on Form 8-K                            42

SIGNATURES                                                     43
                                        
</TABLE>                                        
                                        2
                                        
                                        
                                        
<PAGE> 3                                        
                                     PART I


Item 1.  BUSINESS
-----------------

  Wickes Inc. ("Wickes" or the "Company") is a major supplier and distributor of
building  materials.  The Company sells its products and services  primarily  to
residential and commercial building professionals, repair and remodeling ("R&R")
contractors  and,  to  a  lesser  extent, project  do-it-yourselfers  ("DIYers")
involved  in  major home improvement projects.  At March 24, 1998,  the  Company
operated  101  sales and distribution facilities in 23 states  in  the  Midwest,
Northeast, and South and 10 component manufacturing facilities that produce  and
distribute pre-hung door units, roof and floor trusses, and framed wall panels.


Background
----------

   The Company was formed in 1987 as a Delaware corporation named "Wickes Lumber
Company."  In June 1997, the Company changed its corporate name to "Wickes Inc."
The  Company  continues  to  conduct its primary operations  under  the  "Wickes
Lumber" name.

   In  April 1988 the Company completed the acquisition (the "1988 Acquisition")
of  operations  that had commenced in 1952.  These operations consisted  of  223
building  centers and 10 component manufacturing facilities.  From 1988  through
1993,  the  Company reduced the number of its building centers to  124  and  the
number of its component manufacturing facilities to six.

  On October 22, 1993, the Company completed a plan of recapitalization pursuant
to which the Company retired all outstanding indebtedness incurred in connection
with  the  1988  Acquisition, restructured its previously  existing  classes  of
capital stock, and completed the initial public offering of 2,800,000 shares  of
its common stock.

   In 1994 and 1995, the Company acquired 15 building centers and five component
manufacturing  facilities.  For further information, see  Note  4  of  Notes  to
Consolidated Financial Statements included elsewhere herein.

   During  the  fourth  quarter  of  1995 the Company  committed  to  and  began
implementing  a  plan (the "1995 Plan") to reduce the number of under-performing
building  centers, the corresponding overhead to support these building centers,
and to strengthen its capital structure.  Pursuant to the 1995 Plan, the Company
consolidated  or  closed  21 building centers and three component  manufacturing
facilities.  The 1995 Plan also included the modification and extension  of  the
Company's  bank  revolving credit agreement, which was completed  on  March  12,
1996,  and  the  private sale of 2 million newly-issued shares of the  Company's

                                        3

<PAGE> 4

Common  Stock  for $10 million, which occurred on June 20, 1996.  In  connection
with  the  1995  Plan,  and other unusual items, the Company  recorded  a  $17.8
million  charge  in  the  fourth  quarter of 1995.   See  Note  3  of  Notes  to
Consolidated Financial Statements included elsewhere herein.

   In the fourth quarter of 1997, the Company announced and began to implement a
plan  to  streamline  operations, to focus on the  Company's  core  professional
builder  business,  and  to eliminate overhead costs and programs  not  directly
supporting   this  core  business.   For  further  information,  see   "Business
Strategy."

   On  February 23, 1998, the Company announced that, in addition to the actions
begun  in  the  fourth quarter of 1997, it had closed eight additional  building
centers and two component manufacturing facilities, planned to sell two building
centers  located  in  Eastern  Iowa,  and had implemented  further  headquarters
staffing  and expense reductions.  The Company expects to record a $5.4  million
restructuring  charge  in  the  first quarter of  1998  with  respect  to  these
activities  (the "1998 Plan").  For further information see "Business  Strategy"
and  Note  14  of Notes to Consolidated Financial Statements included  elsewhere
herein.


Industry Overview
-----------------

   According to the Home Improvement Research Institute ("HIRI"), sales of  home
improvement  products (defined as lumber, building materials,  hardware,  paint,
plumbing,  electrical, tools, floor coverings, glass, wallpaper,  and  lawn  and
garden  products)  associated with the maintenance  and  repair  of  residential
housing  and new home construction were estimated to be $212.7 billion in  1997.
Despite some consolidation over the last ten years, particularly in metropolitan
areas,  the  building material industry remains highly fragmented.  The  Company
believes that no building material supplier accounted for more than 12%  of  the
total market in 1997.

   In  general, building material suppliers concentrate their marketing  efforts
either  on building professionals or consumers.  Professional-oriented  building
material  suppliers,  such  as  the Company,  tend  to  focus  on  single-family
residential  contractors,  repair and remodeling  ("R&R")  contractors,  project
DIYers  and  to  some  extent commercial contractors.  These  suppliers  compete
principally  on the basis of service, product assortment, price, scheduled  job-
site  delivery  and  trade credit availability.  In contrast,  consumer-oriented
building  material retailers target the mass consumer market, where  competition
is   based  principally  on  price,  merchandising,  location  and  advertising.
Consumer-oriented warehouse and home center retailers typically do not offer  as
wide  a range of services, such as specialist advice, trade credit, manufactured
components,   and  scheduled  job-site  delivery,  as  do  professional-oriented
building material suppliers.

   Industry sales are linked to a significant degree to the level of activity in
the residential building industry, which tends to be cyclical and seasonal.  New
residential construction is determined largely by household formations, interest

                                        4

<PAGE> 5

rates,  housing  affordability,  availability of  mortgage  financing,  regional
demographics, consumer confidence, job growth, and general economic  conditions.
According  to  the U.S. Bureau of the Census, U.S. housing starts  totaled  1.29
million in 1993, 1.46 million in 1994, 1.35 million in 1995, and 1.48 million in
1996.  In 1997, housing starts were relatively unchanged at 1.47 million.  There
was  a  decrease,  however,  in 1997 housing starts  in  the  Company's  primary
geographical  market,  the Midwest, of approximately 5.5%.   The  Company's  two
other  geographical markets, the Northeast and South, experienced  increases  in
1997  housing starts of 3.5% and 1.3%, respectively.  Nationally, single  family
housing  starts, which generate the majority of the Company's sales to  building
professionals, experienced a decrease of 2.4% from 1.16 million starts  in  1996
to  1.13  million  starts in 1997.  The Blue Chip Economic Indicators  Consensus
Forecast  dated March 10, 1998, projects 1998 housing starts to be 1.48 million,
relatively unchanged from 1997 and 1996.

   Repair  and  remodeling  expenditures tend  to  be  less  cyclical  than  new
residential construction.  These expenditures are generally undertaken with less
regard   to  economic  conditions,  but  both  repair  and  remodeling  projects
(including projects undertaken by DIYers) tend to increase with increasing sales
of both existing and newly-constructed residences.  The HIRI estimates the sales
of  home improvement products to repair and remodeling professionals represented
$40.7 billion, or approximately 19% of total 1997 sales of the building material
supply industry, while direct sales to DIYers amounted to $101.7 billion.


Business Strategy
-----------------

  General
  -------

   The Company's mission is to be the premier provider of building materials and
specialized   services  to  the  professional  segments  of  the  building   and
construction industry.

   In order to better serve its customers and markets, the Company has organized
and  streamlined  its  operations into three channels  of  distribution:   Major
Markets,  Conventional Markets, and Wickes Direct/Wickes  International.   These
channels  are  supported by the Company's Manufacturing  operations.   In  Major
Markets  the Company serves the national, regional, and large local  builder  in
larger  markets  with specialized services and a total solutions  approach.   In
Conventional  Markets the Company provides the smaller building professional  in
less-populous markets with tailored products and services.  Wickes Direct/Wickes
International provides another distribution alternative to supply the  needs  of
its commercial customers.  The Company's Manufacturing operations produce value-
added  products  (such  as  pre-hung interior and exterior  doors,  framed  wall
panels,  and roof and floor trusses) for the Company's customers in  both  Major
Markets and Conventional Markets and for its Wickes Direct customers.

                                        5

<PAGE> 6

  Major Markets
  -------------

   The  Company operates in 20 Major Markets, which are served by 31  sales  and
distribution facilities.  These facilities are designed, stocked and staffed  to
meet the needs of the particular markets in which they are located and vary from
facilities  similar  to the Company's Conventional Market  building  centers  to
facilities  that only stock specific types of products, for instance lumber  and
wood  related  products.   In  addition, two  of  these  facilities  are  Wickes
Contractor  Supply  ("WCS") facilities which stock a wide  variety  of  building
materials (no lumber or hardlines) designed to meet the demands of home  builder
and  R&R  customers  for roofing, drywall, insulation and  related  accessories.
Major Markets are also served by seven of the Company's manufacturing facilities
and two other manufacturing facilities operated by third parties exclusively  or
primarily for the Company.

   These  Major  Markets are generally large metropolitan areas  with  favorable
growth  projections  and are characterized by the active presence  of  national,
regional  and  large  local builders.  The Company believes  that  the  building
supply industry in these Major Markets remains heavily fragmented.

   Beginning  in  1997,  the Company initiated Major Markets  programs  in  four
markets:   Pensacola, Denver, Louisville, and Raleigh/Charlotte.  Other programs
are  being  commenced in five other Major Markets.  The Company plans additional
Major Markets Programs as opportunities and resources permit.

   The  Company's Major Markets programs seek to provide the large builder  with
specialized   programs   and  services  that  integrate   various   methods   of
distribution.   The Company provides these programs and services on  a  "virtual
store"  basis;  that  is,  products and services may be provided  from  multiple
facilities  serving  the  Major Market on a coordinated basis  with  centralized
customer  contact  and  support.   The Company devotes  significant  efforts  to
redefine  and  improve  the  customer's and its  own  supply  chain  management,
material flow and logistics.

   The  Company's Manufacturing operations constitute an integral  part  of  the
Major  Markets  programs.   These  operations  provide  the  Company  with   the
capability to provide its customers with custom engineered, value-added products
such  as  manufactured framing component systems.  For instance,  in  two  Major
Markets  the  Company  has  begun its "Frame a Home in  a  Day"  concept.   This
program, which allows a large builder to complete the entire process of  framing
and  sheathing  an average two-story residence in as little as one  day,  rather
than  the  substantially  longer period involved in  traditional  stick  framing
methods, is now being expanded to two other Major Markets.

                                        6

<PAGE> 7

   The Company's operations in Major Markets contributed approximately 35.0%  of
the  Company's  sales  in  1997, compared to 32.2%  in  1996,  and  the  Company
anticipates  that this percentage will continue to increase in  1998.   For  the
four  Major Market programs initiated in 1997, total 1997 sales increased  34.0%
over 1996 total sales.

  Conventional Markets
  --------------------

   In  addition  to Major Markets, the Company operates 70 building  centers  in
smaller,  or  Conventional  Markets.   The Company's  Conventional  Markets  are
generally less populous and the majority of customers are generally the  smaller
single-family residential contractor, the R&R contractor and the project  DIYer.
The  Company believes that competition in the building supply industry  is  more
limited  in  Conventional Markets compared to Major Markets but  that  there  is
generally less opportunity for growth within a given Conventional Market.

   Since  the  beginning of 1997, the Company has completed remerchandising  and
remarketing  programs ("Resets") in 13 building centers located in  Conventional
Markets.   The  Company has also completed Resets in six sales and  distribution
facilities  in Major Markets.  These programs include upgrading of the  showroom
layout  and  product  presentation, expansion of product  assortment  (typically
adding  a  significant number of stock keeping units, or "SKUs") with  the  view
towards  achieving  category  dominance in the market,  and  increasing  service
offerings  such  as installed sales, tool rental, specialized delivery  services
and  additional in-store sales specialists.  The Company is currently evaluating
the results of these Resets and if favorable the Company will expand the program
to   additional  Conventional  Markets  as  resources  permit.   The   Company's
Manufacturing  operations  also provide significant support  for  the  Company's
Conventional  Market sales activities, particularly through the  manufacture  of
pre-hung interior and exterior doors.

  Wickes Direct/Wickes International
  ----------------------------------

  In an effort to increase its business to non-traditional customers and out-of-
market trade areas, the Company formed the Commercial Sales Division in 1993 and
added  a national builder accounts sales team in 1996.  In late 1996, these  two
groups   were  combined  to  form  "Wickes  Direct,"  the  Company's   wholesale
distribution  channel,  which  is  also  operated  internationally  as   "Wickes
International."   Through  Wickes Direct, the Company focuses  on  large  volume
orders  from both commercial and residential builders, much of which  is  to  be
shipped  directly from the manufacturer to the customer's job-site.  In addition
to  lumber and building materials, Wickes Direct provides estimating, logistics,
and  material  delivery services to large customers anywhere in the  world,  all
accomplished  without the need for a physical facility close  to  the  customer.
Wickes  Direct also provides leads and sales support to the Company's sales  and
distribution facilities.

                                        7   

<PAGE> 8

  Manufacturing Operations
  ------------------------

    The  Company  owns  and  operates  ten  component  manufacturing  facilities
(including  seven located in Major Markets) that supply the Company's  customers
with  higher-margin, value-added products such as pre-hung interior and exterior
doors,  framed  wall  panels,  and  roof and floor  trusses.   These  operations
supplied  approximately 48% of the pre-hung interior doors,  65%  of  the  metal
exterior  doors,  38% of the roof and floor truss systems and 56%  of  the  wall
panel systems sold by the Company in 1997.

   The Company also has agreements with two third party manufacturers to provide
manufactured  housing components in two Major Markets exclusively  or  primarily
for the Company.

   The  Company  believes  that these pre-assembled  products  improve  customer
service and provide an attractive alternative to job-site construction as  labor
costs  rise.  As  resources  permit,  the  Company  also  plans  to  expand  its
manufacturing  facilities  to  supply  a  greater  number  of  its   sales   and
distribution facilities with these value added products.

  Recent Restructurings and Operational Efforts
  ---------------------------------------------

  Beginning with the formulation and adoption of the 1995 Plan in late 1995, the
Company  has  continuously reviewed its assets and operations in the  effort  to
eliminate under-performing facilities and the corresponding overhead, to  reduce
other costs, and to focus its efforts on its target customers.

   At  the  time  the 1995 Plan was adopted, the Company operated  126  building
centers  and 12 component manufacturing facilities.  From that time through  the
end  of  1997,  the  Company  closed or consolidated  21  building  centers  and
consolidated  three component manufacturing facilities.  During this  time,  the
Company  also devoted substantial efforts to control costs.  Beginning in  early
1997, the Company made a determination to increase expenditures related to sales
efforts  and  to  initiate  the Major Market programs  and  Conventional  Market
remerchandising programs discussed above.  See "Item 7. Management's  Discussion
and Analysis of Financial Condition and Results of Operations."

   In the fourth quarter of 1997, the Company announced and began to implement a
plan  to  streamline  operations further and to  focus  on  the  Company's  core
professional  builder  business.  The principal feature  of  this  plan  was  to
eliminate  costs  and  programs  not directly  related  to  the  Company's  core
operations.   In furtherance of this plan, the Company has, among other  things,
ceased  its  involvement in utilities marketing and internet  operations  (other
than  those  directly  related  to its building  supply  business)  through  the
transfer  of these programs to an affiliate.  Also, the Company transferred  its
mortgage  and construction lending program to an unrelated financial institution
that  intends  to  expand this program on a no-cost basis to  the  Company.   In

                                        8

<PAGE> 9

addition,  in  the fourth quarter of 1997, the Company wrote-off  its  remaining
investment  in  Russian logging and sawmill operations.  For the  twelve  months
ended December 27, 1997, the Company's results of operations included more  than
$1.5  million in selling, general and administrative ("SG&A") costs  related  to
these  discontinued  non-core  programs  and  $1.5  million  in  losses  on  its
investment in the Russian operations.

   Also in the fourth quarter of 1997, the Company completed a further review of
its  administrative  structure and reorganized certain functions  for  increased
efficiency,  resulting  in  an  estimated $2.0 million  in  future  annual  SG&A
savings.

   On  February 23, 1998, the Company announced that, in addition to the actions
begun  in  the  fourth quarter of 1997, it had closed eight additional  building
centers and two component manufacturing facilities, planned to sell two building
centers  located  in  Eastern  Iowa,  and had implemented  further  headquarters
staffing  and expense reductions.  The Company anticipates that the headquarters
reductions, together with those implemented in the fourth quarter of 1997,  will
result  in  overall  reduction in administrative  staffing  levels  of  25%  and
approximately  $6.0 million of future annual SG&A savings.  The Company  expects
to  record a $5.4 million restructuring charge in the first quarter of 1998 with
respect to the 1998 Plan.


Markets
-------

   The  Company operates in 20 Major Markets, which are served by 31  sales  and
distribution  facilities  and seven manufacturing facilities.       The  Company
also  operates  70  building  centers in less populous  areas,  or  Conventional
Markets.  For a further discussion of Major Markets and Conventional Markets see
"Business Strategy".

   The  following table sets forth the distribution of the Company's  sales  and
distribution facilities located in Conventional and Major Markets by size of the
local market:

<TABLE>
<CAPTION>

                                     Number of Sales and
             Owner-Occupied        Distribution Facilities
              Households in     Conventional       Major
           Thirty Mile Radius      Markets        Markets
           ------------------   ------------      -------
           <S>                      <C>            <C>
           Under 50,000              21              0
           50,000-100,000            19              7
           100,000-250,000           25              9
           250,000-500,000            3             10
           500,000 and over           2              5
                                     --             --
           Total                     70             31

</TABLE>

                                        9

<PAGE> 10

  Geographical Distribution
  -------------------------

   The  Company's 101 sales and distribution facilities are located in 23 states
in  the  Midwest, Northeast and South.  The Company believes that its geographic
diversity generally lessens the impact of economic downturns and adverse weather
conditions in any one of the Company's geographic markets.  The following  table
sets  forth  certain information with respect to the locations of the  Company's
sales and distribution facilities as of March 24, 1998:

<TABLE>
<CAPTION>

       Midwest                        Northeast                         South
       -------                        ---------                         -----
             Number of                       Number of                       Number of
             Sales and                       Sales and                       Sales and
            Distribution                    Distribution                    Distribution
State        Facilities         State        Facilities         State        Facilities
-----       ------------        -----       ------------        -----       ------------
<S>             <C>             <C>             <C>             <C>             <C>
Michigan         30             Pennsylvania      6             Alabama           3
Wisconsin        14             New York          3             Kentucky          3
Indiana          11             Maine             2             Texas             2
Ohio              5             New Hampshire     2             Florida           2
Illinois          4             Connecticut       1             Mississippi       2
Colorado          3             New Jersey        1             North Carolina    2
                 --             Massachusetts     1             Georgia           1
                                Maryland          1             Louisiana         1
                                                 --             Tennessee         1
                                                                                 --
Total            67             Total            17             Total            17
                 ==                              ==                              ==
</TABLE>


  Facilities Opened, Closed and Consolidated
  ------------------------------------------

   During  1997,  the Company opened six new sales and distribution  facilities.
Five  new  facilities were in Major Markets: Aurora, Illinois; Colorado  Springs
and  Denver,  Colorado; Denton, North Carolina (Raleigh/Charlotte area);  and  a
second  facility in Pensacola, Florida.  The new Niles, Michigan building center
is  in  a Conventional market.  A new component manufacturing facility was  also
opened   in  Denver,  Colorado.   During  1997,  the  Company  also  closed   or
consolidated   three  sales  and  distribution  facilities  and  two   component
manufacturing  facilities,  all  but one sales and  distribution  facility  were
located in Conventional Markets.

   During  the  first two months of 1998, as part of the 1998 Plan, the  Company
closed  or  consolidated eight building centers and two component  manufacturing
facilities, all in Conventional Markets.  For a further description of the  1998
Plan  see  "Business  Strategy" and Note 14 of Notes to  Consolidated  Financial
Statements included elsewhere herein.

                                       10

<PAGE> 11

  The following table reconciles the number of sales and distribution facilities
and  component manufacturing facilities operated by the Company at December  31,
1994,  December 30, 1995, December 28, 1996, December 27, 1997,  and  March  24,
1998.

<TABLE>
<CAPTION>
                                    Sales and          Component
                                   Distribution      Manufacturing
                                    Facilities         Facilities
                                   ------------       ------------
<S>                                    <C>                <C>
As of December 31, 1994                130                 10

  Acquisitions                           5                  2
  Expansion                              2                 --
  Closings                             (10)                --
  Consolidations                       (17)                (1)
                                       ----               ----
As of December 30, 1995                110                 11
                                                   
  Expansion                             --                  1
  Consolidations                        (2)                --
                                       ----               ----
As of December 28, 1996                108                 12

  Expansion                              6                  1
  Closings                              (2)                --
  Consolidations                        (1)                (2)
                                       ----               ----
As of December 27, 1997                111                 11
                                  
  Expansion                             --                  1
  Sold                                  (2)                --
  Closings                              (7)                (2)
  Consolidations                        (1)                --
                                       ----               ----
As of March 24, 1998                   101                 10

</TABLE>

Customers
---------

   The Company has a broad base of customers, with no single customer accounting
for  more than 1.0% of net sales in 1997.  In 1997, 87% (the same percent as  in
1996)  of  the Company's sales were on trade credit, with the remaining  13%  as
cash and credit card transactions.

  Home Builders
  -------------

  The Company's primary customers are single-family home builders.  In 1997, all
home builder customers accounted for 57% of the Company's sales, the same as  in
1996.  The majority of the Company's sales to these customers are of high-volume
commodity  items,  such as lumber, building materials, and manufactured  housing

                                       11

<PAGE> 12

components.   The  Company  will continue its intense  focus  on  this  customer
segment, offering new products and developing additional services to meet  their
needs.

  Commercial / Multi-family  Contractors
  --------------------------------------

   Wickes  Direct  and Wickes International concentrate on sales  to  commercial
contractors  (primarily  those  engaged  in  constructing  motels,  restaurants,
nursing  homes  and extended stay facilities, and similar projects)  and  multi-
family  residential contractors.  Sales to these customers are made on a  direct
ship  basis  as well as through the Company's sales and distribution facilities.
In  1997,  sales to these customers accounted for more than 18% of the Company's
sales,  compared with 16% of the Company's sales in 1996.  As part of  the  1998
Plan, the Company has integrated the Wickes Direct domestic program more closely
with its other operations.

  Repair & Remodelers
  -------------------

  In 1997, R&R customers accounted for approximately 12% of the Company's sales,
the same as in 1996.  The R&R segment consists of a broad spectrum of customers,
from  part-time  handymen  to large, sophisticated business  enterprises.   Some
contractors  are involved exclusively with single product application,  such  as
roofing,  siding, or insulation, while some specialize in remodeling jobs,  such
as kitchen or bathroom remodeling or the construction of decks, garages, or full
room  additions.  The Company offers the product and project expertise,  special
order  capability,  design  assistance, and credit terms  to  serve  the  widely
varying needs of this diverse market.

  DIYers
  ------

   Sales  to DIYers (both project and convenience) represented about 13% of  the
Company's sales in 1997, compared with 15% in 1996.  The percentage of sales  to
DIYers varies widely from one sales and distribution facility to another,  based
primarily  on  the degree of local competition from warehouse  and  home  center
retailers.   The  Company's sales and distribution facilities do  not  have  the
large  showrooms  or broad product assortments of the major  warehouse  or  home
center  retailers.  For small purchases, the showrooms serve  as  a  convenience
rather  than a destination store.  Consequently, the Company's focus on consumer
business  is  toward  project DIYers -- customers  who  are  involved  in  major
projects  such as building decks or storage buildings or remodeling kitchens  or
baths.


Sales and Marketing
-------------------

   The  Company employs a number of marketing initiatives designed  to  increase
sales and to support the Company's goal of being the dominant force in the  sale
of  lumber and other building materials to building professionals in each of its
markets.

                                       12

<PAGE> 13

  Building Professional
  ---------------------

   The  Company seeks to establish long-term relationships with its professional
customers  by providing a higher level of customer assistance and services  than
are  generally  available  at  independently-owned  building  centers  or  large
warehouse and home center retailers.

    The  Company  provides  a  wide  range  of  customer  services  to  building
professionals,  including expert assistance, technical  support,  trade  credit,
scheduled  job-site  delivery, manufacture of customized  components,  installed
sales,  specialized equipment, logistical and material flow design and  support,
and  other  special services.  Building professionals generally select  building
material  suppliers based on price, job-site delivery, quality  and  breadth  of
product lines, reliability of inventory levels, and the availability of credit.

   For a description of the programs designed for and the emphasis being applied
to  professional  customers in Major Markets, see " Business  Strategy  -  Major
Markets."

   In  both  Conventional and Major Markets, the Company's primary link  to  the
building  professional  market is its experienced sales  staff.   The  Company's
approximately 400 outside sales representatives ("OSR's") are commissioned sales
persons  who  work  with  professional customers on an  on-going  basis  at  the
contractors' job sites and offices.  Typically, a sale to a contractor  is  made
through a competitive bid prepared by the OSR from plans made available  by  the
contractor.   From these plans, the OSR or sales support associate prepares  and
provides  to  the  contractor a bid and a complete list, or "take-off,"  of  the
materials required to complete the project.  Preparation of a take-off  requires
significant time and effort by trained and experienced sales representatives and
support associates.  The Company has equipped most of its sales and distribution
facilities  with  a  computerized system which significantly  reduces  the  time
required  to prepare take-offs.  In addition, this system instantly recalculates
changes  and  automatically  includes add-on products  needed  to  complete  the
project, which generally improves productivity, sales and margins.  The  ability
of the sales representative to provide prompt and accurate take-offs, to arrange
timely  deliveries, and to provide additional products or services as  necessary
is  an  important element of the Company's marketing strategy and  distinguishes
the Company from many of its competitors.

   The  Company  currently employs 148 specialty salespeople in  its  sales  and
distribution  facilities  who  provide expert advice  to  customers  in  project
design,  product  selection and applications.  A staff of 60 trained  R&R  sales
specialists  offer  special  services  to R&R  contractors  equivalent  to  that
accorded  home builders.  In many of its sales and distribution facilities,  the
Company  maintains separate R&R offices.  The Company currently has kitchen  and
bath  departments  in most of its sales and distribution facilities  and  has  a
staff  of  80  kitchen  and  bath  specialists.   The  Company  also  employs  8
specialists in other departments.

                                       13

<PAGE> 14

   The  Company  extends  credit, generally due on the 10th  day  of  the  month
following the sale, to qualified and approved contractors.  Approximately 87% of
the  Company's  sales  during  1997  were on  credit,  with  the  remaining  13%
consisting of cash or credit card sales, including approximately 1% of sales  on
the  Company's private label credit card.  Overall credit policy is  established
at the corporate level, with each sales and distribution facility manager and  a
district  credit  manager responsible for the administration and  collection  of
accounts.   The accounts are generally not collateralized, except to the  extent
the  Company is able to take advantage of the favorable materialmen's lien  laws
of  most  states applicable in the case of delinquent accounts.   The  Company's
credit  practices  have resulted in a bad debt expense of .2%  of  total  credit
sales  in 1997, compared with .1% in 1996, .8% in 1995 and .3% in both 1994  and
1993.   Much  of  the  increase in 1995 was attributable to  the  conversion  of
accounts  at  the Gerrity Lumber facilities, acquired in 1994, to the  Company's
credit practices.

   The  Company owns and leases a fleet of 770 delivery vehicles as of  February
28,  1998,  to  provide job-site deliveries of building materials  scheduled  to
coordinate  with  project  progress, including 68  specialized  delivery  trucks
equipped for roof-top or second story delivery, 90 specialized millwork delivery
vehicles,  and  28 vehicles designed for installation of blown insulation.   The
Company  will continue to add these specialized vehicles to other markets  where
there is sufficient demand for such services.

   Over  the past several years, the Company has installed and will continue  to
increase its base of computer-aided design hardware and software.  These systems
include   design  and  take-off  software  for  kitchens,  decks,  outbuildings,
additions  and houses.  With these tools, sales representatives and  specialists
are able to provide customers with professional-quality plans more efficiently.

  In 1997, the Company rolled out an equipment rental program at 25 of its sales
and  distribution  facilities.   This program  rents  specialized,  professional
quality  tools  and equipment to customers in need of equipment  for  unique  or
short term projects.

   The  Company's internet site on the world wide web provides information about
Wickes' services and products, facilitates doing business with customers, allows
customers to look up their own transactional information, and features extensive
links to suppliers and other industry references.  The home page can be found at
the internet address:  http://www.wickes.com/.

   The Company advertises in trade journals and produces specialized direct mail
promotional  materials  designed  to attract  specific  target  customers.   The
Company does some select newspaper advertising, which may include circulars  and
run-of-press advertisements.  It also has numerous product displays in its sales
and distribution facilities to highlight special products and services.

                                       14

<PAGE> 15

   To  increase  customer  loyalty and strengthen  customer  relationships,  the
Company, in many cases with vendor support, sponsors or participates in numerous
special  marketing activities, such as trade show events, informational  product
seminars, various outings, and professional builder trips.

  DIYers
  ------

   Most sales and distribution facilities, primarily building centers located in
Conventional Markets, also pursue sales to project DIYers through their staff of
specially-trained   inside  sales  representatives   and   specialists.    These
representatives  provide professional advice to consumers for  home  improvement
projects  and  assist  these  customers  in  designing  specific  projects  with
sophisticated  computer  design software.  The sales  representatives  can  also
provide  a  comprehensive  list of materials and  detailed  drawings  to  assist
customers  in  completing  their projects.  The Company  believes  that  project
DIYers are attracted to its sales and distribution facilities by this high level
of service.

   The  Company's  showrooms  generally feature product  presentations  such  as
kitchen and bath and door and window displays.  The showrooms are regularly  re-
merchandised  to  reflect  product  trends,  service  improvements  and   market
requirements.  During 1997, the Company made significant investments to  improve
the appearance and merchandising of 19 of its sales and distribution facilities'
showrooms.   For the first six Resets, completed prior to the end of  the  third
quarter  of 1997, the average sales increase over 1996 has exceeded 15%.   While
the  Company has no current Resets in progress, additional showroom improvements
are scheduled for 1998 and future years.

   While the Company's product offerings in hardlines are generally more limited
than its consumer-oriented competitors, the Company stocks a larger selection of
commodity  products and offers a special order program for custom  or  specialty
products.   The Company emphasizes project packages, which include all materials
and  detailed  instructions for the assembly of the larger  projects  frequently
undertaken by project DIYers.


Products
--------

  The Company stocks a wide variety of building products, totaling approximately
63,000  SKUs  Company-wide, to provide its customers with the  quality  products
needed to build, remodel and repair residential and commercial properties.  Each
of  the  Company's sales and distribution facilities tailors its product mix  to
meet  the  demands of its local market.  Approximately 5,500 SKUs  is  typically
stocked in each sales and distribution facility.

                                       15

<PAGE> 16

   The Company separates its products into four groups:  Commodity Wood Products
-- lumber, plywood, treated lumber, sheathing, wood siding and specialty lumber;
Building  Products -- roofing, vinyl siding, doors, windows, mouldings,  drywall
and  insulation;  Hardlines  -- hardware products,  paint,  tools,  kitchen  and
bathroom  cabinets, plumbing products, electrical products, light  fixtures  and
floor  coverings; and Manufactured Housing Components -- roof and floor trusses,
and  interior  and  exterior  wall panels.  Commodity  Wood  Products,  Building
Products,  Hardlines, and Manufactured Housing Components represented 45%,  35%,
11%  and  9%  of  the  Company's  sales for 1997  and  45%,  36%,  12%  and  7%,
respectively, of sales for 1996.

  In addition to stock items, the Company also fills special orders, either from
its  own  manufacturing  facilities or through outside suppliers.   The  Company
believes  that  these  special order services are  extremely  important  to  its
customers,  particularly the building professional.  In 1997, approximately  31%
of the Company's sales were of special order items, compared with 30% in 1996.


Manufacturing
-------------

   The  Company  owns and operates ten component manufacturing  facilities  that
supply  the  Company's  sales and distribution facilities with  certain  higher-
margin,  value-added products such as pre-hung doors, framed  wall  panels,  and
roof  and  floor trusses.  These manufacturing facilities enable the Company  to
serve  the  needs  of  its professional customers for such quality,  custom-made
products.  In 1997 the door manufacturing operations supply approximately 48% of
the  pre-hung  interior doors and 65% of the metal exterior doors  sold  by  the
Company.  The truss manufacturing operations supplied approximately 38%  of  the
total  roof  and floor truss systems and    56% of the total wall panel  systems
sold  by  the  Company  in 1997.  The Company believes that these  pre-assembled
products improve customer service and provide an attractive alternative to  job-
site  construction  as  labor costs rise.  The Company  has  also  entered  into
arrangements  with  two manufacturers that exclusively or  primarily  serve  the
Company  and  as resources permit the Company plans to expand its  manufacturing
facilities  to take advantage of these increased opportunities and to  supply  a
greater number of its sales and distribution facilities with these products.


Suppliers and Purchasing
------------------------

   The Company purchases its products from numerous vendors.  The great majority
of  commodity  items  are  purchased  directly  from  manufacturers,  while  the
remaining   products  are  purchased  from  a  combination   of   manufacturers,
wholesalers and other intermediaries.  No single vendor accounted for 5% of  the
Company's  purchases in 1997, and the Company is not dependent upon  any  single
vendor  for any material product.  The Company believes that alternative sources
of supply are readily available for substantially all of the products it offers.

                                       16

<PAGE> 17

   The great majority of the Company's commodity purchases are made on the basis
of  individual purchase orders rather than supply contracts.  In certain product
lines,  though,  the  Company  has negotiated some advantageous  volume  pricing
agreements for a portion of the product line's purchases.  Because approximately
32%  of the Company's average inventory consists of commodity wood products  and
manufactured  housing  components, which are subject to  price  volatility,  the
Company attempts to match its inventory levels to short-term demand in order  to
minimize  its  exposure  to price fluctuations.  The Company  has  developed  an
effective  coordinated  purchasing program that  allows  it  to  minimize  costs
through  volume  purchases,  and  the  Company  believes  that  it  has  greater
purchasing  power than many of its smaller, local independent competitors.   The
Company  seeks  to develop close relationships with its suppliers  in  order  to
obtain favorable pricing and service arrangements.

   The Company's computerized inventory tracking and forecasting system, as part
of  its  inventory  replenishment  system, is designed  to  track  and  maintain
appropriate  levels of products at each sales and distribution facility.   These
systems  have  increased the Company's operating efficiencies  by  providing  an
automated inventory replenishment system.

   The  Company  has  active rail sidings at 47 of its  sales  and  distribution
facilities enabling suppliers to ship products purchased by the Company directly
to these facilities by rail.  The Company also utilizes two distribution centers
owned   by   third   parties,  located  in  Chicago,  Illinois  and   Allentown,
Pennsylvania,  through  which approximately 4% of the  Company's  wood  products
inventory is delivered.


Seasonality
-----------

   Historically,  the  Company's  first quarter and,  occasionally,  its  fourth
quarter are adversely affected by weather patterns in the Midwest and Northeast,
which  result in seasonal decreases in levels of construction activity in  these
areas.   The extent of such decreases in activity is a function of the  severity
of  winter  conditions.  See "Item 7.  Management's Discussion and  Analysis  of
Financial Condition and Results of Operations."


Competition
-----------

   The  building material industry is highly competitive.  Due to the fragmented
nature  of  this  industry,  the  Company's competitive  environment  varies  by
location and by customer segment.  Reduced levels of construction activity have,
in  the  past,  resulted  in intense price competition among  building  material
suppliers that has at times adversely affected the Company's gross margins.

                                       17

<PAGE> 18
         
   Within  the  professional market, the Company competes primarily  with  local
independent  lumber  yards  and  regional and local  building  material  chains.
Building  professionals generally select building material  suppliers  based  on
price,  job-site delivery, quality and breadth of product lines, reliability  of
inventory levels, and the availability of credit.  The Company believes that  it
competes favorably on each of these bases.  The Company believes that it  has  a
significant competitive advantage in rural markets and small communities,  where
it  competes  primarily with local independent lumber yards,  regional  building
material  chains, and, to a lesser extent, with national building center  chains
and  warehouse and home center retailers, which generally locate their units  in
more  densely populated areas.  In Major Markets the Company believes  that  its
total  package  of services and ability to serve the large builder  provides  it
with a competitive advantage.


Environmental and Product Liability Matters
-------------------------------------------

   Many of the sales and distribution facilities presently and formerly operated
by  the Company contained underground petroleum storage tanks.  Other than tanks
at  one  acquired  facility, recently installed and in  compliance  with  modern
standards,  all such tanks known to the Company located on facilities  owned  or
operated  by  the  Company have been filled, removed, or  are  scheduled  to  be
removed in accordance with applicable environmental laws in effect at the  time.
As  a  result  of reviews made in connection with the sale or possible  sale  of
certain  facilities, the Company has found petroleum contamination of  soil  and
ground  water  on  several of these sites and has taken  remedial  actions  with
respect  thereto.   In addition, it is possible that similar  contamination  may
exist  on  properties no longer owned or operated by the Company the remediation
of  which  the  Company could, under certain circumstances, be held responsible.
Since 1988, the Company has incurred approximately $2.0 million of costs, net of
insurance and regulatory recoveries, with respect to the filling or removing  of
underground  storage tanks and related investigatory and remedial  actions,  and
the  Company  has  reserved $0.5 million towards the cost  of  these  and  other
environmental  and product liability matters.  Sales of excess  properties  over
the past three years have resulted in only minimal findings.

   Although the Company has not expended material amounts in the past nine years
with  respect to the foregoing, and expenditures in the most recent three  years
have  been significantly reduced, there can be no assurances that these  matters
will  not give rise to additional compliance and other costs that could  have  a
material adverse effect on the Company.

   For  information concerning certain litigation concerning products containing
asbestos, see "Item 3.  Legal Proceedings."

                                       18

<PAGE> 19

Employees
---------

   As  of  February 28, 1998, the Company had approximately 3,766 employees,  of
whom 3,270 were employed on a full-time basis.  The Company believes that it has
maintained  favorable  relations  with its employees.   None  of  the  Company's
employees are covered by a collective bargaining agreement.


Trademarks and Patents
----------------------

   The  Company  has no material patents, trademarks, licenses,  franchises,  or
concessions other than the name "Wickes Lumber" and the "Flying W" trademark.


Item 2.  PROPERTIES.
--------------------

   The Company's 101 sales and distribution facilities are located in 23 states,
with  67 in the Midwest, 17 in the Northeast and 17 in the South.  See "Item  1.
Business - Markets."  The Company believes that its facilities generally are  in
good condition and will meet the Company's needs in the foreseeable future.

   The  Company's Conventional Market building centers generally  consist  of  a
showroom averaging 9,600 square feet and covered storage averaging 38,500 square
feet.   The Company's sales and distribution facilities located in Major Markets
tend  to  be  more  specialized.  Included among these facilities  are  two  WCS
facilities, which stock little or no commodity wood products and therefore  have
no  traditional lumber storage yard, as well as facilities that stock  primarily
commodity  wood products and therefore have no showroom, as well  as  facilities
similar  to  the  Company's Conventional Market building centers.   The  Company
upgraded  or  Reset  19  of  its showrooms in 1997.   The  Company's  sales  and
distribution  facilities are situated on properties ranging  from  1.0  to  28.2
acres  and  averaging  9.4  acres.   The Company  also  operates  ten  component
manufacturing facilities which have an average of 40,000 square feet under  roof
on 7.1 acres.

   The  Company owns 84 of its sales and distribution facilities and 82  of  the
sites  on  which  such  facilities are located.   The  remaining  17  sales  and
distribution facilities and 19 sites are leased.  As of December 27,  1997,  the
Company  also held for sale the assets of nine closed facilities and  one  other
property with an aggregate book value of $3.5 million.  In addition to its sales
and  distribution  facilities, the Company operates ten component  manufacturing
plants.   Four  of  these plants are located on sales and distribution  facility
sites.   Of  the remaining six plants, four are on owned sites and  two  are  on
leased properties.

   The  Company also owns or leases a large fleet of trucks and other  vehicles,
including  vehicles  specialized for the delivery of certain  of  the  Company's

                                       19

<PAGE> 20

products.   As of February 28, 1998, the fleet included approximately 129  heavy
duty  trucks, 68 of which provide roof-top or second story delivery, 523  medium
duty  trucks,  516  light  duty  trucks  and  automobiles,  571  forklifts,   90
specialized  millwork  delivery vehicles, and 28 vehicles  equipped  to  install
blown insulation.

   The  Company  leases  its  corporate headquarters,  a  portion  of  which  is
subleased, located at 706 North Deerpath Drive in Vernon Hills, Illinois.


Item 3.  LEGAL PROCEEDINGS.
---------------------------

   On  November 3, 1995, a complaint styled Morris Wolfson v. J. Steven  Wilson,
                                            ------------------------------------
Kenneth  M.  Kirschner, Albert Ernest, Jr., Claudia B. Slacik,  Jon  F.  Hanson,
--------------------------------------------------------------------------------
Robert  E.  Mulcahy, Frederick H. Schultz, Wickes Lumber Company  and  Riverside
--------------------------------------------------------------------------------
Group,  Inc. was filed in the Court of Chancery of the State of Delaware in  and
------------
for  New  Castle  County (C.A. No. 14678).  As amended, this complaint  alleges,
among  other  things, that the sale by the Company in 1996 of 2  million  newly-
issued  shares  of  the  Company's Common Stock to Riverside  Group,  Inc.,  the
Company's largest stockholder, was unfair and constituted a waste of assets  and
that  the Company's directors in connection with the transaction breached  their
fiduciary duties.  The amended complaint, among other things, seeks on behalf of
a  purported class of the Company's shareholders equitable relief or  to  obtain
damages  with respect to, the transaction.  See "Item 1.  Business - Background"
and  Note  9  of  Notes to Consolidated Financial Statements included  elsewhere
herein.  There was no activity in this suit in 1997.

   The  Company is one of many defendants in approximately 100 actions, each  of
which  seeks  unspecified damages, brought since 1993 in various Michigan  state
courts against manufacturers and building material retailers by individuals  who
claim to have suffered injuries from products containing asbestos.  Each of  the
plaintiffs in these actions is represented by one of two law firms.  The Company
is  aggressively defending these actions and does not believe that these actions
will have a material adverse effect on the Company.

   The  Company  is  involved  in  various other  legal  proceedings  which  are
incidental  to the conduct of its business.  The Company does not  believe  that
any of these proceedings will have a material adverse effect on the Company.

   The  Company's assessment of the matters described in this Item 3  and  other
forward-looking  statements ("Forward-Looking Statements") in  this  report  are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform  Act  of 1995 and are inherently subject to uncertainty.  The outcome  of
the matters described in this Item 3 may differ from the Company's assessment of
these  matters as a result of a number of factors including but not limited  to:
matters  unknown  to  the  Company at the present time,  development  of  losses

                                       20

<PAGE> 21

materially  different  from the Company's experience, the Company's  ability  to
prevail  against  its  insurers with respect to coverage  issues  to  date,  the
financial ability of those insurers and other persons from whom the Company  may
be entitled to indemnity, and the unpredictability of matters in litigation.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
-------------------------------------------------------------

  None.
                                       21

<PAGE> 22
                                        
                                        
                                        
                                     PART II
                                        
Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
----------------------------------------------------------
         STOCKHOLDER MATTERS.
         --------------------

   The  Company's Common Stock is authorized for trading on the NASDAQ  National
Market  System under the trading symbol "WIKS."  As of February 28, 1998,  there
were  7,682,666  shares outstanding held by approximately  153  shareholders  of
record.  There was also outstanding 499,768 shares of Class B Non-Voting  Common
Stock, which are not publicly traded.

  The following table sets forth for the periods indicated the high and low last
sale  prices  for the Company's Common Stock as reported on the NASDAQ  National
Market System.  Prices do not include retail markups, markdowns or commissions.

<TABLE>
<CAPTION>

          Three Months Ended              High           Low
          ------------------              ----           ---
          Fiscal 1997
          -----------
          <S>                            <C>           <C>
          March 29                       $6.50         $3.125
          June 28                         6.25          3.00
          September 27                    6.25          4.00
          December 27                     5.125         3.00

          Fiscal 1996
          -----------
          March 30                       $6.625        $4.00
          June 29                         5.50          4.75
          September 28                    5.25          4.00
          December 28                     4.875         3.375

</TABLE>

  The Company has not declared or paid any dividends on Common Stock in the past
three  years and has no present intention to pay cash dividends on Common  Stock
in  the  foreseeable future.  The Company's revolving credit facility  prohibits
cash dividends on Common Stock, and the trust indenture related to the Company's
11-5/8% senior subordinated notes restricts cash dividends on Common Stock.  See
"Item  7.   Management's  Discussion and Analysis  of  Financial  Condition  and
Results of Operations."


Item 6.  SELECTED FINANCIAL DATA.
---------------------------------

   The following table presents selected financial data derived from the audited
consolidated financial statements of the Company for each of the five  years  in
the  period  ended  December 27, 1997.  The following  selected  financial  data
should  be  read  in  conjunction  with "Item 7.   Management's  Discussion  and
Analysis  of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and Notes thereto contained elsewhere in this report.
                                        
                                        
                                       22

<PAGE> 23
                                        
                                        
                                          WICKES INC. AND SUBSIDIARIES
                                      SELECTED CONSOLIDATED FINANCIAL DATA
                                (in thousands, except ratios and per share data)

                                        
<TABLE>
<CAPTION>
                                                     Dec. 27,        Dec. 28,        Dec. 30,        Dec.  31,      Dec. 25,
                                                       1997            1996            1995            1994           1993
                                                       ----            ----            ----            ----           ----
<S>                                                  <C>            <C>              <C>             <C>           <C>          
                           
Income Statement Data:
 Net sales                                           $884,082        $848,535        $972,612         $986,872      $846,842
 Gross profit                                         203,026         189,463         220,812          233,831       206,558
 Selling, general and administrative expense          185,385         162,329         194,629          194,586       174,889
 Depreciation, goodwill and trademark amortization      4,863           5,367           5,882            4,543         5,782
 Provision for doubtful accounts                        1,707           1,067           6,482            2,457         1,942
 Other operating income                                10,689           6,796           5,831            6,772         4,575
 Income from operations before restructuring
  and unusual items                                    21,760          27,496          19,650           39,017        28,520
 Restructuring and unusual items (1)                     (559)            745          17,798            2,000            53
 Income from operations                                22,319          26,751           1,852           37,017        28,467
 Interest expense (2)                                  21,417          21,750          24,351           21,663        20,298
 Equity in loss of affiliated company                   1,516           3,183           3,543               --            --
 (Loss) income before income taxes, and
  extraordinary gain                                     (614)          1,818         (26,042)          15,354         8,169
 Income taxes                                           1,099           1,010           1,353            1,660         1,227
 Deferred tax (benefit)/expense(3)                       (153)            300         (11,796)         (14,360)           --
 (Loss) income before extraordinary gain               (1,560)            508         (15,599)          28,054         6,942
 Extraordinary gain (4)                                    --              --              --               --         1,241
 Net (loss) income                                     (1,560)            508         (15,599)          28,054         8,183
 Dividends applicable to redeemable
  preferred stock                                          --              --              --               --          (872)
 (Loss) income applicable to common shares             (1,560)            508         (15,599)          28,054         7,311
 Ratio of earnings to fixed charges (5)                  0.98            1.07              --             1.63          1.37
 Interest coverage (6)                                   1.36            1.61            0.35             2.09          2.08
 Adjusted interest coverage (7)                          1.33            1.65            1.15             2.19          2.09

Per Share Data: (8)
 Basic and diluted (loss) earnings per common
  share (per pro forma share in 1993) (9)              ($0.19)          $0.07          ($2.54)           $4.57         $1.34
 Weighted average common shares outstanding
  (pro forma in 1993) (9)                           8,188,420       7,221,082       6,150,619        6,154,770     6,099,985

Operating and Other Data:
 EBITDA (10)                                          $27,182         $32,118         $ 7,734          $41,560       $34,249
 Adjusted EBITDA (11)                                  26,623          32,863          25,532           43,560        34,302
 Cash interest expense (12)                            19,791          19,969          22,266           19,882        16,435
 Depreciation and amortization                          4,863           5,367           5,882            4,543         5,782
 Deferred financing cost amortization                   1,401           1,781           2,085            1,781         1,840
 Capital expenditures                                   7,758           2,893           7,538            9,760         4,289
 Same store sales growth (13)                             4.7%           (6.4%)          (3.8%)           14.1%         14.3%
 Sales and distribution facilities open
  at end of period                                        111             108             110              130           124
 Net cash (used in) provided by operating activities  (24,554)         18,710          15,862            1,331       (21,269)
 Net cash provided by (used in) investing activities    6,040           2,410         (10,277)         (41,777)        5,323
 Net cash provided by (used in) financing activities   16,660         (19,274)         (7,535)          42,480        15,944

Balance Sheet data (at period end):
 Working capital                                     $134,459        $116,771        $139,622         $163,511      $104,089
 Total assets                                         283,352         272,842         302,515          319,573       248,015
 Total long-term debt, less current maturities        193,061         176,376         205,221          211,139       167,883
 Total stockholders' equity                            24,001          25,499          15,129           30,146         1,818
                                        
</TABLE>                                        
                                       23

<PAGE> 24
                                        
                                        
                                        
                  Notes to Selected Consolidated Financial Data

  (1)      In  1997,  the Company recorded a $0.6 million credit as a result  of
     finalizing  the 1995 Restructuring Plan.  In 1995, the Company  recorded  a
     $17.8  million charge relating to a plan to reduce the number of  operating
     building  centers,  the  corresponding overhead to  support  those  centers
     identified, strengthen its capital structure, and other unusual items.  The
     1995  restructuring  plan was adjusted in 1996 by an additional  charge  of
     $0.7 million. In 1994, the Company recorded a $2.0 million charge primarily
     as a result of its headquarters cost reduction plan.

  (2)      Interest  expense  includes cash interest  expense,  amortization  of
     deferred  financing  costs  and accretion of note  discount  (See  note  12
     below).

  (3)      The  deferred  tax benefit recorded in 1994 includes a $21.0  million
     reduction of the Company's valuation allowance for deferred tax assets.

  (4)      During  the  year  ended December 25, 1993, the Company  completed  a
     recapitalization plan (the "Recapitalization Plan").  As a  result  of  the
     Recapitalization Plan, the early extinguishment of debt, the retirement  of
     supplemental  retirement  benefits and the expensing  of  unamortized  1988
     Acquisition  costs,  the  Company recorded an extraordinary  gain  of  $1.2
     million, net of income taxes of $0.2 million.

  (5)      For  purposes  of  computing this ratio, earnings consist  of  income
     (loss)  before  income taxes, extraordinary gain and fixed charges.   Fixed
     charges   consist  of  cash  interest  expense,  amortization  of  deferred
     financing  costs, and a portion of operating lease rental expense  that  is
     representative  of  the interest factor attributable to  interest  expense.
     Such earnings were insufficient to cover fixed charges by $26.0 million for
     the year ended December 30, 1995.

  (6)      For purposes of computing this ratio, earnings consists of EBITDA (as
     defined  in  Note 10 below), which is divided by cash interest expense  (as
     defined in Note 12 below).

  (7)      For  purposes of computing this ratio, earnings consists of  Adjusted
     EBITDA  (as  defined in Note 11 below), which is divided by  cash  interest
     expense (as defined in Note 12 below).

  (8)      All per share data reflect a 21.73-for-1 stock split declared October
     1993, immediately prior to the consummation of the Recapitalization Plan.

  (9)      For  1993,  earnings per share is based upon the pro forma  6,099,985
     weighted average number of common shares outstanding giving effect  to  the
     Recapitalization  Plan.  1993 historical earnings  per  common  share  were
     $2.55, based on 2,871,091 weighted average common shares outstanding.  Both
     historical and weighted average common shares have been adjusted  per  SFAS
     128 requirements.

                                       24

<PAGE> 25
         
(10)       EBITDA  represents  income (loss) before  income taxes, extraordinary
     gain, equity in loss of affiliated company, interest  expense, depreciation
     and amortization.  EBITDA is not presented herein as an alternative measure
     of operating  results but rather to provide additional information  related
     to  debt  service   capability, and  does  not  represent  cash  flow  from
     operations, as defined by GAAP.

(11)       Adjusted  EBITDA  represents  EBITDA  (as  defined in  Note 10 above)
     adjusted to exclude restructuring and unusual items.

(12)       Cash interest expense consists of interest expense less  amortization
     of deferred financing costs and  accretion  of  subordinated note discount.
     The following table details interest expense,  cash interest  expense,  and
     interest paid for each of the five years ended December 27, 1997.
<TABLE>
<CAPTION>
                                   1997     1996     1995     1994     1993
                                 -------  -------  -------  -------  -------
<S>                              <C>      <C>      <C>      <C>      <C>
Interest expense                 $21,417  $21,750  $24,351  $21,663  $20,298
Less:
 Amortization of deferred
     financing costs               1,401    1,781    2,085    1,781    1,840
 Accretion of note discount           --       --       --       --    2,023
                                 -------  -------  -------  -------  -------
Cash interest expense             20,016   19,969   22,266   19,882   16,435

Decrease (increase) in
  accrued interest                  (225)     403      557   (1,105)   8,863
                                 -------  -------  -------  -------  -------
Interest paid                    $19,791  $20,372  $22,823  $18,777  $25,298
                                 -------  -------  -------  -------  -------

13)  For  1997,  same  store  data reflects average sales  from  107  sales  and
     distribution  facilities and other facilities that  were  operated  by  the
     company  throughout  1997  and 1996.  In 1996,  the  company  includes  101
     building  centers and other facilities in same store data  averages.   Same
     store  data  for 1995 reflects average sales from 101 building centers  and
     other  facilities.  The sixteen lumber centers closed on December 29,  1995
     were  excluded from the 1995 same store figures, and two centers that  were
     consolidated  with another Wickes center, in early 1995, were  included  in
     1995  same store results.  For 1994 same store data reflects average  sales
     from  the  122 building centers and other facilities that were operated  by
     the  Company  throughout 1994 and 1993.  1993 data  reflects  124  building
     centers  and  other facilities operated throughout the period 1992  through
     1993.
         
                                       25

<PAGE> 26


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

General
-------

   The  following  table sets forth, for the periods indicated,  the  percentage
relationship  to net sales of certain expense and income items.  The  table  and
subsequent  discussion  should  be  read  in  conjunction  with  the   financial
statements and notes thereto appearing elsewhere herein.


</TABLE>
<TABLE>
<CAPTION>
                                                      Years Ended
                                                      -----------

                                              Dec. 27,  Dec. 28,  Dec. 30,
                                                1997      1996      1995
                                              --------  --------  --------
     <S>                                      <C>       <C>       <C>
     Net sales                                 100.0%    100.0%    100.0%
     Gross profit                               23.0      22.3      22.7
     Selling, general and administrative
       expense                                  21.0      19.1      20.0
     Depreciation, goodwill and trademark
       amortization                               .6        .6        .6
     Provision for doubtful accounts              .2        .1        .7
     Restructuring and unusual items             (.1)       .1       1.8
     Other operating income                     (1.2)      (.8)      (.6)
     Income from operations                      2.5       3.2        .2

</TABLE>

   The  Company's operations, as well as those of the building material industry
generally,  have reflected substantial fluctuations from period to period  as  a
consequence  of  various  factors, including levels  of  construction  activity,
general  regional  and local economic conditions, weather, prices  of  commodity
wood  products, interest rates and the availability of credit, all of which  are
cyclical  in nature.  The Company anticipates that fluctuations from  period  to
period  will  continue in the future.  Because a substantial percentage  of  the
Company's  sales  are attributable to building professionals, certain  of  these
factors may have a more significant impact on the Company than on companies more
heavily focused on consumers.

   The  Company's  first  quarter  and, occasionally,  its  fourth  quarter  are
adversely  affected  by  weather patterns in the Midwest  and  Northeast,  which
result  in seasonal decreases in levels of construction activity in these areas.
The extent of such decreases in activity is a function of the severity of winter
conditions.   While the Company experienced relatively mild weather  during  the
first  quarter  of 1995, record setting snow falls throughout  the  Midwest  and
Northeast  in January of 1996, adversely affected construction activity  in  the
first  quarter  of  1996.   Weather conditions in 1997  were  relatively  normal
throughout the year.

                                       26

<PAGE> 27

   The following table contains selected unaudited quarterly financial data  for
the years ended December 27, 1997, December 28, 1996, and December 30, 1995.

                            QUARTERLY FINANCIAL DATA
                            ------------------------            
                               Three Months Ended
              (in millions, except per share data and percentages)
<TABLE>
<CAPTION>
                                                           Basic and Diluted
                        Net Sales as a                       Net Earnings/
                         % of Annual    Gross    Net Income   (Loss) per
              Net Sales   Net Sales     Profit    /(Loss)    Common Share
              ---------   ---------   ---------   ---------   ------------
<S>           <C>         <C>         <C>         <C>         <C>
1997
  March 29      $159.3       18.0%      $36.9       $(5.2)       $(.63)
  June 28        237.3       26.9        54.3         1.3          .16
  September 27   266.3       30.1        60.3         1.8          .22
  December 27    221.1       25.0        51.5         0.5          .06

1996
  March 30      $152.5       18.0%      $34.9       $(6.2)      $(1.00)
  June 29        228.8       27.0        51.2         1.9          .29
  September 28   255.6       30.1        55.5         2.8          .35
  December 28    211.7       24.9        47.9         2.0          .24

1995
  April 1       $191.7       19.7%      $45.6       $(4.6)       $(.75)
  July 1         272.8       28.0        63.9         2.5          .40
  September 30   284.5       29.3        62.9         1.9          .31
  December 30    223.6       23.0        48.4       (15.4)       (2.50)
</TABLE>

   Net income/(loss) in the fourth quarter of 1995 was negatively affected by  a
$17.8 million charge for restructuring and unusual items.  In 1997 and 1996  the
Company  recorded  a  benefit of $0.6 million and  a  charge  of  $0.7  million,
respectively, as restructuring and unusual items.  For additional information on
the  restructuring and unusual items charge see Note 3 of Notes to  Consolidated
Financial  Statements  included elsewhere herein.   In  addition,  in  1996  the
Company  received insurance premium adjustments from a former insurance  carrier
in  the amount of $2.2 million and reversed an accrual of $1.5 million for other
disputed insurance premiums with this carrier.  Accordingly selling, general and
administrative  expenses were reduced by $1.0 million  during  the  first  three
quarters  of  1996 and by $2.7 million in the fourth quarter of  1996.   In  the
fourth quarter of 1997, the Company recorded a gain of $4.5 million on the  sale
of  six pieces of real estate.  In the fourth quarter of 1996, only three pieces
of  real  estate were sold with a net gain of $0.6 million.  Gains or losses  on
the sale of real estate are recorded under other operating income.

                                       27 

<PAGE> 28

   The Company has historically generated approximately 15% to 20% of its annual
revenues during the first quarter of each year, and the Company has historically
recorded a significant net loss for this quarter.  As a result of these seasonal
factors, the Company's inventories and receivables reach peak levels during  the
second  and  third quarters and are generally lower during the first and  fourth
quarters, depending on sales volume and lumber prices.

   This  Item  7  contains statements which, to the extent  that  they  are  not
recitations of historical fact, constitute Forward Looking Statements  that  are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform  Act  of  1995 and are inherently subject to uncertainty.   A  number  of
important  factors could cause the Company's business and financial results  and
financial condition to be materially different from those stated in the  Forward
Looking  Statements.  Those factors include but are not limited to the  seasonal
and  cyclical  factors  discussed above in this Item 7  and  elsewhere  in  this
report,  the effects of the Company's substantial leverage and competition,  the
success of the Company's operational efforts, and the matters discussed in  Note
8 of the Notes to Consolidated Financial Statement included elsewhere herein.


1997 Compared with 1996
-----------------------

  Net Sales
  ---------

   Net  sales for 1997 increased $35.5 million, or 4.2%, to $884.1 million  from
$848.5 million in 1996.  Sales for all facilities operated throughout both years
("same  store")  increased 4.7%.  During 1997, the Company  experienced  a  4.1%
increase  in  same store sales to its primary customer segment, the professional
home  builder, and a 16.4% increase in same store sales to commercial  builders.
Consumer same store sales were down 6.8% for the year.

   The Company believes that the following matters contributed to the 1997 sales
increase.   Throughout most of 1997, the Company operated three more  sales  and
distribution  facilities  than  it operated  during  1996.   Also,  the  Company
believes that showroom Resets at 19 of its sales and distribution facilities  in
1997, sales training, and big builder initiatives also had a positive effect  on
sales.  Finally, weather conditions in the Northeast during the first quarter of
1997  were  more  favorable compared with the record snowfalls recorded  in  the
first  quarter of 1996.  The Company believes that inflation/deflation in lumber
prices had negligible impact on total sales.

  In February 1998, the Company announced that it had closed an additional eight
facilities  and  intended  to sell its two locations  in  Iowa.   See  "Item  1.
Business  -  Business Strategy".  These facilities contributed an  aggregate  of
$46.5 million to 1997 sales.

                                       28

<PAGE> 29

   Total  housing starts in the United States were relatively unchanged in  1997
compared  with 1996.  Starts in the Company's primary geographical  market,  the
Midwest,   decreased  approximately 5.5%.  The Company's two other  geographical
markets,  the Northeast and South, experienced increases in 1997 housing  starts
of 3.5% and 1.3%, respectively.  Nationally, single family housing starts, which
generate  the  majority  of  the  Company's  sales  to  building  professionals,
experienced a decrease of 2.4%, from 1.16 million starts in 1996 to 1.13 million
starts in 1997.

  Gross Profit
  ------------

   Gross  profit increased $13.6 million to 23.0% of net sales for 1997 compared
with 22.3% of net sales for 1996.  The increase in gross profit is primarily due
to  increases in sales, reductions in product costs, and increases in  sales  of
manufactured products.

   The  increase in gross profit as a percent of sales is primarily attributable
to  reduced cost of sales as a result of a concerted effort to obtain  the  best
pricing  available.   The  Company also expanded  its  sales  of  higher  margin
internally  manufactured products by approximately 27% from 1996  to  1997,  and
experienced  a  reduction  in  costs associated with  physical  inventory  count
adjustments.   These  increases were partially offset by  increased  percent  of
sales  attributable to professional builders and an increase in the  percent  of
sales  attributable to lower margin commodity lumber products.  The  percent  of
Company sales attributable to professional builders increased to 86.5% for  1997
compared  with 84.7% in 1996.  The Company anticipates that its continued  focus
on  the  professional builder will create additional pressure  on  gross  profit
margins.

  Selling, General, and Administrative Expense
  --------------------------------------------

   In 1997, selling, general, and administrative expense ("SG&A") increased as a
percent  of  net  sales  to 21.0% compared with 19.1%  of  net  sales  in  1996,
primarily  as  a  result  of the Company's increase in  sales  and  distribution
facility  employees  in an effort to increase sales and market  share,  expenses
associated  with  showroom remerchandisings in 19 facilities in  1997,  expenses
associated  with expansion of the Company's Major Market program  in  1997,  and
insurance recoveries recorded in 1996 with respect to prior years.

   Compared  to 1996, on a same store basis, the average number of employees  at
the   Company's  sales  and  distribution  facilities  in  1997   increased   by
approximately  5%.   The Company also experienced an increase  in  salaries  and
wages in its non-core operations.  Both were major factors in the 1.0% increase,
as  a  percentage  of  sales,  of  the Company's salaries,  wages  and  employee
benefits.   The Company also experienced increases as a percentage of  sales  in
travel, office supplies, professional and marketing expenses.

                                       29

<PAGE> 30

   During  1997,  the  Company  Reset the showrooms of  13  Conventional  Market
building  centers and six Major Market sales and distribution facilities.   Also
during  1997,  the  Company continued its efforts to expand  its  Major  Markets
program.  See "Item 1. Business - Business Strategy".  Expenses associated  with
these  Resets  and expansion of the Major Markets program totaled  approximately
$1.8  million in 1997 and accounted for approximately $1.3 million of  the  SG&A
increase.

   In  1996, the Company recorded $3.7 million of insurance recoveries for prior
years'  casualty  insurance programs.  During 1997, the  Company  recorded  $0.3
million in prior year insurance recoveries.

   In October 1997, the Company announced plans to streamline operations and  to
focus  on  core  operations.   In  accordance  with  these  plans,  the  Company
discontinued  or  sold non-core operations that contributed  approximately  $1.5
million  of  SG&A  during 1997.  In addition, the Company effected  headquarters
staffing reductions beginning in October 1997, and increased the amount of these
reductions pursuant to a determination announced in February 1998.  The  Company
expects  these  headquarters reductions to result in  approximately  $6  million
annually  in future SG&A savings.  Also, the Company announced in February  1998
that it had closed eight additional underperforming building centers and planned
to  sell its two Iowa building centers.  For further information, including  the
charge  expected to be taken by the Company in the first quarter  of  1998,  see
"Item  1. Business - Business Strategy" and Note 14 of the Notes to Consolidated
Financial Statement included elsewhere herein.

  Depreciation, Goodwill and Trademark Amortization
  -------------------------------------------------

  Depreciation, goodwill and trademark amortization costs decreased $0.5 million
in  1997 compared with 1996.  The primary reason for this decrease is that  most
of  the  Company-owned delivery vehicles were fully depreciated in 1997.   Since
1993  the  Company's new vehicles have been obtained primarily through operating
leases.

  Provision for Doubtful Accounts
  -------------------------------

   The  Company  extends  credit, generally due on the 10th  day  of  the  month
following  the  sale,  to  qualified and approved  contractors.   Provision  for
doubtful accounts increased to $1.7 million or 0.2% of sales for 1997 from  $1.1
million  or  0.1% of sales for 1996.  Historically the Company's  provision  for
doubtful accounts averages approximately 0.3% of sales.  The results achieved in
1996  were a result of increased efforts to collect previously reserved accounts
receivable,  especially  those attributable to the  Gerrity  Lumber  acquisition
centers.

                                       30

<PAGE> 31


  Restructuring and Unusual Items
  -------------------------------

   During 1997 the Company completed its 1995 Plan.  As a result, it recorded  a
reduction in accrued costs and a benefit to restructuring and unusual charges of
approximately $2.1 million.  This benefit was partially offset by a $1.5 million
restructuring  charge for severance and postemployment benefits and  anticipated
losses  on the disposal of discontinued non-core programs and related reductions
in  headquarters staffing which was announced by the Company in October of 1997.
The  non-core programs affected by these reductions included the sale or closing
of  the  Company's  mortgage lending, utilities marketing, and internet  service
programs  not  directly related to the building supply business.  See  "Item  1.
Business  -  Business Strategy".  The company expects to record a  $5.4  million
restructuring  charge  in the first quarter of 1998 with respect  to  facilities
closings and staffing reductions announced in February 1998. See Note 14 of  the
Notes to Consolidated Financial Statement included elsewhere herein.

  Other Operating Income
  ----------------------

   Other operating income increased to $10.7 million in 1997, compared with $6.8
million  in  1996.  The increase resulted from gains reported  on  the  sale  of
facilities  and excess equipment of approximately $6.3 million, an  increase  of
$4.3  million  from  the $2.0 million recorded in 1996.  The approximately  $0.7
million  gain  on  the  sale  of  the Company's headquarters  in  Vernon  Hills,
Illinois, is being amortized over a 15-year period consistent with the Company's
lease  of  the  facility.  This increase was partially offset by a $0.6  million
gain  recorded in 1996 as a result of the difference between insured replacement
cost  and  book value as a result of a fire and storm damage at several  of  the
Company's building centers.

  Interest Expense
  ----------------

   Interest  expense decreased to $21.4 million in 1997 from  $21.8  million  in
1996, as a result of a decrease in Company's overall effective borrowing rate of
21  basis  points,  partially offset by an increase in average outstanding  debt
under  the Company's revolving line of credit of $4.5 million.  The increase  in
average  outstanding  debt  was due primarily to  reduced  net  cash  flow  from
operating activities and increased investment in property, plant and equipment.

  Equity in Loss of Affiliated Company
  ------------------------------------

  During 1997, the Company's equity in the losses of Riverside International LLC
was  $1.5 million compared with $3.2 million during 1996.  The $1.5 million loss
in  1997  reduced the Company's net investment to zero.  See Notes 2 and  13  of
Notes to Consolidated Financial Statements included elsewhere herein.

                                      31

<PAGE>32

  Provision for Income Taxes
  --------------------------

   In  1997  the  Company recorded current income tax expense  of  $1.1  million
compared  with  $1.0  million in 1996.  Current income tax provisions  for  both
years consist of state and local tax liabilities.

   A  deferred  tax benefit of $0.2 million was also recorded  for  1997.   This
compares with a deferred tax expense of $0.3 million in 1996.  The 1997  benefit
results  from the loss before income taxes and the establishment of  a  deferred
tax  asset, in accordance with FAS 109.  Management has determined (based on the
Company's  positive earnings growth from 1992 through 1994 and its  expectations
for  the future) that operating income of the Company will more likely than  not
be  sufficient to recognize fully these net deferred tax assets.  See Note 11 of
Notes to Consolidated Financial Statements included elsewhere herein.

  Net Income
  ----------

   The Company experienced a net loss of $1.6 million in 1997 compared with  net
income  of  $0.5  million  in  1996, a change  of  $2.1  million.   The  primary
components  of  this  change consist of an increase in  SG&A  expense  of  $23.1
million  and  an  increase in provision for doubtful accounts of  $0.6  million.
These unfavorable changes were partially offset by increases in gross profit  of
$13.6  million and other operating income of $3.9 million, as well as  decreases
in   losses  attributable  to  Riverside  International  LLC  of  $1.7  million,
restructuring and unusual items of $1.3 million, and depreciation, goodwill  and
trademark amortization of $0.5 million.

   Had  the  program  eliminations, facilities closings and  expense  reductions
announced  in  October  1997 and February 1998 been  implemented  prior  to  the
beginning  of  1997, the Company estimates that 1997 pro forma net income  would
have been $6.0 million, before the $6.9 million estimated charge with respect to
these restructuring activities.  See "Item 1. Business - Business Strategy"  and
Note 14 of Notes to Consolidated Financial Statements included elsewhere herein.


1996 Compared with 1995
-----------------------

  Net Sales
  ---------
   Net sales for 1996 decreased $124.1 million, or 12.8%, to $848.5 million from
$972.6  million  in 1995.  Same store sales decreased 6.4%.   During  1996,  the
Company  experienced a 2.1% decrease in same store sales to its primary customer
segment, the professional home builder, and a 3.2% increase in same store  sales
to commercial builders.

                                      32

<PAGE> 33

   The reduction in the number of under-performing building centers pursuant  to
the  restructuring plan committed to in December of 1995 was the major cause  of
the  1996  total  sales decline.  Pursuant to this plan, the Company  closed  or
consolidated  16 building centers in December 1995 and two during 1996.   During
1995, these closed or consolidated building centers contributed an aggregate  of
$86.7 million to total net sales.

   Severe  weather conditions in the first quarter of 1996, together  with  mild
weather  in the first quarter of 1995, and a 17.5% decrease in same store  sales
staff  as  part of the Company's efforts to better align its costs to its  sales
volume,  were  the  major  factors contributing to the  1996  same  store  sales
decline.   The  decrease in same store sales occurred most  heavily  during  the
first  nine  months of 1996.  For this period, same store sales were down  8.8%,
while  fourth quarter same store sales were up slightly from the fourth  quarter
of 1995.

   Total  housing starts in the United States increased 9.6% in 1996, and starts
in   the  Company's  primary  markets,  the  Midwest  and  Northeast,  increased
approximately 10.6% and 11.2%, respectively.  Nationally, single family  housing
starts,  which  generate  the  majority  of  the  Company's  sales  to  building
professionals, experienced an increase of 7.8% in 1996, from 1.07 million starts
in  1995 to 1.16 million starts in 1996.  In 1996 inflation in lumber prices had
a negligible effect on sales.

  Gross Profit
  ------------

   Gross  profit decreased $31.3 million to 22.3% of net sales for 1996 compared
with  22.7% of net sales for 1995.  The primary reason for the decrease in gross
profit was the reduction in total sales as a result of the Company's program  to
reduce the number of under-performing building centers.

   The  decline in gross profit as a percent of sales was primarily attributable
to  the  Company's  continued  emphasis on sales to  the  professional  builder,
resulting  in  an  increase in the portion of the Company's sales  comprised  of
lower margin commodity products, and to a lesser extent a program to reduce  the
amount  of  excess  and  slow moving inventory.  The percent  of  Company  sales
attributable to professional builders increased to 84.7% for 1996 compared  with
81.6%  in  1995,  and  sales  attributable  to  commodity  lumber  products  and
manufactured housing components increased from 50.6% in 1995 to 52.7%  in  1996.
The  decline  in gross profit as a percent of sales was partially  offset  by  a
decrease in the cost associated with physical inventory count adjustments.

  Selling, General, and Administrative Expense
  --------------------------------------------

  In 1996, SG&A decreased as a percent of net sales to 19.1% compared with 20.0%
of  net  sales  in  1995.  In 1996, the Company focused substantial  efforts  on
better   aligning  its  SG&A  expenses  to  sales  volumes  and  improving   the
productivity of its existing sales staff in order to improve profitability.   As

                                      33

<PAGE> 34

a  result  of  the  Company's 1995 Plan and several cost  reduction  initiatives
implemented  in the second half of 1995 and early 1996 the Company was  able  to
reduce  its  total SG&A expense by 16.6%, which is proportionately greater  than
the 12.8% total sales decline for the year.

  The Company experienced a decrease in salaries, wages and employee benefits as
a percent of sales by 0.5% from 1995 to 1996.  On a same store basis, the number
of  total  employees  at  the average building center during  1996  was  reduced
approximately  13% from 1995.  In 1996 the Company successfully  recovered  $3.7
million  in  previous  years' insurance costs.  The recoveries  associated  with
workers compensation insurance reduced salaries, wages and employee benefits  by
0.2%  of  sales, and the balance of the recoveries reduced property and casualty
insurance,  as  a  percent  of  sales, by 0.2%.  The  Company  also  experienced
decreases  from  1995 to 1996 as a percent of sales in postage,  communications,
office supplies, and marketing expenses which were partially offset by increased
delivery costs.

   In  addition  to  the reductions in SG&A directly related to building  center
closings, other cost reduction initiatives included a reduction in vehicles  and
other  equipment at continuing operations and various programs to  reduce  costs
associated with the corporate headquarters in Vernon Hills, Illinois.

  Depreciation, Goodwill and Trademark Amortization
  -------------------------------------------------

  Depreciation, goodwill and trademark amortization costs decreased $0.5 million
in  1996  compared  with 1995.  The primary reasons for  this  decrease  were  a
program initiated in early 1996 to reduce excess vehicles and equipment and  the
closing and sale of facilities in conjunction with the 1995 Plan.

  Provision for Doubtful Accounts
  -------------------------------

  Provision for doubtful accounts decreased to $1.1 million or 0.1% of sales for
1996  from  $6.5 million or 0.7% of sales for 1995.  Much of this  decrease  was
attributable to improved credit policies at centers acquired since  1994  and  a
more  selective customer base.  In addition, the Company significantly increased
its  efforts to collect previously reserved accounts receivable.  The  provision
attributable  to  the Gerrity Lumber acquisition centers improved  significantly
from 1995 to 1996.

  Restructuring and Unusual Items
  -------------------------------

  After extensive review of the 1995 Plan, and changes in business conditions in
certain  markets in which the Company operates, the Company made adjustments  to
the  1995 Plan and incurred other one time costs resulting in a net $0.7 million
charge  to results of operations in the fourth quarter of 1996 for restructuring
and  unusual items.  These adjustments included (i) the determination that three
of  the  centers  identified  in the 1995 Plan for  closure  will  remain  open,
resulting  in a $1.5 million credit to restructuring expense, (ii) the extension

                                       34

<PAGE> 35

of  the 1995 plan to include the closing (substantially completed by the end  of
1996)  of  two  building centers not previously included, resulting  in  a  $1.3
million  charge  for  the  write down of assets and  liabilities  to  their  net
realizable  value  and a $0.1 million charge for severance  and  post-employment
benefits,  (iii) a $1.1 million charge for impairment in the carrying  value  of
real estate held for sale at closed centers, and (iv) a $0.3 million credit with
respect to the resolution of a claim at below the reserved amount.

  Other Operating Income
  ----------------------

   Other operating income increased to $6.8 million in 1996 from $5.8 million in
1995.  The increase was the result of an increase in gains reported on the  sale
of  closed  facilities,  excess  vehicles and equipment  of  approximately  $1.9
million when compared with 1995.  The Company also reported a $0.6 million  gain
as  the result of the difference between insured replacement cost and book value
as  a  result  of  a fire and storm damage at several of the Company's  building
centers.  These gains were partially offset by decreases in services charges for
overdue  credit accounts of approximately $0.9 million and closed center  rental
income and other miscellaneous revenues of $0.7 million.

  Interest Expense
  ----------------

   Interest  expense decreased to $21.8 million in 1996 from  $24.4  million  in
1995.   This  decrease was the result of a decrease in average outstanding  debt
under  the Company's revolving line of credit of $26.8 million partially  offset
by  an increase in the overall effective borrowing rate of 22 basis points.  The
decrease  in  average  outstanding debt was due primarily to  cash  provided  by
operations,  proceeds from the sale of additional common stock (See  Note  9  of
Notes  to Consolidated Financial Statements included elsewhere herein)  and  the
proceeds from the sale of excess real estate and vehicles.

  Equity in Loss of Affiliated Company
  ------------------------------------

  During 1996, the Company's equity in the losses of Riverside International LLC
was  $3.2  million compared with equity in losses of $3.5 million  during  1995.
See  Note  2  of  Notes to Consolidated Financial Statements included  elsewhere
herein.

  Provision for Income Taxes
  --------------------------

   In  1996,  the  Company recorded current income tax expense of  $1.0  million
compared  with  $1.4  million in 1995.  The 1996 and  1995  current  income  tax
provisions consist of state and local tax liabilities.

                                       35

<PAGE> 36

   A  deferred  tax  expense of $0.3 million was also recorded  in  1996.   This
expense  results from temporary differences in the recognition of certain  items
of  revenue  and expense for tax and financial reporting purposes.   In  1995  a
deferred  tax  benefit  of  $11.8  million was recorded  primarily  due  to  the
recording  of a deferred tax asset as a result of the operating loss experienced
during  1995,  in accordance with FAS 109.  See Note 11 of Notes to Consolidated
Financial Statements included elsewhere herein.

  Net Income
  ----------

  Net income was $0.5 million in 1996, compared with a net loss of $15.6 million
in  1995,  an  improvement  of $16.1 million.  The primary  components  of  this
improvement  include a decrease in SG&A expense of $32.3 million, a decrease  in
restructuring  and  unusual  items  expense of  $17.1  million,  a  decrease  in
provision for doubtful accounts of $5.4 million, a decrease in interest  expense
of  $2.6  million,  and  an increase in other income  of  $1.0  million.   These
improvements  were  partially offset by a decrease  in  gross  profit  of  $31.3
million and an increase in the provision for income taxes of $11.8 million.


Statements of Financial Accounting Standards
--------------------------------------------

  Recently Issued Accounting Pronouncements
  -----------------------------------------

   Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income,"   establishes  standards for reporting  and  display  of  comprehensive
income and its components in a full set of general-purpose financial statements.
The  term comprehensive income is defined as the change in a business's  equity.
Comprehensive income includes net income as well as other components  (revenues,
expenses,  gains and losses) that under generally accepted accounting principals
are  excluded from net income but effect equity.  The statement is effective for
fiscal  years beginning after December 15, 1997.  The Company believes  adoption
of the statement will not have a material effect on its financial statements.

   Statement  of  Financial  Accounting Standards  No.  131,  "Disclosure  about
Segments of an Enterprise and Related Information," changes SFAS 14 by requiring
a  new  framework for segment reporting and includes the disclosure of financial
information  related  to each segment.  The statement is  effective  for  fiscal
years  beginning after December 15, 1997.  Since the Company currently  operates
as  one business segment, the adoption of this statement is not expected to have
an impact on the Company's financial statements.

                                       36

<PAGE> 37

Liquidity and Capital Resources
-------------------------------

   The Company's principal sources of working capital and liquidity are earnings
and  borrowings under its revolving credit facility.  The Company's primary need
for capital resources is to finance inventory and accounts receivable.

   In  1997,  net  cash used in operating activities amounted to $24.6  million.
This  compares  with cash provided by operating activities of $18.7  million  in
1996  and  $15.9 million in 1995.  The change of $43.3 million is primarily  the
result  of  increases  in accounts and notes receivable,  inventory,  and  other
assets, as well as decreased earnings after adjustment for non-cash expenses.  A
smaller  decrease in accounts payable and accrued liabilities than the  decrease
recorded  in 1996 helped to offset a portion of the change in net cash  used  in
operating activities.  The primary sources of cash for operating activities were
borrowings  on  the Company's revolving credit agreement and proceeds  from  the
sales of property, plant, and equipment.  The Company also increased its capital
expenditures in 1997 to $7.8 million from $2.9 million in 1996.

   Accounts  receivable at the end of 1997 were $10.6 million, or 14.9%,  higher
than  at  year  end  1996 primarily as a result of a $5.5 million  increase  in
December 1997 credit sales compared with December 1996, an increase in accounts
with  extended terms,  a  reduction  in  allowance  for doubtful  accounts,  and
a  receivable established  for  a property insurance loss.  Inventory at the end
of  December 1997  was $2.0 million higher than at the end of 1996, primarily as
a result  of an  increase in the  number of sales and distribution  centers. The
amount of the Company's accounts payable on any balance sheet date may vary from
the  average  accounts  payable  throughout  the  period  due  to  the timing of
payments  and  will tend  to  increase  or  decrease  in  conjunction  with   an
increase  or  decrease in inventory. The Company's use of funds of approximately
$3.4 million  in  other assets  was  primarily  the  purchase of $2.2 million in
rental  equipment  to  establish  rental  programs  at  25  of  its  sales   and
distribution  facilities and  $0.9  million in  additional transaction  costs to
amend and restate the Company's revolving credit agreement on April 11, 1997.

   In 1997, the Company completed two  significant  sale  leaseback transactions
that resulted in net proceeds of approximately $9.6 million, one of these  being
the Company's headquarters in Vernon Hills, Illinois.  The $0.7 million  gain on
the  sale of the  headquarters facility  is being amortized over the term of the
lease.

   The  Company's capital expenditures consist primarily of the construction  of
facilities  for  new  and  existing operations,  the  remodeling  of  sales  and
distribution facilities and component manufacturing facilities, and the purchase
of equipment and management information systems.  The Company may also from time
to  time  make  expenditures to establish or acquire  operations  to  expand  or
complement  its  existing  operations, especially in  its  major  markets.   The
Company  made $7.8 million in capital expenditures in 1997.  Approximately  $4.1
million was expended on capital improvements for new operations, showroom Resets
and expansion of manufacturing operations.  The Company expects to spend between

                                       37

<PAGE> 38

$4 million and $5 million in 1998.  These expenditures are expected to be funded
by the Company's borrowings and its internally generated cash flow.  At December
27, 1997, there were no material commitments for future capital expenditures.

  The Company maintained excess availability under its revolving credit facility
throughout 1997.  The Company's receivables and inventory typically increase  in
the  second  and  third quarters of the year due to higher  sales  in  the  peak
building  season.   In the first and second quarters of each year,  the  Company
typically reaches its peak utilization of its revolving credit facility  because
of  the  inventory build-up needed for the peak building season.  At  all  times
during  1997  the  Company was in full compliance with all of  the  requirements
contained  in its revolving credit agreement.  Availability under the  revolving
credit facility is limited, in the aggregate, to the lesser of $130 million  and
a  "borrowing  base  amount," which is the sum of (i) between  80%  and  85%  of
eligible  accounts  receivable  plus  (ii)  between  50%  and  60%  of  eligible
inventory.   At  February  28, 1998, the Company had outstanding  borrowings  of
$95.4  million  and  unused availability of $17.4 million  under  its  revolving
credit facility.

  A second amendment and restatement of the Company's revolving credit agreement
was  completed  on  April  11,  1997.  Among other things,  this  amendment  and
restatement  (i) extended the life of the facility to March 2001,  (ii)  reduced
the  interest rate premiums over LIBOR and over prime by 75 basis points,  (iii)
included  provisions  for further interest rate premium  reductions  if  certain
performance  levels  are  achieved, (iv) modified  certain  covenants,  and  (v)
provided  for  increases in the amount of capital expenditures  allowed  by  the
agreement  equal to the proceeds received from the sale of certain  excess  real
estate.  On December 24, 1997, the second amended and restated revolving  credit
agreement  was  amended to incorporate, among other things, a reduction  in  the
fixed  charge  and  net worth levels for the fourth quarter of  1997  and  first
quarter  of 1998.  A third amendment which, among other things, further  reduced
the  fixed  charge ratio requirement for the first three quarters  of  1998  and
allowed  the Company to proceed with its 1998 Restructuring plan, was  completed
in  March  of  1998.  See Note 14 of Notes to Consolidated Financial  Statements
included elsewhere herein.  The Company currently has excess availability  under
its  revolving credit facility and anticipates that funds provided by operations
and under this facility will be adequate for the Company's future needs.

   On  June  16,  1997 the Company entered into an interest rate swap  agreement
which  effectively fixed the interest rate at 8.11% (subject to  adjustments  in
certain  circumstances),  for  three years, on  $40  million  of  the  Company's
borrowings under its floating rate revolving line of credit.  This interest rate
swap is operative while the 30 day LIBOR borrowing rate remains below 6.7%.   At
February 27, 1998 the 30 day LIBOR borrowing rate was 5.69%.

                                       38

<PAGE> 39

   The  revolving  credit  facility  and the trust  indenture  relating  to  the
Company's  11-5/8%  Senior  Subordinated Notes  contain  certain  covenants  and
restrictions.  Among other things, the revolving credit facility prohibits  non-
stock  dividends,  certain investments and other "restricted  payments"  by  the
Company.  The trust indenture generally restricts non-stock dividends and  other
restricted  payments  by  the  Company to 50% of  "cumulative  consolidated  net
income," or if cumulative consolidated net income is a loss, minus 100% of  such
loss, of the Company earned subsequent to October 22, 1993, plus the proceeds of
the  sale of certain equity securities after such date.  In addition, the  trust
indenture  prohibits  non-stock dividends and limits other  restricted  payments
while (as at present) the Company's fixed charge coverage ratio is less than  or
equal to 2.0.


Net Operating Loss Carryforwards
--------------------------------

   At December 27, 1997, the Company and its subsidiaries had federal income tax
net  operating  loss carryforwards ("NOLs") of approximately $41  million.   The
NOLs  will  expire  in the years 2004 to 2012 if not previously  utilized.   The
Company's ability to use certain of the NOLs carried forward, approximately $7.5
million,  will  be  subject to the limitations of Section 382  of  the  Internal
Revenue  Code.   See  Note  11  of  Notes to Consolidated  Financial  Statements
included elsewhere herein.


Year 2000
---------

   In  response to the Year 2000 issue, the Company initiated a project in early
1997  to  identify, evaluate and implement changes to its existing  computerized
business systems.  The Company is addressing the issue through a combination  of
modifications  to  existing  programs and conversions  to  Year  2000  compliant
software.   In  addition,  the  Company is  communicating  with  its  customers,
suppliers,  and other service providers to determine whether they  are  actively
involved in projects to ensure that their products and business systems will  be
Year  2000 compliant.  If modifications and conversions by the Company and those
it  conducts business with are not made in a timely manner, the Year 2000  issue
may  have  a  material  adverse  effect on  the  Company's  business,  financial
condition,  and  results  of operations.  The total  cost  associated  with  the
required  modifications  is  not  expected  to  be  material  to  the  Company's
consolidated results of operations and financial position, and is being expensed
as incurred.

                                       39

<PAGE> 40

Item 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
--------------------------------------------------------
      MARKET RISK
      -----------

  Not applicable.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
-----------------------------------------------------

   Financial statements of the Company are set forth herein beginning on page F-
1.


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

  None.

                                        
                                        
                                       40

<PAGE> 41                                        
                                        
                                    PART III
                                    --------           
                                        
Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
-------------------------------------------------------------

  Information required by this Item is incorporated herein by reference from the
definitive  proxy statement to be filed in connection with the Company's  Annual
Meeting of Stockholders tentatively scheduled to be held on May 18, 1998.


Item 11.  EXECUTIVE COMPENSATION.
---------------------------------

  Information required by this Item is incorporated herein by reference from the
definitive  proxy statement to be filed in connection with the Company's  Annual
Meeting of Stockholders tentatively scheduled to be held on May 18, 1998.



Item    12.     SECURITY   OWNERSHIP   OF   CERTAIN   BENEFICIAL   OWNERS    AND
--------------------------------------------------------------------------------
MANAGEMENT.
-----------

  Information required by this Item is incorporated herein by reference from the
definitive  proxy statement to be filed in connection with the Company's  Annual
Meeting of Stockholders tentatively scheduled to be held on May 18, 1998.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
---------------------------------------------------------

  Information required by this Item is incorporated herein by reference from the
definitive  proxy statement to be filed in connection with the Company's  Annual
Meeting of Stockholders tentatively scheduled to be held on May 18, 1998.

                                        
                                       41

<PAGE> 42
                                        
                                     PART IV
                                     -------

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

(a)  List of Documents Filed as a Part of this Report:
------------------------------------------------------

(1)  Financial Statements:                               Page No.
--------------------------                               --------

Report of Independent Accountants                           F-1

Consolidated balance sheets as of December 27, 1997
  and December 28, 1996                                     F-2

Consolidated statements of operations for the years ended December 27,
  1997, December 28, 1996 and December 30, 1995             F-3

Consolidated statements of changes in common stockholders' equity for
  the years ended December 27, 1997, December 28, 1996 and
  December 30, 1995                                         F-4

Consolidated statements of cash flows for the years ended December 27,
  1997, December 28, 1996 and December 30, 1995             F-5

Notes to consolidated financial statements                  F-6


(2)  Financial Statement Schedules:
-----------------------------------

Schedule            Description
--------            -----------

II.                 Valuation and Qualifying Accounts       S-1


(3)  Exhibits
-------------

See Exhibit Index included elsewhere herein.


(b)  Reports on Form 8-K
------------------------

None
                                        
                                       42
                                        

<PAGE> 43

                                   SIGNATURES
                                   ----------

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                    WICKES INC.
                                    -----------


Date:  March 25, 1998           By: /s/ J. Steven Wilson
                                    --------------------
                                    J. Steven Wilson
                                    Chairman and Chief Executive Officer


     Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>

     Signature                  Title                    Date
     ---------                  -----                    ----
<S>                            <C>                                         <C>
/s/ J. Steven Wilson            Chairman and Chief Executive Officer        March 25, 1998
--------------------
J. Steven Wilson               (Principal Executive Officer), Director

/s/ Albert Ernest, Jr.          Director                                    March 25, 1998
----------------------
Albert Ernest, Jr.

/s/ Kenneth M. Kirschner        Vice Chairman                               March 25, 1998
------------------------
Kenneth M. Kirschner           (Principal Financial Officer), Director

/s/ William H. Luers            Director                                    March 25, 1998
--------------------
William H. Luers

/s/ Robert E. Mulcahy III       Director                                    March 25, 1998
-------------------------
Robert E. Mulcahy III

/s/ Frederick H. Schultz        Director                                    March 25, 1998
------------------------
Frederick H. Schultz

/s/ Claudia B. Slacik           Director                                    March 25, 1998
---------------------
Claudia B. Slacik

/s/ John M. Lawrence            Controller                                  March 25, 1998
--------------------
John M. Lawrence               (Principal Accounting Officer)

</TABLE>                                        
                                       43

<PAGE> F-1
                                        
                        REPORT OF INDEPENDENT ACCOUNTANTS
                        ---------------------------------


To The Stockholders and Board of Directors
Wickes Inc.


   We  have audited the accompanying consolidated balance sheets of Wickes  Inc.
and   Subsidiaries   (the  "Company",  formerly  Wickes  Lumber   Company)  and
Subsidiaries,  as of December 27, 1997 and December 28, 1996,  and  the  related
consolidated  statements of operations, changes in common  stockholders'  equity
and  cash flows for the years ended December 27, 1997 and December 28, 1996, and
December  30,  1995.  We have also audited the financial statement  schedule  of
valuation  and  qualifying accounts.  These financial statements  and  financial
statement  schedule  are  the responsibility of the Company's  management.   Our
responsibility is to express an opinion on these financial statements  and  this
financial statement schedule 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 consolidated 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 consolidated financial statements  referred  to  above
present fairly, in all material respects, the consolidated financial position of
Wickes Inc. and Subsidiaries as of December 27, 1997 and December 28, 1996,  and
the  consolidated results of their operations and cash flows for the years ended
December 27, 1997, December 28, 1996, and December 30, 1995, in conformity  with
generally  accepted  accounting principles.  In addition, in  our  opinion,  the
financial  statement schedule referred to above, when considered in relation  to
the  basic  financial  statements  taken as a whole,  presents  fairly,  in  all
material respects, the information required to be included therein.



                                        /s/ Coopers & Lybrand L.L.P.
                                        ----------------------------
                                        COOPERS & LYBRAND L.L.P.
Chicago, Illinois
                      

February 23, 1998
                                        
                                       F-1
                                        
<PAGE> F-2                                        
                                        
                          WICKES INC. AND SUBSIDIARIES
                                        
                           CONSOLIDATED BALANCE SHEETS
                                        
                     December 27, 1997 and December 28, 1996
                        (in thousands except share data)
                                        
<TABLE>
<CAPTION>

                                                       1997          1996
                                                    --------      --------
        ASSETS

<S>                                                <C>          <C>
Current assets:
 Cash                                             $      79      $   1,933
 Accounts receivable, less allowance
  for doubtful accounts of $3,765
  in 1997 and $4,289 in 1996                         81,788         71,210
 Notes Receivable                                     3,200             --
 Inventory                                          102,706        100,672
 Deferred tax asset                                   8,955         10,331
 Prepaid expenses                                     1,246            915
                                                   --------       --------
   Total current assets                             197,974        185,061
                                                   --------       --------
 Property, plant and equipment, net                  46,763         50,171
 Trademark (net of accumulated
  amortization of $10,274 in 1997
  and $10,052 in 1996)                                6,745          6,948
 Deferred tax asset                                  17,054         15,525
 Rental Equipment (net of
  depreciation of $176 in 1997)                       2,030             --
 Other assets (net of accumulated
  amortization of $8,053 in 1997
  and $6,487 in 1996)                                12,786         15,137
                                                   --------       --------
                                                  $ 283,352      $ 272,842
                                                   ========       ========

        LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
 Current maturities of long-term debt             $      46      $     133
 Accounts payable                                    41,190         41,039
 Accrued liabilities                                 22,279         27,118
                                                   --------       --------
   Total current liabilities                         63,515         68,290
                                                   --------       --------
Long-term debt, less current maturities             193,061        176,376
Other long-term liabilities                           2,775          2,677
Commitments and contingencies (Note 8)

Common stockholders' equity (Note 9):
 Preferred Stock (no shares issued)
 Common stock (8,176,205 shares issued
  and outstanding in 1997 and 8,159,498
  shares issued and outstanding in 1996)                 82             82
 Additional paid-in capital                          86,675         86,613
 Accumulated deficit                                (62,756)       (61,196)
                                                   --------       --------
   Total common stockholders' equity                 24,001         25,499
                                                   --------       --------
                                                  $ 283,352      $ 272,842
                                                   ========       ========
</TABLE>                                        
    The accompanying notes are an integral part of the consolidated financial
                                   statements.
                                        
                                       F-2
                                        

<PAGE> F-3
                          WICKES INC. AND SUBSIDIARIES
                                        
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                        
 For the Years Ended December 27, 1997, December 28, 1996, and December 30, 1995
                        (in thousands, except share data)
<TABLE>
<CAPTION>

                                        
                                         1997          1996          1995
                                       --------      --------      --------
<S>                                  <C>           <C>           <C>         
Net sales                            $  884,082    $  848,535    $  972,612
Cost of sales                           681,056       659,072       751,800
                                       --------      --------      --------    
  Gross profit                          203,026       189,463       220,812
                                       --------      --------      --------
Selling, general and
 administrative expense                 185,385       162,329       194,629
Depreciation, goodwill and
 trademark amortization                   4,863         5,367         5,882
Provision for doubtful accounts           1,707         1,067         6,482
Restructuring and unusual items            (559)          745        17,798
Other operating income                  (10,689)       (6,796)       (5,831)
                                       --------      --------      --------   
                                        180,707       162,712       218,960
                                       --------      --------      --------
  Income from operations                 22,319        26,751         1,852

Interest expense                         21,417        21,750        24,351
Equity in loss of affiliated company      1,516         3,183         3,543
                                       --------      --------      --------
  (Loss) income before income taxes        (614)        1,818       (26,042)

Provision (benefit) for income taxes:
  Current                                 1,099         1,010         1,353
  Deferred                                 (153)          300       (11,796)
                                       --------      --------      --------
      Net (loss) income              $   (1,560)   $      508    $  (15,599)
                                       ========      ========      ========
Basic and Diluted (loss)/income
 per common share                    $    (0.19)   $     0.07    $    (2.54)
                                       ========      ========      ========
Weighted average common
 shares - for basic                   8,168,257     7,207,761     6,135,610
                                      =========     =========     =========
Weighted average common
 shares - for diluted                 8,188,420     7,221,082     6,150,619
                                      =========     =========     =========

</TABLE>
                

    The accompanying notes are an integral part of the consolidated financial
                                   statements.
                                        
                                       F-3


<PAGE> F-4
                                        
                                        
                          WICKES INC. AND SUBSIDIARIES
                                        
        CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
                                        
 For the Years Ended December 30, 1995, December 28, 1996 and December 27, 1997
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                     Total
                                          Additional                 Common
                                 Common     Paid-in  Accumulated  Stockholders'
                                  Stock     Capital     Deficit      Equity
                               ---------  ----------  ----------  ------------
<S>                           <C>        <C>         <C>          <C>
Balance at January 1, 1995     $    61    $  76,190   $ (46,105)   $  30,146

Net loss                            --           --     (15,599)     (15,599)
Issuance of common stock, net       --          582          --          582
                               ---------  ----------  ----------  ------------
Balance at December 30, 1995        61       76,772     (61,704)      15,129

Net income                          --           --         508          508
Issuance of common stock, net       21        9,841          --        9,862
                               ---------  ----------  ----------  ------------
Balance at December 28, 1996        82       86,613     (61,196)      25,499

Net loss                            --           --      (1,560)      (1,560)
Issuance of common stock, net       --           62          --           62
                               ---------  ----------  ----------  ------------
Balance at December 27, 1997   $    82    $  86,675   $ (62,756)   $  24,001
                               =========  ==========  ==========  ============
</TABLE>



    The accompanying notes are an integral part of the consolidated financial
                                   statements.
                                        
                                       F-4


<PAGE> F-5
                          WICKES INC. AND SUBSIDIARIES
                                        
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                        
 For the Years Ended December 27, 1997, December 28, 1996, and December 30, 1995
                                 (in thousands)

<TABLE>
<CAPTION>                            
                                                              1997        1996        1995
                                                           ----------  ----------  ----------
<S>                                                       <C>         <C>         <C>
Cash flows from operating activities:
Net (loss)/income                                          $  (1,560)  $     508   $ (15,599)
 Adjustments to reconcile net (loss)/income to
    net cash (used in)/provided by operating activities:
 Equity in loss of affiliated company                          1,516       3,183       3,543
 Depreciation expense                                          4,395       4,904       5,391
 Amortization of trademark                                       222         222         222
 Amortization of goodwill                                        246         242         270
 Amortization of deferred financing costs                      1,401       1,781       2,085
 Provision for doubtful accounts                               1,707       1,067       6,482
 Gain on sale of assets                                       (6,180)       (940)        (71)
 Deferred tax (benefit)/provision                               (153)        300     (11,795)
 Changes in assets and liabilities net of effects
    from acquisitions:
  (Increase) decrease in accounts receivable                 (12,285)      9,515       9,355
  (Increase) decrease in notes receivable                     (3,200)         --          --
  (Increase) decrease in inventory                            (2,034)      9,967      20,697
  (Decrease) increase in accounts payable and                 (4,590)    (10,907)      2,377
     accrued liabilities
  Increase in deferred gain                                     (670)         --          --
  Increase in other assets                                    (3,369)     (1,132)     (7,095)
                                                           ----------  ----------  ----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES          (24,554)     18,710      15,862
                                                           ----------  ----------  ----------
Cash flows from investing activities:
 Purchases of property, plant and equipment                   (7,758)     (2,893)     (4,111)
 Payments for acquisitions                                        --          --      (8,686)
 Proceeds from sales of property, plant and equipment         13,798       5,303       2,520
                                                           ----------  ----------  ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES            6,040       2,410     (10,277)
                                                           ----------  ----------  ----------
Cash flows from financing activities:
 Net borrowing/(repayment) under revolving line of credit     16,732     (28,708)     (5,760)
 Reductions of note payable                                     (134)       (428)     (2,357)
 Net proceeds from issuance of common stock                       62       9,862         582
                                                           ----------  ----------  ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES           16,660     (19,274)     (7,535)
                                                           ----------  ----------  ----------
NET (DECREASE) INCREASE IN CASH                               (1,854)      1,846      (1,950)
Cash at beginning of period                                    1,933          87       2,037
                                                           ----------  ----------  ----------
CASH AT END OF PERIOD                                      $      79   $   1,933   $      87
                                                           ==========  ==========  ==========
Supplemental schedule of cash flow information:
 Interest paid                                             $  19,791   $  20,372   $  22,823
 Income taxes paid                                             1,344       1,518       1,987
Supplemental schedule of non-cash investing and
   financing activities:
 The Company purchased capital stock and assets 
    in conjunction with acquisitions made during the
    period.  In connection with these acquisitions,
    liabilities were assumed as follows:

     Fair value of assets acquired                                                 $  12,387
     Cash paid                                                                        (8,686)
                                                                                   ----------
       Liabilities assumed                                                         $   3,700
                                                                                   ==========
</TABLE>

    The accompanying notes are an integral part of the consolidated financial
                                   statements.

                                        F-5

<PAGE> F-6

1.  Description of Business
---------------------------

Wickes Inc. and Subsidiaries, formerly Wickes Lumber Company and Subsidiaries,
through its sales and  distribution  facilities, markets lumber, building
materials and services primarily  to professional contractors, repair and
remodelers and do-it-yourself home  owners, principally in the Midwest,
Northeast and Southern United  States.  Wickes  Inc.'s wholly-owned subsidiaries
are:  Lumber Trademark Company ("LTC"), a  holding company for the "Flying W"
trademark, and GLC Division, Inc. ("GLC"), which operates the Gerrity Lumber
business.


2.  Accounting Policies
-----------------------

Principles of Consolidation
---------------------------

The  consolidated  financial  statements  present  the  results  of  operations,
financial  position,  and  cash flows of Wickes Inc. and  all  its  wholly-owned
subsidiaries (the "Company").  All significant intercompany balances  have  been
eliminated.

Fiscal Year
-----------

The Company's fiscal year ends on the last Saturday in December.

Cash and Cash Equivalents
-------------------------

The  Company  considers all highly liquid investments with a  maturity  date  of
three months or less to be cash equivalents.

Accounts Receivable
-------------------

The  Company  extends credit primarily to qualified contractors.   The  accounts
receivable balance excludes consumer receivables, as such receivables  are  sold
on  a  nonrecourse basis.  The remaining accounts and notes receivable represent
credit  extended  to  professional  contractors  and  professional  repair   and
remodelers, generally on a non-collateralized basis.

Inventory
---------

Inventory  consists  principally of finished goods.  The  Company  utilizes  the
first-in,  first-out  (FIFO)  cost flow assumption for  valuing  its  inventory.
Inventory  is  valued at the lower of cost or market, but not in excess  of  net
realizable value.

                                        F-6
<PAGE> F-7

Property, Plant and Equipment
-----------------------------

Property,  plant and equipment are stated at cost and are depreciated under  the
straight-line  method.   Estimated lives used range from  15  to  39  years  for
buildings  and improvements and leasehold improvements.  Machinery and equipment
lives  range  from 3 to 10 years.  Expenditures for maintenance and repairs  are
charged  to  operations  as  incurred.  Gains and losses  from  dispositions  of
property,  plant,  and  equipment  are included  in  the  Company's  results  of
operations  as  other  operating income.  During 1997 the  Company  disposed  of
property  and  equipment for a net gain of $6,180,000, of which $5,989,000   was
from the sale of properties held for sale.

Rental Equipment
----------------

Rental  equipment  consists of hand tools and power equipment held  for  rental.
This equipment is depreciated under the straight line method over a 5 or 10 year
life.

Other Assets
------------

Other  assets  consist primarily of deferred financing costs and goodwill  which
are  being amortized on the straight line method, goodwill over 30 to  35  years
and  deferred  financing  costs over the expected  terms  of  the  related  debt
agreements.

The  Company's  investment in an international operation is recorded  under  the
equity method.  The Company's share of losses is reflected as equity in loss  of
affiliated company on the Consolidated Statements of Operations.  As of December
27,  1997  the  Company's investment has been reduced to zero and  there  is  no
obligation to make additional investments.

Amortization  expense  for  deferred financing costs is  reflected  as  interest
expense on the Company's Consolidated Statements of Operations.

Trademark
---------

The Company's "Flying W" trademark is being amortized over a 40-year period.

Accounts Payable
----------------

The Company includes outstanding checks in excess of in-transit cash in accounts
payable.   There  was $3,273,000 in outstanding checks in excess  of  in-transit
cash at December 27, 1997 and none at December 28, 1996.

                                        F-7

<PAGE> F-8

Postretirement Benefits Other Than Pensions
-------------------------------------------

The  Company  provides certain health and life insurance benefits  for  eligible
retirees  and  their dependents.  The Company accounts for the  costs  of  these
postretirement  benefits over the employees' working careers in accordance  with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting  for
Postretirement Benefits Other Than Pensions."

Postemployment Benefits
-----------------------

The  Company provides certain other postemployment benefits to qualified  former
or   inactive  employees.   The  Company  accounts  for  the  costs   of   these
postemployment benefits in the period when it is probable that a benefit will be
provided in accordance with Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits."

Income Taxes
------------

The  Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."  Tax provisions and
credits  are  recorded  at statutory rates for taxable  items  included  in  the
consolidated  statements of operations regardless of the period for  which  such
items  are reported for tax purposes.  Deferred income taxes are recognized  for
temporary differences between financial statement and income tax bases of assets
and  liabilities for which income tax benefits will be realized in future years.
Deferred tax assets are reduced by a valuation allowance when the Company cannot
make the determination that it is more likely than not that some portion of  the
related tax asset will be realized.

Earnings Per Common Share
-------------------------

Earnings  per  common  share  is  calculated in  accordance  with  Statement  of
Financial Accounting Standards No. 128, "Earnings Per Share."  Weighted  average
shares  outstanding have been adjusted for common shares underlying options  and
warrants.

Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------

The  preparation  of financial statements in conformity with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and contingent assets  and
liabilities at the date of the financial statements and the reported amounts  of
revenues and expenses during the reporting period.  Actual results could  differ
from the estimates reported.

                                        F-8

<PAGE> F-9

Significant estimates made by the Company include accrued compensation liability
and  medical claims, accrued postemployment and postretirement benefits, accrued
restructuring   charges,   accrued  environmental  liabilities   and   valuation
allowances for accounts receivable, inventory and deferred tax assets.   Accrued
compensation liability and medical claims involve the determination of  reserves
for incurred but not reported claims.  Accrued postemployment and postretirement
benefits  involve  the  use  of actuarial assumptions,  including  selection  of
discount  rates  (see  Note  10).   Accrued  restructuring  charges  involve  an
estimation of what the market will bring and specific costs incurred relating to
the  liquidation of certain Company assets using actual historical results  (see
Note  3).   Accrued  environmental  costs involve  estimated  remediation  costs
probable at facilities with underground storage tanks removed.  Determination of
the   valuation  allowances  for  accounts  receivable  and  inventory   involve
assumptions  related to current market conditions and historical market  trends.
While the valuation allowance for the deferred tax assets considers estimates of
projected  taxable  income  (see Note 11), it is reasonably  possible  that  the
Company's estimates for such items could change in the near term.

Impairment of Long-Lived Assets
-------------------------------

The  Company  evaluates assets held for use and assets  to  be  disposed  of  in
accordance  with  Financial Accounting Standards No. 121,  "Accounting  for  the
Impairment  of  Long-Lived Assets and for Long-Lived Assets to be Disposed  Of."
This   statement  requires  that  long-lived  assets  and  certain  identifiable
intangibles  held  and  used by an entity be reviewed  for  impairment  whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.  There was no impairment of the Company's long-lived and
intangible  assets other than assets held for sale which has been provided  for.
The  Company  has historically reviewed excess property held for sale  and  when
appropriate recorded these assets at the lower of their carrying amount or  fair
value (see Note 5).

Stock-Based Compensation
------------------------

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation,"  encourages,  but  does  not  require  companies   to   recognize
compensation  expense  for  grants of stock, stock  options,  and  other  equity
instruments to employees based on fair value accounting rules.  Although expense
recognition  for  employee  stock  based  compensation  is  not  mandatory,  the
pronouncement  requires  companies that choose  not  to  adopt  the  fair  value
accounting to disclose the pro-forma net income and earnings per share under the
new  method.  The Company elected not to adopt Statement of Financial Accounting
Standards  No.  123, but to continue to apply APB Opinion 25.  As required,  the
Company has disclosed the pro forma net income and pro forma earnings per  share
as if the fair value based accounting methods in this Statement had been used to
account for stock-based compensation cost (see Note 9).

                                        F-9

<PAGE> F-10

Recently Issued Accounting Pronouncements
-----------------------------------------

Reporting Comprehensive Income.  Statement of Financial Accounting Standards No.
------------------------------
130, "Reporting Comprehensive Income,"  establishes standards for reporting  and
display  of  comprehensive income and its components in a full set  of  general-
purpose financial statements.  The term comprehensive income is defined  as  the
change in the equity of a business.  Comprehensive income includes net income as
well  as  other  components (revenues, expenses, gains, and losses)  that  under
generally  accepted  accounting principles are  excluded  from  net  income  but
affect  equity.   The  statement is effective for fiscal years  beginning  after
December 15, 1997.  The Company believes adoption of the statement will not have
a material effect on its financial statements.

Disclosure about Segments.  Statement of Financial Accounting Standards No. 131,
-------------------------
"Disclosure  about  Segments of an Enterprise and Related Information,"  changes
Statement  of Financial Accounting Standards No. 14 by requiring a new framework
for  segment  reporting  and includes the disclosure  of  financial  information
related  to each segment.  The statement is effective for fiscal years beginning
after  December 15, 1997.  Since the Company currently operates as one  business
segment, the adoption of this statement is not expected to have an impact on the
Company's financial statements.


3.  Restructuring and Unusual Charges
-------------------------------------

During  the  fourth  quarter  of  1995,  the  Company  committed  to  and  began
implementing a restructuring plan ("1995 Plan") to improve return on  assets  by
closing  or  consolidating under-performing operating  centers,  decreasing  the
corresponding overhead to support these building centers, and initiating actions
to  strengthen  its  capital structure.  The costs for  closing  these  building
centers  were based on management estimates of costs to exit these  markets  and
actual historical experience.  Included in 1995 results of operations is a $17.8
million charge, including $12.6 million in anticipated losses on the disposition
of  closed  center  assets  and liabilities and $2.2 million  in  severance  and
postemployment benefits, relating to the 1995 Plan and other one time costs.

The  major components of this charge include the write-down of assets  to  their
net  realizable value, liabilities associated with closed building centers  held
for  sale, postemployment benefits to qualified former employees as a result  of
the  center  closings,  and other charges related to the  strengthening  of  the
Company's  capital structure.  Also included was a charge for unusual employment
related claims expensed in the fourth quarter of 1995.

                                        F-10

<PAGE> F-11

During  1996,  the  Company  continued executing  the  1995  Plan,  through  the
consolidation  and  closing of 18 building centers and the  improvement  of  its
overall   capital  structure  through  the  issuance  of  new  shares  and   the
modification of its bank revolving credit agreement (see Notes 7 and 9).

After  extensive review of the 1995 Plan, and changes in business conditions  in
certain  markets in which the Company operates, the Company made adjustments  to
the  1995 Plan and incurred other one time costs resulting in a net $0.7 million
charge  to results of operations in the fourth quarter of 1996 for restructuring
and  unusual items.  These adjustments included (i) the determination that three
of  the  centers  identified  in the 1995 Plan for closure  would  remain  open,
resulting  in a $1.5 million credit to restructuring expense, (ii) the extension
of  the 1995 plan to include the closing (substantially completed by the end  of
1996)  of  two  building centers not previously included, resulting  in  a  $1.3
million  charge  for  the  write down of assets and  liabilities  to  their  net
realizable  value  and a $0.1 million charge for severance  and  post-employment
benefits,  (iii) a $1.1 million charge for impairment in the carrying  value  of
real estate held for sale at closed centers, and (iv) a $0.3 million credit with
respect to the resolution of a claim below the reserved amount.

During  1997,  the  Company  recorded a $1.5 million  restructuring  charge  for
discontinued  programs  and reductions in its corporate headquarters  workforce.
This  charge  was offset by a $2.1 million reduction in accrued  costs  for  the
Company's 1995 Plan, which is now complete.


4.  Acquisitions
----------------

All  acquisitions  have  been  accounted for as purchases.   Operations  of  the
companies  and  businesses  acquired  have been  included  in  the  accompanying
consolidated  financial statements from their respective dates  of  acquisition.
The  excess of the purchase price over fair value of the net assets acquired  is
included in goodwill.  The fair market value of the assets acquired in 1995  was
approximately $12.4 million.  The Company had no acquisitions in 1997 or 1996.

During 1995 the Company acquired five building material centers for a total cost
of  $11.8 million, $8.1 million in cash and $3.7 million in liabilities assumed.
An  additional $0.6 million was recorded for the 1994 Gerrity acquisition.   The
cost  of  the  acquisitions have been allocated on the basis of the fair  market
value  of  the  assets  acquired and the liabilities assumed.   This  allocation
resulted in goodwill for one of the acquired businesses which is being amortized
over a 30-year period on a straight line basis.

                                        F-11

<PAGE> F-12

5.  Property, Plant, and Equipment
----------------------------------

Property, plant and equipment is summarized as follows:

<TABLE>
<CAPTION>
                                         December 27,              December 28,
                                             1997                      1996
                                         ------------              ------------
                                                     (in thousands)
 <S>                                      <C>                       <C>
  Land and improvements                    $  12,781                 $  12,391
  Buildings                                   27,584                    25,169
  Machinery and equipment                     30,619                    26,068
  Leasehold improvements                       2,584                     2,701
  Construction in progress                       844                        90
                                         ------------              ------------
  Gross property, plant, and equipment        74,412                    66,419
  Less:  accumulated depreciation            (31,178)                   27,322
                                         ------------              ------------
  Property, plant, and equipment
    in use, net                               43,234                    39,097
  Assets held for sale, net                    3,529                    11,074
                                         ------------              ------------
  Property, plant, and equipment, net      $  46,763                 $  50,171
                                         ============              ============
</TABLE>

The  Company  reviews  assets  held for sale in  accordance  with  Statement  of
Financial Accounting Standards No. 121.  In 1997 the Company recorded a loss  of
$156,000 to report land, land improvements and buildings held for sale at  their
fair value.  This charge is reflected under "restructuring and unusual items" on
the Consolidated Statement of Operations.


6.  Accrued Liabilities
-----------------------

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>

                                         December 27,              December 28,
                                             1997                      1996
                                         ------------              ------------
                                                     (in thousands)
    <S>                                   <C>                       <C>
     Accrued payroll                       $   8,148                 $   6,564
     Accrued interest                          1,367                     1,142
     Accrued liability insurance               4,173                     4,572
     Accrued restructuring charges             1,348                     6,199
     Other                                     7,243                     8,641
                                         ------------              ------------
     Total accrued liabilities             $  22,279                 $  27,118
                                         ============              ============
</TABLE>

                                         F-12

<PAGE> F-13

7.  Long-Term Debt
------------------

Long-term debt obligations are summarized as follows:
<TABLE>
<CAPTION>

                                                     December 27,              December 28,
                                                         1997                      1996
                                                     ------------              ------------
                                                                  (in thousands)
    <S>                                             <C>                        <C>
     Revolving line of credit, interest payable
     at 1.5% above prime or 3.0% over LIBOR,
     principal due March 31, 2001                    $    93,045                $   76,313

     Senior subordinated notes, interest payable
     at 11-5/8% semi-annually, principal due
          December 15, 2003                              100,000                   100,000

     Other                                                    62                       196
                                                     ------------              ------------
     Total long-term debt                                193,107                   176,509
     Less current maturities                                 (46)                     (133)
                                                     ------------              ------------
     Total long-term debt less current maturities    $   193,061                $  176,376
                                                     ============              ============

</TABLE>

Revolving Line of Credit
------------------------

Under the revolving line of credit, which expires in March 31, 2001, the Company
may borrow against certain levels of accounts receivable and inventory, up to  a
maximum  credit  limit  of  $130,000,000.  At  December  27,  1997,  the  amount
available for additional borrowing was $21,064,000.  A commitment fee of 1/2  of
1%  is  payable  on  the unused portion of the commitment.  The weighted-average
interest  rate for the years ending December 27, 1997 and December 28, 1996  was
approximately 8.8% and 9.0% respectively.

Substantially  all  of  the  Company's accounts receivable,  inventory,  general
intangibles  and certain machinery and equipment are pledged as  collateral  for
the  revolving  line  of  credit.  Covenants under the related  debt  agreements
require,  among other restrictions, that the Company maintain certain  financial
ratios  and  certain  levels of consolidated net worth.  In addition,  the  debt
agreement restricts among other things, capital expenditures, the incurrence  of
additional  debt, asset sales, dividends, investments, and acquisitions  without
prior approval from the lender.

The revolving credit agreement was amended and restated on April 11,1997.  Among
other  things,  the  amendment and restatement (i)  extended  the  term  of  the
facility  to March 2001, (ii) reduced the interest rate premiums over LIBOR  and
over  prime  by 75 basis points, (iii) included provisions for further  interest
rate  premium  reductions  if  certain performance  levels  are  achieved,  (iv)
modified certain covenants, and (v) provided  for  increases  in  the amount  of
                                         F-13

<PAGE> F-14

capital expenditures  allowed  by  the agreement  equal to the proceeds received
from the sale of certain excess real estate.

On  June 16, 1997 the Company entered into an interest rate swap agreement which
effectively fixed the interest rate at 8.11% (subject to adjustments in  certain
circumstances),  for  three years, on $40 million of  the  Company's  borrowings
under its floating rate revolving line of credit (See Note 12).

On December 24, 1997, the second amended and restated revolving credit agreement
was  amended to incorporate, among other things, a reduction in the fixed charge
and net worth levels for the fourth quarter of 1997 and first quarter of 1998.

Senior Subordinated Notes
-------------------------

On  October 22, 1993, the Company issued $100,000,000 in principal amount of 10-
year  unsecured  senior subordinated notes.  Interest on the notes  is  11-5/8%,
payable  semi-annually.   Covenants under the related indenture  restrict  among
other  things,  the  payment of dividends, the prepayment of certain  debt,  the
incurrence of additional debt if certain financial ratios are not met,  and  the
sale  of  certain  assets  unless the proceeds are applied  to  the  notes.   In
addition,  the notes require that, upon a change in control of the Company,  the
Company must offer to purchase the notes at 101% of the principal thereof,  plus
accrued interest.

Aggregate Maturities
--------------------

The  aggregate  amounts  of long-term debt maturities  by  fiscal  year  are  as
follows:
<TABLE>
<CAPTION>
               Year                       Amount
               ----                       ------
                                      (in thousands)
              <S>                        <C>
               1998                       $      46
               1999                              16
               2000                              --
               2001                          93,045
               2002                              --
               Thereafter                   100,000

</TABLE>

Fair Value
----------

The fair value of the Company's long-term debt, in accordance with SFAS No. 107,
is estimated based on the quoted market prices for the same or similar issues or
on  the  current  rates offered to the Company for debt of  the  same  remaining
maturities.   The  estimated  fair values of the  Company's  material  financial
instruments at December 27, 1997 and December 28, 1996 are as follows:

                                        F-14

<PAGE> F-15

<TABLE>
<CAPTION>
                                        Fair           Carrying
                                        Value            Value
                                      ----------       ----------
                                             (in thousands)
    <S>                              <C>              <C>
     1997 Financial Liabilities:
     Long-term Debt
     Revolver                         $  93,045        $  93,045
     Senior Subordinated Notes           95,000          100,000

     1996 Financial Liabilities:
     Long-term Debt
     Revolver                         $  76,313        $  76,313
     Senior Subordinated Notes           77,000          100,000

</TABLE>

8.  Commitments and Contingencies
---------------------------------

At  December  27,  1997,  the  Company had accrued  approximately  $500,000  for
remediation  of certain environmental and product liability matters, principally
underground storage tank removal.

Many of the sales and distribution facilities presently and formerly operated by
the Company contained underground petroleum storage tanks.  Other than tanks  at
one  acquired  facility,  recently  installed  and  in  compliance  with  modern
standards,  all such tanks known to the Company located on facilities  owned  or
operated  by  the  Company have been filled, removed, or  are  scheduled  to  be
removed in accordance with applicable environmental laws in effect at the  time.
As  a  result  of reviews made in connection with the sale or possible  sale  of
certain  facilities, the Company has found petroleum contamination of  soil  and
ground  water  on  several of these sites and has taken, and  expects  to  take,
remedial actions with respect thereto.  In addition, it is possible that similar
contamination may exist on properties no longer owned or operated by the Company
the  remediation of which the Company could under certain circumstances be  held
responsible.  Since 1988, the Company has incurred approximately $2.0 million of
costs,  net of insurance and regulatory recoveries, with respect to the  filling
or  removing of underground storage tanks and related investigatory and remedial
actions.  Insignificant  amounts of contamination  have  been  found  on  excess
properties sold over the past three years.

The  Company  is  one of many defendants in approximately 100 actions,  each  of
which  seeks  unspecified damages, brought since 1993 in various Michigan  state
courts against manufacturers and building material retailers by individuals  who
claim to have suffered injuries from products containing asbestos.  Each of  the
plaintiffs in these actions is represented by one of two law firms.  The Company
is  aggressively defending these actions and does not believe that these actions
will have a material adverse effect on the Company's financial position, results
of operations or liquidity.

                                        F-15

<PAGE> F-16

On  November  3, 1995, a complaint was filed against the Company, its  directors
and Riverside Group, Inc. seeking to enjoin or to obtain damages with respect to
the  Company's agreement to issue 2,000,000 newly-issued shares of common  stock
to Riverside Group, Inc. for $10 million (see Note 9).

The  Company is involved in various other legal proceedings which are incidental
to  the conduct of its business.  The Company does not believe that any of these
proceedings will have a material adverse effect on the Company's financial
position, results of operations or liquity.

The Company's assessment of the matters described in this note and other forward
looking  statements  ("Forward-Looking Statements")  in  these  notes  are  made
pursuant  to  the  safe  harbor provisions of the Private Securities  Litigation
Reform  Act  of 1995 and are inherently subject to uncertainty.  The outcome  of
the  matters  in  this  note may differ from the Company's assessment  of  these
matters  as  a  result  of a number of factors including  but  not  limited  to:
matters  unknown  to  the  Company at the present time,  development  of  losses
materially  different  from the Company's experience, the Company's  ability  to
prevail  against  its  insurers with respect to coverage  issues  to  date,  the
financial ability of those insurers and other persons from whom the Company  may
be entitled to indemnity, and the unpredictability of matters in litigation.

Leases
------

The Company has entered into operating leases for corporate office space, retail
space,  equipment  and  other items.  These leases provide  for  minimum  rents.
These  leases generally include options to renew for additional periods.   Total
rent  expense  under  all  operating leases was  $10,616,000,  $10,076,000,  and
$10,501,000  for  the  years ended December 27, 1997,  December  28,  1996,  and
December 30, 1995, respectively.

Future minimum commitments for noncancelable operating leases are as follows:

<TABLE>
<CAPTION>

               Year                       Amount
               ----                       ------
                                      (in thousands)
              <S>                       <C>
               1998                      $   8,259
               1999                          6,834
               2000                          4,792
               2001                          3,277
               2002                          2,345
               Thereafter                   17,022
                                         ----------
                 Subtotal                $  42,529
               Less:  Sublease income       (6,301)
                                         ----------
                 Total                   $  36,228
                                         ==========
</TABLE>

                                        F-16

<PAGE> F-17

9.  Stockholders' Equity
------------------------

Preferred Stock
---------------

As of December 27, 1997 the Company had authorized 3,000,000 shares of preferred
stock, none of which is issued or outstanding.

Common Stock
------------

The  Company has two classes of common stock:  Common Stock, par value $.01  per
share,  and  Class  B  Non-Voting Common Stock, par value $.01  per  share.   At
December  27,  1997 there were 20,000,000 shares of Common Stock authorized  and
7,676,437  shares  issued and outstanding, and there were  1,200,000  shares  of
Class  B Non-Voting Common authorized and 499,768 shares issued and outstanding.
In  addition, at December 27, 1997, 910,000 shares of Common Stock were reserved
for issuance under the Company's 1993 Long Term Incentive Plan and 1993 Director
Incentive Plan.  Another 6,913 shares of Common Stock were reserved for issuance
under  outstanding  warrants.   Class B Non-Voting  Common  Stock  is  generally
equivalent  to  Common Stock, except that shares of Class  B  Non-Voting  Common
Stock   may   not   be  voted  except  on  certain  matters  regarding   merger,
consolidation, recapitalization and reorganization, and as otherwise provided by
law.   Class  B Non-Voting Common Stock is convertible into Common  Stock  on  a
share-for-share basis in certain circumstances.

Private Sale of Common Stock
----------------------------

On June 20, 1996, pursuant to a stock purchase agreement dated January 11, 1996,
the  Company sold 2,000,000 newly-issued shares of its Common Stock to Riverside
Group, Inc., the Company's largest stockholder, for $10 million in cash.   Prior
to  the  sale  the  terms  of  the stock purchase agreement  were  reviewed  and
recommended to the boards of directors of both companies by committees comprised
of the independent directors of each company.

Warrants
--------

The  Company  has  outstanding  warrants  for  6,913  shares  of  Common  Stock,
exercisable through April 29, 1998, at a nominal exercise price.

                                        F-17

<PAGE> F-18
           
Stock Compensation Plans
------------------------

As  of  December  27,  1997, the Company has two stock-based compensation  plans
(both  fixed option plans), which are described below. Under the 1993 Long  Term
Incentive  plan, the Company may grant options and other awards to its employees
up  to  835,000 shares of common stock.  Under the 1993 Director Incentive plan,
the  Company  may grant options and other awards to directors on  up  to  75,000
shares.   For grants after 1995, the exercise price generally equals the  market
price  at  the  date  of grant.  For grants prior to 1996,  the  exercise  price
generally  equals the greater of $15 or the market price at the date  of  grant.
The  options  have  a maximum term of 10 years.  For non-officers,  the  options
generally become exercisable in equal installments over a three year period from
the  date  of  grant.   For officers, the vesting periods are  based  on  graded
calendar year schedules, which can vary by officer.

Since  the  Company  applies  APB  Opinion 25  and  related  interpretations  in
accounting  for  its  plans,  no  compensation  cost  has  been  recognized   in
conjunction  with  these plans.  Had compensation cost for the Company's  stock-
based compensation plans been determined consistent with FASB Statement 123, the
Company's net income and earnings per share would have been reduced to  the  pro
forma amounts indicated below:

<TABLE>
<CAPTION>

Year                                      1997         1996        1995
----                                      ----         ----        ----
<S>                <C>               <C>          <C>         <C>
Net (loss) income   As reported       $ (1,560)    $    508    $(15,599)
                    Pro forma         $ (1,772)    $    321    $(15,920)

Basic and diluted   As reported       $   (.19)    $    .07    $  (2.54)
  (loss) earnings   Pro forma         $   (.22)    $    .04    $  (2.59)
  per share

</TABLE>

The  fair value of each option grant is estimated on the date of grant using the
Black-Scholes   option-pricing  model  with  the  following   weighted   average
assumptions  used  for  grants in 1997, 1996, and 1995, respectively:   dividend
yield  of  0% for all years, expected volatility of 43%, 42%, and 40%; risk-free
interest rates of 6.6%, 6.2%, and 7.7%; and expected lives of 6.6, 6.5, and  6.1
years.

A summary of the status of the Company's fixed stock option plans as of December
27,  1997, December 28, 1996, and December 30, 1995 and changes during the years
ended on those dates is presented as follows:

                                              F-18

<PAGE> F-19
           
<TABLE>
<CAPTION>
         
                                  1997                     1996                     1995
                                  ----                     ----                     ----
                                Weighted                 Weighted                 Weighted
                                Average                  Average                  Average
                                Exercise                 Exercise                 Exercise
Fixed  Options               Shares     Price         Shares     Price         Shares     Price
--------------              -------    ------        -------    ------        -------    ------
<S>                        <C>        <C>           <C>         <C>          <C>        <C>
Outstanding beginning
   of year                  612,282    $10.94        446,686     $15.32       286,716    $15.72

Granted                     108,350     $5.12        264,721      $4.60       193,867    $14.90

Exercised                         0       n/a              0        n/a             0       n/a

Forfeited-nonvested         (46,981)    $8.22        (59,793)    $13.18       (19,817)   $15.99

Forfeited-exercisable        (5,168)   $22.36        (36,632)    $15.32        (7,713)   $16.46

Expired                           0       n/a              0        n/a             0       n/a

Canceled                       (200)   $15.00         (2,700)     $5.12        (6,367)   $17.12
                            -------                  -------                  -------
Outstanding end
   of year                  668,283    $10.09        612,282     $10.94       446,686    $15.32

Options exercisable
   at year-end              210,402    $14.26        146,775     $15.60       107,662    $15.52

Options available for
   future grant at
   year-end                 392,344                  304,411                  471,482

</TABLE>

Weighted-average fair value of options granted during the year where:

<TABLE>
<CAPTION>

                               1997           1996           1995
                               ----           ----           ----
<S>                          <C>            <C>            <C>
 Exercise price equals
     market price             $2.77          $2.40          $6.94

 Exercise price exceeds
     market price               n/a            n/a          $6.26

 Exercise price is less
     than market price          n/a            n/a            n/a

</TABLE>

                                              F-19

<PAGE> F-20

The following table summarizes information about fixed stock options outstanding
at December 27, 1997:
<TABLE>
<CAPTION>
                         Options Outstanding                Options Exercisable
                         -------------------                -------------------
                              Weighted-
                               Average       Weighted-                    Weighted-
Range of       Number         Remaining       Average       Number        Average
Exercise     Outstanding     Contractual     Exercise     Exercisable     Exercise
 Prices      at 12/27/97        Life          Price       at 12/27/97      Price
--------     -----------     -----------     --------     -----------     ---------
<S>          <C>             <C>              <C>           <C>            <C>
$4.13 -
$10.95         335,530        6.7 years        $4.84         29,644         $5.28
                  
$15 -
$23.25         332,753        7.8 years       $15.40        180,758        $15.73

$4.13 -
$23.25         668,283        7.9 years       $10.09        210,402        $14.26

</TABLE>

Earnings Per Share
------------------

The  Company  calculates  earnings per share in  accordance  with  Statement  of
Financial  Accounting  Standards  No. 128. As required  by  this  statement  the
Company has adopted the new standards for computing and presenting earnings  per
share for 1997, and for all prior period earnings per share data presented.  The
following is the reconciliation of the numerators and denominators of the  basic
and diluted earnings per share:

<TABLE>
<CAPTION>
                                 
                                               1997             1996          1995
                                               ----             ----          ----
<S>                                      <C>                  <C>         <C>
Numerators:                                              
  Net (loss) income - for basic and
     diluted EPS                          $(1,560,000)          $508,000    $(15,599,000)
                                          ============         =========    =============
Denominators:
  Weighted average common
     shares - for basic EPS                 8,168,257          7,207,761       6,135,610
     Common share from warrants                 6,913             10,751          14,589
     Common shares from options                13,250              2,570             420
  Weighted average common
     shares - for diluted EPS               8,188,420          7,221,082       6,150,619
                                          ============         =========       =========

</TABLE>


In  addition,  options  to purchase of 385,000,  302,000  and  278,000  weighted
average  shares of common stock during 1997, 1996 and 1995, respectively,   were
not  included  in the diluted EPS as the options' exercise prices  were  greater
than the average market price and the effect would be antidilutive.

                                       F-20

<PAGE> F-21

10.  Employee Benefit Plans
---------------------------

401(k) Plan
-----------

The  Company  sponsors a defined contribution 401(k) plan covering substantially
all  of  its  full-time employees.  Additionally, the Company provides  matching
contributions up to a maximum of 2.5% of  participating employees' salaries  and
wages.   Total  expenses under the plan for the years ended December  27,  1997,
December  28,  1996,  and  December 30, 1995 were  $1,606,000,  $1,392,000,  and
$1,700,000, respectively.


Postretirement Benefits Other than Pensions
-------------------------------------------

The  Company  provides  life  and  health care benefits  to  retired  employees.
Generally, employees who have attained an age of 60, have rendered 10  years  of
service and are currently enrolled in the medical benefit plan are eligible  for
postretirement  benefits.   The Company accrues the estimated  cost  of  retiree
benefit  payments,  other  than pensions, during the employee's  active  service
period.

The plan's funded status is as follows:

<TABLE>
<CAPTION>
                                                  December 27,      December 28,
                                                      1997              1996
                                                      ----              ----
                                                          (in thousands)
<S>                                                 <C>               <C>
  Accumulated postretirement benefit obligation-
     Retirees and their dependents                  $1,033            $1,259
     Active employees fully eligible to retire
       and receive benefits                            637               682
     Active employees not fully eligible               908             1,349
                                                     -----             -----
  Total accumulated postretirement benefit
     obligations                                     2,578             3,290
  Plan's assets at fair value                          -0-               -0-
                                                     -----             -----
  Accumulated postretirement benefit obligation
     in excess of plan's assets                      2,578             3,290
  Unrecognized prior service cost                       59               -0-
  Unrecognized net loss                                138              (613)
                                                     -----             ------
  Accrued postretirement health care cost           $2,775            $2,677
                                                     =====             =====
</TABLE>

                                       F-21

<PAGE> F-22

Actuarial assumptions used were as follows:

<TABLE>
<CAPTION>
                                                  December 27,      December 28,
                                                      1997              1996
                                                      ----              ----
                                                          (in thousands)
<S>                                                   <C>               <C>
  Projected health care costs trend rate               6.0%              6.0%
  Ultimate trend rate                                  6.0%              6.0%
  Year ultimate trend rate achieved                    n/a               n/a
  Effect of a 1% point increase in the health
    care cost trend rate on the postretirement
    benefit obligation                                $ 49              $ 77
  Effect of a 1% point increase in the health
    care cost trend rate on the aggregate of
    service and interest cost                         $ 19              $ 21
  Discount  rate                                      7.25%             7.75%

</TABLE>


Postemployment Benefits
-----------------------

The  Company  provides certain postemployment benefits to  qualified  former  or
inactive  employees  who  are  not  retirees.   These  benefits  include  salary
continuance, severance, and healthcare.  Salary continuance and severance pay is
based  on normal straight-line compensation and is calculated based on years  of
service.  Additional severance pay is granted to eligible employees who  are  40
years  of age or older and have been employed by the Company five or more years.
The  Company  accrues  the  estimated cost of benefits  provided  to  former  or
inactive  employees who have not yet retired over the employees' service  period
or  as  an expense at the date of the event triggering the benefit.  The Company
incurred  postemployment benefit income of $28,000 and  $31,000  for  the  years
ended  December  27,  1997  and  December 28,  1996,  and  expense  of  $160,000
(exclusive of amounts included in its restructuring liability, see Note  3)  for
the year ended December 30, 1995.


11.     Income Taxes
--------------------

The  Company and its subsidiaries file a consolidated Federal income tax return.
As  of  December  27, 1997, the Company has US net operating loss  carryforwards
available to offset income of approximately $41.4 million expiring in the  years
2004  through 2012.  Capital loss carryovers of $1.5 million were fully utilized
in 1997 before their expiration.

On October 22, 1993, the Company completed a recapitalization plan which created
an  ownership change as defined by Section 382 of the Internal Revenue  Code  of
1996.  As a result, certain of the loss carryforwards of the company are limited
to  an annual limitation of approximately $2.6 million a year.  At December  27,
1997,  approximately $7.5 million of these loss carryforwards were  affected  by
this limitation.

                                              F-22

<PAGE> F-23

Income  tax  provision for 1997 consists of both current and  deferred  amounts.
The components of the income tax provision are as follows:

<TABLE>
<CAPTION>
                                            December 27,   December 28,    December 30,
                                                1997           1996            1995
                                                ----           ----            ----
                                                          (in thousands)
<S>                                         <C>           <C>              <C>
  Taxes currently payable:
     State income tax                       $  1,099       $  1,010        $  1,353
     Federal income tax                           --             --              --
  Deferred (benefit)/expense                    (153)           300         (11,796)
                                             -------        -------         -------
  Total income tax expense/(benefit)        $    946       $  1,310        $(10,443)
                                             =======        =======         =======
</TABLE>


Tax  provisions  and credits are recorded at statutory rates for  taxable  items
included  in the consolidated statements of operations regardless of the  period
for  which  such  items  are reported for tax purposes.  Deferred  income  taxes
reflect the net effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes.  Management has determined, based on the Company's positive
earnings growth from 1992 through 1994 and its expectations for the future, that
operating  income  of  the Company will more likely than not  be  sufficient  to
recognize fully its net deferred tax assets.  The components of the deferred tax
assets and liabilities at December 27, 1997, December 28, 1996 and December  30,
1995, respectively, are as follows:

<TABLE>
<CAPTION>
                                            December 27,   December 28,    December 30,
                                                1997           1996            1995
                                                ----           ----            ----
                                                          (in thousands)
<S>                                         <C>            <C>             <C>
  Deferred income tax assets:
  Trade accounts receivable                 $  1,469       $  1,676        $  3,193
  Inventories                                  1,895          1,954           2,446
  Accrued personnel cost                       2,013          1,936           1,850
  Other accrued liabilities                    6,743          6,911          12,042
  Net operating loss                          16,164         16,556           9,856
  Other                                        3,348          2,342           1,399
                                             -------        -------         -------
  Gross deferred income tax assets            31,632         31,375          30,786
  Less:  valuation allowance                  (1,542)        (1,493)         (1,350)
                                             -------        -------         -------
  Total deferred income tax assets            30,090         29,882          29,436
                                             -------        -------         -------

  Deferred income tax liabilities:
  Property, plant and equipment                1,394          1,962           1,906
  Goodwill and trademark                       2,687          2,052           1,348
  Other accrued income items                      --             13              26
                                             -------        -------         -------
  Total deferred income tax liabilities        4,081          4,027           3,280

  Net deferred tax assets                   $ 26,009       $ 25,855        $ 26,156
                                             =======        =======         =======
</TABLE>

                                       F-23

<PAGE> F-24

The  deferred  tax expense recorded in the current year results  from  temporary
differences in the recognition of certain items of revenue and expense  for  tax
and  financial reporting purposes.  The sources of these differences and the tax
effect of each were as follows:

<TABLE>
<CAPTION>
                                            December 27,   December 28,    December 30,
                                                1997           1996            1995
                                                ----           ----            ----
                                                          (in thousands)
<S>                                          <C>            <C>            <C>
  Change in bad debt reserve                 $  (207)       $(1,517)       $  1,377
  Differences in tax and book
      inventory                                  (60)          (491)           (806)
  Settlement of deferred
      compensation                                77             86            (303)
  Change in accrued liabilities                 (168)        (5,130)          3,324
  (Utilization)/creation of NOL                 (392)         6,700           4,216
  AMT credit and capital loss
      carryover                                1,006            942            (604)
  Differences in tax and book
      asset basis                                568            (56)          3,188
  Differences in book and tax
       intangibles                              (635)          (704)           (658)
    Change in accrued income items                13             13              (9)
  (Increase)/decrease in valuation
      allowance                                  (49)          (143)          2,071
                                              -------       --------        -------

  Deferred tax benefit/(expense)             $   153       $   (300)       $ 11,796
                                              =======       ========        =======

</TABLE>

The following table summarizes significant differences between the provision for
income  taxes  and the amount computed by applying the statutory federal  income
tax rates to income before taxes:

<TABLE>
<CAPTION>
                                            December 27,   December 28,    December 30,
                                                1997           1996            1995
                                                ----           ----            ----
                                                          (in thousands)
<S>                                        <C>            <C>             <C>                           
  (Benefit) taxes computed at
      U.S. statutory tax rate               $   (215)      $    637        $ (9,115)
  State and local taxes                          714            656             894
  Other                                          398           (126)           (151)
  Change in valuation allowance                   49            143          (2,071)
                                             -------        -------         --------
  Total tax provision                       $    946       $  1,310        $(10,443)
                                             =======        =======         ========
</TABLE>


                                       F-24

<PAGE> F-25

12.     Financial Instruments
-----------------------------

The  Company  uses financial instruments in its normal course of business  as  a
tool  to manage its assets and liabilities.  The Company does not hold or  issue
financial  instruments  for  trading purposes.  Gains  and  losses  relating  to
hedging contracts are deferred and recorded in income or as an adjustment to the
carrying value of the asset at the time the transaction is complete. Payments or
receipts of interest under the interest rate swap arrangement are accounted  for
as  an  adjustment  to  interest  expense.  The fair  value  of  such  financial
instruments is determined through dealer quotes.

Lumber Futures Contracts
------------------------

The  Company  enters  into lumber futures contracts as a  hedge  against  future
lumber price fluctuations.  All futures contracts are purchased to protect long-
term pricing commitments on specific future customer purchases.  At December 27,
1997 the Company had 79 lumber futures contracts outstanding with a total market
value  of $2,028,000 and a net unrealized loss of $42,480.  These contracts  all
mature in 1998.

Interest Rate Swap
------------------

The  Company  has entered into an interest rate swap agreement which effectively
fixed   the   interest  rate  at  8.11%  (subject  to  adjustments  in   certain
circumstances), for three years.  The swap agreement is on $40  million  of  the
Company's  borrowings under its floating rate revolving line  of  credit.   This
interest  rate swap is operative while the 30 day LIBOR borrowing  rate  remains
below  6.7%.   The  agreement also includes a floor  LIBOR  rate  at  4.6%.   At
December  28, 1997 the 30 day LIBOR borrowing rate was 6.0%.  The fair value  of
the  interest rate swap agreement, in accordance with SFAS No. 107, at  December
27, 1997 was $47,129.


13.  Related Party Transactions
-------------------------------

In 1997, the Company paid approximately $1,289,000 in reimbursements primarily
to affiliates of the Company's chairman, for costs related to services provided
to the Company during 1997 by certain employees of the affiliated company and
use of a corporate aircraft.  Total payments in 1996 and 1995 for similar 
services were approximately $612,000 and $613,000, respectively.

In  June of 1996, the Company entered into a mortgage lending agreement with  an
affiliate   of   the  Company's  chairman.   In  exchange  for  providing   home
construction  loans to the Company's customers the Company has  reimbursed  this
affiliate  for certain start-up expenses.  Reimbursements in 1997 and 1996  were
approximately $1,045,000   and  $365,000,  respectively.   In  late  1997,  this
affiliate's involvement in the program, and the Company's reimbursement
obligation, ceased.

                                       F-25

<PAGE> F-26

A director and executive officer of the Company was during 1997, 1996 and 1995 a
shareholder of the law firm that is general counsel to the Company.  The Company
paid  this firm $665,050, $430,000, and $394,000 for legal services provided  to
the Company during 1997, 1996, and 1995, respectively.

For a description of the sale of 2,000,000 newly-issued shares by the Company to
Riverside Group, Inc. in 1996, see Note 9.

On  July  31,  1994,  the  Company acquired Riverside International  Corporation
("RIC"),  from  Riverside Group, Inc., the Company's majority  stockholder,  for
$895,000.   The acquisition was accounted for as a purchase.  In December  1995,
voting rights to 66 2/3% of RIC's voting stock were assigned to Riverside Group,
Inc.


14.  Subsequent Events (Unaudited)
----------------------------------

Restructuring Plan
------------------

In  February  of 1998, the Company announced a plan for additional restructuring
activities to be completed in the first quarter of 1998 (the "1998 Plan").  This
1998  Plan  includes the closing or consolidation of eight building centers  and
two  component  manufacturing facilities, the sale of  two  additional  building
centers,  and  further reductions in headquarters staffing.  The eight  building
centers  and two component manufacturing facilities were closed in the beginning
of  February, the sale of the two building centers was completed in  March,  and
the headquarters reductions have been implemented.  The Company anticipates that
it  will  incur, in the first quarter, a restructuring charge of  $5.4  million,
including $3.6 million in anticipated losses on the disposition of closed center
assets  and  liabilities  and  $1.8 million in  severance  and  post  employment
benefits.

In  March of 1998, as contemplated by the 1998 Plan, the Company sold the assets
of  its  two Iowa centers to another building center chain for an amount greater
than current book value.  The sale and transfer of the assets and operations was
completed at the end of March 1998.

Sale of Internet and Utilities Marketing Programs
-------------------------------------------------

In  November of 1997, the Company entered into an agreement to sell its internet
and utilities marketing operations to its majority stockholder.  The disposition
of  these  operations  was part of the determination  made  by  the  Company  to
discontinue  or sell non-core operations.  In February of 1998,  this  sale  was
completed and the Company received compensation of approximately $870,000 in the
form  of  a  three-year unsecured promissory note.  In addition,  the  Company's
stockholder  agreed  to  pay  ten percent of the  future  net  income  of  these
operations, subject to a maximum of $429,249 plus interest.   The  terms of the

                                       F-26

<PAGE> F-27

transaction were approved by a  committee  of  the disinterested members of the
Company's board of directors.

Third Amendment to Bank Agreement
---------------------------------

On  March 20, 1998 the Company and its lenders entered into a third amendment to
the   Company's   revolving  credit  agreement.   This  amendment   includes   a
modification  to  the fixed charge ratio covenant to reflect  the  restructuring
recently  announced  by  the Company and includes the lenders'  consent  to  the
Company's  sale of its Iowa facilities and its internet and utilities  marketing
operations.
                                      F-27

<PAGE> S-1

                          WICKES INC. AND SUBSIDIARIES
                                        
                 Schedule II - Valuation and Qualifying Accounts
                                        
 For the Years Ended December 27, 1997, December 28, 1996, and December 30, 1995
                                 (in thousands)
                                        
<TABLE>
<CAPTION>

     Col. A                Col. B                  Col. C                   Col. D          Col. E
     ------                ------                  ------                   ------          ------           

                                                  Additions
                                                  ---------
                                               (1)          (2)
                          Balance at       Charged to   Charged to                       Balance at
                          Beginning        Costs and       Other                           End of
  Description             of Period        Expenses(a)  Accounts(b)     Deductions(c)      Period
  -----------             ---------        -----------  -----------     -------------    ----------
<S>                       <C>              <C>           <C>             <C>             <C>
1997:
Allowance for doubtful
    accounts                $4,289          $1,707       ($190)           $2,041          $3,765
                        
1996:
Allowance for doubtful
    accounts                $8,208          $1,067          --            $4,986          $4,289

1995:
Allowance for doubtful
    accounts                $4,657          $6,482          --            $2,931          $8,208


</TABLE>

(a)  Net of reserved and collected accounts.
(b)  Allowance for doubtful accounts charged to restructuring reserve.
(c)  Reserved accounts written-off.

                                       S-1

<PAGE> 44
                                        
                                  Exhibit Index
                                  -------------      
Exhibit
Number      Description
-------     -----------

3.1 (a)*  Amended  and  Restated  Certificate  of  Incorporation  of   the
          Registrant   (incorporated  by  reference  to  Exhibit  3.1   to   the
          Registrant's  Registration Statement on Form  S-1  (the  "Form  S-1"),
          Commission File No. 2-67334).

    (b)*  First  Amendment to Second Amended and Restated  Certificate  of
          Incorporation (incorporated by reference to Exhibit 3.01 to  the  June
          1994 Form 10-Q).

    (c)*  Second  Amendment to Second Amended and Restated Certificate  of
          Incorporation (incorporated by reference to Exhibit 3.1  to  the  June
          1997 Form 10-Q).

3.2*      By-laws  of  the Registrant, as amended and restated (incorporated  by
          reference to Exhibit 3.2 to the Registrant's Annual Report on Form 10-
          K (the "1993 Form 10-K") for the year ended December 25, 1993).

4.1 (a)*  Second  Amended and Restated Credit Agreement  dated  April  11,
          1997,  among  the  Registrant,  as Borrower,  each  of  the  financial
          institutions signatory thereto, BT Commercial Corporation,  as  Agent,
          Nations  Bank of Georgia N.A. as Syndication Agent, and Bankers  Trust
          Company, as Issuing Bank  (incorporated by reference to Exhibit 4.1 to
          the March 1997 Form 10-Q).

    (b)*  First Amendment to Second Amended and Restated Credit  Agreement
          (incorporated by reference to Exhibit 4.1 to the June 1997 Form 10-Q).

    (c)** Second  Amendment  to Second Amended  and  Restated  Credit
          Agreement.

    (d)** Third Amendment to Credit Agreement.

4.2*      Indenture  dated  as  of October 15, 1993 between the  Registrant  and
          Marine Midland Bank, N.A. (incorporated by reference to Exhibit 4.2 to
          the 1993 Form 10-K).

10.1*     Trademark  Agreement, dated April 29, 1988, between Wickes  Companies,
          Inc. and the Registrant (incorporated by reference to Exhibit 10.2  to
          the Form S-1).

                                       44

<PAGE> 45

10.2*     Agreement,  dated July 21, 1993, between Collins & Aikman Group,  Inc.
          and  the Registrant (incorporated by reference to Exhibit 10.12 to the
          Form S-1).

10.3*     Form  of  Employee Warrant to purchase Common Stock of the  Registrant
          (incorporated by reference to Exhibit 10.16 to the Form S-1).

10.4 (a)* Amended  and  Restated  1998 Long-Term  Incentive  Plan  of  the
          Registrant (incorporated by reference to Exhibit 10.8 to the 1994 Form
          10-K).

     (b)* Amendment No. 1 (incorporated by reference to Exhibit 10.8(b)  to
          the 1996 Form 10-K).

     (c)* Form  of Option Agreement (incorporated by reference to  Exhibit
          10.22 to the Form S-1).

     (d)* Form  of Option Agreement (incorporated by reference to  Exhibit
          10.8 to the 1994 Form 10-K).

     (e)* Form  of  Long-Term  Stock  Option  Agreement  (incorporated  by
          reference to Exhibit 10.8 to the 1994 Form 10-K).

     (f)* Form  of Long-Term Performance Bonus Agreement (incorporated  by
          reference to Exhibit 10.8 to the 1994 Form 10-K).

     (g)**Amendment No. 2.

     (h)**Form of Option Agreement.

10.5 (a)* Amended and Restated 1993 Director Incentive Plan of  Registrant
          (incorporated  by  reference  to Exhibit  10.03  to  the  Registrant's
          Quarterly  Report on Form 10-Q (the "March 1994 Form  10-Q")  for  the
          period ended March 26, 1994).

     (b)* Form  of Option Agreement (incorporated by reference to  Exhibit
          10.24 to the Form S-1).

10.6*     Employment  Agreement  between George A. Bajalia  and  the  Registrant
          (incorporated by reference to Exhibit 10.02 to the March 1994 Form 10-
          Q).

10.7**    Special Severance and Stay Incentive Bonus Plan.

                                       45

<PAGE> 46

10.8*     Mortgage  Lending  Agreement between Wickes Lumber Company,  Inc.  and
          Wickes  Mortgage Lending, Inc. dated as of June 30, 1996 (incorporated
          by  reference to Exhibit 10.01 to the Registrant's Quarterly Report on
          Form 10-Q for the period ended June 29, 1996).

10.9 (a)* Agreement  dated  November 4, 1997 between  the  Registrant  and
          Riverside  Group, Inc. (incorporated by reference to Exhibit  10.1  to
          the September 1997 Form 10-Q).

     (b)**Amendment and Closing Agreement to Agreement dated November
          4, 1997 between the Registrant and Riverside Group, Inc.

21.1**    List of Subsidiaries of the Registrant.

23.1**    Consent of Coopers & Lybrand L.L.P.

27.1**    Financial data schedule (SEC use only).

*         Incorporated by reference.

**        Filed herewith.

There  have been omitted certain instruments with respect to long-term debt  not
in  excess of 10% of the consolidated total assets of the Company.  The  Company
agrees to furnish copies of any such instruments to the Commission upon request.

                                       46