<PAGE>
                                 FORM 10-Q


                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                ----------------

(MARK ONE)

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

             For the quarterly period ended March 31, 1998

                                      OR

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

                 COMMISSION FILE NUMBERS 0-676 AND 0-16626
                           -----------------

                       THE SOUTHLAND CORPORATION
          (Exact name of registrant as specified in its charter)

                      TEXAS                                  75-1085131
       (State or other jurisdiction of                    (I.R.S. Employer
         incorporation or organization)                 Identification No.)

     2711 NORTH HASKELL AVE., DALLAS, TEXAS                   75204-2906
     (Address of principal executive offices)                 (Zip code)

         Registrant's telephone number, including area code, 214/828-7011
                               --------------

     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 


                    APPLICABLE ONLY TO CORPORATE ISSUERS:

     409,922,935 shares of common stock, $.0001 par value (the issuer's only 
class of common stock), were outstanding as of March 31, 1998.



<PAGE>
                          THE SOUTHLAND CORPORATION
                                    INDEX


                                                                        Page
                                                                         No.
                                                                        ----

Part I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

     Condensed Consolidated Balance Sheets -
       March 31, 1998 and December 31, 1997...............................1

     Condensed Consolidated Statements of Earnings -
       Three Months Ended March 31, 1998 and 1997.........................2

     Condensed Consolidated Statements of Cash Flows -
       Three Months Ended March 31, 1998 and 1997.........................3

     Notes to Condensed Consolidated Financial Statements ................4

     Report of Independent Accountants....................................7


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS.......................................8

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......15

Part II.  OTHER INFORMATION

      ITEM 1.  LEGAL PROCEEDINGS ........................................16
      ITEM 2.  CHANGES IN SECURITIES.....................................16
      ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K..........................16

SIGNATURES...............................................................17

Exhibit (15) - Letter re Unaudited Interim Financial Information......Tab 1

Exhibit (27) - Financial Data Schedule...................................*

*Submitted in electronic format only


                                    (i)


<PAGE>
<TABLE>
<CAPTION>
                    THE SOUTHLAND CORPORATION AND SUBSIDIARIES 
                      CONDENSED CONSOLIDATED BALANCE SHEETS 
                   (DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA) 

                                       ASSETS 

                                                           MARCH 31,      DECEMBER 31, 
                                                             1998            1997
                                                        -------------    ------------- 
                                                        (UNAUDITED) 
<S>                                                     <C>              <C> 
CURRENT ASSETS: 
   Cash and cash equivalents                            $      3,055     $     38,605 
   Accounts receivable                                       130,048          126,495 
   Inventories                                               102,253          125,396 
   Other current assets                                      148,986           96,145
                                                        -------------    ------------- 
       TOTAL CURRENT ASSETS                                  384,342          386,641 
PROPERTY AND EQUIPMENT                                     1,462,132        1,416,687 
OTHER ASSETS                                                 288,950          286,753
                                                        -------------    ------------- 
                                                        $  2,135,424     $  2,090,081
                                                        =============    ============= 

                    LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES: 
   Trade accounts payable                               $    187,077     $    196,799 
   Accrued expenses and other liabilities                    277,521          275,267 
   Commercial paper                                           17,696           48,744 
   Long-term debt due within one year                        269,859          208,839
                                                        -------------    ------------- 
       TOTAL CURRENT LIABILITIES                             752,153          729,649 
DEFERRED CREDITS AND OTHER LIABILITIES                       190,519          187,414 
LONG-TERM DEBT                                             1,522,391        1,594,545 
CONVERTIBLE QUARTERLY INCOME DEBT SECURITIES                 380,000          300,000 
COMMITMENTS AND CONTINGENCIES 
SHAREHOLDERS' EQUITY (DEFICIT): 
   Common stock, $.0001 par value                                 41               41 
   Additional capital                                        625,574          625,574 
   Accumulated deficit                                    (1,346,292)      (1,352,058)
   Accumulated other comprehensive income                     11,038            4,916
                                                        -------------    ------------- 
       TOTAL SHAREHOLDERS' EQUITY (DEFICIT )                (709,639)        (721,527)
                                                        -------------    ------------- 
                                                        $  2,135,424     $  2,090,081 
                                                        =============    ============= 
</TABLE> 



              See notes to condensed consolidated financial statements.


                                          1



<PAGE>
<TABLE>
<CAPTION>
                             THE SOUTHLAND CORPORATION AND SUBSIDIARIES
                            CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                            (DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)

                                            (UNAUDITED)

                                                                             THREE MONTHS
                                                                            ENDED MARCH 31,
                                                                   ------------------------------
                                                                        1998             1997
                                                                   -------------    -------------
<S>                                                                <C>              <C>
REVENUES:
     Net sales (Including $229,242 and $222,765 in excise taxes)   $  1,594,958     $  1,604,400
     Other income                                                        20,443           21,623
                                                                   -------------    -------------
                                                                      1,615,401        1,626,023

COSTS AND EXPENSES:
     Cost of goods sold                                               1,140,539        1,154,633
     Operating, selling, general and administrative expenses            471,716          438,288
     Interest expense, net                                               22,573           23,899
                                                                   -------------    -------------
                                                                      1,634,828        1,616,820
                                                                   -------------    -------------
EARNINGS (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY GAIN             (19,427)            9,203
INCOME TAXES (BENEFIT)                                                  (7,322)            3,681
                                                                   -------------     -------------
EARNINGS (LOSS) BEFORE EXTRAORDINARY GAIN                              (12,105)            5,522
                                                                                                  
EXTRAORDINARY GAIN ON DEBT REDEMPTION (net of                                                      
        tax effect of $11,425)                                          17,871               -    
                                                                    ------------     -------------
NET EARNINGS                                                      $      5,766      $      5,522
                                                                   =============     =============
EARNINGS (LOSS) BEFORE EXTRAORDINARY GAIN PER COMMON SHARE:
     Basic                                                              $(.03)               $.01
     Diluted                                                            $(.03)               $.01
EXTRAORDINARY GAIN ON DEBT REDEMPTION PER COMMON SHARE:
     Basic                                                               $.04                $.00
     Diluted                                                             $.04                $.00
NET EARNINGS PER COMMON SHARE: 
     Basic                                                               $.01                $.01
     Diluted                                                             $.01                $.01
                                                                                                  
</TABLE>



                   See notes to condensed consolidated financial statements.

                                                2



<Page
<TABLE>
<CAPTION>
                                     THE SOUTHLAND CORPORATION AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (DOLLARS IN THOUSANDS)

                                                    (UNAUDITED)
                                                                                         THREE MONTHS
                                                                                        ENDED MARCH 31,
                                                                                -------------------------------
                                                                                     1998              1997
                                                                                -------------    --------------
<S>                                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings                                                                $      5,766     $      5,522
    Adjustments to reconcile net earnings to net cash provided
        by operating activities:
        Extraordinary gain on debt redemption                                        (17,871)             -  
        Depreciation and amortization of property and equipment                       42,623           43,593
        Other amortization                                                             4,757            4,757
        Deferred income taxes                                                         (5,838)             744
        Noncash interest expense                                                         138            1,723
        Other noncash income                                                            (885)            (119)
        Net loss on property and equipment                                                55              312
        Decrease in accounts and notes receivable                                        292           15,601
        Decrease in inventories                                                       23,143            7,366
        Increase in other assets                                                      (3,850)          (3,365)
        Decrease in trade accounts payable and other liabilities                     (18,944)         (49,027)
                                                                                -------------    -------------
                  NET CASH PROVIDED BY OPERATING ACTIVITIES                           29,386           27,107
                                                                                -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Payments for purchase of property and equipment                                  (80,501)         (41,149)
    Proceeds from sale of property and equipment                                       1,384            4,502
    Increase in restricted cash                                                      (43,213)             -  
    Other                                                                                123              478 
                                                                                -------------    -------------
                  NET CASH USED IN INVESTING ACTIVITIES                             (122,207)         (36,169)
                                                                                -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from commercial paper and revolving credit facilities                 1,488,195        1,460,167
    Payments under commercial paper and revolving credit facilities               (1,459,140)      (1,425,198)
    Proceeds from issuance of long-term debt                                             -            225,000
    Principal payments under long-term debt agreements                               (51,223)        (236,380)
    Proceeds from issuance of convertible quarterly income debt securities            80,000              -   
    Other                                                                               (561)            (450)
                                                                                -------------    -------------
                  NET CASH PROVIDED BY FINANCING ACTIVITIES                           57,271           23,139
                                                                                -------------    -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                 (35,550)          14,077
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                        38,605           36,494
                                                                                -------------    -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $      3,055     $     50,571
                                                                                =============    =============

RELATED DISCLOSURES FOR CASH FLOW REPORTING:
    Interest paid, excluding SFAS No.15 Interest                                $    (24,724)    $    (25,009)
                                                                                =============    =============
    Net income taxes refunded                                                   $        859     $      1,522
                                                                                =============    =============
    Assets obtained by entering into capital leases                             $      8,949     $      2,284 
                                                                                =============    =============


                                  See notes to condensed consolidated financial statements.


                                                                3
</TABLE>



<PAGE>

              THE SOUTHLAND CORPORATION AND SUBSIDIARIES

           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                THREE MONTHS ENDED MARCH 31, 1998
              (DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)

                          (UNAUDITED)

1.   BASIS OF PRESENTATION:

     The condensed consolidated balance sheet as of March 31, 1998, and the 
condensed consolidated statements of earnings and cash flows for the three-
month periods ended March 31, 1998 and 1997, have been prepared by the 
Company without audit.  In the opinion of management, all adjustments 
(which included only normal, recurring adjustments) necessary to present 
fairly the financial position at March 31, 1998, and the results of 
operations and cash flows for all periods presented have been made.  The 
results of operations for the interim periods are not necessarily 
indicative of the operating results for the full year.

     The condensed consolidated balance sheet as of December 31, 1997, is 
derived from the audited financial statements but does not include all 
disclosures required by generally accepted accounting principles. The notes 
accompanying the consolidated financial statements in the Company's Annual 
Report on Form 10-K for the year ended December 31, 1997, include 
accounting policies and additional information pertinent to an 
understanding of both the December 31, 1997, balance sheet and the interim 
financial statements.  The information has not changed except as a result 
of normal transactions in the three months ended March 31, 1998, and as 
discussed in the following notes.

2.   COMPREHENSIVE INCOME:

     In January 1998, the Company adopted the provisions of Statement of 
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive 
Income," which is required for fiscal years beginning after December 15, 
1997.  SFAS No. 130 establishes standards for reporting comprehensive 
income and its components in a full set of general-purpose financial 
statements.  The components of accumulated other comprehensive income, net 
of tax, of the Company are as follows:
<TABLE>
<CAPTION>
                                                            March 31,   December 31,
                                                              1998          1997
                                                          -----------   ------------
<S>                                                       <C>           <C>
Unrealized gain on equity securities                      $   15,343    $    9,192
Foreign currency translation adjustments                      (4,305)       (4,276)
                                                          -----------   ------------
Accumulated other comprehensive income                    $   11,038    $    4,916
                                                          ===========   ============
</TABLE>

The components of comprehensive income of the Company for the three months 
ended March 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
                                                                 Three Months
                                                                Ended March 31,
                                                               -----------------
                                                                 1998      1997
                                                               ------    --------
<S>                                                            <C>       <C>
Net earnings                                                   $  5,766  $  5,522
Other comprehensive income (expense), net of tax:
   Unrealized gains on equity securities                          6,151    (2,487)
   Foreign currency translation adjustments                         (29)     (394)
                                                                --------  --------
         Other comprehensive income (expense)                     6,122    (2,881)
                                                                --------  --------
Comprehensive income                                           $ 11,888  $  2,641   
                                                               ========= =========
</TABLE>
                                      4


<PAGE>

3.   EARNINGS PER SHARE:

     In December 1997, the Company adopted the provisions of SFAS No. 128, 
"Earnings per Share," which requires the following reconciliation of the 
numerators and the denominators of the basic and diluted per-share 
computations for net earnings for the periods presented:
<TABLE>
<CAPTION>
                                                                                           Three Months
                                                                                          Ended March 31,
                                                                                       --------------------
                                                                                           1998       1997
                                                                                       --------    --------
<S>                                                                                  <C>           <C>       
BASIC EPS COMPUTATION:
  Earnings (Numerator):
    Earnings (loss) before extraordinary gain available to common shareholders        $  (12,105)   $  5,522
    Earnings on extraordinary gain available to common shareholders                       17,871         -
                                                                                      -----------   ---------
    Net earnings available to common shareholders                                     $    5,766    $  5,522
                                                                                       ==========   =========
  Shares (Denominator):
    Weighted average number of common shares outstanding                                 409,923     409,923
                                                                                       ==========   =========
BASIC EPS:
  Earnings (loss) per common share before extraordinary gain                          $   (.03)     $  .01
  Earnings per common share on extraordinary gain                                          .04          -
                                                                                       ----------   ---------
  Net earnings per common share                                                       $    .01      $  .01
                                                                                       ==========   =========

DILUTED EPS COMPUTATION:
  Earnings (Numerator):
    Earnings (loss) before extraordinary gain available to common shareholders        $  (12,105)   $  5,522
    Add interest on Convertible Quarterly Income Debt Securities, net of tax                 -  (A)      -  (A)
                                                                                       ---------     --------
    Earnings before extraordinary gain available to common shareholders
          plus assumed conversions                                                       (12,105)      5,522

    Earnings on extraordinary gain available to common shareholders                       17,871         -  
                                                                                       ---------     --------
    Net earnings available to common shareholders plus assumed
          conversions                                                                 $    5,766    $  5,522
                                                                                       ==========    ========
  Shares (Denominator):
    Weighted average number of common shares outstanding                                409,923      409,923
    Add effects of assumed conversions:
          Conversion of Convertible Quarterly Income Debt Securities                         -  (A)      -  (A)
          Exercise of stock options                                                          -  (B)      -  (B)
                                                                                       ----------    ---------
    Weighted average number of common shares outstanding plus shares
          from assumed conversions                                                       409,923     409,923
                                                                                        =========    =========
DILUTED EPS :
    Earnings (loss) per common share before extraordinary gain                          $   (.03)     $  .01     
    Earnings per common share on extraordinary gain                                          .04          -
                                                                                         ---------   ---------
    Net earnings per common share                                                       $    .01      $  .01
                                                                                         =========    =========

(A)  The Convertible Quarterly Income Debt Securities are not assumed  converted
     for the three months ended March 31, 1998 and 1997, because they have an
     antidilutive effect on EPS.
(B)  The weighted average shares for the three months ended March 31,1998 and 1997,
     do not assume exercise of stock options since the average market price of 
     shares for both periods is below the options' exercise prices.
</TABLE>

                                      5


<PAGE>

4.   DEBT REDEMPTION:

     On March 31, 1998, the Company completed the redemption of its 12% 
Second Priority Senior Subordinated Debentures (Series C) due 2009 ("12% 
Debentures") with a portion of the proceeds from the issuance of $80 
million principal amount of Convertible Quarterly Income Debt Securities 
due 2013 ("1998 QUIDS") to Ito-Yokado Co., Ltd., and Seven-Eleven Japan 
Co., Ltd., on February 26, 1998.  The 1998 QUIDS have an interest rate of 
4-1/2% and are convertible into 32,508,432 shares of the Company's common 
shares.  The redemption of the 12% Debentures resulted in an extraordinary 
gain of $17,871 (net of tax effect of $11,425) as a result of the inclusion 
of SFAS No. 15 interest in the carrying amount of the debt.  

5.   SEVERANCE COSTS:

     In the first quarter of 1998, the Company accrued $7,104 for severance 
benefits for the reduction in force of more than 150 management and 
administrative employees.  The cost of the severance benefits is recorded 
in operating, selling, general and administrative expenses.  As of 
March 31, 1998, there have been 43 employees terminated with $728 of 
severance benefits paid against the accrual.

6.   SUBSEQUENT EVENTS:

     On April 30, 1998, funding occurred on a yen-denominated loan for 
12.5 billion yen or approximately $96.5 million of proceeds, which 
included exercising a put option at the strike price of 129.53 yen per 
dollar.  The loan has an interest rate of 2.325% and will be repaid from 
the Seven-Eleven Japan area license royalty income beginning in 2001, after 
the existing yen loan has been retired.  Both principal and interest of the 
loan are nonrecourse to the Company.  Proceeds of the loan will be used for 
general corporate purposes.

     The purchase of the put option was financed by the Company by selling 
a call option  at a strike price of 125.08 yen per dollar with the same yen 
amount and maturity as the put option, thereby committing the Company to 
exchange at a rate of 125.08.  The call option was marked to market and, as 
a result, income of $1,510 was recognized during the first quarter of 1998. 
The call option expired unexercised on April 28, 1998.  

  On May 4, 1998, the Company purchased 100% of the stock of a company that 
operates 132 convenience stores in the New England area.  Also, on May 12, 
1998, the Company purchased 20 convenience stores in the South Bend, 
Indiana area.


                                 6



<PAGE>
                           REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders of
    The Southland Corporation

We have reviewed the accompanying condensed consolidated balance sheet of 
The Southland Corporation and Subsidiaries as of March 31, 1998, and the 
related condensed consolidated statements of earnings and cash flows for 
the three-month periods ended March 31, 1998 and 1997.  These financial 
statements are the responsibility of the company's management.

We conducted our review in accordance with standards established by the 
American Institute of Certified Public Accountants.  A review of interim 
financial information consists principally of applying analytical 
procedures to financial data and making inquiries of persons responsible 
for financial and accounting matters.  It is substantially less in scope 
than an audit conducted in accordance with generally accepted auditing 
standards, the objective of which is the expression of an opinion regarding 
the financial statements taken as a whole.  Accordingly, we do not express 
such an opinion.

Based on our review, we are not aware of any material modifications that 
should be made to the accompanying financial statements of The Southland 
Corporation and Subsidiaries for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing 
standards, the consolidated balance sheet as of December 31, 1997, and the 
related consolidated statements of earnings, shareholders' equity 
(deficit), and cash flows for the year then ended (not presented herein); 
and in our report dated February 5, 1998 (except as to Items 2 and 3 in 
Note 17, for which the date is March 12, 1998), we expressed an unqualified 
opinion on those consolidated financial statements.  In our opinion, the 
information set forth in the accompanying condensed consolidated balance 
sheet as of December 31, 1997, is fairly stated, in all material respects, 
in relation to the consolidated balance sheet from which it has been 
derived.



COOPERS & LYBRAND L.L.P.



Dallas, Texas
April 21, 1998


                                      7



<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Some of the matters discussed in this quarterly report contain 
forward-looking statements regarding the Company's future business which 
are subject to certain risks and uncertainties, including competitive 
pressures, adverse economic conditions and government regulations. These 
issues, and other factors, which may be identified from time to time in the 
Company's reports filed with the SEC, could cause actual results to differ 
materially from those indicated in the forward-looking statements.


RESULTS OF OPERATIONS

SUMMARY OF RESULTS OF OPERATIONS

     The Company's reported net earnings were $5.8 million ($.01 per share) 
for the first quarter of 1998, compared to net earnings of $5.5 million 
($.01 per share) for the first quarter of 1997.  The first quarter of 1998 
included a $17.9 million (after tax) extraordinary gain from the redemption 
of the Company's 12% Senior Subordinated Debentures ("12% Debentures"), 
which was substantially offset by the cumulative costs associated with a 
lease termination, severance and a one-time write-off of slow-moving 
inventory.  The prior year included items which benefited earnings by 
approximately $3 million (pretax), the most significant of which was a 
reduction in an estimated environmental liability (see Liquidity and 
Capital Resources - Environmental).

MANAGEMENT STRATEGIES

     Since 1992, the Company has been committed to several key strategies 
that it believes, over the long term, will provide further differentiation 
from competitors and allow 7-Eleven to maintain its position as the premier 
convenience retailer.  These strategies include:

*Upgrading the Company's store base through developing or acquiring new 
stores, continuing the upgrading of existing stores and closing 
underachieving stores. In 1998, new store openings are expected to 
significantly outpace closings, with the expansion occurring in existing 
markets to support the Company's fresh food and combined-distribution 
initiatives.

*A customer-driven approach to merchandising, which focuses on providing 
the customer an expanded selection of quality products at a good value.

*An everyday-fair-pricing strategy which provides consistent, reasonable 
prices on all items.

*Daily delivery of time-sensitive or perishable items, along with high-
quality, ready-to-eat foods, through the use of combined distribution 
centers, fresh-food commissaries and bakery facilities.  These facilities, 
which are generally third party operated, are designed to provide fresher 
products, improve in-stock conditions and lower product costs.

*The development of a retail information system which initially has 
automated accounting and other store-level tasks. The current phase 
involves the installation of point-of-sale registers with scanning and 
ordering capabilities.

                                  8


<PAGE>
(EXCEPT WHERE NOTED, ALL PER-STORE NUMBERS REFER TO AN AVERAGE OF ALL 
STORES RATHER THAN ONLY STORES OPEN MORE THAN ONE YEAR.)

SALES
     The Company recorded net sales of $1.59 billion for the three months 
ended March 31, 1998, compared to sales of $1.60 billion during the same 
period in 1997.  The sales decline is entirely due to lower retail gasoline 
prices, as per-store merchandise sales and gasoline gallons both increased 
over the prior year.  The first quarter of 1998 produced a U.S. same-store 
(stores open more than one year) merchandise sales increase of 2.7%.  After 
adjusting for first quarter inflation of 1.1%, same-store merchandise sales 
real growth was 1.6%.

     Regionally, per-store merchandise sales were fairly consistent with 
the exception of the Southwest region, which was impacted by El Nino-
related weather, combined with intense competitive pricing on cigarettes 
and gasoline.  Highlights of changes in category results for the first 
quarter of 1998 compared to 1997 are as follows:  COFFEE SALES are up 
substantially, partially due to the introduction of new products; CIGARETTE 
SALES have increased, but primarily due to  price increases in response to 
manufacturer-led cost increases, which have had an unfavorable impact on 
margin and gross profit; FOUNTAIN DRINK sales have declined as ready-to-
drink products have become the preference of more customers.
 
     Gasoline sales dollars per store decreased 11.7% for the first 
quarter, due to significantly lower retail prices.  Average per-store 
gallonage increased 2.3% when compared to 1997.

<TABLE>
<CAPTION>
GROSS PROFITS                                                     Three Months Ended
                                                                    March 31, 1998
                                                                ----------------------
                                                                 MERCHANDISE   GASOLINE
                                                                 -----------   --------
<S>                                                              <C>          <C>
Gross Profit - DOLLARS IN MILLIONS                               $  410.9     $   43.5

INCREASE/(DECREASE) FROM PRIOR YEAR - ALL STORES
------------------------------------------------
Average per-store gross profit dollar change                         (0.1)%       10.2%
Margin percentage point change (gasoline in cents per gallon)       (1.03)          .89
Average per-store sales (gasoline in gallons)                         2.9%         2.3%
</TABLE>

     Total merchandise gross profit dollars were slightly higher in the 
first quarter of 1998 than the comparable period in 1997.  Higher average 
per-store merchandise sales were almost entirely offset by the lower 
merchandise margin.  Merchandise margin was negatively impacted by the 
Company's decision to write off $5 million of slow-moving inventory, 
combined with increased write-offs during the roll-out of the Company's 
fresh-food programs, and pricing adjustments in certain categories in a 
continuing effort to provide fair prices on all products.  The Company 
anticipates the write-off of slow-moving inventory will provide 
opportunities to accelerate the introduction of new products, combined with 
potentially lower write-offs for the remainder of the year.  As a result of 
the items discussed above, merchandise margin is projected to be slightly 
lower in 1998, when compared to 1997.

     During the first three months of 1998, gasoline gross profits 
increased $4.6 million, versus the comparable period in 1997, due to 
favorable per-store gallon sales, higher margins and increased gasoline 
outlets.  Market conditions have contributed to the improved margins, as 
the supply problems experienced in 1997 have occurred to a lesser extent so 
far in 1998.  While management anticipates fewer supply problems in 1998, 
it expects competitive conditions to remain intense.

                                  9


<PAGE>
OPERATING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("OSG&A") 

     Operating, selling, general and administrative expenses increased 
$33.4 million in the first quarter of 1998 compared to the same period in 
1997. The ratio of OSG&A expenses to sales was 29.6% in the first three 
months of 1998, an increase of 2.3 percentage points from the same period 
in 1997.  Expense resulting from the cumulative effects of a computer 
equipment lease termination, combined with severance costs, unfavorably 
impacted 1998 OSG&A by nearly $19 million.  The retail price of gasoline, 
which dropped nearly 14% in 1998 compared to 1997's first quarter, also 
impacted the ratio of OSG&A expenses to sales.  Excluding the items 
discussed above, the ratio of OSG&A to sales was approximately 27.3% for 
the first quarter of both 1998 and 1997.  

     In addition to the items discussed above, a portion of the increase in 
OSG&A expenses resulted from costs associated with the Company's 
implementation of its retail information system and other strategic 
initiatives, as well as from higher store labor costs, all of which were 
partially offset by lower insurance costs.  In 1997's first quarter, OSG&A 
benefited from a reduction of an estimated environmental liability.  
Incremental costs of approximately $3 million associated with the Company's 
retail information system, were expensed in the first quarter of 1998.  
While the ratio will vary on a quarterly basis, management believes this 
ratio will not improve dramatically during the rollout phase of the retail 
information system.

     The Company continues to review the functions necessary to enable its 
stores to respond faster and more cost efficiently to rapidly changing 
customer needs and preferences. In conjunction with this review, management 
continues to realign and reduce personnel and office facilities in order to 
eliminate non-essential costs, while devoting resources to the 
implementation of its retail information system and other strategic 
initiatives (see Management Strategies).  In the first quarter of 1998, an 
accrual of $7.1 million was made representing severance benefits for more 
than 150 management and administrative employees to be terminated.  As of 
March 31, 1998, nearly one-third of the positions have been reduced, with 
the balance to be completed later this year.  The benefits from these 
reductions on an annualized basis approximate the one-time charge, with the 
majority of the benefit carrying forward to future years.

     The Company is a defendant in two legal actions, which are referred to 
as the 7-Eleven OFFF and Valente cases, filed by franchisees in 1993 and 
1996, respectively, asserting various claims against the Company.  A 
nationwide settlement has recently been negotiated and, in connection with 
the settlement, these two cases have been combined on behalf of a class of 
all persons who operated 7-Eleven convenience stores in the United States 
at any time between January 1, 1987 and July 31, 1997, under franchise 
agreements with the Company.  Class members have overwhelmingly approved 
the settlement, and the court presiding over the settlement process gave 
its final approval of the settlement on April 24, 1998.  The settlement 
will become effective in August, unless an appeal is filed.  The Company's 
accruals are sufficient to cover the payment due under the settlement with 
no material impact on 1998 earnings.

                                   10


<PAGE>
INTEREST EXPENSE, NET

     Net interest expense decreased $1.3 million in 1998 over the first 
quarter of 1997.  The decrease was primarily due to the write-off of 
deferred costs associated with the Company's refinancing of its credit 
agreement in February of 1997.

     Approximately 39% of the Company's debt contains floating rates that 
will be unfavorably impacted by rising interest rates.  The weighted-
average interest rate for such debt was 5.8% for the first quarter of both 
1998 and 1997.  The Company expects net interest expense in 1998 to remain 
relatively flat, based upon anticipated levels of debt and interest rate 
projections.  Factors increasing 1998 interest expense include higher 
borrowings/obligations to finance new store development and the redemption 
of the Company's 12% Debentures which, in accordance with SFAS No. 15, 
"Accounting by Debtors and Creditors for Troubled Debt Restructuring", 
recognize no interest expense in the statement of earnings (see Liquidity 
and Capital Resources).  Items that will decrease 1998 interest expense 
include a lower interest rate on the existing yen-denominated loan (see 
Liquidity and Capital Resources), the new 2.325% yen-denominated loan 
(which will reduce short-term borrowings) and higher capitalized interest.  
The interest rate on the existing yen-denominated loan was reset in March 
of 1998, resulting in a rate reduction of 315 basis points.

     In accordance with SFAS No. 15, no interest expense is recognized on 
the Company's public debt securities. These securities were recorded at an 
amount equal to the future undiscounted cash payments, both principal and 
interest, and accordingly, the cash interest payments are charged against 
the recorded amount of such securities and are not treated as interest 
expense.

EXTRAORDINARY GAIN

     In March 1998, redemption of the Company's 12% Debentures resulted in 
a $17.9 million after-tax gain from the retirement of future undiscounted 
interest payments as recorded under SFAS No. 15.  The cash outlay to the 
Company was $22.5 million, which was financed through the issuance of $80 
million of 4-1/2% Convertible Quarterly Income Debt Securities ("1998 
Convertible Debt") due 2013, to Ito-Yokado Co., Ltd., and Seven-Eleven 
Japan Co., Ltd., the joint owners of IYG Holding Company, which is the 
Company's majority shareholder.


LIQUIDITY AND CAPITAL RESOURCES

     The majority of the Company's working capital is provided from three 
sources: i) cash flows generated from its operating activities; ii) a $400 
million commercial paper facility (guaranteed by Ito-Yokado Co., Ltd.); and 
iii) short-term seasonal borrowings of up to $400 million (reduced by 
outstanding letters of credit) under its revolving credit facility.  The 
Company believes that operating activities, coupled with available short-
term working capital facilities, will provide sufficient liquidity to fund 
current operating and capital expenditure programs, as well as to service 
debt requirements.

               In April 1998, the Company entered into a financing agreement
for 12.5 billion yen, or approximately $96.5 million, monetizing its future yen 
royalty stream.  The financing, which bears interest at 2.325%, is secured

                                           11


          <PAGE>
           by a pledge (secondary to the existing yen loan) of the future
royalty payments from Seven-Eleven Japan associated with the Company's Japanese
7-Eleven trademarks.  Payment of principal and interest on the debt is
nonrecourse to the Company and will commence when the existing yen
denominated loan is paid in full, which is currently estimated to be in
2001. 
It is anticipated that this loan will be fully repaid
in 2006.

     In February 1998, the Company issued $80 million of 1998 Convertible 
Debt, which is subordinated to all existing debt except the 1995 
Convertible Debt, which has the same priority ranking. The debt has a 15-
year life, no amortization and an interest rate of 4.5%.  The instrument 
gives the Company the right to defer interest payments thereon for up to 20 
consecutive quarters.  The debt mandatorily converts into 32,508,432 shares 
of the Company's common stock if the Company's stock achieves certain 
levels after the third anniversary of issuance.  A portion of the proceeds 
from the 1998 Convertible Debt were used to redeem the Company's 12% 
Debentures at par.
 
     In April 1997, the Company entered into a $115 million Master Lease 
Facility ("MLF"), which will be the primary financing for a complete 
integrated point-of-sale system (see Management Strategies).  The 
commitment period for this lease expires in early 1999, and, based upon the 
current roll out schedules, the MLF may not be fully funded at that time.  
As a result, the Company is currently seeking, from the lessors under the 
MLF, an extension of the commitment period through the end of 1999.  If the 
Company does not receive such an extension, it may accelerate the delivery 
of the remaining components of the system from the vendors and store such 
components until installation during 1999, so that the facility is fully 
funded by the expiration date of the commitment.  Alternatively, the 
Company may find other financing to fully fund the remainder of the rollout 
of the system during 1999.
 
     The credit agreement and the MLF contain certain financial and 
operating covenants requiring, among other things, the maintenance of 
certain financial ratios, including interest and rent coverage, fixed-
charge coverage and senior indebtedness to net earnings before 
extraordinary items and interest, taxes, depreciation and amortization 
("EBITDA").  The covenant levels established by the credit agreement and 
the MLF generally require continuing improvement in the Company's financial 
condition.  In May 1998, the financial covenant levels required by these 
instruments were amended prospectively in order to allow the Company 
flexibility to continue its store growth strategy.  In addition, a maximum 
amount of annual capital expenditures was established, which does permit 
the levels of capital spending within the Company's strategic plans.

     For the period ended March 31, 1998, the Company was in compliance 
with all of the covenants required under the credit agreement, including 
compliance with the principal financial and operating covenants under the 
pre-amended version of the credit agreement (calculated over the latest 12-
month period) as follows:

                                                        Requirements
                                                     --------------------
     Covenants                        Actuals        Minimum      Maximum
     ---------                        -------        -------      -------
     Interest and rent coverage *   2.09 to 1.0    2.00 to 1.0
     Fixed charge coverage          0.69 to 1.0    0.35 to 1.0
     Senior indebtedness to EBITDA  3.27 to 1.0                  3.40 to 1.0

     * INCLUDES EFFECTS OF THE SFAS NO. 15 INTEREST PAYMENTS.

                                  12


<PAGE>
     During the first three months of 1998, the Company repaid $51.2 
million of debt of which $22.5 million related to the redemption of the 
Company's 12% Debentures.  The remaining principal reduction during the 
quarter of $28.7 million included a $14.1 million quarterly installment due 
on the Term Loan and $8.5 million for principal payments on the Company's 
yen-denominated loan (secured by the royalty income stream from its area 
licensee in Japan).  Outstanding balances at March 31, 1998, for commercial 
paper, Term Loan and Revolver, were $367.7 million, $210.9 million and 
$125.0 million, respectively.  As of March 31, 1998, outstanding letters of 
credit issued pursuant to the credit agreement totaled $63.5 million.

CASH FROM OPERATING ACTIVITIES

     Net cash provided by operating activities was $29.4 million for the 
first quarter of 1998, similar to the $27.1 million provided in the same 
period of 1997 (see Results of Operations section).

CAPITAL EXPENDITURES

     In the first three months, net cash used in investing activities 
consisted primarily of payments of $80.5 million for property and 
equipment.  The majority of this capital was used for new store 
development, continued implementation of the Company's retail information 
system, remodeling stores, new equipment to support merchandising 
initiatives, upgrading retail gasoline facilities, replacing equipment and 
complying with environmental regulations.

     The Company expects 1998 capital expenditures, excluding lease 
commitments, to exceed $300 million. Capital expenditures are being used to 
develop or acquire new stores, upgrade store facilities, further implement 
a retail information system, replace equipment, upgrade gasoline facilities 
and comply with environmental regulations.  The amount of expenditures 
during the year will be materially impacted by the proportion of new store 
development funded through working capital versus leases and the speed at 
which new sites/acquisitions can be located, negotiated, permitted and 
constructed.

CAPITAL EXPENDITURES - ACQUISITIONS

     In May 1998, the Company purchased all of the capital stock of 
Christy's Market, Inc., of Brockton, Mass, thereby acquiring 132 Christy's 
Market convenience stores, located in the New England area. Also in May 
1998, the Company purchased the assets of 20 'red D mart' convenience 
stores in the South Bend, Indiana, area from MDK Corporation of Goshen, 
Ind. 

CAPITAL EXPENDITURES - GASOLINE EQUIPMENT

     The Company incurs ongoing costs to comply with federal, state and 
local environmental laws and regulations primarily relating to underground 
storage tank ("UST") systems.  The Company anticipates it will spend 
approximately $10 million in 1998 on capital improvements required to 
comply with environmental regulations relating to USTs, as well as above-
ground vapor recovery equipment at store locations, and approximately an 
additional $25 million on such capital improvements from 1999 through 2001.

                                      13


<PAGE>

ENVIRONMENTAL

     In December 1988, the Company closed its chemical manufacturing 
facility in New Jersey.  As a result, the Company is required to conduct 
environmental remediation at the facility and has submitted a clean-up plan 
to the New Jersey Department of Environmental Protection (the "State"), 
which provides for active remediation of the site for approximately a 
three-to-five-year period, as well as continued groundwater monitoring and 
treatment for a projected 15-year planning period.  The projected 15-year 
clean-up period represents a reduction from the previously reported 20-year 
period and is a result of revised estimates as determined by an independent 
environmental management company in the first quarter of 1997. These 
revised estimates, which generally resulted from the conditional approval 
of the Company's plan, reduced both the estimated time and the estimated 
costs to complete the project.  While conditional approval was received on 
its clean-up plan, the Company must supply additional information to the 
State before the plan can be finalized. The Company has recorded 
undiscounted liabilities representing its best estimates of the clean-up 
costs of $10.2 million at March 31, 1998.  In 1991, the Company and the 
former owner of the facility executed a final settlement pursuant to which 
the former owner agreed to pay a substantial portion of the clean-up costs.  
Based on the terms of the settlement agreement and the financial resources 
of the former owner, the Company has recorded a receivable of $6.0 million 
at March 31, 1998.

     Additionally, the Company accrues for the anticipated future costs and 
the related probable state reimbursement amounts for remediation activities 
at its existing and previously operated gasoline sites where releases of 
regulated substances have been detected. At March 31, 1998, the Company's 
estimated undiscounted liability for these sites was $35.1 million.  This 
estimate is based on the Company's prior experience with gasoline sites and 
its consideration of such factors as the age of the tanks, location of tank 
sites and experience with contractors who perform environmental assessment 
and remediation work.  The Company anticipates that substantially all of 
the future remediation costs for detected releases at these sites as of 
March 31, 1998 will be incurred within the next five years.

     Under state reimbursement programs, the Company is eligible to receive 
reimbursement for a portion of future remediation costs, as well as a 
portion of remediation costs previously paid.  Accordingly, at March 31, 
1998, the Company has recorded a net receivable of $40.0 million for the 
estimated probable state reimbursements.  In assessing the probability of 
state reimbursements, the Company takes into consideration each state's 
fund balance, revenue sources, existing claim backlog, status of clean-up 
activity and claim ranking systems.  As a result of these assessments, the 
recorded receivable amount is net of an allowance of $8.8 million.  While 
there is no assurance of the timing of the receipt of state reimbursement 
funds, based on its experience, the Company expects to receive the majority 
of state reimbursement funds, except from California, within one to three 
years after payment of eligible remediation expenses, assuming that the 
state administrative procedures for processing such reimbursements have 
been fully developed.  The Company estimates that it may take one to seven 
years to receive reimbursement funds from California.  Therefore, the 
portion of the recorded receivable amounts that relate to sites where 
remediation activities have been conducted have been discounted at 5.6% to 
reflect their present value. Thus, the recorded receivable amount is also 
net of a discount of $6.0 million. 

                                     14


<PAGE>

     The estimated future assessment and remediation expenditures and 
related state reimbursement amounts could change within the near future as 
governmental requirements and state reimbursement programs continue to be 
implemented or revised.

ENVIRONMENTAL - ACQUISITIONS

     Both the 'red D mart' and Christy's Market acquisitions include retail 
gasoline outlets that are subject to certain environmental regulations.  
Under the terms of the acquisition agreements, the sellers are responsible 
for ensuring compliance with all applicable environmental regulations 
existing as of the closing date.  In addition, the acquisition agreements 
provide that, subject to certain limitations, the sellers will bear the 
expense of future environmental cleanup resulting from existing conditions 
at the sites, which is required under applicable legal requirements (see 
Capital Expenditures - Acquisitions).

YEAR 2000

     The year 2000 issue is the result of computer programs being written 
using two digits rather than four to define the applicable year. Some of 
the Company's older computer programs that have date-sensitive software may 
recognize a date using "00" as the year 1900 rather than the year 2000. 
This could result in a system failure or miscalculations causing 
disruptions of operations.

     The Company has replaced, over the last couple of years, or has plans 
to replace significant portions of its existing systems with third-party-
provided software, which properly interpret dates beyond December 31, 1999.  
In addition, the Company has contracted resources to modify the remainder 
of its existing software to make it year 2000 compliant. Based on a recent 
assessment, the Company believes all system modifications and related 
testing should be completed by early 1999.

     The Company has initiated formal communications with its significant 
suppliers to determine the extent to which the Company is vulnerable to 
those third parties' failure to remediate their own year 2000 issue.  At 
this time, based on presently available information, the Company does not 
foresee any material effects related to outside company compliance.

     The Company does not believe the costs related to the year 2000 
compliance project will be material to its financial position or results of 
operations. However, the costs of the project and the date on which the 
Company plans to complete the year 2000 modifications are based on 
management's best estimates, which were derived utilizing numerous 
assumptions of future events including the continued availability of 
certain resources, third party modification plans and other factors.  As a 
result, there can be no assurance that these estimates will be achieved and 
the actual costs and vendor compliance could differ materially from those 
plans, resulting in a material financial risk.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       Not Required.
                                    15


<PAGE>
                                 PART II.
                             OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     As previously reported, the Company is a defendant in two legal 
actions, which are referred to as the 7-Eleven OFFF and Valente cases, 
filed by franchisees in 1993 and 1996, respectively, asserting various 
claims against the Company.  A nationwide settlement has recently been 
negotiated and, in connection with the settlement, these two cases have 
been combined on behalf of a class of all persons who operated 7-Eleven 
convenience stores in the United States at any time between January 1, 1987 
and July 31, 1997, under franchise agreements with the Company.  Class 
members have overwhelmingly approved the settlement, and the court 
presiding over the settlement process gave its final approval of the 
settlement on April 24, 1998.  The settlement will become effective in 
August, unless an appeal is filed.  The Company's accruals are sufficient 
to cover the payment due under the settlement with no material impact on 
1998 earnings.

     There are no other reportable suits or proceedings pending or 
threatened against the Company other than as previously reported.


ITEM 2.  CHANGES IN SECURITIES.

     On March 31, 1998, the Company called its 12% Second Priority Senior 
Subordinated Debentures, (Series C) due on June 15, 2009 (the 
"12% Debentures") for redemption at par value plus accrued interest.  
Please see "Management's Discussion and Analysis of Financial Condition and 
Results of Operations - Extraordinary Gain" elsewhere in this Form 10-Q for 
further detail about the redemption of the 12% Debentures and refinancing 
related thereto.  In February 1998, the Company issued $80 million of 4.5% 
Convertible Quarterly Income Debt Securities due 2013 to Ito-Yokado Co., 
Ltd. ($40.8 million) and Seven-Eleven Japan Co., Ltd. ($39.2 million).  
Please see "Management's Discussion and Analysis of Financial Condition and 
Results of Operations - Liquidity and Capital Resources" in this Form 10-Q 
for further detail about these securities.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a)    Exhibits:

            1.  Exhibit (15) -- Letter re Unaudited Interim Financial
                                 Information.
                              Letter of Coopers & Lybrand L.L.P.,
                                 Independent Accountants.

            2.  Exhibit (27) -- Financial Data Schedule.
                              Submitted in electronic format only.

     (b)    8-K Reports:

During the first quarter of 1998, the Company filed no reports on Form 8-K.


                                      16


<PAGE>

                               SIGNATURES

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

                                         THE SOUTHLAND CORPORATION
                                             (Registrant)



Date:  May 13, 1998                  /s/     Clark J. Matthews, II
                                     ------------------------------
                                     (Officer)
                                     Clark J. Matthews, II
                                     President and Chief Executive Officer


Date:  May 13, 1998                 /s/     Donald E. Thomas
                                    --------------------------------
                                   (Principal Accounting Officer)
                                   Donald E. Thomas
                                   Vice President and Controller




                                   17