SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                        
                                    FORM 10-Q
                                        
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934.
                                        
For the quarterly period ended December 31, 1996

                                       OR

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

For the transition period from ______________ to ________________

Commission File Number 1-7258
                                        
                                TANDYCRAFTS, INC.
              (Exact name of registrant as specified in its charter)
                                        
Delaware                                              75-1475224
(State of incorporation)             (I.R.S. Employer Identification Number)


                 1400 Everman Parkway, Fort Worth, Texas  76140
               (Address of principal executive offices) (Zip Code)

                                 (817) 551-9600
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X       No___.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

       Class                      Shares outstanding as of January 31, 1996
-----------------------------     -----------------------------------------
Common Stock, $1,00 par value                     12,560,767



                                TANDYCRAFTS, INC.
                                        
                                    Form 10-Q
                                        
                         Quarter Ended December 31, 1996
                                        
                                TABLE OF CONTENTS
                                        
                         PART 1 - FINANCIAL INFORMATION

Item                                                    Page No.
----                                                    --------

1.   Condensed Consolidated Financial Statements             3-9

2.   Management's Discussion and Analysis of
     Financial Condition and Results of Operations          9-16


                           PART II - OTHER INFORMATION

4.   Submission of Matters to a Vote of Security
     Holders                                                  17

6.   Exhibits and Reports on Form 8-K                         17

     Signatures                                               18


                                     PART I
                                    -------
Item 1.  Financial Statements
         --------------------

                                TANDYCRAFTS, INC.
                 Condensed Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                   (Unaudited)

<TABLE><S><C>
                                          Three Months Ended          Six Months Ended
                                             December 31,                December 31,
                                      ------------------------     -----------------------
                                         1996          1995           1996         1995
                                      ----------    ----------     ----------   ----------

Net sales                             $   73,246    $   74,347     $  131,016   $  136,696
                                      ----------    ----------     ----------   ----------
                                                                          
Operating costs and expenses:                                             
 Cost of goods sold                       46,732        47,885         82,420       86,698
 Selling, general and administrative      20,775        23,263         39,437       44,176
 Restructuring charges                         0        18,818              0       18,818
 Depreciation and amortization             1,391         1,715          2,763        3,240
                                      ----------    ----------     ----------   ----------
 Total operating costs and expenses       68,898        91,681        124,620      152,932
                                      ----------    ----------     ----------   ----------
                                                                          
Operating income (loss)                    4,348       (17,334)         6,396      (16,236)
Interest expense, net                        833         1,117          1,655        2,202
                                      ----------    ----------     ----------   ----------
Income (loss) before provision                                            
 for income taxes                          3,515       (18,451)         4,741      (18,438)
Provision (benefit) for income taxes       1,230        (6,072)         1,659       (6,068)
                                      ----------    ----------     ----------   ----------
                                                                          
 Net income (loss)                    $    2,285    $  (12,379)    $    3,082   $  (12,370)
                                      ==========    ==========     ==========   ==========
                                                                          
Net income (loss) per share           $     0.19    $    (1.04)    $     0.25   $    (1.04)
                                      ==========    ==========     ==========   ==========
                                                                          
Weighted average common and                                               
 common equivalent shares                 12,346        11,935         12,272       11,852
                                      ==========    ==========     ==========   ==========
</TABLE>

                                TANDYCRAFTS, INC.
                      Condensed Consolidated Balance Sheets
                             (Dollars in thousands)
                                   (Unaudited)
                                        
                                                 December 31,       June 30,
                                                     1996             1996
                                                 ------------     ------------
ASSETS
------
Current assets:
   Cash, including short-term investments        $      2,225     $      1,512
   Trade accounts receivable, net of allowance
      for doubtful accounts of $1,268 and
      $784, respectively                               34,352           31,741
   Inventories                                         58,010           59,284
   Other current assets                                 3,660            7,234
                                                 ------------     ------------
         Total current assets                          98,247           99,771
                                                 ------------     ------------

Property and equipment, at cost                        51,510           50,686
Accumulated depreciation                              (25,476)         (23,903)
                                                 ------------     ------------
   Property and equipment, net                         26,034           26,783
                                                 ------------     ------------

Other assets                                              752              751
Goodwill                                               40,757           41,274
                                                 ------------     ------------
                                                 $    165,790     $    168,579
                                                 ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
   Current portion of long-term debt             $          0     $      3,270
   Accounts payable                                    14,284           13,259
   Accrued liabilities and other                       14,701           17,222
                                                 ------------     ------------
         Total current liabilities                     28,985           33,751
                                                 ------------     ------------

Long-term debt                                         47,010           50,000
Deferred income taxes                                   1,230            1,230

Stockholders' equity:
   Common stock, $1 par value, 50,000,000
      shares authorized, 18,527,988 shares issued      18,528           18,528
   Additional paid-in capital                          20,120           19,371
   Retained earnings                                   72,457           69,375
   Cost of stock in treasury, 6,044,751 shares
      and 6,349,607 shares, respectively              (22,540)         (23,676)
                                                 ------------     ------------
         Total stockholders' equity                    88,565           83,598
                                                 ------------     ------------
                                                 $    165,790     $    168,579
                                                 ============     ============
                                                 
                                                 
                                TANDYCRAFTS, INC.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)

                                                       Six Months Ended
                                                          December 31,
                                                 -----------------------------
                                                     1996             1995
                                                 ------------     ------------

Net cash flows from operating activities         $      6,714     $      1,643
                                                 ------------     ------------

Cash flows from investing activities:
 Additions to property and equipment, net              (1,626)          (1,840)
                                                 ------------     ------------
      Net cash used for investing activities           (1,626)          (1,840)
                                                 ------------     ------------

Cash flows from financing activities:
 Sales of treasury stock to employee benefit
   program, net                                         1,885            2,834
 Borrowings under bank credit facility, net            (6,260)               -
                                                 ------------     ------------
      Net cash provided (used) by financing
       activities                                      (4,375)           2,834
                                                 ------------     ------------

Increase in cash, including short-term
 investments                                              713            2,637
Balance, beginning of period                            1,512            1,807
                                                 ------------     ------------
Balance, end of period                           $      2,225     $      4,444
                                                 ============     ============


                                TANDYCRAFTS, INC.
            Condensed Consolidated Statement of Stockholders' Equity
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE><S><C>
                                                       Additional                                 
                                            Common      paid-in      Retained    Treasury          
                                             stock      capital      earnings     stock       Total
                                            -------    ----------    --------    --------    --------
                                                                                            
Balance, June 30, 1996                      $18,528     $ 19,371     $ 69,375    $(23,676)   $ 83,598
ESOP forfeitures of 69,097 shares                 -         (247)           -        (258)       (505)
Sale of 373,953 shares of treasury stock                                                    
 to employee benefit program                      -          996            -       1,394       2,390
Net income for six months ended                                                             
 December 31, 1996                                -            -        3,082           -       3,082
                                            -------     --------     --------    --------    --------
Balance, December 31, 1996                  $18,528     $ 20,120     $ 72,457    $(22,540)   $ 88,565
                                            =======     ========     ========    ========    ========

</TABLE>
                                TANDYCRAFTS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.  In the opinion of management, the
accompanying condensed consolidated financial statements contain all adjustments
(consisting of normal recurring accruals and restructuring charges as more fully
described in Note 4, below) necessary for a fair statement of the Company's
financial position as of December 31, 1996 and June 30, 1996, and the results of
operations and cash flows for the six-month periods ended December 31, 1996 and
December 31, 1995.  The results of operations for the three and six-month
periods ended December 31, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full fiscal year.  The consolidated financial
statements should be read in conjunction with the financial statement
disclosures contained in the Company's 1996 Annual Report to Stockholders.

NOTE 2 - INVENTORIES

The components of inventories at December 31, 1996 consisted of the following
(in thousands):

          Merchandise held for sale          $ 43,044
          Raw materials and work-in-process    14,966
                                             --------
                                             $ 58,010
                                             ========

NOTE 3 - EARNINGS PER SHARE

Net income (loss) per share is based upon the weighted average number of shares
of common stock and common stock equivalents outstanding during the periods.
For the three and six-month periods ended December 31, 1996 and 1995, the number
of weighted average shares and common stock equivalents is as follows (in
thousands):

                                       Three Months Ended   Six Months Ended
                                          December 31,        December 31,
                                       -----------------    -----------------
                                        1996      1995       1996      1995
                                       -------   -------    -------   -------

   Weighted average shares              12,346    11,935     12,272    11,852
   Common stock equivalents                  -         -          -         -
                                       -------   -------    -------   -------
   Total weighted average common and
    common equivalent shares            12,346    11,935     12,272    11,852
                                       =======   =======    =======   =======


NOTE 4 - STRATEGIC RESTRUCTURING AND CONSOLIDATION PROGRAM

Description
In December 1995, the Company adopted a strategic restructuring and
consolidation program.  The primary components of this program included: (i) the
sale of Cargo Furniture and Accents, (ii)  the sale or closure of Prestige
Leather Creations, David James Manufacturing, Brand Name Apparel and certain
other individually insignificant operations, (iii) the closure of 11 retail
stores, (iv) the consolidation, streamlining and, in some cases, outsourcing of
certain functions throughout various operating units, and (v) the retention of
an outside consulting firm to assist senior management in evaluating and
developing the Company's retail concepts.

As a result of the adoption of the strategic restructuring and consolidation
program discussed above, the Company recorded restructuring charges of $18.3
million in fiscal 1996.   During the three and six month periods ended December
31, 1996, $131,000 and $470,000, respectively, of the reserve initially recorded
for lease obligations was reclassified to the reserve for asset writedowns as a
result of the assignment of leases to purchasers.  The increase in the asset
writedown reserve was necessary to cover asset writedowns in excess of those
originally anticipated.

During the six months ended December 31, 1996, the Company closed one Tandy
Leather store, two Sav-On stores and three Joshua's Christian stores which were
initially targeted in the restructuring program.

On January 27, 1997, the Company completed the sale of Cargo Furniture and
Accents to an acquisition group comprised of management and employees of Cargo
for proceeds of approximately $4.2 million.  A portion of the purchase price was
financed through a note with a bank for which the Company provided a guaranty.
Gain on the transaction is not expected to be material and will be deferred as a
result of the Company's guaranty.

After completing the sale of Cargo, the restructuring program is substantially
complete.  The accrual remaining at December 31, 1996 primarily represents lease
obligations related to stores and manufacturing facilities which were closed as
part of the restructuring program.

The following table sets forth the activity in the restructuring accrual, which
is included in current accrued liabilities in the December 31, 1996 balance
sheet (in thousands):

<TABLE><S><C>
                                   Specialty     Specialty
                                 Manufacturing    Retail     Corporate    Total
                                 -------------   ---------   ---------   -------

      Balance at June 30, 1996      $ 1,184       $   439     $   -      $ 1,623
      Cash payments                    (571)         (135)        -         (706)
      Non-cash asset writedowns        (439)          (31)        -         (470)
                                    -------       -------     -----      -------
      Balance at December 31, 1996  $   174       $   273     $   -      $   447
                                    =======       =======     =====      =======
</TABLE>

The above provisions are estimates based on the Company's judgment at this time.
Adjustments to the restructuring provisions may be necessary in the future based
on further development of restructuring related costs.  Although no additional
restructuring plans are currently under consideration, the Company continues to
evaluate possible actions which will improve the profitability and competitive
position of the Company.

Revenues and operating losses (before restructuring charges) from separately
identifiable businesses divested as part of the restructuring plan are set forth
below by segment (in thousands):

                                Three Months Ended December 31,
                          -----------------------------------------
                                1996                   1995
                          ------------------    -------------------
                                    Operating              Operating
                                     Income                 Income
                           Sales     (loss)      Sales      (loss)
                          -------   --------    -------    --------
                                                              
Specialty manufacturing   $   527   $      -    $ 4,852    $   (763)
Specialty retail            4,709       (125)     4,852         112
                          -------   --------    -------    --------
  Total                   $ 5,236   $   (125)   $ 9,704    $   (651)
                          =======   ========    =======    ========


                                Six Months Ended December 31,
                          -----------------------------------------
                                1996                   1995
                          ------------------    -------------------
                                    Operating              Operating
                                     Income                 Income
                           Sales     (loss)      Sales      (loss)
                          -------   --------    -------    --------
                                                            
Specialty manufacturing   $ 1,396   $     (3)   $ 9,901    $ (1,293)
Specialty retail            9,835         (3)     9,552         186
                          -------   --------    -------    --------
  Total                   $11,231   $     (6)   $19,453    $ (1,107)
                          =======   ========    =======    ========


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

GENERAL

Tandycrafts, Inc. (the "Company") operates in two primary industry segments,
specialty retail and specialty manufacturing.  The specialty retail group
consists of four distinct retail concepts: Tandy Leather Company, which sells
leathercraft and related products through 172 stores located in 45 states;
Joshua's Christian Stores, which sells inspirational books, music and gifts
through a chain of 72 stores located in eight states; Sav-On Office Supplies,
which sells office supplies and related products through a chain of 36 stores
located primarily in smaller markets; and Cargo Furniture and Accents, which
sells a proprietary line of solid wood furniture and decorative accessories
through a chain of 38 stores located primarily in regional shopping malls.  As
further discussed under the heading Strategic restructuring and consolidation
program, the Company sold Cargo to an acquisition group comprised of management
and employees of Cargo effective January 27, 1997.  The specialty manufacturing
segment is comprised of two divisions: Picture Frames and Framed Art and TWI.

With the exception of historical information, the matters discussed herein are
forward-looking statements that involve risks and uncertainties that may cause
actual results to differ from such projections.  These risks and uncertainties
include, but are not limited to, the performance of each operating unit,
relationships with certain key customers, commodity price fluctuations, product
demand, inventory fluctuations due to shifts in market demand and preferences,
the regulatory and trade environment, interest rate fluctuations, recessionary
factors, seasonality and other factors or risks indicated in filings with the
Securities and Exchange Commission.

The following table presents selected financial data for each significant
company or division comprising the Company's two primary industry segments for
the three and six-month periods ended December 31, 1996 and 1995 (in thousands):

<TABLE><S><C>
                                  Three Months Ended December 31,
                             -----------------------------------------
                                   1996                  1995             % Increase (Decrease)
                             -------------------   -------------------    ---------------------
                                       Operating             Operating                Operating
                              Sales      Income     Sales      Income      Sales        Income
                             --------  ---------   --------  ---------    -------     ---------

Specialty Retail:                                                                           
-----------------                                                                           
Tandy Leather                $ 11,573   $   676    $ 12,317   $   882     $ (6.0)%      (23.4)%
Sav-On Office Supplies          8,571       388       7,093        26       20.8       1392.3
Joshua's Christian Stores      11,330       230      10,300      (189)      10.0        221.7
Cargo Furniture & Accents       4,709      (125)      4,852       112       (2.9)      (211.6)
Restructuring charges               -         -           -         -       (835)       100.0
                             --------   -------    --------   -------     ------      -------
 Specialty Retail              36,183     1,169      34,562        (4)       4.7      29325.0
                             --------   -------    --------   -------     ------      -------
                                                                                           
Specialty Manufacturing:                                                                    
-----------------------                                                                     
Frames and Framed Art          27,295     4,353      26,628     3,833        2.5%        13.6%
TWI                             9,241      (170)      8,305       425       11.3        140.0)
Divested Units                    527         -       4,852      (763)     (89.1)       100.0
Restructuring charges               -         -           -   (17,943)         -        100.0
                             --------   -------    --------   -------     ------      -------
 Specialty Manufacturing       37,063     4,183      39,785   (14,448)      (6.8)       128.9
                             --------   -------    --------   -------     ------      -------
                                                                                            
 Total operations, excluding                                                                
  corporate                  $ 73,246   $ 5,352    $ 74,347  ($14,452)      (1.5)%      137.0%
                             ========   =======    ========   =======     ======      =======


                                   Six Months Ended December 31,
                             -----------------------------------------
                                   1996                  1995             % Increase (Decrease)
                             -------------------   -------------------    ----------------------
                                       Operating             Operating                Operating
                              Sales      Income     Sales      Income      Sales        Income
                             --------  ---------   --------  ---------    -------     ---------
Specialty Retail:                                                                              
----------------                                                                               
Tandy Leather                $ 21,131   $   346    $ 22,578    $ 1,071     (6.4)%       (67.7)%
Sav-On Office Supplies         18,026       950      14,638         85     23.1        1017.6
Joshua's Christian Stores      17,158      (517)     17,370       (916)    (1.2)         43.6
Cargo Furniture & Accents       9,835        (3)      9,552        186      3.0        (101.6)
Restructuring charges               -         -           -       (835)       -         100.0
                             --------   -------    --------    -------    -----       -------
 Specialty Retail              66,150       776      64,138       (409)     3.1         289.7
                             --------   -------    --------    -------    -----       -------
                                                                                               
Specialty Manufacturing:                                                                       
-----------------------                                                                        
Frames and Framed Art          44,118     6,484      45,261      5,990     (2.5)%         8.2%
TWI                            19,352       768      17,396      1,533     11.2         (49.9)
Divested Units                  1,396        (3)      9,901     (1,293)   (85.9)         99.8
Restructuring charges               -         -           -    (17,943)       -         100.0
                             --------   -------    --------    -------    -----       -------
 Specialty Manufacturing       64,866     7,249      72,558    (11,713)   (10.6)        161.9
                             --------   -------    --------    -------    -----       -------
                                                                                               
 Total operations, excluding                                                                   
  corporate                  $131,016   $ 8,025    $135,696   ($12,122)    (4.2)%       166.2%
                             ========   =======    ========    =======    =====       =======
</TABLE>

RESULTS OF OPERATIONS

Consolidated net sales for the three and six-month periods ended December 31,
1996 decreased $1,101,000, or 1.5%, and $5,680,000, or 4.2%, respectively,
compared to the same periods last year.  Operating income for the three and six-
month periods ending December 31, 1996 was $5,352,000 and $8,025,000,
respectively, as compared to operating losses of $14,452,000 and $12,122,000,
respectively, for the same periods of the prior year.  Excluding restructuring
charges, operating income increased $1,026,000, or 23.7%, and $1,369,000, or
20.3%, respectively, for the three and six-month periods ending December 31,
1996 compared to the same periods of the previous year.  Discussions relative to
each of the Company's industry segments are set forth below.

SPECIALTY RETAIL
Net sales for the specialty retail segment increased 4.7% for the quarter and
3.1% for the six-months ended December 31, 1996 compared to the same periods
last year.  The specialty retail segment contributed 49.4% and 50.5% of
consolidated net sales for the three and six-month periods ended December 31,
1996, respectively, compared to 46.5% and 46.9%, respectively, for the same
periods last year.  Before restructuring charges of $835,000 taken in December
1995, operating income increased $338,000, or 40.7%, and $350,000, or 82.2%,
respectively, for the three and six-month periods ending December 31, 1996
compared to the same periods of the previous year.

Tandy Leather Retail
Tandy Leather Company's net retail sales decreased 6.0% for the quarter and 6.4%
for the six-months ended December 31, 1996 compared to the same periods last
year.   Same-store sales at Tandy Leather for the three and six-month periods
ending December 31, 1996 decreased 5.4% and 5.7%, respectively.  The decrease in
sales is attributable to a shorter Christmas selling season in 1996, high store
manager turnover and inclement weather in California and the Northwest during
December 1996 which negatively impacted sales.

Operating income at Tandy Leather decreased $206,000, or 23.4%, and $725,000, or
67.7%, for the quarter and six months ended December 31, 1996, respectively.
These decreases in operating income are the result of declining sales combined
with slight declines in gross margins and increases in selling, general and
administrative ("SG&A") expenses as a percent of sales during the two periods.
For the quarter ended December 31, 1996, gross profit decreased $376,000;
however, gross profit as a percentage of sales was relatively unchanged compared
to the same quarter of the previous year.   SG&A expenses for the quarter
decreased $168,000, but increased 1.4 points as a percent of sales due to the
sales decline during the quarter.  For the six-month period ended December 31,
1996,  gross profit decreased $1,037,000 due primarily to decreased sales and to
a reduction in gross margin as a percent of sales caused by the declining market
in Southwest fashion.  SG&A for the six-month period decreased $311,000 from the
same period last year, but increased 1.7 points as a percent of sales due to the
lower sales levels in 1996.

Sav-On Office Supplies
Sav-On achieved total net sales increases of 20.8% and 23.1% for the quarter and
six-month periods ended December 31, 1996, respectively, compared to the same
periods last year.  Same-store sales increased 23.4% and 25.9% for the quarter
and the six-months ended December 31, 1996, respectively, over the comparable
periods last year.  The sales increase is partially due to the continued
maturation of the stores within this chain and the addition of a line of PC
printers and fax machines to the merchandise assortment.

Sav-On had operating income of $388,000 and $950,000 for the three and six-month
periods ended December 31, 1996, respectively, compared to operating income of
$26,000 and $85,000 for the corresponding periods last year.  The increase in
operating income is primarily a result of increased sales and efficiency gains
at both stores and administrative units.  SG&A expenses, as a percent of sales,
have declined 7.7 points and 6.6 points for the three and six-month periods
ended December 31, 1996, respectively, compared to the same periods last year
primarily due to an increase in sales without a corresponding increases in labor
and occupancy costs. Gross profit, as a percent of sales, for the three and six-
months ended December 31, 1996, decreased slightly compared to the respective
periods last year primarily as a result of the addition of the PC printers and
fax machines, which carry lower margins than the average of Sav-On's other
merchandise categories.

Joshua's Christian Stores
Joshua's net sales for the quarter ended December 31, 1996 increased 10.0%
compared to the same quarter last year, while sales for the six-month period
ended December 31, 1996 decreased $212,000 or 1.2%.  Same-store sales increased
9.4% for the quarter but decreased 3.6% for the six-month period ended December
31, 1996.  The sales increase for the quarter is the result of successful
holiday sales promotions and improved product assortment in the stores. The six-
month sales results were negatively impacted by significant price promotions in
the first quarter of the prior year which were not repeated this year.

Joshua's Christian Stores had operating income of $230,000 for the quarter and
operating losses of $517,000 for the six-month period ended December 31, 1996
compared to operating losses of  $189,000 and $916,000, respectively, for the
comparable periods last year.  For the three and six-months ended December 31,
1996, gross profit as a percent of sales increased; however, SG&A expenses as a
percent of sales also increased.  Gross margin increased primarily as a  result
of heavy sales promotions and inventory writedowns of approximately $900,000
taken during the six months ended December 31, 1995.  The increase in selling,
general and administrative expenses as a percent of sales is due to increases in
labor, occupancy and advertising costs incurred in management's efforts to
improve store staff levels and to increase customer traffic.

Cargo Furniture & Accents
Net sales for Cargo decreased 2.9% for the quarter and increased 3.0% for the
six months ended December 31, 1996 compared to the same periods last year.  The
increase in sales for the six-month period is due to an increase in contract and
dealer sales.  The decrease in sales during the quarter ended December 31, 1996
was primarily a result of the product availability problems with a major
supplier as well as the shorter holiday selling season in 1996.

Cargo experienced operating losses of $125,000 and $3,000 for the three and six-
month periods ended December 31, 1996, respectively, compared to operating
income of $112,000 and $186,000, respectively, for the same periods last year.
The operating loss for the quarter is attributable to contract and dealer sales,
with their lower gross margins, representing a larger percentage of total sales
and to additional expenses associated with product availability problems.

SPECIALTY MANUFACTURING
Net sales for the specialty manufacturing segment decreased 6.8% and 10.6% for
the three and six-month periods ended December 31, 1996, respectively, compared
to the corresponding periods a year ago.  The specialty manufacturing segment
contributed 50.6% and 49.5% of consolidated net sales for the three and six-
month periods ended December 31, 1996, respectively, compared to 53.5% and
53.1%, respectively, for the same periods last year.  Operating income for this
segment was $4,183,000 and $7,249,000 for the three and six-month periods ended
December 31, 1996, respectively, compared to operating losses of $14,448,000 and
$11,713,000, respectively, for the same periods of last year.  Excluding the
results of divested units and restructuring charges of $17,943,000 taken in
December 1995, sales of this segment increased $1,603,000, or 4.6%, and
$813,000, or 1.3%, for the three and six-month periods ending December 31, 1996,
respectively, while operating income decreased $75,000, or 1.8%, and $277,000,
or 3.6%, respectively.

Picture Frames and Framed Art
Net sales for the Picture Frames and Framed Art division increased 2.5% and
decreased 2.5% for the three and six-month periods ended December 31, 1996,
respectively, compared to the same periods last year.  The sales increase for
the quarter is primarily attributable to the cancellation of certain large
framed art orders by a major customer in December of the prior year.  The
decrease for the six-month period is primarily due to a lag in orders from a
major  customer.  In late December 1996, large orders were placed by this
customer with only a portion being filled by quarter-end, resulting in an
increase in the backlog of open orders for this division of $3,621,000 or 139%
at December 31, 1996 compared to the prior year.

Operating income for the Picture Frames and Framed Art division increased
$520,000, or 13.6%, and $494,000, or 8.2%, for the three and six-month periods
ended December 31, 1996, respectively, compared to the corresponding periods
last year.  The increase in operating income is primarily attributable to the
cancellation of certain large framed art orders by a key customer in December of
the prior year, which were not repeated in the current year.

Tandy Wholesale International ("TWI")
Net sales for the TWI division, increased 11.3% and 11.2% for the three and six-
month periods ended December 31, 1996, respectively, compared to the same
periods last year.  The increases in net sales reflect the increased wholesale
sales of Tandy Leather Manufacturing, as well as, sales gains from the licensed
products operations primarily due to increased NFL and NBA merchandise sales and
the 1996 Olympic sales during the first quarter of fiscal 1997.

The TWI division experienced operating losses of $170,000 and operating income
of $768,000 for the three and six-month periods ended December 31, 1996,
respectively, compared to operating income of $425,000 and $1,533,000 for the
corresponding periods of last year.  The operating loss for the quarter and the
decrease in operating income for the six months are due to slight profitability
decreases at Tandy Leather Manufacturing and significant decreases in operating
income of the Licensed Products Group due to customer returns of Olympic
products, severance costs, and to decreased margins on the liquidation of
remaining Olympic inventory sold during the quarter ended December 31, 1996.

Strategic restructuring and consolidation program
In December 1995, the Company adopted a strategic restructuring and
consolidation program.  The primary components of this program included: (i) the
sale of Cargo Furniture and Accents, (ii) the sale or closure of Prestige
Leather Creations, David James Manufacturing, Brand Name Apparel and certain
other individually insignificant operations, (iii) the closure of 11 retail
stores (iv) the consolidation, streamlining and, in some cases, outsourcing of
certain functions throughout various operating units, and (v) the retention of
an outside consulting firm to assist senior management in evaluating and
developing the Company's retail concepts.

As a result of the adoption of the strategic restructuring and consolidation
program discussed above, the Company recorded restructuring charges of $18.3
million in fiscal 1996.  During the three and six month periods ended December
31, 1996, $131,000 and $470,000, respectively, of the reserve initially recorded
for lease obligations was reclassified to the reserve for asset writedowns as a
result of the assignment of leases to purchasers.  The increase in the asset
writedown reserve was necessary to cover asset writedowns in excess of those
originally anticipated.

During the six months ended December 31, 1996, the Company closed one Tandy
Leather store, two Sav-On stores and three Joshua's Christian stores which were
initially targeted in the restructuring program.

On January 27, 1997, the Company completed the sale of Cargo Furniture and
Accents to an acquisition group comprised of management and employees of Cargo
for proceeds of approximately $4.2 million.  A portion of the purchase price was
financed through a note with a bank for which the Company provided a guaranty.
Gain on the transaction is not expected to be material and will be deferred as a
result of the Company's guaranty.

After completing the sale of Cargo, the restructuring program is substantially
complete.  The accrual remaining at December 31, 1996 primarily represents lease
obligations related to stores and manufacturing facilities which were closed as
part of the restructuring program.

The following table sets forth the activity in the restructuring accrual, which
is included in current accrued liabilities in the December 31, 1996 balance
sheet (in thousands):

<TABLE><S><C>
                                      Specialty      Specialty
                                    Manufacturing      Retail     Corporate     Total
                                    -------------    ---------    ---------    -------

      Balance at June 30, 1996         $1,184         $  439        $   -      $ 1,623
      Cash payments                      (571)          (135)           -         (706)
      Non-cash asset writedowns          (439)           (31)           -         (470)
                                      -------         ------        -----      -------
      Balance at December 31, 1996    $   174         $  273        $   -      $   447
                                      =======         ======        =====      =======
</TABLE>

The above provisions are estimates based on the Company's judgment at this time.
Adjustments to the restructuring provisions may be necessary in the future based
on further development of restructuring related costs.  Although no additional
restructuring plans are currently under consideration, the Company continues to
evaluate possible actions which will improve the profitability and competitive
position of the Company.

Revenues and operating losses from (before restructuring charges) separately
identifiable businesses divested as part of the restructuring plan are set forth
below by segment (in thousands):


                                  Three Months Ended December 31,
                          -----------------------------------------
                                1996                   1995
                          ------------------    -------------------
                                    Operating              Operating
                                     Income                 Income
                           Sales     (loss)      Sales      (loss)
                          -------   --------    -------    --------
                                                              
Specialty manufacturing   $   527   $      -    $ 4,852    $   (763)
Specialty retail            4,709       (125)     4,852         112
                          -------   --------    -------    --------
  Total                   $ 5,236   $   (125)   $ 9,704    $   (651)
                          =======   ========    =======    ========


                                Six Months Ended December 31,
                          -----------------------------------------
                                1996                   1995
                          ------------------    -------------------
                                    Operating              Operating
                                     Income                 Income
                           Sales     (loss)      Sales      (loss)
                          -------   --------    -------    --------
 
                                                              
Specialty manufacturing   $ 1,396   $     (3)   $ 9,901    $ (1,293)
Specialty retail            9,835         (3)     9,552         186
                          -------   --------    -------    --------
  Total                   $11,231   $     (6)   $19,453    $ (1,107)
                          =======   ========    =======    ========



Selling, general and administrative expenses
Consolidated selling, general and administrative (SG&A) expenses were 28.4% and
30.1%, as a percent of sales, for the three and six-month periods ended December
31, 1996, respectively, compared to 31.3% and 32.3% for the corresponding
periods last year.  In total dollars, SG&A expenses decreased $2,488,000, or
10.7%, and $4,739,000, or 11.7%, for the three and six-month periods ended
December 31, 1996, respectively, compared to the corresponding periods last
year.  The decrease in expenses was primarily due to the elimination of expenses
related to those companies closed or divested during fiscal 1996 and to a
reduction in labor and benefits expenses.

Interest expense, net
Interest expense decreased $284,000, or 25.4%, and $547,000, or 24.8%, for the
three and six-month periods ended December 31, 1996, respectively, compared to
the corresponding periods of the prior year.  The decrease in interest expense
was due to a reduction in average borrowings during the current year periods and
to lower average interest rates.

Depreciation and amortization
Consolidated depreciation and amortization decreased $324,000, or 18.9%, and
$477,000, or 14.7%, for the three and six-month periods ended December 31, 1996,
respectively, compared to the corresponding periods last year.  The decrease is
due primarily to the sale or write-down of equipment of businesses closed or
divested during fiscal 1996.

Provision for income taxes
The Company's tax expense for the six-months ended December 31, 1996 was $1,659
compared to $6,068 of tax benefit for the same period last year.  The tax
benefit for the six-months ended December 31, 1995 reflected losses of that year
which could be carried back to recover taxes paid in prior periods.  The
effective income tax rate in each six-month period was 35% and 32.9%,
respectively.  The effective income tax rate increased 2.1% as a result of the
acceleration of permanent tax differences in fiscal 1996 attributable to certain
sales or closures included in the restructuring charges discussed previously.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity have come from cash flows from
operations and sales of treasury stock to employee benefit programs.  Primarily,
these funds have been used to reduce borrowings under the Company's revolving
credit facility, purchase property and equipment, and finance the growth in
inventories and receivables.

During the six-months ended December 31, 1996, cash increased $713,000.  Cash
provided by operating activities of $6,714,000 resulted from operating income
plus a decrease in inventory and an increase in accounts payable offset by an
increase in receivables.  Cash used for investing activities of $1,626,000
resulted primarily from capital expenditures for property and equipment.  Cash
of approximately $4,375,000 was used by financing activities, primarily to
reduce borrowings under the Company's revolving credit facility, partially
offset by the funding of the Company's contribution to the Tandycrafts Employee
Stock Ownership Program with treasury stock.

Effective December 31, 1996, the Company's revolving credit facility was renewed
by its banks.  The maturity of the credit facility was extended through October
1, 1998 and the commitment amount under the credit facility was reduced to $55
million.  The Company also agreed that the commitment amount would be lowered to
$50 million effective May 1, 1997.  The Company estimates that cash generated
from the sale of Cargo Furniture and Accents and cash flow from operations will
enable the Company to operate within that commitment amount on a continuing
basis.  Actual results may differ from this forward-looking projection.  Please
refer to the discussion of risk factors contained herein.

Cash of approximately $1,480,000 was used for capital expenditures during the
six-months ended December 31, 1996.  Planned capital expenditures for the
remainder of fiscal 1997 approximate $3,520,000 and are primarily targeted for
investments in the Frames and Framed Art division and expansion of Sav-On's
store base.  Current store expansion plans call for Sav-On to open up to six new
stores during the remainder of fiscal 1997.  Management believes that the
Company's current cash position, its cash flows from operations and available
borrowing capacity will be sufficient to fund its planned operations and capital
expenditures for the remainder of fiscal 1997.  Actual results may differ from
this forward-looking projection.  Please refer to the discussion of risk factors
contained herein.

CONTINGENCIES

A former subsidiary of the Company, which was spun-off in 1978,  filed for
Chapter 11 protection under the federal bankruptcy code in January 1996.  As
part of the bankruptcy proceedings, the former subsidiary has rejected certain
store leases which were originated prior to the spin-off and for which the
Company was allegedly a guarantor.  A reserve for losses associated with these
alleged guarantees was established in fiscal 1996 and, based on the present
information with respect to about the rejected leases, management believes such
reserve is adequate to cover any alleged liability the Company may have the
Company's liability under these alleged guarantees.  Actual results may differ
from this forward-looking projection.  The former subsidiary may reject further
alleged guaranteed leases with alleged guarantees, which may result in
additional potential liabilitylosses.  Please refer to the risk factors
discussion herein.


                                        
                                        
                                TANDYCRAFTS, INC.
                           PART II - OTHER INFORMATION

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

            The following proposals were approved at the Company's annual 
            meeting held on November 13, 1996:

                                                     Affirmative   Votes Against
                                                        Votes        or Withheld
                                                      ---------     ------------
      1.  Election of management's slate of nominees
          to serve as Directors:
             B. Franklin Bigger                       7,642,546      1,323,211
             R. Earl Cox III                          7,280,435      1,685,322
             Joe K. Pace                              7,288,091      1,677,666
             Robert Schutts                           7,381,016      1,584,741
             Sheldon I. Stein                         7,219,113      1,746,644
             Michael J. Walsh                         7,348,028      1,617,729



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

           (a) Exhibits:

               Exhibit 10.15  Seventh Amendment to Revolving Credit and Term 
                              Loan Agreement

               Exhibit 27     Financial Data Schedule

           (b) Reports on Form 8-K:

               The Company filed a Current Report on Form 8-K, dated January 28,
               1997, which included the contents of a press release announcing 
               the unaudited results of operations for the three and six-month 
               periods ended December 31, 1996.

               The Company filed a Current Report on Form 8-K, dated January 20,
               1997, which included the contents of a press release announcing 
               the resignation of Frank Bigger as Director of Tandycrafts, Inc.
               and as Chief Executive Officer of its Frames and Framed Art 
               Division.


                                        
                                        
                                TANDYCRAFTS, INC.
                                        
                                   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.

                                TANDYCRAFTS, INC.
                                  (Registrant)


Date:  February 14, 1997           By:/s/Michael J. Walsh
                                     -----------------------
                                     Michael J. Walsh
                                     President, Chief Executive Officer
                                     and Director



Date:  February 14, 1997           By:/s/James D. Allen
                                     -----------------------
                                     James D. Allen
                                     Executive Vice President and Chief
                                     Financial Officer
                                     (Principal Financial Officer)