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, 1998

                                       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, 1999
-----------------------------         -----------------------------------------
Common Stock, $1,00 par value                         12,046,717



                               TANDYCRAFTS, INC.

                                   Form 10-Q

                        Quarter Ended December 31, 1998

                               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................     10-17


                          PART II - OTHER INFORMATION

4.    Submission of Matters to a Vote of Security
      Holders......................................................        18

6.    Exhibits and Reports on Form 8-K.............................        18

      Signatures...................................................        19



                                     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,
                                -----------------------     -------------------------
                                   1998         1997           1998           1997
                                ----------   ----------     ----------    -----------

Net sales                       $   52,853   $   73,237     $  103,918    $   128,596
                                ----------   ----------     ----------    -----------

Operating costs and expenses:
  Cost of goods sold                39,476       48,702         74,267        84,536
  Selling, general and              20,354       17,665         33,431        33,597
   administrative
  Restructuring charges              8,145            -          8,145             -
  Depreciation and amortization      1,088        1,259          2,167         2,529
   Total operating costs and 
    expenses                        69,063       67,626        118,010       120,662

Operating income (loss)            (16,210)       5,611        (14,092)        7,934
Interest expense, net                  591          911          1,083         1,773
Income (loss) before provision
 for income taxes                  (16,801)       4,700        (15,175)        6,161
Provision (benefit) for income
 taxes                              (4,578)       1,644         (3,960)        2,156

  Net income (loss)             $  (12,223)  $    3,056     $  (11,215)   $    4,005
                                ==========   ==========     ==========    ==========

Net income (loss) per share -
 basic and diluted              $   (1.00)   $     0.24     $   (0.91)    $     0.32
                                =========    ==========     =========     ==========

Weighted average common shares
  Basic                            12,179        12,685        12,326         12,661
  Diluted                          12,184        12,685        12,330         12,661

</TABLE>

                               TANDYCRAFTS, INC.
                     Condensed Consolidated Balance Sheets
                             (Dollars in thousands)
                                  (Unaudited)

                                                  December 31,      June 30,
                                                      1998            1998
                                                  ------------    -----------
ASSETS
------
Current assets:
   Cash                                           $      1,013    $     1,216
   Trade accounts receivable, net of allowance
      for doubtful accounts of $3,300 and
      $2,755, respectively                              24,066         28,086
   Inventories                                          43,274         45,990
   Other current assets                                  8,655          7,785
                                                  ------------    -----------
         Total current assets                           77,008         83,077
                                                  ------------    -----------

Property and equipment, at cost                         49,611         46,327
Accumulated depreciation                               (26,142)       (23,441)
                                                  ------------    -----------
   Property and equipment, net                          23,469         22,886
                                                  ------------    -----------

Other assets                                             5,887          6,929
Goodwill                                                33,375         37,799
                                                  ------------    -----------
                                                  $    139,739    $   150,691
                                                  ============    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
   Accounts payable                                     10,114         12,155
   Accrued liabilities and other                        18,574         12,520
                                                  ------------    -----------
         Total current liabilities                      28,688         24,675
                                                  ------------    -----------

Long-term debt                                          32,500         34,230
Deferred income taxes                                    2,822          2,822

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                           20,545         20,545
   Retained earnings                                    60,859         72,074
   Cost of stock in treasury, 6,464,416 shares
      and 5,917,419 shares, respectively               (24,203)       (22,183)
                                                  ------------    -----------
         Total stockholders' equity                     75,729         88,964
                                                  ------------    -----------
                                                  $    139,739    $   150,691
                                                  ============    ===========


                               TANDYCRAFTS, INC.
                Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                  (Unaudited)

                                                       Six Months Ended
                                                         December 31,
                                                  --------------------------
                                                     1998            1997
                                                  ----------      ----------

Net cash flows from operating activities          $    7,108      $   (4,116)
                                                  ----------      ----------

Cash flows from investing activities:
  Additions to property and equipment, net            (3,561)         (2,066)
                                                  ----------      ----------
      Net cash used for investing activities          (3,561)         (2,066)
                                                  ----------      ----------

Cash flows from financing activities:
  Sales of treasury stock to employee benefit
   program, net                                            -             448
  Purchases of treasury stock                         (2,020)              -
  Borrowings (payments) under bank credit
   facility, net                                      (1,730)          5,220
                                                  ----------      ----------
      Net cash provided (used) by
        financing activities                          (3,750)          5,668
                                                  ----------      ----------

Decrease in cash                                        (203)           (514)
Balance, beginning of period                           1,216           1,005
                                                  ----------      ----------
Balance, end of period                            $    1,013      $      491
                                                  ==========      ==========



                               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, 1998            $ 18,528   $ 20,545   $ 72,074   $(22,183)  $ 88,964
Purchase of 546,997 shares of
 treasury stock                          -          -          -     (2,020)    (2,020)
Net income (loss) for six
 months ended December 31, 1998          -          -    (11,215)         -    (11,215)
                                  --------   --------   --------   --------   --------
Balance, December 31, 1998        $ 18,528   $ 20,545   $ 60,859   $(24,203)  $ 75,729
                                  ========   ========   ========   ========   ========
</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) necessary for a fair statement of the
Company's financial position as of December 31, 1998 and June 30, 1998, and the
results of operations and cash flows for the six-month periods ended December
31, 1998 and December 31, 1997.  The results of operations for the three and
six-month periods ended December 31, 1998 and 1997 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 1998 Annual Report to
Stockholders.

NOTE 2 - INVENTORIES

The components of inventories at December 31, 1998 consisted of the following
(in thousands):

            Merchandise held for sale                 $  31,080
            Raw materials and work-in-process            12,194
                                                      ---------
                                                      $  43,274
                                                      =========
                                                      
NOTE 3 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing income available to common
shareholders by the weighted-average common shares outstanding.  Since the
Company has no outstanding preferred stock, income available to shareholders is
equal to the Company's net income.  Diluted earnings per share is computed by
dividing the income available to shareholders by the weighted-average common
shares and potentially dilutive common shares outstanding during the period.
For the three and six-month periods ending December 31, 1998 and 1997, the
number of weighted average shares and potentially dilutive common shares is as
follows (in thousands):

                                       Three Months Ended  Six Months Ended
                                         December 31,        December 31,
                                       -----------------   ----------------
                                        1998      1997      1998     1997
                                       -------   -------   -------  -------

   Weighted average shares - basic      12,179    12,685    12,326   12,661
   Potentially dilutive shares               5         -         4        -
                                       -------   -------   -------  -------
   Total weighted average common and
     potentially dilutive shares -
     diluted                            12,184    12,685    12,330   12,661
                                       =======   =======   =======  =======

NOTE 4 - SHARE REPURCHASE PROGRAM

In September 1998, the Company's Board of Directors authorized a common share
repurchase program that provides for the Company to purchase, in the open market
and through negotiated transactions, up to $2 million of the Company's
outstanding common stock.  As of December 31, 1998, the Company had repurchased
approximately 496,000 shares for an aggregate purchase price of $1,861,000.


NOTE 5 - ACCOUNTS RECEIVABLE SECURITIZATION

The Company utilizes a revolving trade accounts receivable securitization
program to sell without recourse, through a wholly-owned subsidiary, certain
trade accounts receivable.  Under the program, the maximum amount allowed to be
sold at any given time through December 31, 1998, was $12,000,000.
The maximum amount of receivables that can be sold is seasonally adjusted.  At
December 31, 1998, the amount of trade accounts receivable outstanding which had
been sold approximated $7,906,000.  The proceeds from the sales were used to
reduce borrowings under the Company's revolving credit facility. Costs of the
program, which primarily consist of the purchaser's financing cost of issuing
commercial paper backed by the receivables, totaled $122,000 and $184,000 for
the three and six-month periods ended December 31, 1998, respectively.  The
Company, as agent for the purchaser of the receivables, retains collection and
administrative responsibilities for the purchased receivables.

NOTE 6 - DIVESTITURE

In the quarter ended December 31, 1998, the Board of Directors of the Company
approved a plan to close the Company's 121 leather and crafts retail stores and
related manufacturing operations to allow the Company to continue to narrow its
focus to its more profitable operating business segments.  The divestiture plan
calls for all retail stores and related manufacturing operations to be closed by
June 30, 1999.

As a result of this plan, the Company recorded charges totaling $11,106,000
during the quarter ended December 31, 1998.  Approximately $2,961,000 of these
charges related to the write-down of inventory to its liquidation value and is
included in cost of sales on the Condensed Consolidated Statements of
Operations.  Approximately $8,145,000 of the charges related to the write-down
of assets and anticipated future cash outlays and is classified as restructuring
charge on the Condensed Consolidated Statements of Operations.

Approximately $5,441,000 of the restructuring charge related to non-cash write-
downs of assets to their estimated net realizable value, including $3,923,000
related to the write-down of goodwill, $1,313,000 related to the write-down of
fixed assets (primarily comprised of store fixtures and leasehold improvements
and manufacturing equipment all of which will be abandoned or sold), and
$205,000 related to the write-down of various other assets.  The remaining
restructuring charge of $2,704,000 represents an accrual for anticipated future
cash outlays for lease obligations and other exit costs.

The following table sets forth the activity in the restructuring reserve, which
is included in current accrued liabilities in the December 31, 1998 balance
sheet (in thousands):

            Lease obligations          $  2,346
            Other                           358
                                       --------
                                       $  2,704
                                       ========
                                       
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.

Revenues and operating losses (before restructuring charges, but including the
inventory write-down charge of $2,961,000) for the operations to be divested are
set forth below (in thousands):

                            Three months ended         Six months ended
                               December 31,              December 31,
                          ---------------------    ----------------------
                             1998        1997         1998        1997
                          ----------  ---------    ---------   ----------

Sales                     $   10,758  $  13,472    $  20,185   $   24,977
Operating income (loss)       (4,926)       384       (5,475)         506


NOTE 7 - SUBSEQUENT EVENT

In October 1998, the Company was informed that Cargo Furniture and Accents
("Cargo"), a former subsidiary of the Company, had obtained a financial advisor
for the purpose of actively pursuing additional investment capital from several
sources to expedite the chain's conversion of their mall-based furniture stores
to their new, higher performing Cargo Collection Store concept.  To date, Cargo
has opened eight of the Cargo Collection Stores and seen promising results from
these stores.  However, due to Cargo's limited capital resources and the poor
performance of their mall-based stores, Cargo determined that it required a
capital infusion to complete the conversion process.

In December, 1998, Cargo informed the Company that they were unable to obtain
additional investment capital.  In addition, it was probable that Cargo would be
in default of certain covenants contained in their term note agreement, and
Cargo would not be able to cure the events of default.  The Company had
guaranteed Cargo's term note, and had additional amounts receivable from Cargo.

On January 11, 1999, the Company was informed by Cargo's lender that Cargo
defaulted on its term note and Cargo's lender required the Company to perform
pursant to its guaranty of this note.  On February 1, 1999, the Company complied
with the lender's request.  As a result of this payment, the Company has the
option to obtain a majority of Cargo's common stock, thereby obtaining voting
control of Cargo.  As such, the Company will begin to consolidate the results of
operations of Cargo.  Due to Cargo's poor financial condition, the Company
determined that recovery of the $2,481,000 note balance and the receivables from
Cargo was unlikely.  Loss provisions of $3,465,000 were recorded as selling,
general and administrative expenses in the December 31, 1998 financial
statements.


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

GENERAL
Tandycrafts, Inc. ("Tandycrafts" or the "Company") markets consumer products
through four distinct product-related operating divisions: Frames and Wall
Decor, Leather and Crafts, Office Supplies, and Novelties and Promotional.  The
Company's products are marketed and sold through various channels, including
direct-to-consumer (e.g., retail stores, mail order, the Internet) and wholesale
distribution (e.g., direct sales force, telemarketing and outside sales
representatives).  During the quarter ended December 31, 1998, the Company
adopted a plan of closing its leather and crafts retail stores and related
manufacturing operations.  These divested operations comprise substantially all
of the operations within the Company's Leather and Crafts operating division.

Certain statements in this discussion, other filings with the Securities and
Exchange Commission and other Company statements are not historical facts but
are forward-looking statements.  The words "believes," "expects," "estimates,"
"projects," "plans," "could," "may," "anticipates," or the negative thereof or
other variations or similar terminology, or discussions of strategies or plans
identify forward-looking statements.  These forward-looking statements reflect
the Company's reasonable judgments with respect to future events and are subject
to risks and uncertainties that could cause actual results to differ materially
from such forward-looking statements.  These risks and uncertainties include,
but are not limited to, the Company's ability to reduce costs through the
consolidation of certain operations, customers' willingness, need, demand and
financial ability to purchase the Company's products, new business
opportunities, the successful development and introduction of new products and
the successful development of new retail stores, the successful implementation
of new information systems, the development of direct import programs and
foreign manufacturing facilities, relationships with key customers,
relationships with professional sports leagues and other licensors, the
possibility of players' strikes in professional sports leagues, price
fluctuations for commodities such as lumber, paper, leather and other raw
materials, seasonality of the Company's operations, effectiveness of promotional
activities, changing business strategies and intense competition in retail
operations.  Additional factors include economic conditions such as interest
rate fluctuations, consumer debt levels, changing consumer demand and tastes,
competitive products and pricing, availability of products, inventory risks due
to shifts in market demand, regulatory and trade environment and other factors
or risks.

The following table presents selected financial data for each of the Company's
three continuing product divisions and divested operations for the three and
six-month periods ended December 31, 1998 and 1997 (in thousands):

<TABLE><S><C>

                              Three Months Ended December 31,
                         -----------------------------------------
                                1998                  1997          % Increase (Decrease)
                         -------------------  --------------------   -------------------
                                   Operating             Operating             Operating
                                     Income                Income                Income
                          Sales      (loss)     Sales      (loss)     Sales      (loss)
                         --------   --------   --------   --------   --------   --------

Frames and Wall Decor    $ 28,152   $  3,980   $ 32,825   $  4,891    (14.2)%    (18.6)%
Office Supplies             9,779        278      9,668        309      1.1      (10.0)
Novelties and
  Promotional               4,164       (202)     6,113        244    (31.9)    (182.8)
                         --------   --------   --------   --------    -----     ------
                           42,095      4,056     48,606      5,444    (13.4)     (25.5)
Divested operations        10,758     (5,054)    24,631      1,409    (56.3)    (458.7)
Restructuring charge            -     (8,145)         -          -        -     (100.0)
                         --------   --------   --------   --------    -----     ------
  Total operations,
   Excluding corporate   $ 52,853   $ (9,143)  $ 73,237   $  6,853    (27.8)%   (233.4)%
                         ========   ========   ========   ========    =====     ======



                              Six  Months Ended December 31,
                         -----------------------------------------
                                1998                  1997          % Increase (Decrease)
                         -------------------   -------------------   -------------------
                                   Operating             Operating             Operating
                                     Income                Income                Income
                          Sales      (loss)     Sales      (loss)     Sales      (loss)
                         --------   --------   --------   --------   --------   --------

Frames and Wall Decor    $ 54,534   $  7,345   $ 53,165   $  6,883      2.6%       6.7%
Office Supplies            20,844        930     20,267        912      2.8        2.0
Novelties and
  Promotional               8,355       (221)    12,101        723    (31.0)    (130.6)
                         --------   --------   --------   --------    -----     ------
                           83,733      8,054     85,533      8,518     (2.1)      (5.4)
Divested operations        20,185     (5,603)    43,063      1,352    (53.1)    (514.4)
Restructuring charge            -     (8,145)         -          -        -     (100.0)
                         --------   --------   --------   --------    -----     ------
  Total operations,
   Excluding corporate   $103,918   $ (5,694)  $128,596   $  9,870    (19.2)%   (157.7)%
                         ========   ========   ========   ========    =====     ======
</TABLE>

RESULTS OF OPERATIONS

Consolidated net sales decreased $20,384,000, or 27.8%, and $24,678,000, or
19.2%, respectively, for the three and six-month periods ended December 31,
1998, as compared to the same periods of the prior year.  Excluding divested
operations, consolidated net sales decreased $6,511,000, or 13.4%, and
$1,800,000, or 2.1%, respectively, for the three and six-month periods ended
December 31, 1998 compared to last year.

The Company experienced operating losses before corporate expenses of $9,143,000
and $5,694,000, respectively, for the three and six-month periods ended December
31, 1998, compared to operating income of $6,853,000 and $9,870,000,
respectively, for the same periods last year.  Excluding divested operations and
restructuring charges, operating income decreased $1,388,000, or 25.5%, and
$464,000, or 5.4%, respectively, for the three and six-month periods ended
December 31, 1998, compared to the same periods of the previous year.
Discussions relative to each of the Company's product divisions are set forth
below.

Frames and Wall Decor
Net sales at the Frames and Wall Decor division decreased $4,673,000, or 14.2%,
for the three months ended December 31, 1998; however, as a result of a strong
first quarter of fiscal 1999, sales for the six months ended December 31, 1998
increased $1,369,000, or 2.6%, compared to last year.  The decrease in sales for
the three-month period is primarily due to a shift in the timing of shipments
between the first and second quarters of fiscal 1998 compared to the previous
year and to a large one-time promotional order in the second quarter of fiscal
1998 which was not repeated in the current year.  The sales increase for the
six-month period primarily reflects the increase in sales of framed art to
existing customers.

Operating income for the Frames and Wall Decor division decreased $911,000, or
18.6%, for the quarter ended December 31, 1998, but increased $462,000, or 6.7%,
for six-month periods then ended, compared to same periods last year.  The
decrease in operating income for the quarter is a result of the lower sales
volume compared to the prior year quarter.  For the six-month period, gross
margin as a percent of sales increased one percentage point due to improved
operating efficiencies and decreases in lumber prices from the prior year.  The
increase in the gross margin percentage combined with the increase in sales
volume for the six months resulted in an increase in gross margin dollars of
approximately $1,276,000.  Selling, General and Administrative ("SG&A") expenses
increased $854,000, or 14.4%, over the six months primarily due to increased
marketing and product development costs related to the framed art program.  SG&A
expenses as a percent of sales increased to 12.4% for the six month period ended
December 31, 1998 compared to 11.2% for the same period last year.

Office Supplies
Sav-On Office Supplies' net sales increased $111,000, or 1.1%, and $577,000, or
2.8%, respectively, for the three and six-month periods ended December 31, 1998,
compared to the same periods last year.  Same store sales for the two periods of
fiscal 1999 increased less than one percent due primarily to increased
competition in Sav-On's existing markets.  Sales were positively impacted by
four stores which were opened during the first six months of fiscal 1998 being
open for a full six months in the current year.

Sav-On's operating income decreased $31,000, or 10.0%, for the quarter, but
increased $18,000, or 2.0%, for the six-month period ended December 31, 1998,
compared to the same periods last year.  Gross margin as a percent of sales
decreased 0.9 points and 1.5 points, respectively, for the three and six-month
periods primarily due to a change in sales mix, with lower-margin office
equipment and promotional merchandise comprising a larger percentage of total
sales.  SG&A expenses were flat for the quarter but decreased $70,000, or 1.1%,
for the six month period compared to the same periods of the prior year. SG&A
expenses as a percent of sales decreased to 29.8% from 30.9% in the prior year
six month period.

Novelties and Promotional
Net sales for the Novelties and Promotional division decreased $1,949,000, or
31.9%, and $3,746,000, or 31.0%, respectively for the three and six-month
periods ended December 31, 1998, compared to the same periods last year.  The
decrease in net sales reflects a generally weaker market for sports-licensed
novelty products, with weaker Major League Baseball and National Football League
"hot market" sales and the National Basketball Association lock-out, as well as
a conscious effort to reposition this division's business to focus on larger,
more profitable customers.

The Novelties and Promotional division had operating losses of $202,000 and
$221,000, respectively,  for the three and six month periods ended December 31,
1998 compared to income of $244,000 and $723,000, respectively, for the same
periods last year.  Gross margin dollars and gross margin as a percent of sales
for this division decreased for both periods of fiscal 1999 due to the decrease
in sales with relatively fixed manufacturing overhead costs.  SG&A expenses
decreased $400,000 and $520,000, respectively, for the three and six-month
periods primarily due to a reduction in labor and administrative costs.

Divested Operations
Divested operations at December 31, 1998 consist primarily of the leather and
crafts retail stores and related manufacturing operations for which a plan of
closure was approved in the second quarter of fiscal 1999.  The sales and
operating income for the divested operations for the two periods ending December
31, 1997 also includes Joshua's Christian Stores which the Company sold
effective May 31, 1998.

For the three and six month periods ended December 31, 1998, net sales of the
leather and crafts operations decreased $2,714,000, or 20.1%, and $4,792,000, or
19.2%, respectively.  The leather and crafts operations had operating losses of
$4,926,000 and $5,475,000, respectively, for the three and six-month periods
ended December 31, 1998 compared to operating income of $384,000 and $506,000,
respectively, for the same periods of the prior year.  Both periods of fiscal
1999 include a charge of $2,961,000 to write-down inventory of the leather
operations to its liquidation value.

Restructuring charges
In the quarter ended December 31, 1998, the Board of Directors of the Company
approved a plan to close the Company's 121 leather and crafts retail stores and
related manufacturing operations to allow the Company to continue to narrow its
focus to its more profitable operating business segments.  The divestiture plan
calls for all retail stores and related manufacturing operations to be closed by
June 30, 1999.

As a result of this plan, the Company recorded charges totaling $11,106,000
during the quarter ended December 31, 1998.  Approximately $2,961,000 of these
charges related to the write-down of inventory to its liquidation value and is
included in cost of sales on the Condensed Consolidated Statements of
Operations.  Approximately $8,145,000 of the charges related to the write-down
of assets and anticipated future cash outlays and is classified as restructuring
charge on the Condensed Consolidated Statements of Operations.

Approximately $5,441,000 of the restructuring charge related to non-cash write-
downs of assets to their estimated net realizable value, including $3,923,000
related to the write-down of goodwill, $1,313,000 related to the write-down of
fixed assets (primarily comprised of store fixtures and leasehold improvements
and manufacturing equipment all of which will be abandoned or sold), and
$205,000 related to the write-down of various other assets.  The remaining
restructuring charge of $2,704,000 represents an accrual for anticipated future
cash outlays for lease obligations and other exit costs.

The following table sets forth the activity in the restructuring reserve, which
is included in current accrued liabilities in the December 31, 1998 balance
sheet (in thousands):

            Lease obligations          $  2,346
            Other                           358
                                       --------
                                       $  2,704
                                       ========
                                       
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, but including the
inventory write-down charge of $2,961,000) for the operations to be divested are
set forth below (in thousands):

                            Three months ended          Six months ended
                                December 31,              December 31,    
                          ---------------------    -----------------------
                             1998        1997          1998        1997
                          ----------  ---------    ----------   ----------

Sales                     $   10,758  $  13,472    $   20,185   $   24,977
Operating income (loss)       (4,926)       384        (5,475)         506

Selling, general and administrative expenses
Consolidated selling, general and administrative (SG&A) expenses were 38.5% and
32.2%, as a percent of sales, for the three and six-month periods ended December
31, 1998, respectively, compared to 24.1% and 26.2% for the corresponding
periods last year.  In total dollars, SG&A expenses increased $2,689,000, or
15.2%, for the three-month period ended December 31, 1998, but decreased
$166,000, or 0.5%, for the six-month period ended December 31, 1998, compared to
the corresponding periods last year.  The increase in SG&A expense for the
three-month period is primarily attributable to the $3,465,000 expense
recognized during the quarter related to the Company's performance under the
Cargo note guaranty and the write-down of other amounts receivable from Cargo.
For the six-month period, the increase in SG&A expense due to the Cargo charges
was offset by decreases resulting from the elimination of expenses related to
operations discontinued in fiscal 1998 and to tighter expense controls.

Interest expense, net
Interest expense decreased $320,000, or 35.1%, and $690,000, or 38.9%, for the
three and six-month periods ended December 31, 1998, respectively, compared to
the corresponding periods of the prior year.  These decreases are primarily due
to $170,000 and $340,000 of interest income recognized during the three and
six-month periods ended December 31, 1998, respectively, and to lower average
borrowings during the current year.

Depreciation and amortization
Consolidated depreciation and amortization decreased $171,000, or 13.6%, and
$362,000, or 14.3%, for the three and six-month periods ended December 31, 1998,
respectively, compared to the corresponding periods last year.  The decrease is
due primarily due to the divestiture of Joshua's during fiscal 1998.

SUBSEQUENT EVENT

In October 1998, the Company was informed that Cargo Furniture and Accents
("Cargo"), a former subsidiary of the Company, had obtained a financial advisor
for the purpose of actively pursuing additional investment capital from several
sources to expedite the chain's conversion of their mall-based furniture stores
to their new, higher performing Cargo Collection Store concept.  To date, Cargo
has opened eight of the Cargo Collection Stores and seen promising results from
these stores.  However, due to Cargo's limited capital resources and the poor
performance of their mall-based stores, Cargo determined that it required a
capital infusion to complete the conversion process.

In December, 1998, Cargo informed the Company that they were unable to obtain
additional investment capital.  In addition, it was probable that Cargo would be
in default of certain covenants contained in their term note agreement, and
Cargo would not be able to cure the events of default.  The Company had
guaranteed Cargo's term note, and had additional amounts receivable from Cargo.

On January 11, 1999, the Company was informed by Cargo's lender that Cargo
defaulted on its term note and Cargo's lender required the Company to perform
pursant to its guaranty of this note.  On February 1, 1999, the Company complied
with the lender's request.  As a result of this payment, the Company has the
option to obtain a majority of Cargo's common stock, thereby obtaining voting
control of Cargo.  As such, the Company will begin to consolidate the results of
operations of Cargo.  Due to Cargo's poor financial condition, the Company
determined that recovery of the $2,481,000 note balance and the receivables from
Cargo was unlikely.  Loss provisions of $3,465,000 were recorded as selling,
general and administrative expenses in the December 31, 1998 financial
statements.  The Company is currently evaluating the best course of action of
the Company with respect to Cargo.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity have come from cash flows from
operations.  These funds have been used primarily for capital expenditures, to
repurchase the Company's common stock and to repay borrowings under the
Company's revolving credit facility.

During the six-months ended December 31, 1998, cash decreased $203,000.  Cash
provided by operating activities of $7,108,000 primarily resulted from improved
working capital management and profitability (net of non-cash write-downs).
Cash used for investing activities of $3,561,000 resulted primarily from capital
expenditures for property and equipment.  Cash of approximately $3,750,000 was
used by financing activities for repayments of borrowings under the Company's
revolving credit facility and for repurchases of the Company's common stock.

The Company has a $50 million revolving credit facility with a group of banks.
The credit facility is a two-year revolving line of credit renewable annually.
Effective September 30, 1997, the Company's revolving credit facility was
renewed by its banks and the maturity was extended to October 31, 1999.
Effective February 9, 1999, the revolving credit facility was amended to extend
the maturity to January 31, 2000, and to change certain provisions, restrictions
and covenants under the facility as of December 31, 1998, to allow the
restructuring plan approved in the quarter then ended to occur without placing
the Company in default.  The Company and the banks are currently negotiating a
new credit facility which the Company expects to finalize by March 1999 on
essentially the same terms as the existing facility.

Effective November 3, 1997, the Company entered into an Interest Rate Swap
Agreement with its primary bank in which a $20,000,000 notional amount of
floating rate debt at LIBOR was swapped for a fixed rate of 6.01%.  The Swap
Agreement has a three-year term and is being accounted for as a hedge by the
Company.  The transaction was executed to hedge interest rate risk on the
Company's interest obligation associated with a portion of its revolving credit
facility, and to change the nature of the liability from a variable to a fixed
interest obligation.  At December 31, 1998, the Company would have had to pay
approximately $378,000 to terminate the interest rate swap.  This amount was
obtained from the counterparties and represents the fair market value of the
Swap Agreement.

The Company also utilizes a revolving trade accounts receivable securitization
program to sell without recourse, through a wholly-owned subsidiary, certain
trade accounts receivable. Under the program, the maximum amount allowed to be
sold at any given time through December 31, 1998, was $12,000,000.
The maximum amount of receivables that can be sold is seasonally adjusted.  At
December 31, 1998, the amount of trade accounts receivable which had been sold
approximated $7,906,000.  The proceeds from the sales were used to reduce
borrowings under the Company's revolving credit facility.  Costs of the program,
which primarily consist of the purchaser's financing cost of issuing commercial
paper backed by the receivables, totaled $122,000 and $184,000 for the three and
six month periods ended December 31, 1998, respectively, and are included in
SG&A expense in the accompanying Consolidated Statements of Operations.  The
Company, as agent for the purchaser of the receivables, retains collection and
administrative responsibilities for the purchased receivables.

In September 1998, the Company's Board of Directors authorized a common share
repurchase program that provides for the Company to purchase, in the open market
and through negotiated transactions, up to $2 million of the Company's
outstanding common stock.  As of December 31, 1998, the Company had repurchased
approximately 496,000 shares for an aggregate purchase price of $1,861,000.

Cash of approximately $3,561,000 was used for capital expenditures during the
six months ended December 31, 1998.  Planned capital expenditures for the
remainder of fiscal 1999 approximate $5,692,000 and are primarily targeted for
investments in the Frames and Wall Decor division and investments in information
systems.  Management believes that the Company's current cash position, its cash
flows from operations and available borrowing capacity will be sufficient to
fund its current operations, capital expenditures and current growth plans.
Actual results may differ from this forward-looking projection, see risk factors
discussed herein.

THE YEAR 2000

The Company has initiated a comprehensive project ("Year 2000 project") designed
to minimize or eliminate business disruption caused by processing problems
associated with the "Year 2000" issue.  The Year 2000 project, which addresses
both the Company's information technology ("IT") systems and non-IT systems,
consists of three phases:  identification and analysis, planning, and
implementation and testing.  The Company's Year 2000 project has used both
internal and external resources.

The first phase of the Company's Year 2000 project involves identifying and
analyzing the IT and non-IT systems that are susceptible to failures or
processing errors as a result of Year 2000 issue.  This phase consisted of the
Company and its operating units identifying the systems that may require
remediation or replacement.  Through its systems requirements study, the Company
believed that, with regard to IT systems, five should be remediated through
replacement and three remediated through upgrades.  With respect to non-IT
systems, the Company believed that there was an insubstantial susceptibility to
the Year 2000 issue.  This phase has been completed.

The second phase of the Year 2000 project involves analyzing proposed
remediations and planning how to implement such remediations.  The Company then
established priorities for remediation.  This phase has been completed for IT
systems.

The third phase of the Year 2000 project involves implementing and testing the 
proposed remediations.  With regard to IT systems, two of the five replacements
have been completed and the other three are in process.  The three upgrades and
testing are in process.  The Company's objective is to substantially complete
the implementation and testing phase by June 30, 1999, although further
remediation efforts may be required thereafter to address Year 2000 issues 
discovered during this phase.

Additionally, as part of its Year 2000 project, the Company has identified
certain service providers, vendors, suppliers, and customers ("Key Partners")
that it believed were critical to business operations after January 1, 2000.
The Company initiated communications with such Key Partners in an attempt to
reasonably ascertain their stage of Year 2000 readiness.  The Company has
received responses to approximately 60% of these questionnaires.  The majority
of such responses indicated that the Key Partner had Year 2000 remediation
programs and expected to be compliant by at least year end 1999.  The Company
has sent follow-up inquiries to the Key Partners who have not responded to the
Company's questionnaire.  The Company plans to continue assessment of Key
Partners, which may include further communications, interviews and face-to-face
meetings, as deemed appropriate.  Despite the Company's efforts, there can be no
guaranty that the systems of other companies which the Company relies upon to
conduct its operations and business will be compliant.

In addition to the above measures, the Company is currently developing
contingency plans intended to mitigate the possible disruption in business
operations from the Year 2000 issue.  The Company intends to continue to
evaluate and modify contingency planning as additional information becomes
available.

The Company estimates that the costs of the Year 2000 project will range from
$1.5 million to $2.0 million.  As of December 31, 1998, the Company had spent
approximately $1.0 million.  The cost estimates do not include any costs
associated with the implementation of contingency plans and any potential costs
related to any customer or other claims relating to the Year 2000 issue.

Because of the number of systems used by the Company, the significant number of
service providers, vendors, suppliers and customers, and the interdependent
nature of systems, there can be no guaranty that the Company will not experience
some disruption in its business due to the Year 2000 issue.  Although it is not
currently possible to quantify the most reasonably likely worst case scenario,
the possible consequences of the Company or Key Partners not being fully ready
in a timely manner include without limitation temporary plant closings, delays
in the delivery of products, delays in the receipt of supplies, invoice and
collection errors and inventory and supply obsolescence.  Consequently, the
business and operations of the Company could be materially adversely affected by
a temporary inability of the Company to conduct its business in the ordinary
course for periods of time due to the Year 2000 issue.  However, the Company
believes that its Year 2000 project and related contingency planning should
reduce the adverse effect any such disruptions may have.

The Year 2000 project is an ongoing process and the risk assessments, estimates
of costs, projected completion dates and other factors are forward looking
statements and are subject to change.  Factors that may cause such changes
include without limitation, the continued availability of qualified personnel
and other information technology resources; the ability to identify and
remediate all date sensitive lines of computer code and embedded chips; the
timely receipt and installation of Year 2000 ready replacement systems and
upgrades; the actions of governmental agencies, utilities and other third
parties with respect to the Year 2000 issue; the ability to implement
contingency plans; the occurrence of broad-based or systemic economic failures.

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.  An accrual for claims associated with the
alleged guarantees on leases rejected as of December 31, 1998 has been
established.  Based on the information presently available, management believes
the amount of the accrual at December 31, 1998 is adequate to cover the
liability the Company may incur under the alleged guarantees.


 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 11, 1998:

                                                  Affirmative    Votes Against
                                                     Votes        or Withheld
                                                  -----------    -------------
        1. Election of management's slate of nominees
            to serve as Directors:
              R. Earl Cox III                     10,383,040       1,344,902
              Joe K. Pace                         10,415,967       1,311,975
              Robert Schutts                      10,380,789       1,347,153
              Sheldon I. Stein                    10,407,087       1,320,855
              Michael J. Walsh                    10,475,807       1,252,135

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

          (a)   Exhibits:

                Exhibit 10.21    Twelfth 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 7,
                1999, announcing that Robert Schutts, a longtime member of the
                Tandycrafts board of directors, passed away Tuesday, 
                December 22, 1998.

                The Company filed a Current Report on Form 8-K, dated January
                13, 1999, announcing plans to close its leather and crafts 
                retail stores and related manufacturing operations.

                The Company filed a Current Report on Form 8-K, dated January
                22, 1999, which included pro forma information based on the
                historical financial statements of Tandycrafts, Inc. adjusted to
                give effect to the disposition of it leather and crafts retail
                stores and related manufacturing operations.

                The Company filed a Current Report on Form 8-K, dated January
                26, 1999, which included the contents of a press release
                announcing  the unaudited results of operations for the three
                and six-month periods ended December 31, 1998.



                               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 15, 1999                  By:/s/Michael J. Walsh
                                             ---------------------------
                                             Michael J. Walsh
                                             President, Chief Executive Officer
                                             and Director



Date:  February 15, 1999                  By:/s/James D. Allen
                                             ---------------------------
                                             James D. Allen
                                             Executive Vice President and Chief
                                             Financial Officer
                                             (Principal Financial Officer)



Date:  February 15, 1999                  By:/s/Troy A. Huseman
                                             ---------------------------
                                             Troy A. Huseman
                                             Assistant Vice President and Chief
                                             Accounting Officer