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                                                                 Exhibit Index
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                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                  FORM 10-Q
(Mark One)

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

         For the quarterly period ended May 29, 1998

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

         For the transition period from________to________.

                       Commission File Number: 1-4404

                         THE STRIDE RITE CORPORATION

           (Exact name of registrant as specified in its charter)

                   Massachusetts                    04-1399290
              (State or other jurisdiction (I.R.S. Employer Identified No.)
                      of incorporation)

               191 Spring Street, Lexington, Massachusetts 02173
                (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (617)824-6000

        Securities registered pursuant to Section 12(b) of the Act:

                              Name of each exchange
      Title of each class                        on which registered
      Common stock, $.25 par value               New York Stock Exchange

      Preferred Stock Purchase Rights            New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

         Indicate by check mark whether the registrant (1) has filed all reports
required 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  report),  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.
         Yes   X            No

As of July 6, 1998, 47,308,321 shares of the registrant's common stock, $.25 par
value, and the accompanying Preferred Stock Purchase Rights were outstanding.



<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements

<TABLE>
                           THE STRIDE RITE CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)

<CAPTION>
                                             May 29,                   May 30,
                                              1998      November 28,    1997
                                           (Unaudited)     1997      (Unaudited)
     Assets

     Current assets:
<S>                                         <C>           <C>          <C>     
       Cash and cash equivalents            $ 19,565      $ 41,663     $ 14,728

       Short-term investments                 10,000         9,417       46,387

       Accounts and notes receivable, net     84,284        51,708       78,140

       Inventories:
          Finished goods                      99,870       133,233       93,267
          Work in process                          -           256          515
          Raw materials                          598         1,239        2,387
                                             -------       -------      -------
                                             100,468       134,728       96,169

       Deferred income taxes and
     prepaid expenses                         35,294        34,135       35,968
                                             -------       -------      -------

       Total current assets                  249,611       271,651      271,392

     Property and equipment, net              58,587        55,395       53,563

     Other assets                             19,055        16,872       19,527
                                             -------       -------     --------

       Total assets                         $327,253      $343,918     $344,482
                                            ========      ========     ========
</TABLE>
















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





                                       2



<PAGE>



PART I - FINANCIAL INFORMATION (Continued)

                           THE STRIDE RITE CORPORATION
                CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
                                              (Dollars in Thousands)

<TABLE>
                                               May 29,                  May 30,
<CAPTION>
                                                1998     November 28,    1997
                                             (Unaudited)     1997    (Unaudited)
      Liabilities and Stockholders' Equity

      Current Liabilities:
           Current maturities of
            long-term debt                            -           -    $    833
<S>                                           <C>          <C>           <C>   
           Accounts payable                   $  19,719    $ 31,748      18,330
           Income taxes payable                  21,074      21,445      24,518
           Accrued expenses and other
            liabilities                          28,927      42,195      40,325
                                                --------    -------     -------

           Total current liabilities             69,720      95,388      84,006

      Deferred income taxes                       6,504       6,504       8,276

      Stockholders' Equity:
           Preferred stock, $1 par value
             Shares authorized-1,000,000
             Shares issued-None                       -           -           -

           Common stock, $.25 par value
             Shares authorized-135,000,000
             Shares issued-56,946,544            14,237      14,237      14,237

           Capital in excess of par value        22,309      22,289      22,682

           Retained earnings                    335,561     326,292     322,459

           Less cost of  9,656,021  shares  of
            common  stock  held in  treasury
            (9,630,600 on November 28, 1997 
            and 8,533,335 on May 30, 1997)     (121,078)   (120,792)   (107,178)
                                              ---------    --------    --------

           Total stockholders' equity           251,029     242,026     252,200
                                               ---------   --------    --------

           Total liabilities and
            stockholders' equity               $327,253     $343,918   $344,482
                                              ==========    ========   ========
</TABLE>








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




                                      3


<PAGE>



PART I - FINANCIAL INFORMATION (Continued)

<TABLE>
                           THE STRIDE RITE CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
               For the periods ended May 29, 1998 and May 30, 1997
                      (In Thousands Except Per Share Data)

<CAPTION>
                         Three Months Ended           Six Months Ended
                         ------------------           ----------------
                          May 29,     May 30,        May 29,       May 30,
                           1998        1997           1998          1997
                         --------    --------     ------------    ---------

<S>                      <C>         <C>            <C>           <C>     
Net sales                $143,176    $141,604       $272,161      $273,409

Cost of sales              91,543      90,341        174,048       176,136

Selling and 
 administrative expenses   40,033      40,652         79,178        80,364
                         --------    --------       --------      --------

Operating income           11,600      10,611         18,935        16,909

Other income(expense):
   Interest income            843         991          1,773         1,843
   Interest expense          (557)       ( 50)          (943)          (81)
   Other, net               3,215        (497)         2,279        (1,181)
                         ---------   ---------      --------      ---------
                            3,501         444          3,109           581
                         --------    ---------      --------      --------
Income before income
 taxes                     15,101      11,055         22,044        17,490

Provision for income
 taxes                      5,505       3,978          8,047         6,293
                         --------    --------       --------      --------

Net income               $  9,596    $  7,077       $ 13,997      $ 11,197
                         ========    ========       ========      ========

Net income per common
 share:
   Diluted               $    .20    $    .14       $    .29      $    .22
                         ========    ========       ========      ========
   Basic                 $    .20    $    .15       $    .30      $    .23
                         ========    ========       ========      ========
Dividends per common
 share                   $    .05    $    .05       $    .10      $    .10
                         ========    ========       ========      ========

Average common shares
 used in per share
 computations:
   Diluted                 47,655      49,282         47,611        49,591
                         ========    ========       ========      ========
   Basic                   47,275      48,775         47,282        49,184
                         ========    ========       ========      ========
</TABLE>








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




                                      4


<PAGE>



PART I - FINANCIAL INFORMATION (Continued)
                           THE STRIDE RITE CORPORATION
<TABLE>
 
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
             For the six months ended May 29, 1998 and May 30, 1997
                                  (Dollars in Thousands)

<CAPTION>
                                                         May 29,       May 30,
                                                          1998          1997
                                                        ---------     ---------
    Cash was provided from (used for) Operations:
<S>                                                      <C>            <C>    
      Net income                                         $13,997        $11,197
      Adjustments to reconcile to net cash
       provided from (used for)operations:
      Depreciation and amortization                        5,166          5,160
      Compensation expense related to executive
       stock plans                                           165            299
      Equity in loss of affiliate                              -            400
      Gain on disposals of property and equipment         (3,395)           (44)
    Changes in:
      Accounts and notes receivable                      (32,576)       (33,274)
      Inventories                                         34,260         22,918
      Prepaid expenses                                    (1,159)         4,327
      Accounts payable, income taxes, accrued
       expenses and other current liabilities            (24,683)       (10,436)
                                                         --------        -------
      Net cash provided from (used for) operations        (8,225)           547
                                                          -------        -------

    Investments:
      Short-term investments                                (583)       (11,776)
      Additions to property and equipment                (10,720)        (5,692)
      Proceeds from sales of property and
       equipment                                           5,888             49
      Sale(purchase) of noncurrent marketable
       securities                                            444         (2,538)
      Increase in other assets                            (2,758)        (2,199)
                                                          -------        -------
      Net cash used for investments                       (7,729)       (22,156)
                                                          -------       --------

    Financing:
      Proceeds from sales of stock under stock plans         944            422
      Cash dividends paid                                 (4,727)        (4,943)
      Repurchase of common stock                          (2,361)       (16,411)
                                                          -------       --------
      Net cash used for financing                         (6,144)       (20,932)
                                                          -------       -------

    Net decrease in cash and cash equivalents            (22,098)       (42,541)
    Cash and cash equivalents at beginning of the
     period                                               41,663         57,269
                                                         --------      --------

    Cash and cash equivalents at end of the period       $19,565        $14,728
                                                        =========      ========
</TABLE>

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







                                  5


<PAGE>


PART I - FINANCIAL INFORMATION (Continued)

                           THE STRIDE RITE CORPORATION

               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                     NOTE 1

         The financial information included in this Form 10-Q of The Stride Rite
Corporation  (the "Company") for the periods ended May 29, 1998 and May 30, 1997
is  unaudited  and  subject  to  year-end  audit  adjustments.   However,   such
information   includes  all   adjustments   (including   all  normal   recurring
adjustments) which, in the opinion of management, are considered necessary for a
fair presentation of the consolidated  results for those periods. The results of
operations  for the  periods  ended  May 29,  1998  and  May  30,  1997  are not
necessarily indicative of the results of operations that may be expected for the
complete fiscal year. The year-end condensed balance sheet data was derived from
audited financial  statements,  but does not include all disclosures required by
generally accepted accounting  principles.  Certain  reclassifications have been
made to the 1997 condensed  consolidated  financial statements to conform to the
fiscal 1998  presentation.  These financial  statements  should be read together
with the Company's financial  statements (and notes thereto) for the fiscal year
ended  November 28, 1997,  which are included in the Company's  most recent Form
10K.

                                  NOTE 2

         During the first six months of fiscal 1998,  interest payments amounted
to  $932,000  ($85,000 in 1997).  For the first six months of 1998,  the Company
paid income taxes amounting to $8,418,000 ($3,602,000 in 1997).

                                  NOTE 3

         Earnings per share information has been restated to conform to SFAS No.
128,  "Earnings per Share" which was adopted in the first  quarter  1998.  Basic
earnings per common share is  calculated  by dividing net income by the weighted
average number of common shares outstanding during the period.  Diluted earnings
per share is  calculated  by  dividing  net  income  by the sum of the  weighted
average  number of shares  plus  additional  common  shares that would have been
outstanding  if  potential  dilutive  common  shares  had been  issued for stock
options  granted.  The following  table  reconciles the number of shares for the
basic and dilutive  computations  for the second  quarter and six month  periods
ended May 29, 1998 and May 30, 1997.

<TABLE>
<CAPTION>
                                Second Quarter              First Six Months
                        --------------------------------------------------------
                            May 29,       May 30,       May 29,         May 30, 
                             1998          1997          1998             1997                                   -               -
                        --------------   ---------     ---------       --------
<S>                         <C>            <C>          <C>             <C>    
Net income                  $ 9,596        $7,077       $13,997         $11,197

Earnings per common share:
  Basic                     $   .20        $  .15       $   .30         $   .23
  Diluted                       .20           .14           .29             .22

Weighted average common shares
  outstanding (basic)        47,275        48,775        47,282          49,184
Dilutive effect of stock 
  options                       380           507           329             407
                             ------        ------        ------          ------
Weighted average common shares
  outstanding (diluted)      47,655        49,282        47,611          49,591
                             ======        ======        ======          ======
</TABLE>


                                         6


<PAGE>



         PART I - FINANCIAL INFORMATION (Continued)

                          THE STRIDE RITE CORPORATION

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                              NOTE 3 - continued...

Earnings  per share  information,  restated to conform to SFAS No. 128,  for the
three years ended November 28, 1997, is as follows:

<TABLE>

<CAPTION>
                                      1997            1996            1995
                                 --------------  --------------  --------------
<S>                                  <C>               <C>           <C>   
Basic net income per share           $.41              $.05          $(.17)
Diluted net income per share          .40               .05           (.17)
</TABLE>

                                  NOTE 4

         On March 31, 1998, the Company sold two buildings and adjoining land in
Boston  which was  formerly  used as a  distribution  center  for the  Company's
wholly-owned subsidiary,  Stride Rite Children's Group, Inc. The Boston facility
was closed in  December  1997  following  the  transfer of  operations  to a new
distribution  center in  Huntington,  Indiana.  The  transaction  resulted  in a
one-time  pre-tax gain of $3.8 million ($.05 per share,  net of income taxes) in
the second quarter of fiscal 1998.
































                                    7


<PAGE>



PART I - FINANCIAL INFORMATION (Continued)

                           THE STRIDE RITE CORPORATION

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

         Certain  statements  contained  in  this  Item  2 are  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995 and are thus prospective. Such forward-looking statements are subject to
risks,  uncertainties  and other  factors  which could cause  actual  results to
differ  materially from future results  expressed,  projected or implied by such
forward-looking statements.  Readers are referred to Exhibit 99 to the Company's
Quarterly  Report on Form 10-Q for the fiscal  period  ended March 1, 1996 for a
discussion of certain such  factors.  The Company  disclaims  any  obligation to
update such forward-looking statements.

Results of Operations

         The following table summarizes the Company's performance for the second
quarter  and first six months of fiscal  1998 as compared to the results for the
same periods in fiscal 1997:

Increase (Decrease) Percent vs. 1997 Results:

<TABLE>
<CAPTION>
                                             Second Quarter        Six Months

<S>                                                <C>                <C>   
Net sales                                          1.1%               (0.5)%
Gross profit                                       0.7%                0.9%
Selling and administrative expenses               (1.5)%              (1.5)%
Operating income                                   9.3%               12.0%
Income before income taxes                        36.6%               26.0%
Net income                                        35.6%               25.0%
</TABLE>

Operating Ratios as a Percentage to Net Sales:

<TABLE>
<CAPTION>
                                      Second Quarter            Six Months
                                      1998      1997          1998      1997

<S>                                   <C>       <C>           <C>       <C>  
Gross profit                          36.1%     36.2%         36.0%     35.6%
Selling and administrative expenses   28.0%     28.7%         29.1%     29.4%
Operating income                       8.1%      7.5%          7.0%      6.2%
Income before income taxes            10.6%      7.8%          8.1%      6.4%
Net income                             6.7%      5.0%          5.1%      4.1%
</TABLE>















                                    8


<PAGE>



PART I - FINANCIAL INFORMATION (Continued)

                           THE STRIDE RITE CORPORATION

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

Net Sales

       Net sales in the second  quarter of fiscal 1998 increased $1.6 million or
1.1% over the net sales level for the same period of fiscal 1997. Over the first
six  months of fiscal  1998,  consolidated  net sales  were  lower than the same
period of fiscal 1997 by $1.2 million or 0.5%. A 1.1%  decrease in revenues from
the  Company's  wholesale  divisions  during the first  half of fiscal  1998 was
partially  offset by a 3.5% increase in sales of the Company's  retail  division
sales during the same period.  In the second  quarter of fiscal 1998,  wholesale
division  revenues  increased 1.9% and retail sales increased 2.6% from the same
period in fiscal 1997.  With respect to the wholesale  divisions of the Company,
unit  shipments of current line  merchandise  during the first half of 1998 were
1.8% below the comparable period in fiscal 1997. The lower sales of current line
merchandise  during the first  half of fiscal  1998 were  partially  offset by a
46.8% increase in the sales of  discontinued  products.  Excluding the impact of
product  mix  changes,  net sales in the first six months of fiscal 1998 was not
affected by selling price inflation or deflation.

       In the  second  quarter  of fiscal  1998,  Keds,  the  Company's  largest
division,  accounted for a significant  portion of the increased revenues in the
Company's  wholesale  businesses.  Keds division  sales in the second quarter of
1998  increased  10% from 1997 with sales of  current  line  merchandise  in the
second quarter increasing 13% and sales of discontinued styles down 32% from the
comparable period of 1997. Sales of Keds' new "basics" offerings,  including the
Ready to  Wear(TM)  and  Relaxed  Fit(TM)  collections,  more  than  offset  the
continuing  sales decline of the  Champion(R)  style.  For the first six months,
Keds' net sales  increased  4% compared to 1997,  with the sales of current line
merchandise  higher by 8% and  sales of  discontinued  styles  down 52% from the
first half of 1997.

       The Stride  Rite  Children's  Group  achieved a 6% sales  increase in the
second  quarter of fiscal 1998 with a 3%  increase in retail  sales and sales to
independent  accounts  which were 10% higher  than for the same period in fiscal
1997.  During the  second  quarter of 1998,  sales at  comparable  company-owned
retail stores increased 5.8% from 1997. For the first six months of fiscal 1998,
sales of the Stride Rite  Children's  Group increased 3% from the same period in
1997,  with sales to  independent  accounts  and sales at  company-owned  retail
stores both up 3% from the 1997 period. Sales at comparable company-owned retail
stores  increased  7% during  the first  half of 1998.  At the end of the second
quarter of fiscal 1998,  the Company  operated 194 stores,  down 5% from the 205
stores open at the end of the second quarter in fiscal 1997.

       Sales of Tommy Hilfiger products in the second quarter of 1998 increased
21% as compared to the same period in 1997; however, all of the increase came 
from the liquidation of discontinued styles.  Sales of current merchandise in 
the quarter declined 26% as compared to the same period in 1997. Tommy





                                     9


<PAGE>



PART I - FINANCIAL INFORMATION (Continued)

                         THE STRIDE RITE CORPORATION

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

Hilfiger  sales  continue  to be  adversely  affected  by the  difficult  market
conditions for athletic  footwear and the brand's  disappointing  results in the
Fall 1997 selling season.  Sales for the first six months of fiscal 1998 for the
Tommy Hilfiger  division  increased 4% as compared to the same period in 1997 as
revenues  associated with the  liquidation of  discontinued  styles offset a 16%
decrease in the sales of current line merchandise.  While the comparison to 1997
was difficult,  as sales in the first half of 1997 included  heavy  shipments to
retailers  to support  the  initial  launch of the brand,  the  slowdown  in the
overall  athletic  market  continued to have a negative effect on Tommy Hilfiger
division  sales in 1998.  Additionally,  product  line  changes away from higher
priced basketball styles and more competitive  market conditions  resulted in an
average selling price which was 24% lower than the first half of 1997.

         Compared  to the same  period  in  fiscal  1997,  sales  of the  Sperry
Top-Sider  division  decreased  13% in the  second  quarter  of fiscal  1998 and
declined  14% for the first six months of fiscal  1998 as the brand  experienced
heavy  cancellations  of  future  orders  and  soft  reorders  due to  increased
competition in the men's boat shoe market.  International revenues in the second
quarter of 1998 were below the comparable period of 1997 by $6.1 million or 48%,
largely due to a restructuring of the Company's  international  operations which
changed  distribution  arrangements to license  agreements in certain countries.
For the first six months of 1998,  International  revenues declined $3.7 million
or 18% from the comparable period of fiscal 1997.

         During the third quarter of fiscal 1998,  the Company  expects to begin
shipping products to customers for three new licensed brands: the Levi's product
lines for men and boys; the Tommy Hilfiger women's collection; and the Nine West
Kids products for girls.


Gross Profit

       During the first six months of fiscal 1998,  gross profit  increased $0.8
million,  a gain of 0.9% compared to the net sales decrease of 0.5% for the same
period.  The  consolidated  gross  profit  percent  in the  first  half  of 1998
increased 0.4 percentage points, finishing at 36.0% in 1998 compared to 35.6% in
1997.  The gross profit  performance  in the second quarter of 1998 was slightly
lower than the same period in fiscal  1997,  36.1% in 1998  compared to 36.2% in
the 1997 second quarter.  The Company's LIFO provision had a favorable impact on
gross profit  comparisons for the first six months of 1998, with LIFO increasing
gross  profit  by $1.5  million  (0.6% of net  sales) in 1998  compared  to $0.1
million  (less  than 0.1% of net  sales) in 1997.  The  primary  reason  for the
favorable  LIFO  impact  was the  reduction  of certain  manufactured  inventory
quantities which were valued at costs prevailing in prior years. The lower sales
of current line  merchandise and the increased  sales of discontinued  styles in
the  first  half of 1998  produced  a less  profitable  product  mix than in the
comparable period of 1997. In addition, increased inventory obsolescence charges
and sales allowances, particularly in the Tommy Hilfiger

                                    10


<PAGE>



PART I - FINANCIAL INFORMATION (Continued

                      THE STRIDE RITE CORPORATION

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

division,  and  higher  retail  markdowns  in the  first  half of 1998 were also
contributing  factors.  The Company's  second quarter and six month gross profit
performance  in 1998 was  also  negatively  affected  by $0.9  million  and $1.7
million,  respectively,  in start-up costs related to new licensed product lines
which will be introduced in the second half of the year.

       For the second  quarter of fiscal 1998,  the gross profit  percentage was
adversely  affected by increased  sales  allowances  and inventory  obsolescence
costs,  principally in the Tommy Hilfiger division.  In the second quarter,  the
LIFO  provision had a favorable  impact on gross profit  comparisons,  with LIFO
increasing  gross profit by $0.8 million (0.6% of net sales) in 1998 compared to
$0.3 million (0.2% of net sales) in 1997.

Operating Costs

       Selling  and  administrative  expenses  in the first six months of fiscal
1998 decreased  $1.2 million or 1.5% below the first half of 1997.  This decline
compared  favorably to the overall decrease in net sales of 0.5% during the same
period. Operating costs as a percentage of sales decreased from last year by 0.3
percentage  points in the first six months  (29.1% in 1998  compared to 29.4% in
1997).  The operating cost  comparison  between the 1998 and 1997 second quarter
periods was also  favorable,  as expenses  decreased by 1.5% compared to a sales
gain of 1.1%. In the second quarter of 1998, the relationship of expenses to net
sales declined by 0.7 percentage  points as compared to the comparable period of
1997.  Operating  costs in the  second  quarter  and  first  six  months of 1998
included $1.6 million and $3.0 million, respectively, of product development and
other selling and  administrative  costs related to the Levi's,  Tommy  Hilfiger
women's and Nine West Kids product  lines which are expected to begin  producing
revenues in the second half of 1998.

       Advertising  costs  increased  by $2.2  million  or 14% in the  first six
months of fiscal  1998,  principally  related to the Keds Spring  1998  national
television  campaign  supporting the  introduction  of the Ready to Wear(TM) and
Relaxed Fit(TM) collections.  As a percentage of net sales,  advertising expense
represented 6.5% of sales in the first six months of 1998, which was higher than
the spending rate of 5.7% of sales in the comparable period in 1997.  Offsetting
these spending  increases was a $1.7 million  decrease in distribution  expenses
due to efficiencies at the Company's Kentucky  distribution center and the lower
costs of the new Huntington,  Indiana facility which was opened in October 1997.
Distribution  expenses  represented  1.8% of net sales in the first half of 1998
compared to 2.3% in 1997. In addition,  the elimination of certain International
division overhead costs of $1.3 million and various other administrative expense
decreases contributed to the overall reduction in operating expenses.

Other Income and Taxes

       Other income  (expense)  increased  pre-tax income by $3.1 million in the
first six months of fiscal 1998  compared to an increase of $0.6  million in the
first half of fiscal 1997. In the first half of fiscal 1998, other


                                    11


<PAGE>



PART I - FINANCIAL INFORMATION (Continued)

                    THE STRIDE RITE CORPORATION

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

income  included a pre-tax  gain of $3.8  million  from the sale of real  estate
formerly  used  as  a  distribution   center  for  the  Company's   wholly-owned
subsidiary,  Stride Rite  Children's  Group,  Inc. (See Note 4 above).  Interest
income in 1998 was flat for the first six  months of 1998  compared  to the 1997
first half.  Interest  expense in the first six months of 1998 increased to $0.9
million  compared  to $0.1  million in 1997,  as the Company  maintained  higher
borrowings than in 1997 due to increased  inventory levels and cash expenditures
related to the Company's share repurchase program. Average short-term borrowings
in the  first  six  months  of 1998  were  $28.7  million,  up from the  average
borrowings of $1.1 million in the comparable period of 1997.

       The  provision for income taxes  increased  $1.8 million in the first six
months of fiscal 1998 as compared to the similar period in fiscal 1997 primarily
due to the higher pre-tax  income earned in the 1998 period.  The 1998 effective
income tax rate was also higher, 36.5% compared to 36.0% in 1997, due to reduced
tax savings related to a company-owned life insurance program.

Net Income

       Net  income  for the first  six  months of  fiscal  1998  increased  $2.8
million,  up 25% from the income  earned in the first half of fiscal  1997.  The
higher net income was the result of improved gross profit performance,  a slight
decrease  in  operating  expenses  and the  one-time  gain from the sale of real
estate.  The Company's  after-tax return on net sales in the first six months of
fiscal 1998  improved by 1 percentage  point (5.1% of sales in 1998  compared to
4.1% in 1997).

Liquidity and Capital Resources

       At May 29, 1998, the Company's  balance sheet reflects a current ratio of
3.6 to 1 with no long-term  debt. The Company's cash and short-term  investments
totaled  $29.6  million  at the end of the  latest  quarter,  below the cash and
investments  total of $61.1 million at the end of the first half of fiscal 1997.
This lower cash and short-term  investment balance was principally the result of
cash used in the  company's  stock  repurchase  program  and  increased  working
capital needs.  In 1998,  other assets also included $8.7 million of investments
in  intermediate-term,  fixed  income  instruments  compared to $9.6  million in
similar  investments  in May 1997.  During  the first  six  months of 1998,  the
Company's  operations used $8.2 million of cash, compared to the $0.5 million of
operating  cash generated in 1997, as accounts  receivable and inventory  levels
were increased.

       At May 29, 1998,  receivable and inventory levels totaled $184.8 million,
an increase of $10.5 million or 6.0% from the $174.3 million asset amount at the
end of the first half of fiscal 1997.  Accounts  receivable  of $84.3 million at
the end of the second quarter of 1998  increased  7.9% from the 1997,  above the
sales  increase of 1.1% in the quarter as shipments  were heavier than last year
in the April/May timeframe.  Inventories were higher at the end of the first six
months of 1998,  up $4.3  million  or 4.5% from the 1997  level,  as  additional
inventory  associated  with the Tommy  Hilfiger  division  more than  offset the
impact of lower retail store inventories.
                                   12


<PAGE>



PART I - FINANCIAL INFORMATION  (Continued)

                           The Stride Rite Corporation

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)


         Additions to property and equipment  totaled $10.7 million in the first
six months of fiscal  1998  compared  to $5.7  million in the same 1997  period.
Capital  expenditures  in the  first  half  of  1998  included  a  $3.2  million
expenditure  related  to  the  Company's  purchase  of its  Huntington,  Indiana
distribution  facility.  A large portion of the Company's  capital  expenditures
over the next two years will be related to upgrading its information  systems in
order to prepare for the Year 2000  transition.  During fiscal 1997, the Company
formulated a plan to implement  system changes designed to handle the transition
in the  Company's  systems.  In most areas,  the Company  plans to implement new
computer systems,  which will be Year 2000 compliant,  as part of its continuing
efforts to  upgrade  systems  capabilities  and to effect  the  transition  from
mainframe computer processing to lower cost,  midrange computers.  As previously
disclosed,  the Company  expects to spend  approximately  $15 million in capital
expenditures  during the 1997 to 1999  period as part of this  effort to upgrade
system capabilities and to deal with the Year 2000 transition. As a further step
to minimize business  interruptions  related to the Year 2000 issue, the Company
is in the  process of  executing  a plan to  remediate  certain  elements of its
existing  business  software.  The  cost of this  remediation  effort,  which is
expected to be approximately $1 million, will be charged to expense as the costs
are incurred.  Operating expenses in the first half of fiscal 1998 included $0.3
million related to the remediation of these systems.

         During the first six months of fiscal  1998,  the  Company  repurchased
215,000 shares of stock for an aggregate  cost of $2.4 million.  This brings the
cumulative number of shares repurchased under the authorization  approved by the
Company's  Board  of  Directors  in  October  1997 to  740,000  shares,  leaving
1,260,000 shares currently authorized for future repurchases.

         The Company uses bank lines of credit to fund seasonal  working capital
needs. There were no borrowings  outstanding under these arrangements at May 29,
1998 or May 30, 1997.




















                                   13


<PAGE>



PART II - OTHER INFORMATION

                          THE STRIDE RITE CORPORATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Annual Meeting of the Company's  shareholders was held on April 16,
1998. The three  directors  nominated by management were elected by the vote set
forth below:
<TABLE>
<CAPTION>
                                                            Votes
                                               ---------------------------------
                Name of Director               For              Withheld
<S>                                            <C>              <C>      
                Warren Flick                   42,247,363       1,302,877
                Donald R. Gant                 42,275,028       1,275,212
                W. Paul Tippett, Jr.           42,273,946       1,276,295
</TABLE>

The Company's  other  directors,  whose term of office  continues after the 1998
stockholders' meeting, are as follows:

                              Margaret A. McKenna
                              Frank R. Mori
                              Robert L. Seelert
                              Robert C. Siegel
                              Myles J. Slosberg

The Company's  shareholders  also ratified the Company's  selection of Coopers &
Lybrand  L.L.P.  as auditors of the Company for the 1998 fiscal year by the vote
set forth below:

                                Votes
          -------------------------------------------- ----------------------
                For             Against                     Abstentions

            43,311,869          111,714                       126,658

The  shareholders  voted in favor of a proposal  requesting  that the  directors
consider  and act upon to approve The Stride  Rite  Corporation  1998  Long-Term
Growth Incentive Plan, by the vote set forth below:

                  Votes
       ------------------------------ ----------------- ---------------
             For          Against       Abstentions         No Vote

         30,390,808       2,949,929       661,386          9,548,118

The shareholders also voted in favor of a proposal requesting that the directors
consider and act upon to approve The Stride Rite Corporation  1998  Non-Employee
Director Stock Ownership Plan, by the vote set forth below:

                    Votes
          ------------------------------- ----------------- --------------
                For         Against          Abstentions       No Vote

            30,789,218      2,950,115          263,789        9,547,119

The shareholders also voted in favor of a proposal requesting that the directors
consider and act upon to approve The Stride Rite  Corporation  Senior  Executive
Annual Incentive Compensation Plan, by the vote set forth below:

                          Votes
                ----------------------------- -------------------- 
                      For         Against        Abstentions

                  41,539,117      1,232,503        778,620


                                        14

<PAGE>



PART II - OTHER INFORMATION

                       THE STRIDE RITE CORPORATION

ITEM 5.  OTHER INFORMATION

Rule 14a-4 under the Securities Exchange Act of 1934, as amended,  provides that
the Company's proxy card for the 1999 annual meeting of stockholders  may confer
discretionary  authority  on any  matter as of which the  Company  does not have
notice of by January 13, 1999.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)       Exhibits                    Description of Exhibit
                         Exhibit No.
                              11           Computation of Per Share Earnings
                              27           Financial Data Schedule

     (b)       Reports on Form 8-K
               The Company  did not file any  current  reports on
               Form 8-K during the most recent quarterly period.


































                                      15


<PAGE>



                         THE STRIDE RITE CORPORATION

                                 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 duly authorized.

                                        THE STRIDE RITE CORPORATION
                                                   (Registrant)

Date:  July 13, 1998                    By:      /s/ John M. Kelliher
                                                 --------------------
                                                 John M. Kelliher
                                                 Chief Financial Officer










































                                    16



<PAGE>




                      THE STRIDE RITE CORPORATION

                           INDEX TO EXHIBITS

Exhibit No.

                                                          Sequential Page No.
       11    Computation of Per Share Earnings               Page 18 of 19

       27    Financial Data Schedule                         Page 19 of 19
            














































                                      17


<PAGE>