SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the Fiscal Year Ended November 29, 1996

Commission File No. 1-5548-1

PENOBSCOT SHOE COMPANY
(Exact name of registrant as specified in its
charter)

A Maine Corporation
State of Incorporation

01-0139580
IRS Employer Id. No.

450 North Main Street, Old Town, Maine 04468
(Address of principal executive offices)

207-827-4431
(Registrant's Phone)

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

Title of each class            Name of exchange on which registered
Common $1.00 Par Value         American Stock Exchange

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

Common Stock, Par Value $1.00
(Title of Class)
                            
  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_____

   On February 7, 1997, there were 1,395,165 shares of the registrant's
common stock, $1.00 par value, outstanding.  The aggregate market value of
the 608,038 shares of stock held by all non-affiliates of the registrant,
based on the closing price of the stock on the American Stock Exchange on that 
date, was $4,104,257.

Documents Incorporated By Reference

Incorporated Documents                     Form - 10K Reference

Annual Report to Stockholders for the      Parts II, IV
    fiscal year ended November 29, 1996

Proxy Statement dated February 27, 1997    Part III 

        This report consists of 25 sequentially numbered pages. The indices
of exhibits may be found on pages 7 and 10.
      
                      1
<PAGE>
                         PART I
                            
ITEM 1.  BUSINESS

     a)  The Registrant's Products and Services 

     The Registrant, Penobscot Shoe Company (herein referred to as
the "Company"), was incorporated in 1935, and has been engaged in the
manufacture, importing and sale of branded footwear to retailers.  Its
principal products today are women's casual, sport and leisure footwear,
including boots and sandals, selling in the moderate price range.

     In 1996, all of the Company's sales were made under the exclusive
brand name, TROTTERS, to approximately 1,700 locations. 

      To achieve these sales, the Company employs a national sales force
which is compensated on a commission basis.  The efforts of this sales force
and the identity and value of the Company's principal trademark, TROTTERS,
are supported by trade advertising on a national basis, cooperative advertising 
programs and promotional assistance to retailers. 

    The Company is continually seeking new customers, but, since it does
not have long-term contracts with its customers, there can be no assurance
that its business will be constant or grow.  On February 7, 1997, the Company
had orders in-house of approximately $5,368,000, as compared to orders of 
approximately $4,775,000 one year ago.  Changes in backlog do not necessarily
indicate sales trends, as in-house orders frequently fluctuate according to 
customers' inventory plans as well as the Company's ability to deliver.

   Net sales for 1996 increased 22% from the preceding year.  Total pairs
of footwear shipped increased by approximately 15% from 1995. The average
selling price per pair increased by approximately 6% in 1996. Most of this 
increase in average selling price per pair was a result of the product mix 
rather than price increases.

Trotters sales growth in 1996 was the result of several factors. Improved 
product sell through, as indicated by a 26% increase in our in-stock 
business, sales programs and expanded penetration into key retail segments
all contributed to this success. 

Future growth will be dependent on further expansion of TROTTERS 
distribution in the highly competitive women's footwear market and the
strength of the retail footwear environment. 

  In August 1996, the Company ceased production at its manufacturing 
facility in Old Town, Maine. The decision to cease domestic assembly of
footwear was due to a decline in the portion of the product line which
had been produced in that facility. The profitability of the products which
had been assembled in Old Town had declined to a point where the operation
was no longer economically viable. Approximately 15% of the Company's
products were assembled in Old Town in 1996, down from 27% in 1995. 
The balance of the Company's products are purchased as finished footwear from 
overseas sources. The emphasis on sourcing finished footwear from overseas
has helped the Company to maintain its price competitiveness and quality
control.


                            2
                            
<PAGE>
                         PART I
                            
                            
ITEM 1.  BUSINESS (continued)

     (a) The Registrant's Products and Services (continued)

      The Company had approximately 43 employees on November 29, 1996, 
while the number of employees at November 24, 1995 was 78.

     The Company's sole line of business is the importing and sale of 
footwear, as described above.

      (b)  Material Factors Affecting the Company's Business.

          (1)  Competition
       There are many well-managed, well-financed competitors
supplying moderately-priced footwear to the market served by the Company.
Pricing continues to be a major area of competition inasmuch as imports
constitute a sizable majority of all footwear sold in the American market.
Other important areas of competition include quality, fashion, the reliability 
and timeliness of delivery, and the provision of in-stock service in a range 
of sizes and widths.  The Company makes a special effort to maintain an 
inventory of its better selling styles in a large variety of sizes and 
widths. This allows it to satisfy retailers' needs more efficiently and more 
quickly than can some of its competitors.  The Company believes that it is 
recognized as one of the leaders in the industry in its ability to provide
this service, known as open-stock reorder availability.

          (2)  Seasonality

          The Company's business is characterized by two major
selling seasons, one for the Fall retail season and the other for the Spring
retail season.  Sales for the Fall season generally account for slightly more
than half of a year's sales, while the Spring sales account for the balance. 
Although a portion of the Company's products are not imported until orders 
for them have been received, the Company imports a certain amount of its 
basic and more traditional styles ahead of the receipt of orders. This is 
necessary in order to mitigate the effect of the seasonality of its order 
pattern and to offset the current trend whereby incoming orders are 
concentrated in a shorter period of time and closer to the retail selling 
season.  In addition, the Company imports for in-stock inventories those 
shoes projected to be best sellers, in order to provide the service referred 
to previously.  The risk involved with the early purchase of the Company's 
product is the potential for surplus inventory if the selling patterns do not
materialize as forecast.  The resulting surplus inventory must be sold at 
reduced margins with a corresponding negative impact on earnings.  
Considerable effort has been devoted to minimizing this risk through improved
forecasting techniques and sound inventory management.  The Company finances 
the normal buildup of its finished goods inventory by the use of available 
liquid working capital.


                            3
<PAGE>

                         PART I
                                                     

ITEM 1.  BUSINESS (continued)

          (3)  Source and Availability of Products

           All of the footwear purchased by the Company from overseas resources
is manufactured using the Company's designs and specifications.  There are many
factories throughout the world from which the Company could source the footwear
products.  The Company purchases from foreign sources in U.S. dollars
eliminating any currency risks. 

     (c)  Executive Officers of the Registrant
<TABLE>
<CAPTION>
   The following is a list of the Company's executive officers, their
ages, positions and offices, as of November 29, 1996:

  Name           Age             Position presently held and period of service
<S>              <C>             <C>
Paul Hansen       56              President and Chief Executive Officer since
                                  1994, Chief Operating Officer from 1988
                                  to 1993, Treasurer from 1986 to 1994 and
                                  Executive Vice President from 1981-1988.
                                  Employed by the Company since 1966.

Wilhelm Pfander   59              Vice President since 1977.
                                  Employed by the Company since 1963.

John R. French    52              Vice President since 1978.
                                  Employed by the Company since 1970.

David L. Keane    44              Vice President since 1987, Treasurer since
                                  1994.  Employed by the Company since 1985.
                            
William Hoskins   55              Vice President since 1994.  Employed by the
                                  Company since 1993.

Gerald E. Rudman  68              Clerk since 1969, Director since 1975.
                                  Company General Counsel.
</TABLE>

                            4
<PAGE>
                         PART I
                            
                            
ITEM 2.  PROPERTIES

   The Company owns two buildings in Old Town, Maine, which is
approximately 15 miles from Bangor, Maine.  Both of the buildings in Old
Town are made of steel, brick and concrete construction. One of the buildings
had been used for manufacturing and is currently surplus to the Company's 
needs. That building contains approximately 69,000 square feet and is listed 
for sale or lease. The other, which is used for the Company's executive 
offices and warehousing, contains approximately 74,500 square feet.

      Both buildings are in good condition and have suitable transportation
facilities.  


ITEM 3.  LEGAL PROCEEDINGS

    In September 1987, the Company and numerous other parties entered
into two Administrative Orders by Consent issued by the U.S. Environmental
Protection Agency and the Maine Department of Environmental Protection,
regarding the removal of hazardous wastes from two locations in Maine.  The
Company initially established a loss contingency of $75,000 to cover
anticipated liabilities in these two proceedings.  The amount of this accrual
was determined based on several factors which were known at that time.
These factors included the EPA apportionment percentage applicable to
Penobscot Shoe Company, the volume and type of materials contributed to the
sites by the Company, and the estimated costs for remedial actions at the
sites.  Additionally, costs of cleanup were estimated utilizing available past
experience of other companies and sites.  The loss contingency was charged
against earnings during fiscal 1987.  Costs totaling $14,000 have been incurred
to date and a reserve of $61,000 remains in place.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
               HOLDERS
               
   No matter was submitted to a vote of the Company's security
holders during the last quarter of the Company's fiscal year.


                         PART II
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND
         RELATED STOCKHOLDER MATTERS

    Reference is made to the information set forth on page 25 of the
Company's annual report to stockholders for the fiscal year ended November
29, 1996 ("1996 Annual Report"), filed herewith as Exhibit 13.

ITEM 6.  SELECTED FINANCIAL DATA

  Reference is made to the Selected Financial Data set forth on page
25 of the Company's 1996 Annual Report filed herewith as Exhibit 13.


                            5
<PAGE>
                         PART II
                            
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS
       
  Reference is made to the Management's Discussion and Analysis
of Financial Condition and Results of Operations set forth on page 24 of the
Company's 1996 Annual Report, filed herewith as Exhibit 13.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
         DATA
      Incorporated by reference from the financial statements of the
Company included in the 1996 Annual Report, filed herewith as Exhibit 13.
See Index to Financial Statements and Schedules set forth in response to Part
IV, Item 14 of this Annual Report.


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

     Not applicable


                        PART III
                            
                            
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE
          REGISTRANT
          
      Identification of Directors and Directorships 
                            
Reference is made to the information set forth in the Company's definitive
Proxy Statement which is to be filed with the Securities and Exchange
Commission on or about February 27, 1997. 

Identification of Executive Officers

This information is set forth in Part I, Item 1 (c) of this report.

ITEM 11.  EXECUTIVE COMPENSATION
Reference is made to the information set forth in the Company's definitive
Proxy Statement which is to be filed with the Securities and Exchange
Commission on or about February 27, 1997.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT

Reference is made to the information set forth in the Company's definitive
Proxy Statement which is to be filed with the Securities and Exchange
Commission on or about February 27, 1997.


                           6
<PAGE>
                       PART III
                           
                           
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED
          TRANSACTIONS
          
     Not applicable
                        PART IV
                           
                           
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
          AND REPORTS ON FORM 8-K

(a)  1. and 2.  Financial Statements and Financial Statement Schedules:

       Incorporated by reference to the financial statements of the
Company included in the 1996 Annual Report filed herewith as Exhibit 13.
See the Index to Financial Statements and Schedules included with the
Additional Financial Statements and Schedules filed with this Annual Report.

(a)  3.  Exhibits:

     The index on page 13, directly preceding the exhibits, lists all of
the exhibits either filed as a part of this annual report or incorporated
herein by reference.

(b)  Reports on Form 8-K:

     None
                           7
                           
<PAGE>

                       SIGNATURE

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                PENOBSCOT SHOE COMPANY

                           

                           

                           

                           

                          Paul Hansen
                     By:  Paul Hansen
                          President and
                          Chief Executive Officer





                           David L. Keane
                      By:  David L. Keane
                           Vice President/Finance and Administration



Date:  February 26, 1997

     Pursuant to the requirements of the Securities Exchange Act of 

1934, this report has been signed by the following persons on behalf of the

Registrant and in the capacities and on the dates indicated:






 Irving Kagan            Date      Gerald E. Rudman            Date
 Director                          Director




 Paul Hansen             Date
 Director

                             8
<PAGE>

PENOBSCOT SHOE COMPANY
FINANCIAL STATEMENTS
FORM 10K, PART IV, ITEM 14 (a)1 AND (a)2

YEAR ENDED NOVEMBER 29, 1996


                            9
<PAGE >

PENOBSCOT SHOE COMPANY


FINANCIAL STATEMENTS
FORM 10K, PART IV, ITEM 14 (a)1 AND (a)2


(a)  1.  Financial Statements

     The report of independent certified public accountants and the
following financial statements of the registrant included in the Annual 
Report of the registrant to its stockholders for the year ended November 29, 
1996, are incorporated herein by reference:

      Balance sheets at November 29, 1996 and November 24, 1995
      Statements of  income for the years ended November 29, 1996,
           November 24, 1995, and November 25, 1994
      Statements of shareholders' equity for the years ended November 29, 	     
           1996, November 24, 1995, and November 25, 1994
      Statements of cash flows for the years ended November 29, 1996,
           November 24, 1995, and November 25, 1994
      Notes to financial statements

     2.  Financial Statement Schedules

        Report of independent certified public accountants 
        Schedule II - Valuation and qualifying accounts and reserves

   Other schedules have been omitted because they are either not
required, not applicable, or the information is given in the Financial
Statements, including the notes thereto.



                           10
<PAGE>



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Penobscot Shoe Company
Old Town, Maine


     The audits referred to in our report dated January 10, 1997,
relating to the financial statements of Penobscot Shoe Company which is
incorporated in Item 8 of this Form 10-K by reference to the annual report
to shareholders for the year ended November 29, 1996, included the audit of
the financial statement schedule listed in the accompanying index.  This
financial statement schedule is the responsibility of the Company's
management.  Our responsibility is to express an opinion on this financial
statement schedule based upon our audits.

     In our opinion, such financial statement schedules present fairly, in
all material respects, the information set forth therein.



Boston, Massachusetts
January 10, 1997                   BDO Seidman, LLP
                             11
<PAGE>
<TABLE>
<CAPTION>
PENOBSCOT SHOE COMPANY
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
     AND RESERVES
     (In Thousands)

                                                Column C
      Column A                  Column B       Additions          Column D    Column E
                                                      Charged to               
                                Balance at  Charged to   other    Deductions  Balance
                                beginning   costs and   accounts               at end
                                of  period   expenses  -describe  -describe   of period
<S>                            <C>          <C>        <C>        <C>        <C>
Deducted from Assets to
Which they Apply:

For the Year Ended November 29, 1996
Reserve for Doubtful Accounts    $335        $132                  $144(a)    $323
Reserve for Cash Discounts         22          1                                23
Reserve for Returns & Allowances  111         13                               124                                                 
     
                                 $468        $146       $0         $144       $470
                                                        
For the Year Ended November 24, 1995
Reserve for Doubtful Accounts    $315        $67                    $47 (a)   $335
Reserve for Cash Discounts         26        (4)                                22
Reserve for Returns & Allowances  145         (34)                             111

                                 $486        $29        $0          $47       $468
                                                       
For the Year Ended November 25, 1994
Reserve for Doubtful Accounts    $348        $44                    $77 (a)   $315
Reserve for Cash Discounts         37        (11)                               26
Reserve for Returns & Allowances  154        (9)                               145

                                 $539        $24        $0          $77       $486

Note (a) - Accounts written off net of recoveries.
</TABLE>
                              12
<PAGE>
                       Index to Exhibits
                               
 3(a)  Articles of Incorporation and by-laws of the Registrant, filed with
        the Commission in 1965 as Exhibit 3(a) to the Registrant's Form S-1 
        Registration Statement (Registration No. 2-23907) are incorporated 
        herein by reference.

13     Annual Report to Stockholders for the fiscal year ended
        November 29, 1996.
  
                            13
<PAGE>