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 October 28, 2000

                                    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 0-24902

                              QUALITY STORES, INC.
             (Exact Name of Registrant As Specified In Its Charter)

  Delaware                                                     42-1425562
  (State of Incorporation)                          (I.R.S. Employer No.)

  455 E. Ellis Road, Muskegon, MI                                   49441
  (Address of Principal Executive Offices)                       (Zip Code)

  Registrant's telephone number, including area code:  (231) 798-8787


                                 Not Applicable
             (Former Name, Former Address, and Former Fiscal Year,
                         If Changed Since Last Report)


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 October 28, 2000: 100. All of the registrant's stock is held
by QSI Holdings, Inc., and is not publicly traded.


<PAGE>
<TABLE>
<CAPTION>

                              QUALITY STORES, INC.
                                      INDEX

                                                                                                            PAGE
<S>              <C>                                                                                          <C>

PART I.           FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

                  Condensed consolidated balance sheets, October 28, 2000 (unaudited)
                  and January 29, 2000 (audited) ..............................................................3

                  Condensed  consolidated  statements of operations  (unaudited)
                  for the three months and nine months  ended  October 28, 2000,
                  and
                  October 30, 1999 ............................................................................4

                  Condensed consolidated statements of cash flows (unaudited) for the
                  nine months ended October 28, 2000, and October 30, 1999.....................................5

                  Notes to condensed consolidated financial statements (unaudited).............................6

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
                  QUALITY STORES, INC..........................................................................9


PART II.          OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS...........................................................................13

ITEM 2.           CHANGES IN SECURITIES.......................................................................13

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES.............................................................13

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........................................13

ITEM 5.           OTHER INFORMATION...........................................................................13

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K............................................................13

INDEX TO EXHIBITS.............................................................................................15
</TABLE>

                                      -2-
<PAGE>
<TABLE>
<CAPTION>

QUALITY STORES, INC.
Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)



                                                                                  October 28,        January 29,
                                                                                      2000              2000
                                                                                --------------      ------------
                                                                                  (Unaudited)        (Audited)
<S>                                                                               <C>               <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                        $  9,279          $ 11,029
  Receivables, net                                                                   17,389             7,742
  Inventory                                                                         422,670           365,383
  Other                                                                               8,041            10,235
                                                                                   --------          --------
Total current assets                                                                457,379           394,389
Property, improvements, and equipment, net                                          138,261           123,467
Goodwill, net                                                                       288,246           293,895
Other assets                                                                         11,876            10,712
                                                                                   --------          --------
Total assets                                                                       $895,762          $822,463
                                                                                   ========          ========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable                                                                 $161,907          $124,012
  Accrued expenses and other liabilities                                             38,774            56,102
  Current portion of long-term debt and capital lease obligations                    21,764            22,371
                                                                                   --------          --------
Total current liabilities                                                           222,445           202,485
Long-term debt, less current portion                                                430,654           388,554
Other long-term liabilities                                                           6,643             6,797
                                                                                   --------          --------
Total liabilities                                                                   659,742           597,836

Stockholder's equity:
  Common stock, $.01 par value: authorized shares-3,000; issued and
    outstanding shares-100 (wholly owned by QSI Holdings, Inc.)
  Additional paid-in capital                                                        226,377           209,377
  Retained earnings                                                                   9,643            15,250
                                                                                   --------          --------
Total stockholder's equity                                                          236,020           224,627
                                                                                   --------          --------
Total liabilities and stockholder's equity                                         $895,762          $822,463
                                                                                   ========          ========




<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                      -3-
<PAGE>
<TABLE>
<CAPTION>

QUALITY STORES, INC.
Condensed Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Ratio)

                                                                Three Months Ended
                                                        ---------------- --- ---------------
                                                          October 28,         October 30,
                                                             2000                 1999
                                                        ----------------     ---------------

<S>                                                     <C>                    <C>
Net sales                                                $ 252,588              $ 287,085
Cost of sales                                              178,001                202,749
                                                         ---------              ---------
Gross profit                                                74,587                 84,336

Selling, general, and administrative expense                66,152                 70,691
Merger integration expenses                                     --                  4,357
Store closing expenses                                       7,900                     --
Amortization of intangibles                                  1,382                  2,306
                                                         ---------              ---------
Operating income (loss)                                       (847)                 6,982

Interest expense                                            12,880                  9,392
                                                         ---------              ---------
Loss before income taxes                                   (13,727)                (2,410)
Income tax credit                                           (5,188)                   (10)
                                                         ---------              ---------
Net loss and comprehensive loss                          $  (8,539)             $  (2,400)
                                                         =========              =========

Deficiency of earnings to fixed charges                  $ (13,727)             $  (2,410)
                                                         =========              =========

<CAPTION>

                                                                 Nine Months Ended
                                                        ---------------- --- ---------------
                                                          October 28,         October 30,
                                                             2000                 1999
                                                        ----------------     ---------------

<S>                                                     <C>                    <C>
Net sales                                                $ 858,534              $ 777,051
Cost of sales                                              606,175                549,335
                                                         ---------              ---------
Gross profit                                               252,359                227,716

Selling, general, and administrative expense               207,837                178,356
Merger integration expenses                                  1,850                 11,996
Store closing expenses                                       7,900                     --
Amortization of intangibles                                  5,767                  5,156
                                                         ---------              ---------
Operating income                                            29,005                 32,208

Interest expense                                            35,110                 23,946
                                                         ---------              ---------
Income (loss) before income taxes                           (6,105)                 8,262
Income taxes (credit)                                         (498)                 5,289
                                                         ---------              ---------
Net income (loss) and comprehensive income (loss)        $  (5,607)             $   2,973
                                                         =========              =========

Ratio (deficiency) of earnings to fixed charges          $  (6,105)                 1.3 x
                                                         =========              =========


<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                      -4-

<PAGE>
<TABLE>
<CAPTION>



QUALITY STORES, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)


                                                                                       Nine Months Ended
                                                                             ----------------------------------
                                                                              October 28,           October 30,
                                                                                  2000                 1999
                                                                             ------------         -------------
Operating Activities
<S>                                                                         <C>                   <C>
Net income (loss)                                                            $  (5,607)            $   2,973
Adjustments to reconcile net income (loss) to net cash used in operations:
   Depreciation and amortization                                                21,390                16,293
   Changes in operating assets and liabilities:
      Receivables                                                               (9,647)                1,952
      Inventory                                                                (57,287)              (44,850)
      Accounts payable                                                          37,895                (9,885)
      Other                                                                    (15,134)               (1,133)
                                                                             ---------             ---------
Net cash used in operating activities                                          (28,390)              (34,650)

Investing Activities
Purchases of property, improvements, and equipment                             (38,117)              (22,285)
Acquisitions                                                                        --              (112,368)
Other, net                                                                       7,582                 1,553
                                                                             ---------             ---------
Net cash used in investing activities                                          (30,535)             (133,100)

Financing Activities
Capital contribution from parent                                                15,000                    --
Dividend to parent                                                                  --                (1,061)
Net borrowings under line of credit                                             52,850                47,000
Proceeds from issuance of long-term debt                                            --               220,000
Payments on long-term debt                                                     (11,357)              (91,271)
Other, net                                                                         682                (6,398)
                                                                             ---------             ---------
Net cash provided by financing activities                                       57,175               168,270

Net increase (decrease) in cash and cash equivalents                            (1,750)                  520
Cash and cash equivalents at beginning of period                                11,029                 5,144
                                                                             ---------             ---------
Cash and cash equivalents at end of period                                   $   9,279             $   5,664
                                                                             =========             =========


<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                      -5-

<PAGE>
                              QUALITY STORES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 1. PRESENTATION OF FINANCIAL INFORMATION

Quality Stores, Inc., formerly Central Tractor Farm & Country, Inc., is a wholly
owned subsidiary of QSI Holdings,  Inc., formerly CT Holding, Inc. ("Holdings"),
an affiliate of J.W. Childs Equity Partners,  L.P. ("Childs").  The consolidated
financial  statements  include  Quality  Stores,  Inc.,  and  its  wholly  owned
subsidiary,  Country General,  Inc. ("Country  General"),  as well as the former
Quality  Stores,  Inc.  and its  wholly  owned  subsidiaries,  since the date of
acquisition (hereinafter, collectively, the "Company").

The condensed unaudited  consolidated financial statements have been prepared by
the Company in accordance  with  generally  accepted  accounting  principles for
interim  financial  information and with the instructions for the Securities and
Exchange  Commission's  Form 10-Q and Article 10 of  Regulation  S-X, and do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles for complete  financial  statements.  The  preparation of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and  assumptions  that affect the amounts
reported in the financial  statements  and  accompanying  notes.  Actual results
could differ from those estimates.

The condensed unaudited  consolidated  financial statements include the accounts
of the  Company  and its  subsidiaries.  All  material  intercompany  items  and
transactions  have been eliminated in the  consolidation.  In the preparation of
the condensed  unaudited  consolidated  financial  statements,  all  adjustments
(consisting  of normal  recurring  accruals)  have been made which  are,  in the
opinion of  management,  necessary for the fair and consistent  presentation  of
such financial statements. The operating results for the interim periods are not
necessarily indicative of the results that may be expected for the year.

On August 17, 1999, the Board of Directors of the Company  changed the Company's
fiscal  year.  The  Company's  fiscal year now ends on the  Saturday  closest to
January 31. It is suggested that the condensed unaudited  consolidated financial
statements contained herein be read in conjunction with the statements and notes
in the  Company's  Annual  Report on Form 10-K for the fiscal year ended January
29, 2000 ("Form 10-K").

In June,  1998, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounts   Standards  (SFAS)  No.  133,   Accounting  for  Derivative
Instruments  and  Hedging  Activities,  which  is  effective  for  fiscal  years
beginning  after  June 15,  2000.  SFAS No.  133  requires  companies  to record
derivative  instruments  on the  balance  sheet at fair  value  and  establishes
accounting rules for changing in fair value that result from hedging activities.
The Company currently engages in limited hedging  activities that require use of
derivative  instruments  and  has  not  completed  all of the  complex  analyses
necessary to determine the effect of adopting  SFAS No. 133 on its  consolidated
financial position or future results of operations.

NOTE 2. ACQUISITIONS

On May 7, 1999, the Company acquired Quality Stores, Inc., ("Quality Stores") in
a transaction  in which Quality Stores was merged with and into the Company (the
"Merger").  In connection with the Merger,  the former  shareholders  and option
holders of Quality Stores received, in the aggregate, $111.5 million in cash and
792,430 shares of common stock of Holdings.  In connection with the Merger,  the
Company also repaid  approximately $42.1 million in debt owed by Quality Stores.
The  total  purchase  price  for  Quality  Stores,  including  $4.7  million  of
transaction expenses, was $208.0 million.

Quality Stores, based in Muskegon,  Michigan,  had a strong presence in Michigan
and Ohio and,  at the time of the Merger,  operated a chain of 114 stores,  with
annual sales of approximately $525 million,  which offer merchandise oriented to
farm and  country  living,  including  animal  care  products,  farm  and  ranch
supplies, workwear, and lawn and garden products. In connection with the Merger,
the Company  changed its name from  "Central  Tractor  Farm & Country,  Inc." to
"Quality Stores, Inc." and relocated its headquarters to Muskegon, Michigan. The
Company will continue to operate stores primarily under the Central Tractor Farm
& Country,  Country General,  and Quality Farm & Fleet names.  Since the merger,
new stores  opened are  operating  under the Quality  Farm & Country  name.  The
Company  expects to convert all of the stores  over time to the  Quality  Farm &
Country name.

                                      -6-
<PAGE>

The non-cash portion of the Merger  consideration was contributed to the Company
by Holdings  (which,  in  connection  with the  Merger,  changed its name to QSI
Holdings, Inc.). The Company funded the cash portion of the Merger consideration
and various fees and expenses  associated with the Merger from funds drawn under
an existing  credit facility with Fleet National Bank, as  administrative  agent
for the banks,  financial  institutions,  and other institutional  lenders party
thereto.

The  acquisition  of Quality Stores has been accounted for as a purchase and the
results of operations of Quality  Stores have been included in the  consolidated
financial  statements  from  the date of  purchase.  The  estimated  cost of the
acquisition over the estimated fair value of the underlying  tangible net assets
is as follows (in thousands):

          Cost of acquiring Quality Stores capital stock          $208,043

          Fair value of underlying tangible net assets acquired     44,074
                                                                  --------

          Excess of cost of acquisition over the allocated fair
          value of the underlying tangible net assets             $163,969
                                                                  ========


NOTE 3. PRO FORMA RESULTS

The pro forma results of operations  presented below are based on the historical
financial statements of the Company included in this Form 10-Q, adjusted to give
effect to: (i) the  acquisition  of Quality  Stores by the  Company and (ii) the
debt  financing  arrangements  executed in connection  with the  acquisition  of
Quality Stores, as though these transactions had occurred on January 31, 1999.

Pro Forma Results of Operations
-------------------------------
(In Thousands)
                                             Nine Months Ended
                                              October 30, 1999
                                           ---------------------

          Net sales                            $920,454
          Operating income                       34,128
          Net income                              1,219
          Ratio of earnings to fixed charges      1.2 x


Pro forma  adjustments  to the  historical  financial  statements are based upon
available data and certain assumptions that the Company believes are reasonable.
The pro forma  results  of  operations  are not  necessarily  indicative  of the
Company's results of operations that might have occurred had the  aforementioned
transactions been completed as of the date indicated above and do not purport to
represent what the Company's consolidated results of operations might be for any
future period or date.


NOTE 4.  STORE CLOSINGS

On September 1, 2000, the Company  announced the closing of 17  under-performing
stores.  Expenses  related  to  the  liquidation  of  inventory  and  equipment,
remaining  lease  obligations,  and other charges  associated with the closings,
which commenced September 25, 2000, are estimated to be $7.9 million.


                                      -7-
<PAGE>

NOTE 5. AMENDED CREDIT FACILITY

On May 7, 1999,  the  Company  amended  its bank  credit  facility  to allow for
borrowings up to $320.0  million,  consisting  of $220.0  million under two term
loan  facilities  (Tranche  A and  B)  and a  $100.0  million  revolving  credit
facility. On March 31, 2000, this credit facility was again amended, among other
things, to increase the revolving credit facility by $60 million  (collectively,
the Amended Credit  Facility).  The amendment also added provisions for seasonal
"clean down" periods for the revolving credit facility and amended certain other
covenants.

On September 22 and 27, 2000,  the Amended  Credit  Facility was amended,  among
other things, to waive events of default concerning certain financial  covenants
and the seasonal  "clean-down" period by amending these provisions.  On December
4, 2000,  the facility was further  amended,  among other things,  to reduce the
"clean-down" requirements pertaining to the revolving credit facility during the
period from  December  4, 2000 to  December  25, 2000 and during the period from
January 2, 2001 through January 15, 2001.

The  Tranche A term  loan  under the  Amended  Credit  Facility  is  payable  in
quarterly installments alternating between $2.5 million and $7.5 million through
October 31, 2004 with final  quarterly  installments of $11.25 million and $3.75
million,  while the  Tranche B term loan has  quarterly  principal  installments
alternating between $0.15 million and $0.45 million through October 31, 2004 and
then  alternating  between  $28.35  million and $9.45 million  through April 30,
2006. The revolving  credit debt is due in full on October 30, 2004. The Company
is also required to make mandatory  prepayments on the term loan facilities in a
variety of  circumstances,  including sales of assets and equity  issuances,  as
well as from the Company's excess cash flow, as defined.

Borrowings  under the Amended  Credit  Facility are secured by all assets of the
Company and bear  interest at the prime or eurodollar  rates plus a margin.  The
revolving  credit  agreement  is also  subject to a 0.5%  commitment  fee on its
unused portions.  The Amended Credit Facility  contains certain  covenants which
require the Company to maintain  certain  financial  ratios and also  restricts,
among other  things,  the payment of dividends,  incurrence of additional  debt,
capital expenditures, mergers and acquisitions, and the disposition of assets.



                                      -8-
<PAGE>
                              QUALITY STORES, INC.

Certain statements in this Report may contain "forward-looking"  information (as
defined  in  the  Private  Securities   Litigation  Reform  Act  of  1995).  All
forward-looking  statements involve  uncertainty,  and actual future results and
trends may differ materially depending on a variety of factors. For a discussion
identifying some important  factors that could cause actual results or trends to
differ  materially  from those  anticipated  in the  forward-looking  statements
contained herein, please see Exhibit 99 to this Report.

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

Third Quarter of Fiscal 2000 Compared to Third Quarter of Fiscal 1999

Net sales for the third quarter of fiscal 2000 were $252.6  million,  a decrease
of $34.5  million,  or 12.0%,  as compared to net sales for the third quarter of
fiscal 1999 of $287.1 million.  This decrease was primarily due to a decrease in
comparable store sales and stores closed during fiscal 1999, partially offset by
new stores opened since the end of the third quarter of 1999.  Comparable  store
sales,  including  comparable stores acquired in the Quality Stores  acquisition
during 1999,  decreased 17.6% in the third quarter of fiscal 2000 as compared to
the third  quarter of fiscal  1999.  The decrease  was  primarily  the result of
out-of-stock  issues  resulting  from  interruptions  in normal vendor  shipping
patterns which began while the Company was  renegotiating  its credit  facility,
and unusually high sales of generators  during fiscal 1999 related to customers'
preparation for "year 2000" problems.

Gross profit for the third quarter of fiscal 2000 was $74.6 million,  a decrease
of $9.7 million, or 11.5%, as compared to $84.3 million for the third quarter of
fiscal 1999,  principally as a result of the sales  decrease noted above.  Gross
profit as a percentage of net sales  increased to 29.5% for the third quarter of
fiscal  2000,  as compared to 29.4% for the third  quarter of fiscal  1999.  The
increase in gross profit  percentage is  attributable  to the realization of the
increased  purchasing  power of the Company  resulting  from the  acquisition of
Quality Stores in fiscal 1999.

Selling,  general and  administrative  (SGA)  expenses for the third  quarter of
fiscal 2000 were $66.2 million, a decrease of $4.5 million, or 6.4%, as compared
to SGA  expenses  for the third  quarter of fiscal 1999 of $70.7  million.  This
decrease  is due to the  realization  of  synergies  from the  merger  and other
expense reduction  efforts.  SGA expenses increased as a percentage of net sales
to 26.2% for the third quarter of fiscal 2000 as compared to 24.6% for the third
quarter of fiscal 1999 because of the lower sales  volume for the third  quarter
of fiscal 2000.

There were no merger and integration expenses during the third quarter of fiscal
2000,  compared to such charges of $4.4 million for the third  quarter of fiscal
1999. The merger and integration  expenses  related to the costs associated with
the merger of Quality Stores into the Company and were substantially complete at
the end of the first quarter of fiscal 2000.

Store closing  expenses relate to a charge of $7.9 million taken for the closing
of 17  under-performing  stores in September 2000.  These expenses relate to the
liquidation of inventory and equipment,  remaining lease obligations,  and other
charges associated with the closings.

Operating loss for the third quarter of fiscal 2000 was $0.8 million, a decrease
of $7.8  million as compared to  operating  income of $7.0 million for the third
quarter of fiscal 1999.  Operating  income  (loss) as a percentage  of net sales
decreased to (0.3%) for the third quarter of fiscal 2000 from 2.4% for the third
quarter of fiscal 1999.  The operating loss for the third quarter of fiscal 2000
was  primarily  the result of the lower sales volume and effect of store closing
expenses  recorded during the quarter as compared to the third quarter of fiscal
1999.

Interest  expense  increased  to $12.9  million for the third  quarter of fiscal
2000,  as compared to $9.4  million for the third  quarter of fiscal  1999.  The
increase  is due  principally  to  additional  borrowings  used to  finance  the
acquisition of Quality Stores,  higher borrowings under the Company's  revolving
credit facility to support  increased  inventory  levels, an increase in average
interest rates between years, and amortization of additional  deferred financing
costs and other bank charges.

The  credit  for  income  taxes for the third  quarter  of fiscal  2000 was $5.2
million,  compared to a credit of $10,000 for the third  quarter of fiscal 1999.
The third quarter income tax credit as a percentage of the pretax loss was 37.8%
in

                                      -9-
<PAGE>
2000.  Goodwill  amortization,  which is not deductible for income tax purposes,
has a significant effect on the Company's effective income tax rate.

The net loss for the third quarter of fiscal 2000 was $8.5 million,  compared to
a net loss of $2.4 million for the third  quarter of fiscal 1999, as a result of
the factors discussed above.

Nine Months Ended  October 28, 2000,  Compared to Nine Months Ended  October 30,
1999

Net sales for the nine months ended October 28, 2000,  were $858.5  million,  an
increase  of $81.4  million,  or 10.5%,  as  compared  to net sales for the nine
months ended October 30, 1999, of $777.1 million. The increase was primarily due
to sales from stores acquired in the Quality Stores acquisition in May 1999, and
new stores opened since the end of the third  quarter of fiscal 1999,  partially
offset by a decrease in  comparable  store sales and stores closed during fiscal
1999.  Comparable  store  sales,  including  comparable  stores  acquired in the
Quality Stores acquisition during 1999,  decreased 11.1% between fiscal periods.
The decrease was  primarily  the result of cool,  wet weather  conditions in the
Company's  northeast  markets,  dry  and  drought  conditions  in  Colorado  and
Nebraska, interruptions in normal vendor shipping patterns which began while the
Company was  renegotiating  its credit  facility,  and  unusually  high sales of
generators during fiscal 1999 related to customers'  preparation for "year 2000"
problems.

Gross profit for the nine months ended October 28, 2000 was $252.4  million,  an
increase of $24.7 million,  or 10.8%, as compared to $227.7 million for the nine
months  ended  October 30,  1999,  principally  as a result of the margin on the
increase in net sales discussed above. Gross profit as a percentage of net sales
was 29.4% and 29.3% for the nine months  ended  October 28, 2000 and October 30,
1999, respectively.

Selling,  general,  and administrative  (SGA) expenses for the nine months ended
October 28, 2000 were $207.8 an increase of $29.4 million, or 16.5%, as compared
to SGA expenses of $178.4  million for the nine months  ended  October 30, 1999.
The  increase is due to expenses  related to the stores  acquired  from  Quality
Stores  during  fiscal 1999 and expenses  related to new stores opened since the
third quarter of fiscal 1999,  offset by the  realization  of synergies from the
merger and other expense reduction efforts.  SGA expenses as a percentage of net
sales were 24.2% for the nine  months  ended  October 28,  2000,  as compared to
23.0% for the nine months ended October 30, 1999.  This increase as a percentage
of net sales was  primarily  due to the decrease in  comparable  store sales and
higher  expenses as a percentage of sales in the new stores opened since the end
of the third  quarter of fiscal  1999 that were not offset by expense  reduction
efforts.

Merger and integration  expenses for the nine months ended October 28, 2000 were
$1.9 million,  a decrease of $10.1  million,  or 84.2%,  as compared to the nine
months  ended  October 30,  1999.  The  integration  of Quality  Stores into the
Company was  substantially  complete  at the end of the first  quarter of fiscal
2000.

Store closing  expenses relate to a charge of $7.9 million taken for the closing
of 17  under-performing  stores in September 2000.  These expenses relate to the
liquidation of inventory and equipment,  remaining lease obligations,  and other
charges associated with the closings.

Amortization of intangibles  increased to $5.8 million for the nine months ended
October 28, 2000,  as compared to $5.2 million for the nine months ended October
30, 1999. The increase is due to higher  amortization of goodwill  recognized in
the  nine  months  ended  October  28,  2000  as  part  of  the  Quality  Stores
acquisition.

Operating income for the nine months ended October 28, 2000 was $29.0 million, a
decrease of $3.2  million,  or 9.9%,  as compared to $32.2  million for the nine
months ended October 30, 1999. Operating income as a percentage of net sales was
3.4% for the nine months  ended  October 30,  2000,  as compared to 4.1% for the
nine months ended  October 30, 1999.  The decrease was  primarily  the result of
higher SGA  expenses,  store closing  charges and  amortization  of  intangibles
during the nine months ended October 28, 2000.

Interest  expense  increased to $35.1  million for the nine months ended October
28, 2000,  as compared to $23.9  million for the nine months  ended  October 30,
1999. The increase is due  principally to additional  borrowings used to finance
the  acquisition  of  Quality  Stores,  higher  borrowings  under the  Company's
revolving credit facility,  an increase in average interest rates between years,
and amortization of additional deferred financing costs and other bank charges.

                                      -10-
<PAGE>
The credit for income taxes for the nine months ended  October 28, 2000 was $0.5
million as compared to income tax expense for the nine months ended  October 30,
1999 of $5.3 million.  The credit for income taxes as a percentage of the pretax
loss was 8.2% in 2000,  compared  to  income  taxes as a  percentage  of  pretax
earnings of 64.0% in 1999.  Goodwill  amortization,  which is not deductible for
income tax purposes,  has a significant effect on the Company's effective income
tax rate.

Net loss for the nine ended  October 28, 2000 was $5.6  million,  as compared to
net income of $3.0  million for the nine months  ended  October 30,  1999,  as a
result of the factors discussed above.

Amended Credit Facility

On May 7, 1999,  the  Company  amended  its bank  credit  facility  to allow for
borrowings up to $320.0  million,  consisting  of $220.0  million under two term
loan  facilities  (Tranche  A and  B)  and a  $100.0  million  revolving  credit
facility. On March 31, 2000, this credit facility was again amended, among other
things, to increase the revolving credit facility by $60 million  (collectively,
the Amended Credit  Facility).  The amendment also added provisions for seasonal
"clean down" periods for the revolving credit facility and amended certain other
covenants.

On September 22 and 27, 2000,  the Amended  Credit  Facility was amended,  among
other things, to waive events of default concerning certain financial  covenants
and the seasonal  "clean-down" period by amending these provisions.  On December
4, 2000,  the facility was further  amended,  among other things,  to reduce the
"clean-down" requirements pertaining to the revolving credit facility during the
period from  December  4, 2000 to  December  25, 2000 and during the period from
January 2, 2001 through January 15, 2001.

The  Tranche A term  loan  under the  Amended  Credit  Facility  is  payable  in
quarterly installments alternating between $2.5 million and $7.5 million through
October 31, 2004 with final  quarterly  installments of $11.25 million and $3.75
million,  while the  Tranche B term loan has  quarterly  principal  installments
alternating between $0.15 million and $0.45 million through October 31, 2004 and
then  alternating  between  $28.35  million and $9.45 million  through April 30,
2006. The revolving  credit debt is due in full on October 30, 2004. The Company
is also required to make mandatory  prepayments on the term loan facilities in a
variety of  circumstances,  including sales of assets and equity  issuances,  as
well as from the Company's excess cash flow, as defined.

Borrowings  under the Amended  Credit  Facility are secured by all assets of the
Company and bear  interest at the prime or eurodollar  rates plus a margin.  The
revolving  credit  agreement  is also  subject to a 0.5%  commitment  fee on its
unused portions.  The Amended Credit Facility  contains certain  covenants which
require the Company to maintain  certain  financial  ratios and also  restricts,
among other  things,  the payment of dividends,  incurrence of additional  debt,
capital expenditures, mergers and acquisitions, and the disposition of assets.

Liquidity and Capital Resources

In addition to cash to fund  operations,  the  Company's  primary  on-going cash
requirements are those necessary for the Company's expansion program,  including
inventory purchases and capital  expenditures,  and debt service.  The Company's
primary  sources  of  liquidity  have  been  funds  provided  from   operations,
borrowings  under  the  Company's  revolving  and term  credit  facilities,  and
short-term trade credit.

On October 28, 2000, the Company had working capital of $234.9 million,  a $43.0
million  increase from working  capital of $191.9 million on July 29, 2000. This
increase  resulted  primarily  from a $57.3  million  aggregate  increase in the
Company's  inventory,  partially  offset by a $20.6 million increase in accounts
payable and accrued  expenses.  The increases in the Company's  accounts payable
and  inventory  are due  primarily to increases in inventory for the fall season
and the Company's new store expansion program for fiscal 2000.

Net cash used in  operating  activities  was $28.4  million  for the nine months
ended October 28, 2000. This was a decrease of $6.3 million from the nine months
ended October 30, 1999, during which $34.7 million of cash was used in operating
activities.  This decrease resulted  primarily from a smaller  investment in net
working  capital  during the first nine months of fiscal 2000 as compared to the
same period in the prior year.  The Company's  capital  expenditures  were $38.1
million and $22.3  million  for the nine months  ended  October  28,  2000,  and
October 30, 1999,  respectively.  The increase is primarily  attributable to the
Company's new store expansion program and merger-related capital expenditures in
early fiscal 2000.

                                      -11-
<PAGE>
The  Company  anticipates  that its  principal  uses of cash in the  foreseeable
future will be working  capital  requirements,  debt service  requirements,  and
capital  expenditures.  The  Company  intends  and expects to reduce the average
level of inventory through the systematic  elimination of slow-turning items and
the  reduction  of  promotional  circulars,   which  tend  to  create  inventory
imbalances. Based upon current and anticipated levels of operations, the Company
believes that its cash flow from  operations,  together  with amounts  available
under the Amended  Credit  Facility,  will be  adequate to meet its  anticipated
requirements for working capital, and debt service through fiscal 2001.

Seasonality

Unlike  many  specialty  retailers,   historically  the  Company  has  generally
generated  positive  operating  income  in each  of its  four  fiscal  quarters.
However,  because the Company is an agricultural  specialty retailer,  its sales
necessarily fluctuate with the seasonal needs of the agricultural community. The
Company  responds to this  seasonality by attempting to manage  inventory levels
(and the associated working capital requirements) to meet expected demand and by
varying its use of part-time  employees.  Historically,  the Company's sales and
operating income have been highest in the second quarter of each fiscal year due
to the farming  industry's  planting  season and the sale of seasonal  products.
Working capital needs are highest during the first quarter.  The Company expects
these trends to continue for the foreseeable future.


Inflation

Management  does not believe its  operations  have been  materially  affected by
inflation.


                                      -12-
<PAGE>

                              QUALITY STORES, INC.

                           PART II. OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS................................................None

ITEM 2.  CHANGES IN SECURITIES............................................None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES..................................None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............None

ITEM 5.  OTHER INFORMATION................................................None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS - See Index to Exhibits Included Elsewhere Herein

(b)      Reports on Form 8-K

         The  Company  filed a  current  report  on Form 8-K  dated
         November 13, 2000,  reporting  that Jerry D. Horn had been
         named as its  Chairman,  President,  and  Chief  Executive
         Officer.



                                      -13-
<PAGE>


                                   SIGNATURES


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

Date:  December 12, 2000               QUALITY STORES, INC.



                                       /s/ Thomas J. Reinebach
                                       Thomas J. Reinebach
                                       Senior Vice-President, Finance
                                       and Chief Financial Officer


                                      -14-
<PAGE>

                              QUALITY STORES, INC.

                                INDEX TO EXHIBITS


EXHIBIT 10.1    Amendment No. 2 and Waiver to the Second Amended and Restated
                Credit Agreement

EXHIBIT 10.2    Amendment No. 3 to the Second Amended and Restated Credit
                Agreement

EXHIBIT 10.3    Amendment No. 4 to the Second Amended and Restated Credit
                Agreement

EXHIBIT 12      Statement Re: Computation of Ratio (Deficiency) of Earnings to
                Fixed Charges

EXHIBIT 27      Financial Data Schedule (electronic copy only)

EXHIBIT 99      Important Factors Regarding Forward-Looking Statements



                                      -15-