As filed with the Securities and Exchange Commission March 31, 1997

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------

                                    FORM 10-K

[X]       Annual Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                   For the Fiscal Year Ended December 31, 1996

                                       Or

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities
                     Exchange Act of 1934 (No Fee Required)

                         Commission File Number 1-12381

                              --------------------

                             Linens 'n Things, Inc.
             (Exact name of registrant as specified in its charter)

                 Delaware                                  22-3463939
     (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                    Identification No.)

             6 Brighton Road
           Clifton, New Jersey                                07015
(Address of principal executive offices)                   (Zip Code)

       Registrant's telephone number, including area code: (201) 778-1300


           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                      Name of Each Exchange
     Title of Each Class                              on Which Registered
      ----------------                               ---------------------
Common Stock, $0.01 par value                      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
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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ______

The aggregate market value of voting stock held by  non-affiliates of
the  Registrant  (for this purpose,  deemed to refer to all persons and entities
other than executive  officers,  directors and 5% or more shareholders) on March
3, 1997,  based on the closing sale price on the New York Stock Exchange on such
date, was approximately  $278 million.

The number of outstanding  shares of the  Registrant's  common stock,  $0.01 par
value, as of March 3, 1997 was 19,267,758.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Annual Report to Shareholders for the fiscal year
ended December 31, 1996 are incorporated by reference into Part II, and portions
of the Registrant's  Proxy Statement for the 1997 Annual Meeting of Shareholders
are incorporated by reference into Part III.

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<PAGE>

                                Table of Contents

Form 10-K
Item No.     Name of Item                                                   Page
-------      ------------                                                   ----

                                   PART I
Item 1.      Business.....................................................    3
Item 2.      Properties...................................................   12
Item 3.      Legal Proceedings............................................   12
Item 4.      Submission of Matters to a Vote of
                 Security Holders.........................................   12

                                   PART II
Item 5.      Market for Registrant's Common Equity
                 and Related Stockholder Matters..........................   13
Item 6.      Selected Financial Data......................................   13
Item 7.      Management's Discussion and Analysis of
                 Financial Condition and Results of
                 Operations...............................................   13
Item 8.      Financial Statements and Supplementary
                 Data.....................................................   13
Item 9.      Changes in and Disagreements with
                 Accountants on Accounting and Financial
                 Disclosure...............................................   13

                                  PART III
Item 10.     Directors and Executive Officers of
                 the Registrant...........................................   14
Item 11.     Executive Compensation.......................................   14
Item 12.     Security Ownership of Certain Beneficial
                 Owners and Management....................................   14
Item 13.     Certain Relationships and Related
                 Transactions.............................................   14

                                   PART IV
Item 14.     Exhibits, Financial Statement Schedules and
                 Reports on Form 8-K......................................   15

                                       2
<PAGE>

                                     PART I

Item 1.  Business

General

     Linens 'n Things,  Inc.  and its  subsidiaries  ("Linens  'n Things" or the
"Company")  is one of the  leading,  national  large  format  retailers  of home
textiles,  housewares and home accessories  operating 169 stores in 34 states as
of December 31, 1996. According to Home Textiles Today, Linens 'n Things was the
largest specialty retailer (as measured by sales) in the home linens category in
1995. As of December 31, 1996, the Company  operated 132  superstores  averaging
approximately 32,000 gross square feet in size and 37 smaller traditional stores
averaging  approximately  10,000 gross square feet in size. The Company's newest
stores range between 35,000 and 40,000 gross square feet in size and are located
in strip malls or power center locations.  The Company's business strategy is to
offer a broad assortment of high quality, brand name merchandise at everyday low
prices, provide efficient customer service and maintain low operating costs.

      Linens  'n  Things'  extensive  selection  of  over  25,000  SKUs  in  its
superstores  is driven by the Company's  commitment to offering a broad and deep
assortment  of high  quality,  brand name "linens"  (e.g.,  bedding,  towels and
pillows) and "things" (e.g., housewares and home accessories) merchandise. Brand
names sold by the  Company  include  Wamsutta,  Cannon,  Laura  Ashley,  Martex,
Waverly,  Royal Velvet,  Braun, Krups,  Calphalon and Henckel.  The Company also
sells  an  increasing   amount  of  merchandise  under  its  own  private  label
(approximately  10% of sales)  which is designed  to  supplement  the  Company's
offering of brand name  products by offering high quality  merchandise  at value
prices.  The  Company's  merchandise  offering  is  coupled  with  a  "won't  be
undersold"  everyday low pricing strategy with price points  substantially below
regular  department  store prices and comparable with or below  department store
sale prices.

      From its founding in 1975 through the late 1980's,  the Company operated a
chain of traditional  stores ranging  between 7,500 and 10,000 gross square feet
in size.  Beginning in 1990, the Company  introduced its superstore format which
has evolved  from 20,000 gross square feet in size to its current size of 35,000
to 40,000 gross square feet,  offering a broad merchandise  assortment in a more
visually  appealing,  customer  friendly format.  The Company's  introduction of
superstores  has resulted in the closing or  relocation  of 104 of the Company's
traditional stores through December 31, 1996. As a result of superstore openings
and  traditional  store  closings,  the Company's gross square footage more than
tripled from 1.2 million to 4.7 million  between January 1991 and December 1996,
although its store base only increased 20% from 141 to 169 during this period.

      As part of this strategy,  the Company instituted  centralized  management
and operating programs and invested  significant capital in its distribution and
management  information  systems  infrastructure  in order to control  operating
expenses as the Company grows. In addition,  as part of its strategic initiative
to capitalize on customer demand for one-stop shopping destinations, the Company
has balanced  its  merchandise  mix from being driven  primarily by the "linens"
side of its  business to a fuller  assortment  of  "linens"  and  "things."  The
Company estimates that the "things" side of its business has increased from less
than 10% of net sales in 1991 to approximately 35% in 1996.

      The Company was a  wholly-owned  subsidiary  of CVS  Corporation  ("CVS"),
formerly  Melville  Corporation,  until  November 26, 1996 when CVS completed an
initial public  offering  ("IPO") of 13,000,000  shares of the Company's  common
stock.  Subsequent  to the IPO, CVS owns  approximately  32.5% of the  Company's
common stock,  having retained 6,267,758 shares.

Executive Officers and Certain Key Personnel

     The following table sets forth information regarding the executive officers
of the Company:

Name                   Age    Position
-----                  ---    -------
Norman Axelrod.         44    Chairman, Chief Executive Officer and President
James M. Tomaszewski    48    Senior Vice President, Chief Financial Officer
Steven B. Silverstein   36    Senior Vice President, General Merchandise Manager
Hugh J. Scullin         47    Senior Vice President, Store Operations


                                       3
<PAGE>

      Mr. Axelrod has been Chief Executive  Officer and President of the Company
since 1988 and was elected to the  additional  position of Chairman of the Board
of Directors  of the Company  effective  as of January,  1997.  Prior to joining
Linens  'n  Things,   Mr.   Axelrod   held  various   management   positions  at
Bloomingdale's  between 1976 to 1988 including:  Buyer,  Divisional  Merchandise
Manager, Vice  President/Merchandise  Manager and Senior Vice  President/General
Merchandise  Manager. Mr. Axelrod earned his B.S. from Lehigh University and his
M.B.A. from New York University.

      Mr.  Tomaszewski  has served as Senior  Vice  President,  Chief  Financial
Officer since joining Linens 'n Things in 1994. Mr. Tomaszewski began his career
with J.L. Hudsons  Department Store in Detroit in 1970. In 1982, he was promoted
to Vice President, Controller of Diamonds Department Store in Tempe, Arizona. In
1985, he joined Filene's  Department  Store as Vice President,  Controller,  and
later that year he was  promoted to Senior Vice  President  and Chief  Financial
Officer for Filene's  Basement.  In 1987, Mr.  Tomaszewski  joined Lechmere's in
Boston as Senior Vice  President and Chief  Financial  Officer.  In 1992, he was
promoted to Executive Vice President Retail Operations at Lechmere's and elected
to Lechmere's  Board of  Directors.  Mr.  Tomaszewski  has a B.S. in Finance and
Economics and an M.B.A. in Finance from Wayne State University.

      Mr. Silverstein joined Linens 'n Things in 1992 as Vice President, General
Merchandise  Manager.  Prior to joining Linens 'n Things,  Mr.  Silverstein  was
Merchandise Vice President of Home Textiles at Bloomingdales  from 1985 to 1992.
Mr.  Silverstein has been Senior Vice  President,  General  Merchandise  Manager
since 1993. He received his B.A.  from Cornell  University  and his M.B.A.  from
Wharton Business School.

      Mr.  Scullin  joined  Linens 'n Things  in 1989 as Vice  President,  Store
Operations.  Mr. Scullin has been Senior Vice President,  Store Operations since
1994. From 1978 to 1987, Mr. Scullin held various management  positions with The
Gap, Inc.,  including  Zone Vice  President at both The Gap and Banana  Republic
from 1984 to 1987.  From 1987 to 1989,  Mr. Scullin was Vice President of Stores
with Alcott and Andrews. Mr. Scullin graduated from St. Joseph's University with
a B.S. in  Marketing  Management.  The  following  table sets forth  information
regarding the key managers of the Company:

Name                     Age      Position
-----                    ---      -------
William T. Giles          37      Vice President, Finance, Controller
Matthew J. Meaney         50      Vice President, Management Information Systems
Brian D. Silva            40      Vice President, Human Resources
Dominick J. Trapasso.     43      Vice President, Logistics

      Mr. Giles joined Linens 'n Things in 1991 as Assistant  Controller and was
promoted to Vice President of Finance and Controller in 1994.  From 1981 to 1990
, Mr.  Giles was with Price  Waterhouse.  From 1990 to 1991,  Mr. Giles held the
position of Director of Financial Reporting with Melville Corporation. Mr. Giles
is a  certified  public  accountant  and  member of the  American  Institute  of
Certified Public Accountants. He graduated from Alfred University with a B.A. in
Accounting and Management.

      Mr. Meaney joined Linens 'n Things in 1991 as Vice President of Management
Information  Services.  From 1985 to 1991,  Mr.  Meaney  was Vice  President  of
Management  Information  Services for Laura Ashley,  Inc. Mr. Meaney  received a
B.S. in Economics from St. Peter's  College and an M.B.A.  in Finance from Seton
Hall University.

      Mr. Silva has been Vice President,  Human Resources,  since joining Linens
'n Things in 1995. Mr. Silva was Assistant Vice  President,  Human  Resources at
The Guardian, an insurance and financial services company, from 1986 to 1995. He
holds an M.A. in Organizational Development from Columbia University and an M.A.
in Human Resources  Management from New York Institute of Technology.  Mr. Silva
received his B.A. from St. John's University.

      Mr.  Trapasso has been Vice  President,  Logistics since joining Linens 'n
Things in 1993.  From 1979 to 1986,  he was  employed  with  John  Wanamaker  as
Director,  Warehouse,  Distribution.  From  1986 to  1993,  he was  Senior  Vice
President  Distribution,  Transportation at Charming Shoppes,  Inc. Mr. Trapasso
received his B.A. from New York University.

                                       4
<PAGE>

Business Strategy

      The  Company's  business  strategy is to offer a broad  assortment of high
quality,  brand name products at everyday low prices, provide efficient customer
service and maintain low operating costs. Key elements of the Company's business
strategy are as follows:

      Offer a Broad  Assortment  of Quality  Name Brands at Everyday Low Prices.
Linens 'n Things'  merchandising  strategy  is to offer the  largest  breadth of
selection in high quality, brand name fashion home textiles, housewares and home
accessories  at everyday low prices.  The Company offers over 25,000 SKUs in its
superstores   across  six   departments,   including  bath,  home   accessories,
housewares, storage, top of the bed and window treatments. The Company is one of
the largest retailers of brand names, including Wamsutta,  Laura Ashley, Martex,
Waverly,  Royal Velvet,  Braun,  Krups and Calphalon.  The Company also sells an
increasing  amount of merchandise  under its own private label which is designed
to  supplement  the  Company's  offering of brand name products by offering high
quality  merchandise  at value  prices.  The  Company  believes  its  prices are
typically well below the non-sale  prices  offered by department  stores and are
comparable  to or slightly  below the sale  prices  offered by such  stores.  In
addition, the Company maintains a "won't be undersold" approach which guarantees
its customers prices as low as those offered by any of its competitors.

      Merchandise  and  sample  brands  offered  in each  major  department  are
highlighted below:

<TABLE>
<CAPTION>
      Department                       Items Sold                               Sample Brands
      -----------                      ----------                               -------------
<S>                    <C>                                                  <C>
 Bath                  Towels, shower curtains, waste baskets, hampers,     Fieldcrest, Martex, Royal Velvet
                       bathroom rugs and wall hardware.                     and Springmaid.

 Home Accessories      Decorative pillows, napkins,                         Dakotah, Waverly and
                       tablecloths, placemats,                              Laura Ashley.
                       lamps, gifts, picture frames
                       and framed art.

 Housewares            Cookware, cutlery, kitchen gadgets, small            Braun, Krups, Calphalon, Henckel,
                       electric appliances (such as blenders and            Mikasa, Circulon, Farberware,
                       coffee grinders), dinnerware, flatware               Black & Decker, Kitchen Aid,
                       and glassware.                                       Copco and International Silver.

 Storage               Closet-related items (such as hangers,               Rubbermaid and Closetmaid.
                       organizers and shoe racks).

 Top of the Bed        Sheets, comforters, comforter covers,                Wamsutta, Laura Ashley,
                       bedspreads, bed pillows, blankets and                Revman, Croscill, Fieldcrest,
                       mattress pads.                                       Springmaid, Royal Sateen
                                                                            and Beautyrest.

Window Treatment      Curtains, valances and window hardware.               Croscill, Graber, Bali, Waverly and
                                                                            Laura Ashley.
</TABLE>

      Provide Efficient  Customer Service and Shopping  Convenience.  To enhance
customer  satisfaction and loyalty,  Linens 'n Things strives to provide prompt,
knowledgeable  sales assistance and  enthusiastic  customer  service.  Linens 'n
Things emphasizes competitive wages, training and personnel development in order
to attract and retain  well-qualified,  highly motivated  employees committed to
providing efficient customer service. Linens 'n Things also endeavors to provide
more  knowledgeable  sales  associates  by providing  training  through  various
programs which include management  training,  daily sales associate meetings and
vendor product support seminars. In addition,  the Company has taken initiatives
to enhance the speed of its customer  service,  including  installing  satellite
transmission   for  credit  card   authorizations   and  upgrading  its  current
point-of-sale  ("POS") system. The customer's experience is also enhanced by the
availability  of sales  associates  who,  since the  transfer of  inventory  and
receiving  responsibilities  from the stores to the  distribution  center,  have
redirected  their focus from the backroom to the selling  floor.  The  Company's
superstore  format is designed  to save the  customer  time by having  inventory
visible and accessible on the selling floor for immediate purchase.  The Company
believes its knowledgeable sales staff and efficient customer service,  together
with the Company's liberal return policy,  create a positive shopping experience
which engenders customer loyalty.

      Maintain Low  Operating  Costs.  A cornerstone  of the Company's  business
strategy is its commitment to maintaining  low operating  costs.  In addition to
savings realized through sales volume efficiencies, operational efficiencies are
expected to be achieved  through the  streamlining of the Company's  centralized
merchandising  structure,  the use of integrated management  information systems
and the utilization of the  distribution  center.

                                       5
<PAGE>

The Company  believes that its  significant  investment in the technology of its
management  information  systems and in its  distribution  center will allow the
Company to grow without requiring  significant  additional capital contributions
to its  infrastructure  through  1998.  See  information  and  discussion  under
"Forward-Looking   Statements"  included  under  "Management's   Discussion  and
Analysis of  Financial  Condition"  included  as part of this Form 10-K.

Growth Strategy

      New Superstore Expansion.  The Company's expansion strategy is to increase
market  share in  existing  markets  and to  penetrate  new markets in which the
Company   believes  it  can  become  a  leading  operator  of  home  furnishings
superstores.  Management believes that the new markets will be primarily located
in the western  region of the United States in trading areas of 200,000  persons
within a ten-mile  radius and with  demographic  characteristics  that match the
Company's target profile. See information and discussion under  "Forward-Looking
Statements"  included under  "Management's  Discussion and Analysis of Financial
Condition"  included as part of this Form 10-K. The Company  believes that it is
well-positioned  to take  advantage  of the  continued  market share gain by the
superstore chains in the home furnishings sector.

      The  following  table  sets forth  information  concerning  the  Company's
expansion program during the most recent five years:

                                    Square Footage             Store Count
                                ----------------------   -----------------------
Year    Openings    Closings    Begin Year   End Year    Begin Year     End Year
----    --------    --------     ---------   --------    ---------      --------
1992       22         21          1,350       1,633        143            144
1993       20         21          1,633       2,078        144            143
1994       29         27          2,078       2,865        143            145
1995       28         18          2,865       3,691        145            155
1996       36         22          3,691       4,727        155            169

      Linens 'n Things  focuses on opening  new  superstores  in areas  where it
believes  it can  become  a  leading  retailer  of  home-related  products.  The
Company's goal is to enter two to three new markets a year through its expansion
efforts.  Markets for new  superstores  are selected on the basis of demographic
factors,  such as income,  population  and number of  households.  The Company's
stores are located predominantly in power strip centers and, to a lesser extent,
in malls and as stand-alone stores.

      The  Company  believes  that its  current  management  infrastructure  and
management  information systems,  together with its new distribution center, are
capable of supporting  planned  expansion  through  1998.  See  information  and
discussion  under  "Forward-Looking  Statements"  included  under  "Management's
Discussion  and Analysis of Financial  Condition"  included as part of this Form
10-K.

      Increase  Productivity of Existing Store Base. The Company is committed to
increasing its net sales per square foot, inventory turnover ratio and return on
invested capital.  The Company believes the following  initiatives will allow it
to achieve these goals:

          Enhance  Merchandise Mix and  Presentation.  The Company  continues to
     explore opportunities to increase sales in its "things" merchandise without
     sacrificing  market  share or customer  image in the  "linens"  side of the
     business.  The  Company's  long-term  goal is to increase  the sales of the
     "things"  merchandise  to  approximately  50% of net  sales  as part of its
     strategic   initiative  to  capitalize  on  customer  demand  for  one-stop
     shopping. The Company expects this shift to positively impact net sales per
     square foot, the average net sale per customer and inventory turnover since
     "things"  merchandise  tends  to be  more  impulse  driven  merchandise  as
     compared to the  "linens"  portion of the  business.  See  information  and
     discussion under "Forward-Looking  Statements" included under "Management's
     Discussion  and Analysis of Financial  Condition"  included as part of this
     Form 10-K.  In addition,  most "things"  merchandise  is higher margin than
     "linens"  products.  The Company plans to regularly  introduce new products
     which it expects  will  increase  sales and  generate  additional  customer
     traffic.

          In  addition,   the  Company   intends  to  continue   improving   its
     merchandising  presentation techniques,  space planning and store layout to
     further  improve the  productivity  of its existing  and future  superstore
     locations.  The Company periodically restyles its stores to incorporate new
     offerings and realign its store space with its growth segments. The Company


                                       6
<PAGE>

     expects that the addition of in-store customer  services,  such as a bridal
     registry  service,  will  further  improve  its  store  productivity.   See
     information  and discussion  under  "Forward-Looking  Statements"  included
     under  "Management's   Discussion  and  Analysis  of  Financial  Condition"
     included as part of this Form 10-K.

            Increase Operating Efficiencies. As part of its strategy to increase
      operating  efficiencies,  the Company has invested  significant capital in
      building a centralized infrastructure, including a distribution center and
      a  management  information  system,  which it  believes  will  allow it to
      maintain  low  operating  costs as it  pursues  its  superstore  expansion
      strategy.   See   information   and  discussion   under   "Forward-Looking
      Statements"  included  under  "Management's  Discussion  and  Analysis  of
      Financial Condition" included as part of this Form 10-K. In July 1995, the
      Company  began full  operation  of its 275,000  square  foot  distribution
      center in Greensboro,  North Carolina.  By the end of 1996,  approximately
      80% of merchandise was received at the distribution center, as compared to
      approximately  20% of merchandise  received at the Company's  distribution
      center in 1995.  Management believes that the increased utilization of the
      distribution  center  will result in lower  average  freight  costs,  more
      efficient  scheduling  of  inventory  shipments  to the  stores,  improved
      inventory  turnover,  better in-stock  positions and improved  information
      flow. See information and discussion  under  "Forward-Looking  Statements"
      included  under   "Management's   Discussion  and  Analysis  of  Financial
      Condition"  included as part of this Form 10-K. The Company  believes that
      the transfer of inventory  receiving  responsibilities  from the stores to
      the  distribution  center  allows the store sales  associates  to redirect
      their focus to the sales floor,  thereby  increasing the level of customer
      service.  The warehouse  portion of the  distribution  center provides the
      Company   flexibility  to  manage  safety  stock  and  take  advantage  of
      opportunistic  purchases.  The Company's ability to effectively manage its
      inventory is also enhanced by a centralized  merchandising management team
      and its MIS system which allows the Company to more accurately monitor and
      better  balance  inventory  levels and improve  in-stock  positions in its
      stores.

            Continue  Conversion  of  Store  Base to  Superstore  Format.  As of
      December 31, 1996, the Company operated 132 superstores,  representing 78%
      of its total stores, and 37 traditional stores. The Company plans to close
      or relocate  approximately  13 of the 37 traditional  stores by the end of
      1997. Although the remaining  traditional stores are currently profitable,
      the  Company's  long-term  plans  include  closing  most of the  remaining
      traditional stores as opportunities arise.

Industry

      According to U.S.  Department of Commerce  data,  total  industry sales of
products sold in the Company's stores,  which primarily  includes home textiles,
housewares and decorative furnishings categories,  were estimated to be over $60
billion in 1995.  The  market  for home  furnishings  is  fragmented  and highly
competitive.   Specialty   superstores   are  the  fastest  growing  channel  of
distribution  in this  market.  In 1996,  the Company  estimates  that the three
largest specialty  superstore  retailers of fashion home textiles (including the
Company) had aggregate sales  representing  less than 3% of the industry's total
unit sales.

      The Company competes with many different types of retailers that sell many
or most of the items sold by the  Company,  including  department  stores,  mass
merchandisers,  specialty  retail stores and other  retailers.  Linens 'n Things
generally classifies its competition within one of the following categories:

      Department Stores: This category includes national and regional department
stores  such as J.C.  Penney  Company  Inc.,  Sears,  Roebuck  and Co.,  Dillard
Department  Stores,  Inc. and the department  store chains operated by Federated
Department  Stores,  Inc. and The May Department Store Company.  These retailers
offer brand-name merchandise as well as their own private label furnishings in a
high  service  environment.   Department  stores  also  offer  certain  designer
merchandise,  such as Ralph Lauren,  which is not generally  distributed through
the  specialty  and mass  merchandise  distribution  channels.  In general,  the
department  stores  offer a more  limited  selection  of  merchandise  than  the
Company.  The prices offered by department  stores during  off-sale  periods are
significantly  higher than those of the Company and during  on-sale  periods are
comparable to or slightly higher than those of the Company.

      Mass  Merchandisers:  This category  includes  companies  such as Wal-Mart
Stores,  Inc., the Target Stores division of Dayton Hudson Corporation and Kmart
Corporation.  Fashion home  furnishings  represent  only a small  portion of the
total merchandise sales in these stores and reflect a significantly more limited
selection  with fewer high quality name brands and lower quality  merchandise at


                                       7
<PAGE>

lower price points than  specialty  stores or  department  stores.  In addition,
these mass  merchandisers  typically have more limited customer  services staffs
than the Company.

      Specialty  Stores/Retailers:  This  category  includes  large  format home
furnishings  retailers  most similar to Linens 'n Things,  including  Bed Bath &
Beyond Inc.,  Home Place and Strouds,  Inc. and smaller niche  retailers such as
Crate & Barrel,  Lechters, Inc. and Williams-Sonoma,  Inc. The Company estimates
that large format stores range in size from approximately 30,000 to 50,000 gross
square feet and offer a home furnishings  merchandise selection of approximately
20,000 to 30,000 SKUs.  The Company  believes that these  retailers have similar
pricing on comparable brand name merchandise and that they compete by attempting
to develop loyal customers and increase  customer  traffic by providing a single
outlet to satisfy all the customer's  household  needs.  The niche retailers are
typically  smaller in size than the large format  superstores and offer a highly
focused and broad  assortment  within a specific  niche.  The prices  offered by
niche  retailers are often higher than the large format  superstores and most do
not maintain an everyday low price strategy.

      Other  Retailers:  This category  includes mail order  retailers,  such as
Spiegel Inc. and Domestications,  off-price retailers, such as the T.J. Maxx and
Marshall's  divisions of the TJX Companies,  Inc. and local "mom and pop" retail
stores.  Both mail order retailers and smaller local retailers generally offer a
more  limited  selection  of brand name  merchandise  at prices which tend to be
higher than those of the Company.  Off-price retailers typically offer close-out
or out of season brand name merchandise at competitive prices.

 Merchandising

      The Company offers quality home textiles,  housewares and home accessories
at everyday low prices. The Company's strategy consists of a commitment to offer
a breadth and depth of selection  and to create  merchandise  presentation  that
makes it easy to shop in a visually pleasing  environment.  The stores feature a
"racetrack"  layout,  enabling  the customer to  visualize  and  purchase  fully
coordinated and accessorized ensembles.  Seasonal merchandise is featured at the
front of every store to create  variety and  excitement and to capitalize on key
selling seasons including back-to-school and holiday events.

      The Company's extensive  merchandise  offering of over 25,000 SKUs enables
its  customers to select from a wide  assortment of styles,  brands,  colors and
designs  within  each of the  Company's  major  product  lines.  The  Company is
committed  to  maintaining  a  consistent  in-stock  inventory  position.   This
presentation  of merchandise  enhances the  customer's  impression of a dominant
assortment of merchandise in an easy to shop  environment.  The Company's  broad
and deep  merchandise  offering  is coupled  with  everyday  low prices that are
substantially  below  regular  department  store prices and  comparable  with or
slightly below department store sale prices. The Company has adopted a "won't be
undersold"  approach and believes that the uniform  application  of its everyday
low price policy is essential to maintaining the integrity of this policy.  This
is an important  factor in establishing  its reputation as a price leader and in
helping to build customer loyalty. In addition, the Company offers, on a regular
basis,  "special"  purchases which it obtains  primarily  through  opportunistic
purchasing to enhance its high value  perception  among its customers.

Customer Service

      Linens  'n  Things  treats  every  customer  as  a  guest.  The  Company's
philosophy  supports  enhancing  the  guest's  entire  shopping  experience  and
believes that all elements of service differentiate it from the competition.  To
facilitate  the  ease  of  shopping,   the  assisted   self-service  culture  is
complemented by trained department  specialists,  zoned floor coverage,  product
information  displays  and  videos,  self-demonstrations  and  vendor  supported
training  seminars.  This  philosophy is designed to encourage  guest loyalty as
well as continually develop knowledgeable  Company associates.  The entire store
team is hired and  trained to be highly  visible in order to assist  guests with
their  selections.  The  ability  to assist  guests  has been  augmented  by the
transfer of inventory receiving responsibilities from the stores, allowing sales
associates to focus on the sales floor.  Sophisticated  management systems which
provide  efficient  customer  service and liberal  return  procedures are geared
toward  making each guest's  final  impression of visiting a store a convenient,
efficient and pleasant experience.


                                       8
<PAGE>

Advertising

      Advertising  programs are focused on building and strengthening the Linens
'n Things superstore concept and image.  Because of the Company's  commitment to
everyday low prices,  advertising  vehicles are aggressively used in positioning
the Company among new and existing  customers by communicating  price, value and
breadth  and depth of  selection,  with a "won't  be  undersold"  approach.  The
Company  focuses its  advertising  programs  during key selling  seasons such as
back-to-school and holidays.

      The Company  primarily  uses full color inserts in newspapers to reach its
customers.  In addition,  the Company periodically  advertises on television and
radio during peak  seasonal  periods or for  promotional  events.  Grand opening
promotional events are used to support new stores,  with more emphasis placed on
those located in new markets.

Purchasing and Suppliers

      The  merchandising  mix for each store is selected  by the central  buying
staff in consultation  with district store managers.  The Company  purchases its
merchandise  from  approximately  1,000  suppliers.  Springs  Industries,  Inc.,
through its  various  operating  companies,  supplied  approximately  15% of the
Company's total purchases in 1996. In 1996, the Company  purchased a significant
number of products  from other key  suppliers.  Due to its breadth of selection,
the Company is often one of the largest  customers  for certain of its  vendors.
The Company  believes that this buying power and its ability to make centralized
purchases  generally allow it to acquire  products at favorable  terms. In 1996,
approximately  95% of the  Company's  merchandise  was  purchased  in the United
States.

Distribution

      The  Company  operates  a  275,000  square  foot  distribution  center  in
Greensboro, North Carolina. The Company began full operation of the distribution
center in 1995.  Management  believes that the  utilization  of the  centralized
distribution  center will result in lower average freight  expense,  more timely
control of inventory shipments to stores,  improved inventory  turnover,  better
in-stock positions and improved information flow. See information and discussion
under "Forward-Looking  Statements" included under "Management's  Discussion and
Analysis  of  Financial  Condition"  included  as  part of this  Form  10-K.  In
addition,  transferring inventory receiving  responsibilities from the stores to
the distribution center allows the sales associates to direct their focus to the
sales  floor,  thereby  increasing  the level of customer  service.  The Company
believes strong distribution support for its stores is a critical element to its
growth  strategy and is central to its ability to maintain a low cost  operating
structure.

      The Company manages the distribution  process centrally from its corporate
headquarters.  Purchase  orders  issued by Linens 'n Things  are  electronically
transmitted  to the majority of its  suppliers.  By the end of 1996, the Company
received  approximately  80% of its total  inventory  through  the  distribution
center.  The  balance  of the  Company's  merchandise  is  directly  shipped  to
individual  stores.  The  Company  plans  to  continue  efforts  to ship as much
merchandise  through the distribution  center as possible to ensure all benefits
of the Company's  logistics strategy are fully leveraged.  Continued growth will
also facilitate new uses of Electronic  Data  Interchange  technologies  between
Linens 'n Things and its suppliers to exploit the most productive and beneficial
use of its assets and resources.

      As  of  December  31,  1996,  the  distribution  center  was  utilized  at
approximately   50%  of  capacity.   Management   estimates  that  the  existing
distribution center can support the Company's growth for the next few years. See
information and discussion  under  "Forward-Looking  Statements"  included under
"Management's  Discussion and Analysis of Financial  Condition" included as part
of this Form 10-K.

Management Information Systems

      Over the last three years, the Company has made significant  investment in
technology to improve customer  service,  gain efficiencies and reduce operating
costs.  Linens 'n Things  has  installed  a  customized  IBM  AS/400  management
information  system,  which  integrates  all  major  aspects  of  the  Company's
business,   including  sales,  distribution,   purchasing,   inventory  control,
merchandise  planning  and  replenishment  and  financial  systems.  The Company
utilizes POS terminals  with price look-up  capabilities  for both inventory and
sales  transactions



                                       9
<PAGE>

on a SKU basis  which the  Company is  currently  in the  process of  upgrading.
Information  obtained  daily  by  the  system  results  in  automatic  inventory
replenishment in response to specific requirements of each superstore.

      The  Company  believes  its  management  information  systems  have  fully
integrated  the  Company's  stores,  distribution  and home office.  The Company
continually  evaluates  and upgrades  its  management  information  systems on a
regular basis to enhance the  quantity,  quality and  timeliness of  information
available to management.

Store Management and Operations

      In general,  each superstore is staffed with one General  Manager,  two to
four Merchandise Managers and one Receiving Manager. The General Manager reports
to a District  Manager who in turn reports to one of three Zone Vice Presidents.
Each  Zone  Vice  President  reports  to the  Senior  Vice  President  of  Store
Operations.

      The Company places a strong emphasis on its people,  their development and
opportunity  for  advancement,  particularly  at the store level.  The Company's
commitment to  maintaining a high internal  promotion  rate is best  exemplified
through the practice of opening each new store with a seasoned  management crew,
who  participate in training at an existing store  immediately  prior to the new
opening.  As a result, the vast majority of General Managers opening a new store
have  significant  experience  at  the  Company.  Additionally,  the  structured
management  training  program requires each new associate to learn all facets of
the business  within the framework of a fully  operational  store.  This program
includes,  among other  things,  product  knowledge,  merchandise  presentation,
business  and sales  perspective,  employee  relations  and  manpower  planning,
complemented at the associate level through daily product knowledge seminars and
structured  register training materials and proficiencies.  The Company believes
that  its  policy  of  promoting  from  within  the  Company,  as  well  as  the
opportunities for advancement  generated by its ongoing store expansion program,
serve as incentives to attract and retain quality individuals which, the Company
believes, results in lower turnover.

      Linens 'n Things stores are open seven days a week,  generally  from 10:00
a.m. to 9:00 p.m. Monday through Saturday and 11:00 a.m. to 6:00 p.m. on Sunday,
unless affected by local laws.

Inflation and Seasonality

      The  Company  does  not  believe  that its  operating  results  have  been
materially  affected by inflation during the preceding three years. There can be
no assurance, however, that the Company's operating results will not be affected
by inflation in the future.

      The  Company's  business is subject to  substantial  seasonal  variations.
Historically,  the Company has realized a  significant  portion of its net sales
and substantially all of its net income for the year during the third and fourth
quarters.  The  Company's  quarterly  results of operations  may also  fluctuate
significantly as a result of a variety of other factors, including the timing of
new store openings.  The Company believes this is the general pattern associated
with its segment of the retail  industry and expects this pattern will  continue
in the future.  Consequently,  comparisons  between quarters are not necessarily
meaningful  and the results for any quarter are not  necessarily  indicative  of
future results.

Employees

      As of December 1996, the Company  employed  approximately  6,800 people of
whom  approximately  3,300 were  full-time  employees  and 3,500 were  part-time
employees.  None of the Company's  employees are represented by unions,  and the
Company believes that its relationship with its employees is good.

Competition

      The Company  believes that  although it will continue to face  competition
from   retailers   in   all   four   of   the   categories    referred   to   in
"Business--Industry,"  its most significant competition is from the large format
specialty  stores.   The  home  textiles   industry  is  becoming   increasingly
competitive as several specialty  retailers are in the process of expanding into
new markets. In addition,  as the Company expands into new markets, it will face
new  competitors.  The  visibility  of  the  Company  may  encourage  additional
competitors  or may  encourage  existing  competitors  to imitate the  Company's
format and methods.  If any of the Company's major  competitors  seek to gain or
retain  market share by reducing  prices,  the Company may be required to reduce
its prices in order to remain competitive.

                                       10
<PAGE>

      The  Company  believes  that the  ability to compete  successfully  in its
markets is determined by several factors,  including price,  breadth and quality
of  product   selection,   in-stock   availability  of  merchandise,   effective
merchandise  presentation,  customer service and superior store  locations.  The
Company  believes  that it is well  positioned  to compete on the basis of these
factors. Nevertheless,  there can be no assurance that any or all of the factors
that enable the Company to compete  favorably  will not be adopted by  companies
having greater  financial and other resources than the Company.

Trade Names and Service Marks

      The  Company  uses the  "Linens 'n  Things"  name as a trade name and as a
service mark in connection with retail services.  The Company has registered the
"Linens 'n Things"  logo as a service  mark with the  United  States  Patent and
Trademark  Office.  Management  believes  that the name  Linens  'n Things is an
important element of the Company's business.

                                       11
<PAGE>

Item 2.  Properties

      As of  December  31,  1996 the Company  operated  169 retail  stores in 34
states. The Company currently leases all of its existing stores and expects that
its policy of leasing  rather  than owning  will  continue  as it  expands.  The
Company's leases provide for original lease terms that generally range from 5 to
20 years and certain of the leases provide for renewal options that range from 5
to 15 years at increased rents. Certain of the leases provide for scheduled rent
increases  and  certain of the leases  provide for  contingent  rent (based upon
store  sales  exceeding  stipulated  amounts).  Prior  to the  Company's  IPO in
November  1996,  CVS acted as guarantor on  substantially  all of the  Company's
store  leases.  Following  the IPO,  although CVS will continue to guarantee the
Company's  current store leases where CVS has guaranteed such leases in the past
(including extensions and renewals relating to certain of such leases), CVS will
no longer enter into  commitments  to guarantee  future  leases on behalf of the
Company.

      The Company  owns its 275,000  square  foot  distribution  center in North
Carolina. The Company leases its 59,000 square foot corporate office in Clifton,
New Jersey.

      The table  below sets forth the number of stores  located in each state as
of December 31, 1996:

State           Number of Stores            State              Number of Stores
-----            ---------------            -----               ---------------
Arizona                 2                   Nevada                     2
Arkansas                1                   New Jersey                12
California             19                   New York                   8
Colorado                3                   North Carolina             9
Connecticut             8                   Ohio                       3
Florida                16                   Oklahoma                   1
Georgia                 7                   Oregon                     1
Illinois               12                   Pennsylvania               4
Indiana                 1                   Rhode Island               1
Louisiana               1                   Tennessee                  5
Maine                   1                   Texas                     14
Maryland                3                   Utah                       1
Massachusetts           6                   Vermont                    1
Michigan                2                   Virginia                  13
Minnesota               6                   Washington                 1
Missouri                2                   Washington D.C.            1
Nebraska                1                   Wisconsin                  1

Item 3.  Legal Proceedings

      There are no material legal proceedings  against the Company.  The Company
is involved in various claims and legal actions  arising in the ordinary  course
of business.  In the opinion of  management,  the ultimate  disposition of these
matters will not have a material  adverse  effect on the Company's  consolidated
financial position, results of operations or liquidity.

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

      No matters were submitted to a vote of security  holders during the fourth
quarter of fiscal year 1996.

                                       12
<PAGE>

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

      Linens 'n Things  common  stock is listed on the New York Stock  Exchange.
Its trading symbol is LIN. At December 31, 1996 there were  approximately  2,000
shareholders of record.  The high and low trading price of the Company's  stock,
beginning  November 26, 1996, the date of the IPO,  through December 31, 1996 is
as follows:

                                                      High              Low
                                                      ----              ----
      Fourth Quarter (from November 26, 1996)        19 3/4           15 1/8


      The  Company  paid no  dividends  on its  common  stock  in  fiscal  1996.
Management  of the Company  currently  intends to retain its earnings to finance
the growth and  development  of its business and does not  currently  anticipate
paying  cash  dividends  in the  foreseeable  future.  The payment of any future
dividends will be at the discretion of the Company's Board of Directors and will
depend  upon,  among other  things,  the future  earnings,  operations,  capital
requirements and financial condition of the Company, satisfying all requirements
under its bank financing agreement and such other factors as the Company's Board
of Directors may consider relevant.  In addition,  the revolving credit facility
prohibits the payment of cash dividends by the Company.

Item 6.  Selected Financial Data.

         The  information  required by this Item is incorporated by reference to
the  Five-Year  Financial  Summary  appearing on page 17 of the  Company's  1996
Annual Report to Shareholders.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

      The  information  required by this Item is  incorporated  by  reference to
pages 11 through 14 of the Company's 1996 Annual Report to Shareholders.

Item 8.  Financial Statements and Supplementary Data.

         The  financial  statements  required by this Item are  incorporated  by
reference to pages 16 and 18 through 30 of the  Company's  1996 Annual Report to
Shareholders.  These financial  statements are indexed under Item 14(a)(1).  See
also the financial  statement  schedule  that is included  herein and is indexed
under Item 14(a)(2).

Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure.

         There were no  disagreements  between the  Company and its  independent
public accountants on matters of accounting principles or practices.



                                       13
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

         The  information   required  by  this  Item  concerning  the  Company's
directors is  incorporated by reference to the Company's Proxy Statement for the
Company's 1997 Annual Meeting of Shareholders under the heading "Election of One
Director."

         The  information   required  by  this  Item  concerning  the  Company's
executive  officers is  incorporated by reference to Part I, Item 1, "Business -
Executive Officers and Certain Key Personnel."

         The  information  required  by this Item with  respect  to  Section  16
reporting is  incorporated by reference to the Company's Proxy Statement for the
Company's 1997 Annual Meeting of Shareholders  under the heading  "Section 16(a)
Beneficial Reporting Compliance."

Item 11.  Executive Compensation.

         The  information  required by this Item is incorporated by reference to
the Company's Proxy Statement for the 1997 Annual Meeting of Shareholders  under
the headings  "Director  Compensation - Attendance;  Committees"  and "Executive
Compensation"  other than  information  included  therein under the  subcaptions
"Report on Compensation of Executive Officers" and "Performance Graph" which are
not incorporated herein.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

         The  information  required by this Item is incorporated by reference to
the Company's Proxy Statement for the 1997 Annual Meeting of Shareholders  under
the heading "Beneficial Ownership of Common Stock."

Item 13.  Certain Relationships and Related Transactions.

      The information  required by this Item is incorporated by reference to the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders  under the
heading "Certain Transactions with Related Parties."


                                       14
<PAGE>

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)   The following documents are filed as part of this Report.

1.    Financial Statements:

      The  following  Financial   Statements  of  Linens  'n  Things,  Inc.  are
incorporated by reference to the Company's 1996 Annual Report to Shareholders:

                                                          Pages in Annual Report
                                                             to Shareholders
                                                           ---------------------
Independent Auditors' Report ..........................            16

Consolidated Statements of Operations -
      for the fiscal years ended
      December 31, 1996, 1995 and 1994 ................            18

Consolidated Balance Sheets -
      as of December 31, 1996 and 1995 ................            19

Consolidated Statements of Shareholders' Equity -
      for the fiscal years ended
      December 31, 1996, 1995 and 1994 .................           19

Consolidated Statements of Cash Flows -
      for the fiscal years ended
      December 31, 1996, 1995 and 1994 .................           20

Notes to Consolidated Financial Statements .............     21 through 30

2.    Schedules:

      The supplementary income statement schedule is included in this Report.

3.    Exhibits:

      The Exhibits on the accompanying  Exhibit Index immediately  following the
financial statement schedules are filed as part of, or incorporated by reference
into, this Annual Report on Form 10-K.

                                       15
<PAGE>

                                                                      Schedule 1

                     Linens 'n Things, Inc. and Subsidiaries
                   Supplementary Income Statement Information
                                  ($ in 000's)

<TABLE>
<CAPTION>
                             Year Ended                 Year Ended             Year Ended

      Item                December 31, 1996          December 31, 1995      December 31, 1994
      ----                ----------------           ----------------       ----------------
<S>                            <C>                        <C>                    <C>
Advertising Costs              $19,743                    $16,950                $12,172
                               =======                    =======                =======
</TABLE>


                                       16
<PAGE>

                                  EXHIBIT INDEX


   Exhibit
   Number      Description
   -------     ----------

     3.1       Certificate of Incorporation of the Registrant1

     3.2       Amended and Restated Certificate of Incorporation1

     3.3       By-Laws of the Registrant1

       4       Specimen Certificate of Common Stock1

    10.1       Transitional Services Agreement between the Registrant and
               CVS Corporation1

    10.2       Stockholder Agreement between the Registrant and CVS
               Corporation1

    10.3       Tax Disaffiliation Agreement between the Registrant and CVS
               Corporation1

    10.4       Subordinated Note between Registrant and CVS1
    10.5       Credit Facility1

    10.6       Employment Agreement between Norman Axelrod and the
               Registrant1*

    10.7       Employment Agreement between James M. Tomaszewski and
               the Registrant1*

    10.8       Employment Agreement between Steven B. Silverstein and the
               Registrant1*

    10.9       Employment Agreement between Hugh J. Scullin and the
               Registrant1*

   10.10       1996 Incentive Compensation Plan1*

   10.11       1996 Non-Employee Director Stock Plan1*

      11       Computation of Net Income (Loss) Per Common Share2

      12       Computation of Ratio of Earnings to Fixed Charges2

      21       List of Subsidiaries2

      27       Financial Data Schedule (filed electronically with SEC only)2

---------------
1    Incorporated  by  reference  to  the  Exhibits  filed  with  the  Company's
     Registration  Statement  on Form S-1 (No.  333-12267),  which  Registration
     Statement became effective on November 26, 1996.

2     Filed with this Form 10-K.

*     Management contract or compensatory plan or arrangement.

(b)   Reports on Form 8-K:

      No Current  Reports on Form 8-K were filed by the Company  during the last
      fiscal  quarter of fiscal  1996.  With the  exception  of the  information
      incorporated by reference to the Annual Report to Shareholders in Items 6,
      7,  and 8 of Part II and  Item 14 of Part IV of this  Annual  Report,  the
      Annual Report to  Shareholders  is not deemed filed as part of this Annual
      Report on Form 10-K.

                                       17
<PAGE>

                                   SIGNATURES

      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.

                                      Linens 'n Things, Inc.
                                      (Registrant)

                                      By:/S/ NORMAN AXELROD
                                         ---------------------------------------
                                          Norman Axelrod
                                          Chairman, Chief Executive Officer
                                             and President

Dated:  March 25, 1997

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report has been signed below on its behalf of the  Registrant in the  capacities
and on the dates indicated.

<TABLE>
<CAPTION>
           Signature                                Title                             Date
           ---------                                ----                              ----
<S>                                      <C>                                       <C>
       /S/ NORMAN AXELROD                Chairman, Chief Executive                 March 25, 1997
--------------------------------           Officer and President
         Norman Axelrod

     /s/ CHARLES C. CONAWAY              Director                                  March 27, 1997
--------------------------------
      Charles C. Conaway

    /s/ STANLEY P. GOLDSTEIN             Director                                  March 27, 1997
--------------------------------
     Stanley P. Goldstein

      /s/ PHILIP E. BEEKMAN              Director                                  March 28, 1997
--------------------------------
       Philip E. Beekman

    /s/ JAMES M. TOMASZEWSKI             Senior Vice President,                    March 25, 1997
--------------------------------           Chief Financial Officer
     James M. Tomaszewski                  (Principal Financial Officer)


      /s/ WILLIAM T. GILES               Vice President, Finance,                  March 25, 1997
--------------------------------           Controller
       William T. Giles                    (Principal Accounting Officer)
</TABLE>