<PAGE>   1

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 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 March 29, 1998

                                       OR

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

                      For the transition from ____ to ____

                        Commission file number 001-13222

                           STATER BROS. HOLDINGS INC.
             (Exact name of registrant as specified in its charter)


                 Delaware                                 33-0350671
                 --------                                 ----------
     (State or other jurisdiction of                  (I.R.S. Employer 
     incorporation or organization)                   Identification No.)


         21700 Barton Road
         Colton, California                                   92324
         ------------------                                   -----
    (Address of principal executive offices)                (Zip Code)

    Registrant's telephone number, including area code      (909) 783-5000
                                                            --------------


                                 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 preceeding 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 .

                           As of April 24, 1998, there were issued
                           and outstanding 50,000 shares of the
                           registrant's Class A Common Stock


================================================================================

                                       1

<PAGE>   2

                           STATER BROS. HOLDINGS INC.
                                 MARCH 29, 1998


                                      INDEX


<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                   ----
<S>               <C>                                                                              <C>
PART I            FINANCIAL INFORMATION (UNAUDITED)


ITEM 1.           FINANCIAL STATEMENTS

                  CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF SEPTEMBER 28, 1997
                     AND MARCH 29, 1998                                                             3

                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE 26 WEEKS ENDED
                     MARCH 30, 1997 AND MARCH 29, 1998                                              5

                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE 13 WEEKS ENDED
                     MARCH 30, 1997 AND MARCH 29, 1998                                              6

                  CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE 26 WEEKS
                     ENDED MARCH 30, 1997 AND MARCH 29, 1998                                        7

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                            8

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS                                              10


PART II           OTHER INFORMATION


ITEM 1.           LEGAL PROCEEDINGS                                                                18

ITEM 2.           CHANGES IN SECURITIES                                                            18

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES                                                  18

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                              18

ITEM 5.           OTHER INFORMATION                                                                18

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K                                                 18


SIGNATURES                                                                                         19
</TABLE>


                                       2

<PAGE>   3

PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS


                           STATER BROS. HOLDINGS INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                                 (In thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                   SEPT. 28,      MAR. 29,
                                                                                     1997          1998
                                                                                  ----------     ----------
<S>                                                                               <C>            <C>     
Current Assets
    Cash and cash equivalents.................................................    $   59,086     $   42,891
    Receivables...............................................................        21,481         20,537
    Inventories...............................................................       115,513        117,469
    Prepaid expenses..........................................................         4,667          7,960
    Deferred income taxes.....................................................         2,978          2,979
    Properties held for sale..................................................         1,342          1,200
                                                                                  ----------     ----------

Total current assets..........................................................       205,067        193,036

Investment in unconsolidated affiliate........................................        10,313          8,181


Property and equipment
    Land......................................................................        16,443         16,562
    Buildings and improvements................................................        87,605         92,637
    Store fixtures and equipment..............................................        86,644         95,873
    Property subject to capital leases........................................        14,368         14,368
                                                                                  ----------     ----------
                                                                                     205,060        219,440


    Less accumulated depreciation and amortization............................        96,203        101,882
                                                                                  ----------     ----------
                                                                                     108,857        117,558


Deferred income taxes.........................................................         4,699          4,690
Deferred debt issuance costs, net.............................................        14,273         13,693
Lease guarantee escrow........................................................         8,069          9,265
Other assets..................................................................         7,199          6,717
                                                                                  ----------     ----------


Total assets..................................................................    $  358,477     $  353,140
                                                                                  ==========     ==========
</TABLE>







     See accompanying notes to unaudited consolidated financial statements.

                                       3

<PAGE>   4

                           STATER BROS. HOLDINGS INC.
                     CONSOLIDATED BALANCE SHEETS (Continued)
                                   (Unaudited)
                      (In thousands, except share amounts)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                                  SEPT. 28,       MAR. 29,
                                                                                     1997           1998
                                                                                  ----------     ----------
<S>                                                                               <C>            <C>       
Current Liabilities
    Accounts payable..........................................................    $   66,834     $   59,605
    Accrued payroll and related expenses......................................        23,851         22,809
    Other accrued liabilities.................................................        21,113         22,183
    Current portion of capital lease obligations..............................         1,256          1,271
                                                                                  ----------     ----------

Total current liabilities.....................................................       113,054        105,868

Long-term debt, less current portion..........................................       265,000        265,000
Capital lease obligations, less current portion...............................         5,661          5,019
Long-term portion of self-insurance and other reserves........................         7,409          7,409
Other long-term liabilities...................................................         3,939          3,832

Stockholders' equity (deficit) Class A Common Stock, $.01 par value:
       Authorized shares - 100,000
       Issued and outstanding shares - 50,000.................................             1              1
    Additional paid-in capital................................................        12,715         12,715
    Retained earnings (deficit)...............................................       (49,302)       (46,704)
                                                                                  ----------    -----------

Total stockholders' equity (deficit)..........................................       (36,586)       (33,988)
                                                                                  ----------     ----------

Total liabilities and stockholders' equity (deficit)..........................    $  358,477     $  353,140
                                                                                  ==========     ==========
</TABLE>







     See accompanying notes to unaudited consolidated financial statements.

                                       4

<PAGE>   5

                           STATER BROS. HOLDINGS INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
               (In thousands, except per share and share amounts)


<TABLE>
<CAPTION>
                                                                                         26 Weeks Ended
                                                                                   -------------------------
                                                                                   MAR . 30,       MAR. 29,
                                                                                      1997           1998
                                                                                   ---------      ----------
<S>                                                                                <C>            <C>       
Sales.........................................................................     $ 864,822      $  853,747
Cost of goods sold............................................................       666,301         654,984
                                                                                   ---------      ----------
Gross profit..................................................................       198,521         198,763

Operating expenses
    Selling, general and administrative expenses..............................       167,152         171,129
    Depreciation and amortization.............................................         6,561           7,434
    Consulting fees...........................................................           750               -
                                                                                   ---------      ----------
Total operating expenses......................................................       174,463         178,563
                                                                                   ---------      ----------

Operating profit..............................................................        24,058          20,200

Interest income...............................................................           995           1,311
Interest expense..............................................................        (9,979)        (15,033)
Equity in earnings (loss) from unconsolidated affiliate.......................          (579)         (2,132)
Other income (loss) - net.....................................................            (3)             57
                                                                                   ---------      ----------

Income before income taxes....................................................        14,492           4,403
Income taxes..................................................................         5,943           1,805
                                                                                   ---------      ----------

Net income....................................................................     $   8,549      $    2,598

Less preferred dividends......................................................         3,632               -
                                                                                   ---------      ----------

Earnings available to common shareholders.....................................     $   4,917      $    2,598
                                                                                   =========      ==========

Earnings per common share.....................................................     $   98.34      $    51.96
                                                                                   =========      ==========

Average common shares outstanding.............................................        50,000          50,000
                                                                                      ======          ======
</TABLE>









     See accompanying notes to unaudited consolidated financial statements.

                                       5

<PAGE>   6

                           STATER BROS. HOLDINGS INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
               (In thousands, except per share and share amounts)


<TABLE>
<CAPTION>
                                                                                         13 Weeks Ended
                                                                                   ---------      ----------
                                                                                    MAR. 30,        MAR. 29,
                                                                                     1997            1998
                                                                                   ---------      ----------
<S>                                                                                <C>            <C>       
Sales.........................................................................     $ 431,422      $  422,829
Cost of goods sold............................................................       333,727         322,362
                                                                                   ---------      ----------
Gross profit..................................................................        97,695         100,467

Operating expenses:
    Selling, general and administrative expenses..............................        82,056          86,562
    Depreciation and amortization.............................................         3,286           3,815
    Consulting fees...........................................................           375               -
                                                                                   ---------      ----------
Total operating expenses......................................................        85,717          90,377
                                                                                   ---------      ----------

Operating profit..............................................................        11,978          10,090

Interest income...............................................................           526             590
Interest expense..............................................................        (4,984)         (7,506)
Equity in earnings (loss) from unconsolidated affiliate.......................          (136)         (1,083)
Other income - net............................................................            (3)            (14)
                                                                                   ---------      ----------

Income before income taxes....................................................         7,381           2,077
Income taxes..................................................................         3,027             852
                                                                                   ---------      ----------

Net income....................................................................     $   4,354      $    1,225

Less preferred dividends......................................................         1,816               -
                                                                                   ---------      ----------

Earnings available to common shareholders.....................................     $   2,538      $    1,225
                                                                                   =========      ==========

Earnings per common share.....................................................     $   50.76      $    24.50
                                                                                   =========      ==========

Average common shares outstanding.............................................        50,000          50,000
                                                                                      ======          ======
</TABLE>








     See accompanying notes to unaudited consolidated financial statements.

                                       6

<PAGE>   7

                           STATER BROS. HOLDINGS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                         26 Weeks Ended
                                                                                    -----------------------
                                                                                    MAR. 30,       MAR. 29,
                                                                                      1997           1998
                                                                                    --------       --------
<S>                                                                                 <C>            <C>     
OPERATING ACTIVITIES:
Net income....................................................................      $  8,549       $  2,598
Adjustments to reconcile net income to net cash provided
  by operating activities:
    Depreciation and amortization.............................................         6,561          7,434
    Provision for deferred income taxes.......................................        (2,087)             8
    Gain (loss) on disposals of assets........................................             3            (57)
    Net undistributed loss in investment in unconsolidated affiliate..........           579          2,132
    Changes in operating assets and liabilities:
     (Increase) decrease in receivables.......................................         1,030            944
     (Increase) decrease in inventories.......................................         1,575         (1,956)
     (Increase) decrease in prepaid expenses..................................        (3,092)        (3,293)
     (Increase) decrease in other assets......................................          (725)        (1,036)
     Increase (decrease) in accounts payable..................................       (15,810)        (7,229)
     Increase (decrease) in accrued liabilities and long-term
      portion of self-insurance reserves......................................          (406)           (79)
                                                                                    --------       --------

Net cash (used by) operating activities.......................................        (3,823)          (534)
                                                                                    --------       --------

INVESTING ACTIVITIES:
Investment in unconsolidated affiliate........................................        (5,000)             -
Purchase of property and equipment............................................        (7,192)       (15,303)
Proceeds from sale of property and equipment and properties
  held for sale...............................................................        16,010            269
                                                                                    --------       --------

Net cash (used by) provided by investing activities...........................         3,818        (15,034)
                                                                                    --------       --------

FINANCING ACTIVITIES:
Dividends paid or accrued on preferred stock..................................        (3,632)             -
Principal payments on capital lease obligations...............................          (577)          (627)
                                                                                    --------       --------

Net cash (used by) financing activities.......................................        (4,209)          (627)
                                                                                    --------       --------

Net increase (decrease) in cash and cash equivalents..........................        (4,214)       (16,195)
Cash and cash equivalents at beginning of period..............................        45,279         59,086
                                                                                    --------       --------

Cash and cash equivalents at end of period....................................      $ 41,065       $ 42,891
                                                                                    ========       ========

Interest paid.................................................................      $  9,466       $ 13,292
Income taxes paid.............................................................      $  3,225       $    950
</TABLE>





     See accompanying notes to unaudited consolidated financial statements.

                                       7

<PAGE>   8

                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 MARCH 29, 1998


NOTE 1 - BASIS OF PRESENTATION

         In the opinion of management, the accompanying unaudited consolidated
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of Stater Bros. Holdings Inc. (the
"Company") and its subsidiaries as of September 28, 1997 and March 29, 1998 and
the results of its operations and cash flows for the twenty-six weeks ended
March 30, 1997 and March 29, 1998. These consolidated financial statements
should be read in conjunction with the audited financial statements and notes
thereto included in the Company's latest annual report filed on Form 10-K. The
operating results for the twenty-six weeks ended March 29, 1998 are not
necessarily indicative of the results of operations for a full year.

NOTE 2 - INCOME TAXES

         The provision for income taxes for the twenty-six weeks ended March 30,
1997 and March 29, 1998 consists of the following:

<TABLE>
<CAPTION>
                                                                             26 Weeks Ended
                                                                   ---------------------------------
                                                                   Mar. 30, 1997       Mar. 29, 1998
                                                                   -------------       -------------
                                                                            (In thousands)
       <S>                                                         <C>                 <C>
       Federal Income Taxes                                          $    4,594         $    1,396
       State Income Taxes                                                 1,349                409
                                                                     ----------         ----------
                                                                     $    5,943         $    1,805
                                                                     ==========         ==========
</TABLE>

NOTE 3 - UNCONSOLIDATED AFFILIATE

         The Company owns 50% of Santee Dairies LLC. Through its wholly owned
subsidiary, Santee Dairies, Inc. ("Santee"), it operated a fluid milk processing
plant located in Los Angeles, California, and as of May 1, 1998, Santee moved
its operations to a newly constructed fluid milk processing plant in City of
Industry. The Company is not the controlling stockholder. Accordingly, the
Company accounts for its investment in Santee Dairies LLC using the equity
method of accounting and recognized losses of $2,132,000 and $579,000 for the
twenty-six weeks ended March 29, 1998 and March 30, 1997, respectively. The
Company is a significant customer of Santee which supplies the Company with a
substantial portion of its fluid milk and dairy products.

Summary of unaudited financial information for Santee Dairies LLC is as follows:

<TABLE>
<CAPTION>
                                                                             26 Weeks Ended
                                                                   ---------------------------------
                                                                   Mar. 30, 1997       Mar. 29, 1998
                                                                   -------------       -------------
                                                                            (In thousands)
       <S>                                                         <C>                 <C>
       Current Assets                                              $     16,150       $     25,574
       Non-current assets                                                56,561            106,702
       Current liabilities                                               45,027             33,334
       Non-current liabilities                                            3,561             82,817
       Shareholder's equity                                              24,123             16,125

       Sales                                                             94,621             87,542
       Gross Profit                                                       8,151              6,636
       Net income (loss)                                           $     (2,485)      $     (4,264)
</TABLE>


                                       8

<PAGE>   9

                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 MARCH 29, 1998


NOTE 4 - CONSULTING AGREEMENT AND COVENANT NOT TO COMPETE

         In March 1994, the Company entered into a five-year Consulting
Agreement with Craig Corporation ("Craig"), previously a shareholder of the
Company, whereby the Company paid Craig $1.5 million per year and Craig provided
the Company with consultation and advise in connection with general business
issues, financial management consulting, real estate acquisition and development
and product diversification matters. Consulting fees expense amounted to
$750,000 for the twenty-six weeks ended March 30, 1997. The agreement to make
consulting payments to Craig was terminated, at the election of the Company, in
August 1997. Additionally, on March 8, 1994, the Company paid Craig $5.0 million
which is amortized to earnings over the five-year term of the covenant not to
compete included in the Consulting Agreement.

NOTE 5 - RECLASSIFICATIONS

         Certain amounts in the prior periods have been reclassified to conform
to the current period financial statement presentation.

NOTE 6 - USE OF ESTIMATES

         The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE 7 - SERIES B PREFERRED STOCK REDEMPTION

         In August 1997, the Company redeemed all of the outstanding shares of
its Series B Preferred Stock for approximately $69.4 million plus accrued and
unpaid dividends of approximately $4.6 million. The redemption of the Series B
Preferred Stock was funded from the proceeds of a debt offering of $100 million
of 9% Senior Subordinated Notes due 2004.




                                       9

<PAGE>   10

                           STATER BROS. HOLDINGS INC.
                                 MARCH 29, 1998


PART I - FINANCIAL INFORMATION (CONTD.)


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

          RECAPITALIZATION TRANSACTION

          In March 1994, the Company completed a Recapitalization Transaction
          (the "Recapitalization") which transferred effective voting control of
          the Company to La Cadena Investments ("La Cadena"), reclassified the
          Company's outstanding equity, provided for certain cash payments and
          distributions to Craig Corporation ("Craig"), previously a shareholder
          of the Company, and provided the Company with an option to acquire
          Craig's remaining equity in the Company. The Recapitalization was
          funded through an offering of $165.0 million of 11% Senior Notes due
          2001 (the "11% Notes") which are listed and traded on the American
          Stock Exchange.

          Effective March 8, 1996, pursuant to options available to the Company,
          the Company exercised its right to convert all of its outstanding
          shares of Common Stock (previously held by Craig) into 693,650 shares
          of its Series B Preferred Stock. The Series B Preferred Stock had a
          redemption value of approximately $69.4 million and paid dividends at
          the rate of 10.5% per annum. In August 1997, the Company redeemed all
          of the outstanding shares of its Series B Preferred Stock for $69.4
          million plus accrued and unpaid dividends.

          In July 1997, the Company issued $100 million of 9% Senior
          Subordinated Notes due 2004 (the "9% Notes") under Rule 144A of the
          Securities Act of 1933. Proceeds from the issuance of the 9% Notes
          were used as follows (a) $69.4 million to redeem the Series B
          Preferred Stock, (b) $4.6 million to pay accrued dividends due from
          the Series B Preferred Stock, (c) $4.9 million to obtain consents from
          the holders of the Company's 11% Senior Notes due 2001 to permit the
          issue of the 9% Notes, (d) $2.0 million to La Cadena for financial
          advise relating to the transaction, and (e) $3.4 million for fees and
          expenses of the transaction. The remaining proceeds from the issuance
          of the 9% Notes were used for general corporate purposes, including
          capital expenditures. The 9% Notes are also listed and traded on the
          American Stock Exchange.

          OWNERSHIP OF THE COMPANY

          Effective August 1997, La Cadena became the sole shareholder of the
          Company and holds all of the shares of the Company's Class A Common
          Stock which are entitled to 1.1 votes per share. La Cadena Investments
          is a California General Partnership whose partners include Jack H.
          Brown, Chairman of the Board, President and Chief Executive Officer of
          the Company and other members of senior management of the Company.
          Jack H. Brown has a majority interest in La Cadena and is the managing
          general partner with the power to vote the shares of the Company held
          by La Cadena.

                                       10

<PAGE>   11

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          RESULTS OF OPERATIONS

          The following table sets forth certain income statement components
          expressed as a percent of sales for the thirteen weeks and twenty-six
          weeks ended March 30, 1997 and March 29, 1998.

<TABLE>
<CAPTION>
                                                        Thirteen Weeks            Twenty-Six Weeks
                                                     -------------------       ---------------------
                                                      1997         1998         1997           1998
                                                     ------       ------       ------         ------
<S>                                                  <C>          <C>          <C>            <C>    
          Sales                                      100.00%      100.00%      100.00%        100.00%
          Gross profit                                22.64        23.76        22.96          23.28
          Operating expenses:
              Selling, general and
                  administrative expense              19.02        20.47        19.33          20.04
              Depreciation and amortization             .76          .90          .76            .87
              Consulting fees                           .09            -          .09              -
          Operating profits                            2.77         2.39         2.78           2.37
          Interest income                               .12          .14          .12            .15
          Interest expense                            (1.15)       (1.78)       (1.15)         (1.76)
          Equity in (loss) from
              unconsolidated affiliate                 (.03)        (.26)        (.07)          (.25)
          Other income (loss) - (net)                     -            -            -            .01
          Earnings before income taxes                 1.71%         .49%        1.68%           .52%
</TABLE>

          Total sales for the thirteen weeks ended March 29, 1998 decreased 2.0%
          and amounted to $422.8 million compared to $431.4 million for the like
          period in 1997. Total sales for the twenty-six weeks year to date
          ended March 29, 1998 decreased 1.3% and amounted to $853.8 million
          compared to $864.8 million for the same period in 1997. Sales for
          1998, when compared to 1997, were negatively impacted by the timing of
          the Easter holiday, which was in the second quarter of 1997, but in
          the third quarter of 1998. Additionally, the decrease in sales in the
          first and second quarters of 1998 compared to the like periods of 1997
          was partially due to competitor new store openings and the
          introduction of competitor reward card programs. Comparable like store
          sales (like store sales as adjusted for the timing of the Easter
          holiday and the impact of the new store opening on surrounding like
          stores) for the second quarter of fiscal 1998 decreased 1.6% as
          compared to a decrease of 1.4% in the first quarter of fiscal 1998.
          Like store sales decreased 3.1% for the quarter and decreased 2.3% for
          the year to date period. The Company operated 112 supermarkets at
          March 29, 1998 and 110 supermarkets at March 30, 1997.

          Gross profits for the thirteen weeks ended March 29, 1998, amounted to
          $100.5 million or 23.76% of sales compared to $97.7 million or 22.64%
          of sales in the same period of the prior year. During 1998, the
          Company continued to introduce higher gross margin products into its
          supermarkets, such as prepackaged gourmet vegetables and fresh cut
          flowers. For the twenty-six week year to date period, gross profits
          increased to $198.8 million or 23.28% of sales compared to $198.5
          million or 22.96% of sales in the prior year. The increase in gross
          profits for the year to date period is due to the introduction of
          higher gross margin products, such as prepackaged gourmet vegetables
          and fresh cut flowers and a decrease in competitive activity when
          compared to the prior year.


                                       11

<PAGE>   12

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          RESULTS OF OPERATIONS (CONTD.)

          Operating expenses include selling, general and administrative
          expenses, depreciation and amortization expenses and consulting fees.
          For the thirteen weeks ended March 29, 1998, selling, general and
          administrative expenses amounted to $86.6 million or 20.47% of sales
          compared to $82.1 million or 19.02% of sales for the like period of
          the prior year. For the year to date period, selling, general and
          administrative expenses amounted to $171.1 million or 20.04% of sales
          compared to $167.2 million or 19.33% of sales for the like period of
          the prior year. The increase in selling, general and administrative
          expenses in 1998 when compared to 1997 is due to the costs and
          expenses incurred to operate two additional supermarkets which were
          opened in the 1998 year to date period, increased labor costs due to
          contractual wage rate increases in collective bargaining agreements
          and increased advertising expenses. Late in the second quarter of
          fiscal 1998, the Company invested approximately $1.0 million in
          additional advertising expenses in response to the introduction of
          competitor reward card programs and to re-affirm the Company's
          strategy of Everyday Low Price leadership in its primary marketing
          areas.

          Depreciation and amortization expenses amounted to $3.8 million and
          $7.4 million for the second quarter and year to date periods ended
          March 29, 1998, respectively. Depreciation and amortization expense
          amounted to $3.3 million and $6.6 million for the quarter and year to
          date periods of the prior year. Depreciation and amortization includes
          amortization of a prepaid five-year covenant not to compete between
          the Company and Craig which became effective as of March 8, 1994.

          Effective March 8, 1994, and in conjunction with the Recapitalization
          Transaction, the Company entered into a consulting agreement with
          Craig Corporation whereby the Company was required to pay Craig
          Corporation $375,000 per quarter for up to five years. The agreement
          to make consulting payments to Craig was terminated at the election of
          the Company, in August 1997. Consulting fees expense amounted to
          $375,000 and $750,000 for the second quarter and year to date periods
          in fiscal 1997.

          Operating profits for the second quarter of 1998 amounted to $10.1
          million or 2.39% of sales, compared to $12.0 million or 2.77% of sales
          in the second quarter of 1997. Operating profits for the twenty-six
          weeks year to date ended March 29, 1998, amounted to $20.2 million or
          2.37% of sales, compared to $24.1 million or 2.78% of sales for the
          like period in 1997.

          Interest expense amounted to $7.5 million for the second quarter of
          1998 compared to $5.0 million for the second quarter of fiscal 1997.
          For the year to date periods of 1998 and 1997, interest expense
          amounted to $15.0 million and $10.0 million, respectively. Interest
          expense in the second quarter includes amortization of $691,000 and
          $295,000, respectively, for 1998 and 1997 from fees and expenses
          incurred to acquire debt. Year to date amortization of fees and
          expenses incurred to acquire debt was $1,391,000 in 1998 and $594,000
          in 1997. The increase in interest expense in fiscal 1998


                                       12

<PAGE>   13

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          RESULTS OF OPERATIONS (CONTD.)

          when compared to fiscal 1997, is due to the interest paid or accrued
          on the Company's 9% Notes which were issued in July 1997.

          The increase in the Company's equity in loss from unconsolidated
          affiliate in the second quarter and year to date of fiscal 1998 was
          due to increases in expenses such as depreciation and rent expenses
          associated with a move in April 1998, to a new fluid milk processing
          facility located in City of Industry, California. Additionally, sales
          and gross profits at Santee Dairies LLC ("Santee") decreased in 1998
          due to a reduction of by-product bulk sales, such as cream, to
          unrelated third parties. Santee constructed a new fluid milk and dairy
          products processing facility in City of Industry. Santee vacated the
          Los Angeles facility on April 30, 1998 and occupied the new facility
          which is located in City of Industry, California.

          Income before income taxes amounted to $2.1 million and $7.4 million
          for the second quarters of 1998 and 1997, respectively, and amounted
          to $4.4 million and $14.5 million for the year to date periods of 1998
          and 1997, respectively.

          Net income for the second quarters of 1998 and 1997 amounted to $1.2
          million or .29% of sales and $4.4 million or 1.01% of sales,
          respectively, and for the year to date periods for 1998 and 1997,
          amounted to $2.6 million or .30% of sales and $8.5 million or .99% of
          sales, respectively.

          LIQUIDITY AND CAPITAL RESOURCES

          The Company historically has funded its daily cash flow requirements
          through funds provided by operations and through borrowings from
          short-term revolving credit facilities. The Company's short-term Bank
          Credit Agreement is between a bank and Stater Bros. Markets, a wholly
          owned subsidiary of the Company and consists of revolving credit
          facilities for working capital purposes of $15.0 million, all of which
          was available at March 29, 1998, and a $25.0 million standby letter of
          credit facility maintained pursuant to its workers' compensation and
          general liability self-insurance requirements. The Bank Credit
          Agreement expires on June 1, 1998.

          Working capital amounted to $87.2 million at March 29, 1998 and $92.0
          million at September 28, 1997, and the Company's current ratios were
          1.82:1, and 1.81:1, respectively. Fluctuations in working capital and
          current ratios are not unusual in the industry.

          The net cash used by operating activities for the twenty-six weeks
          ended March 29, 1998 amounted to $.5 million and consisted of
          reductions in accounts payable, increases in inventories, other assets
          and prepaid expenses, and was net of a decrease in receivables. The
          increase in losses associated with Santee Dairies was partially due to
          adverse effects of El Nino weather conditions which has delayed
          completion of the new facility.

          Net cash used by operating activities for the twenty-six weeks ended
          March 30 , 1997 amounted to $3.8 million and consisted of reductions
          in accounts


                                       13

<PAGE>   14

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)

          payable net of decreases in inventories and the deferred tax benefits
          arising from the October 1996 sale and leaseback transaction. As of
          September 29, 1996, the Company had increased its inventory and
          related accounts payable in anticipation of the implementation of the
          Company's 60th Anniversary Marketing Program in the first quarter of
          fiscal 1997. Accordingly, as of March 30, 1997, the Company's
          investment in inventories and related accounts payable are reflected
          at more traditional balances. The increase in the deferred tax benefit
          of $2.1 million was due primarily to the timing difference between tax
          and book requirements for recognizing the gain and resulting tax
          liability from the October 1996 sale and leaseback transaction.

          Net cash used by investing activities for the twenty-six weeks ended
          March 29, 1998, amounted to $15.0 million, compared to net cash
          provided by investing activities of $3.8 million for the same period
          of fiscal 1997. The difference in net cash used by or provided by
          investing activities between the comparable periods is due to the
          Company's capital expenditures during such periods, net of proceeds
          from asset dispositions and the Company's additional investment in
          Santee Dairies LLC. Capital expenditures for the twenty-six week
          periods amounted to $15.3 million in 1998 compared to $7.2 million in
          the like period of 1997. During the twenty-six weeks ended March 29,
          1998, the Company opened two new 43,000 square foot supermarkets, one
          in Laguna Hills, California and one in Yucaipa, California.
          Additionally, the Company remodeled four supermarkets.

          In October 1996 (fiscal 1997), the Company completed a sale and
          leaseback transaction with an unrelated third party for four of the
          Company's supermarkets. The net proceeds from the sale of the four
          supermarkets amounted to approximately $16.0 million, which
          approximated fair market value. The Company entered into leases for
          the four supermarkets with initial terms of 20 years and with options
          available to the Company which extend the lease terms up to an
          additional 20 years. The Company believes the rents due under the
          leases approximate fair market rents. The gains from the sale of the
          supermarkets were approximately $2.5 million and were deferred and
          will be amortized into income over the initial term of the leases.

          In November 1996, for approximately $200,000, the Company increased
          its ownership in Santee Dairies, Inc. to 50%. Additionally, during the
          first quarter of fiscal 1997, the Company increased its investment in
          Santee Dairies, Inc. by approximately $4.8 million. Hughes Family
          Markets ("Hughes"), located in Irwindale, California, retained a 50%
          ownership in Santee Dairies, Inc. Both the Company and Hughes
          subsequently exchanged all of the Common Stock of Santee Dairies, Inc.
          for equal interests in Santee Dairies Limited Liability Company.
          Santee Dairies, Inc. is a wholly owned subsidiary of Santee Dairies
          LLC. Santee Dairies, Inc. operated a fluid milk processing plant in
          Los Angeles, California and constructed a new fluid milk and other
          fluid dairy products processing plant in City of Industry, California.
          Mr. Jack H. Brown, Chairman of the Board, President and Chief
          Executive Officer of Stater Bros. Markets also serves as Chairman of
          the Board and


                                       14

<PAGE>   15

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)

          Chief Executive Officer of Santee. Santee provides the Company's
          supermarkets with a significant amount of high quality fluid milk and
          other dairy products.

          Net cash used by financing activities amounted to $627,000 and $4.2
          million for the first twenty-six weeks of fiscal 1998 and 1997,
          respectively, and consisted of payments on the Company's capitalized
          lease obligations and the accretion or payment of dividends on the
          Company's Series B Preferred Stock. In August 1997, the Company
          redeemed all of the outstanding shares of its Series B Preferred Stock
          for $69.4 million plus accrued and unpaid dividends.

          The Company is subject to certain covenants associated with its 11%
          Senior Notes due 2001, its 9% Senior Subordinated Notes due 2004, and
          covenants included in the Bank Credit Agreement between a bank and
          Stater Bros. Markets, a wholly owned subsidiary of the Company. As of
          March 29, 1998, the Company was in compliance with all such
          convenants. However, there can be no assurance that the Company will
          be able to achieve the expected operating results or implement the
          capital expenditure strategy upon which future compliance with such
          covenants is based.

           THE BANK FACILITIES

          Stater Bros. Markets, the Company's operating subsidiary, and Bank of
          America National Trust and Savings Association (the "Bank") entered
          into a Credit Agreement in March 1994, as amended and effective June
          1, 1996, whereby the Bank provides Stater Bros. Markets with a
          revolving operating line of credit (the "Operating Facility") with a
          maximum availability of $15.0 million which was available at March 29,
          1998 and a revolving letter of credit facility (the "LC Facility")
          with a maximum availability of $25.0 million (collectively, the "Bank
          Facilities"). As of March 29, 1998, approximately $15.5 million of the
          LC Facility, all of which was available to the Company. The Bank
          Credit Agreement expires on June 1, 1998. The Company intends to renew
          or replace its Bank Credit Agreement with a facility with terms and
          conditions at least as favorable as the existing Bank Credit
          Agreement.

          The Bank Facilities also contain certain financial and other covenants
          applicable to Stater Bros. Markets, including without limitation,
          requirements to (i) maintain a minimum current ratio of at least
          1.20:1; (ii) maintain minimum tangible net worth plus debt
          subordinated to the Bank (as defined) of at least $145.0 million;
          (iii) maintain a ratio of total liabilities to tangible net worth plus
          debt subordinated to the Bank of not in excess of 1.30:1; (iv)
          maintain a minimum fixed charge coverage ratio (as defined) of at
          least 1.10:1 for each consecutive four fiscal quarters beginning with
          the four fiscal quarters ending on Stater Bros. Markets' 1996 fiscal
          year end; (v) limit the sale of assets; (vi) prohibit additional
          indebtedness except for normal trade credit and indebtedness secured
          only by real property constructed or acquired within the prior twelve
          months; (vii) prohibit additional liens except for liens for
          indebtedness secured by real property pursuant to clause (v); (viii)
          prohibit the


                                       15

<PAGE>   16

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)

           THE BANK FACILITIES (CONTD.)

          acquisition of other business entities; (ix) restrict the payment of
          dividends (as discussed below); (x) prohibit changes of ownership;
          (xi) prohibit the liquidation, consolidation or merger of the
          business; and (xii) repay all advances outstanding under the Operating
          Facility and not draw any new advances for at least 5 calendar days
          each month.

          As of March 29, 1998, for purposes of the Bank Facilities, Stater
          Bros. Markets was in compliance with all restrictive covenants and had
          (i) a current ratio of 1.88:1, (ii) tangible net worth and debt
          subordinated to the Bank of $224.2 million; (iii) a ratio of total
          liabilities to tangible net worth and debt subordinated to the Bank of
          0.52:1 and (iv) a fixed charge coverage ratio (as defined in the Bank
          Facilities) of 1.86:1. If for any reason Stater Bros. Markets is
          unable to comply with the terms of the Bank Facilities, including the
          covenants contained therein, such noncompliance would result in an
          event of default under the Bank Facilities, and could result in
          acceleration of the payment of indebtedness then outstanding under the
          Bank Facilities or, in certain situations, the prohibition of payments
          of dividends or advances to the Company. In addition, no amendment,
          waiver or supplement may be made to the Indenture without the prior
          written consent of the Bank if such amendment, waiver or supplement
          adversely affects the rights of the Bank as lender to Stater Bros.
          Markets.

          The financial and operational covenants contained in the Bank
          Facilities significantly limit Stater Bros. Markets' ability to pay
          dividends and make loans or advances to the Company, the primary
          source of anticipated cash for the Company, and could limit the
          Company's ability to respond to changing business and economic
          conditions, and to finance future operations or capital needs
          including the Company's ability to achieve its plans to remodel and
          expand existing supermarkets and open new supermarkets.

          The Company is also subject to certain covenants associated with its
          11% Senior Notes due 2001 and its 9% Senior Subordinated Notes due
          2004. As of March 29, 1998, the Company was in compliance with all
          such covenants. However, there can be no assurance that the Company
          will be able to achieve the expected operating results or implement
          the capital expenditure strategy upon which future compliance with
          such covenants is based.

           THE REDEMPTION OF SERIES B PREFERRED STOCK

          Effective March 8, 1996, the Company exercised its option to convert
          the Company's 50,000 shares of Common Stock held by Craig Corporation
          into 693,650 shares of the Company's Series B Preferred Stock. The
          Series B Preferred Stock was redeemed by the Company, in August 1997,
          for $69.4 million plus accrued and unpaid dividends. Funds used to
          redeem the Series B Preferred Stock were provided by the July 1997
          issue of $100 million of 9% Senior Subordinated Notes due 2004.


                                       16

<PAGE>   17

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)

           THE REDEMPTION OF SERIES B PREFERRED STOCK (CONTD.)

          The 9% Notes are due in 2004 and are general unsecured obligations of
          the Company, subordinated in right of payment to the 11% Senior Notes
          and all other present and future Senior Indebtedness of the Company,
          including the Company's obligations under the revolving credit
          agreement and effectively subordinated to all indebtedness and other
          obligations of the subsidiaries of the Company. Interest on the 9%
          Notes is payable semi-annually in arrears on January 1 and July 1 of
          each year. The proceeds from the issuance of the 9% Notes were used
          (approximately) as follows; (a) $69.4 million to redeem all of the
          outstanding shares of the Company's Series B Preferred Stock, (b) $4.6
          million to pay accrued dividends on the Series B Preferred Stock, (c)
          $4.9 million to obtain the consent from the holders of the Company's
          11% Notes to permit the issue of the 9% Notes, (d) $2.0 million to La
          Cadena for financial advisory fee relating to the transaction, and (e)
          $3.4 million for fees and expenses of the transaction. The remaining
          proceeds from the issuance of the 9% Notes were used for general
          corporate purposes, including capital expenditures. The 9% Notes are
          also listed and trade on the American Stock Exchange.

           LABOR RELATIONS

          The Company and other major supermarket employers in Southern
          California negotiated a four-year contract, beginning October 1995,
          with the United Food and Commercial Workers Union. The Company's
          collective bargaining agreement with the International Brotherhood of
          Teamsters was renewed in 1994 and expires in September 1998.
          Management believes it has good relations with its employees.

          RECENT ACCOUNTING STANDARDS

          The Financial Accounting Standards Board has issued Statement of
          Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share";
          No. 130, "Reporting on Comprehensive Income"; and No. 131,
          "Disclosures about Segments of an Enterprise and Related Information",
          all of which were adopted by the Company at the beginning of its
          fiscal year ending on September 27, 1998 (fiscal 1998). The Company
          believes that the adoption of SFAS No. 128, No. 130 and No. 131 will
          not have material effect on its financial position or its results of
          operations in fiscal 1998.

          CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE
          PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

          Certain statements contained in this report are forward looking
          statements. Such forward looking statements are subject to risks,
          uncertainties and other factors which could cause actual results to
          differ materially from future results expressed or implied. Potential
          uncertainties and risks include, but are not limited to, changes in
          the economic environment in the Company's market areas and changes in
          the competitive environment. Due to risks and uncertainties, actual
          results may differ from any future performance discussed in the
          Company's filings with the Securities and Exchange Commission.

                                       17


<PAGE>   18



                           STATER BROS. HOLDINGS INC.
                                 MARCH 29, 1998


PART II - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

          Various legal actions and claims are pending against the Company in
          the ordinary course of business. In the opinion of management and its
          general legal counsel, the ultimate resolution of such pending routine
          legal actions and claims will not have a material adverse effect on
          the Company's consolidated financial position.

          For a description of legal proceedings, please refer to the footnote
          entitled "Legal Proceedings" contained in the Notes to Consolidated
          Financial Statements section of the Company's Annual Report on Form
          10-K for the fiscal year ended September 28, 1997.

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

               Exhibits are as follows:

<TABLE>
<CAPTION>
                      EXHIBIT NO.                DESCRIPTION
                      -----------                -----------
                      <S>                        <C>
                          11                     Calculation of Earnings Per Common Share

                          27                     Financial Data Schedule

                          --------------------------------------------------------------
                          Copies of Exhibits listed herein can be obtained by writing and requesting such
                             Exhibits from: Corporate Secretary, P. O. Box 150, Colton, California 92324.
</TABLE>

          (b)  Reports on Form 8-K

               None



                                       18

<PAGE>   19

                           STATER BROS. HOLDINGS INC.

                                   Signatures

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



           Date:  May 11, 1998           /s/ Jack H. Brown
                                         ----------------------------------
                                         Jack H. Brown
                                         Chairman of the Board, President,
                                         and Chief Executive Officer



           Date:  May 11, 1998           /s/ Dennis N. Beal
                                         ----------------------------------
                                         Dennis N. Beal
                                         Senior Vice President, Finance and
                                         Chief Financial Officer
                                         (Chief Accounting Officer)





                                       19