<PAGE>
                                       
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM 10-QA

  [X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934
               For the quarter period ended April 30, 1997

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

                                       
                        Commission File Number 0-22289
                        Wherehouse Entertainment, Inc.
            (Exact name of registrant as specified in its charter)

                                   Delaware
                      (State or other jurisdiction of
                       incorporation or organization)
                                       
                                  95-4608339
                  (I.R.S. Employer Identification Number)
                                       
                             19701 Hamilton Avenue
                       Torrance, California  90502-1334
                       (Address Of principal executive
                         offices including ZIP code)
                                       
                                (310) 538-2314
           (Registrant's telephone number, including area code)
                                       
       Securities registered pursuant to Section 12 (b) of the Act: None
                                       
       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 
registrants were 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 whether the registrant has filed all documents 
and reports required to be filed by Section 12, 13 or 15(d) of the Securities 
Exchange Act of 1934 subsequent to the distribution of securities under a 
plan confirmed by a court.  Yes  [ X ]    No  [   ]

     As of April 30, 1997, 10,257,808 shares of the registrant's common stock 
were issued and outstanding and 907,839 additional shares are expected to be 
issued pursuant to the bankruptcy plan of reorganization discussed in Item 1 
below.


<PAGE>


The Registrant's Form 10-Q for the quarter ended April 30, 1997, is being 
amended to read as follows:                              
                                       
                                     INDEX
                                       
                         WHEREHOUSE ENTERTAINMENT, INC.

                                                                         Page
                                                                         ----
FORWARD LOOKING STATEMENTS                                                 3

Part I.   FINANCIAL INFORMATION

      Item 1.  Financial Statements

               Condensed Balance Sheets -
               April 30, 1997 (Unaudited) and January 31, 1997             4

               Condensed Statements of Operations -
               Three Months Ended April 30, 1997 (New Wherehouse)
               and 1996 (Old Wherehouse) (Unaudited)                       5

               Condensed Statements of Cash Flows -
               Three Months Ended April 30, 1997 (New Wherehouse) and   
               1996 (Old Wherehouse) (Unaudited)                           6

               Notes to Condensed Financial Statements                     7

      Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operation               10

Part II.  OTHER INFORMATION

      Item 1.  Legal Proceedings                                          14

      Item 2.  Changes in Securities                                      14

      Item 3.  Defaults Upon Senior Securities                            14

      Item 4.  Submission of Matters to a Vote of Security Holders        15

      Item 5.  Other Information                                          15

      Item 6.  Exhibits and Reports on Form 8-K                           15

SIGNATURES                                                                16

                                       2

<PAGE>

                          FORWARD-LOOKING STATEMENTS

      This Quarterly Report on Form 10-Q includes certain statements that may 
be deemed to be "forward-looking statements" within the meaning of the 
Private Securities Litigation Reform Act of 1995.  The Sections of this 
Report containing such forward-looking statements include "Management's 
Discussion and Analysis of Financial Condition and Results of Operation," 
under Item 2 of Part I below.  Statements in this Report which address 
activities, events or developments that the registrant expects or anticipates 
will or may occur in the future, including such things as the future issuance 
of shares, future capital expenditures (including the amount and nature 
thereof), expansion and other developments and technological trends of 
industry segments in which the registrant is active, business strategies, 
growth of the registrant's and its competitors' business and operations and 
other such matters are forward-looking statements.  Although the registrant 
believes the expectations expressed in such forward-looking statements are 
based on reasonable assumptions within the bounds of its knowledge of its 
business, a number of factors could cause actual results to differ materially 
from those expressed in any forward-looking statements, whether oral or 
written, made by or on behalf of the registrant.

      The registrant's operations are subject to factors outside its control. 
Any one, or a combination, of these factors could materially affect the 
results of the registrant's operations.  These factors include: (a) changes 
in levels of competition from current competitors and potential new 
competition from both retail stores and alternative methods or channels of 
distribution such as electronic and telephone shopping services and mail 
order; (b) loss of a significant vendor or prolonged disruption of product 
supply; (c) the presence or absence of popular new releases and products in 
the product categories the registrant represents; (d) changes in levels of 
consumer spending, especially during seasonally significant periods; (e) 
changes in the Federal and state income tax rules and regulations or 
interpretations of existing legislation; (f) changes in the general economic 
conditions in the United States, and in particular the eight major markets 
served by the registrant, including, but not limited to consumer sentiment 
about the economy in general; (g) changes in availability or terms of working 
capital financing from vendors and lending institutions; (h) adverse results 
in significant litigation matters; and (i) the ability to attract and retain 
key personnel.  The foregoing should not be construed as an exhaustive list 
of all factors which could cause actual results to differ materially from 
those expressed in forward-looking statements made by the registrant.  
Forward-looking statements made by or on behalf of the registrant are based 
on a knowledge of its business and the environment in which it operates, but 
because of the factors listed above, actual results may differ from those 
anticipated results described in those forward-looking statements.  
Consequently, all of the forward-looking statements made are qualified by 
these cautionary statements and there can be no assurance that the actual 
results or developments anticipated by the registrant will be realized or, 
even if substantially realized, that they will have the expected consequences 
to or effects on the registrant or its business or operations.

                                       3

<PAGE>

ITEM 1
                                    PART 1

                             FINANCIAL INFORMATION

                       WHEREHOUSE ENTERTAINMENT, INC.
                          CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION> 
                                                              April 30,        January 31,
                                                                1997               1997
                                                            -----------        ------------
                                                            (Unaudited)
ASSETS
<S>                                                        <C>                  <C>
Current Assets
   Cash                                                     $  18,492,000       $  6,178,000
   Receivables                                                  1,222,000          1,932,000
   Prepaid inventory deposits                                     294,000          4,486,000
   Merchandise inventory                                       72,527,000         75,800,000
   Other current assets                                         1,659,000          2,259,000
   Rental  inventory, net (Note 5)                              8,015,000          9,686,000
                                                             ------------       ------------
           Total current assets                               102,209,000        100,341,000
                                                  
Equipment and improvements, net                                20,377,000         21,337,000
Reorganization value in excess of amounts     
  allocable to identifiable assets, net                         9,481,000          9,724,000
Other assets                                                      330,000            340,000
                                                             ------------       ------------
           Total assets                                    $  132,397,000     $  131,742,000
                                                             ------------       ------------
                                                             ------------       ------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
   Accounts payable and accrued expenses                   $   40,311,000      $  40,168,000
   Current maturities of capital lease obligations
     and long-term debt                                           530,000            729,000
                                                             ------------       ------------
           Total current liabilities                           40,841,000         40,897,000
                                                             ------------       ------------
   Capital leases obligations and long-term debt                  707,000            722,000
   Notes payable                                                3,980,000          3,980,000
   Other long-term liabilities                                  3,105,000          2,000,000
                                                             ------------       ------------
Shareholders' equity
   Common stock, $.01 par value, 24,000,000
     authorized, 10,257,808 issued and outstanding
     at April 30, 1997 and January 31, 1997, respectively         103,000            103,000
   Additional paid-in capital                                  89,380,000         89,380,000
   Retained earnings                                             (286,000)           -----
   Notes receivable                                            (5,433,000)        (5,340,000)
                                                             ------------       ------------
           Total shareholders' equity                          83,764,000         84,143,000
                                                             ------------       ------------
           Total liabilities and shareholders' equity      $  132,397,000     $  131,742,000
                                                             ------------       ------------
                                                             ------------       ------------

</TABLE>
               See accompanying notes to Condensed Financial Statements

                                       4

<PAGE>

                                       

                         WHEREHOUSE ENTERTAINMENT, INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                       New                    Old
                                                                    Wherehouse             Wherehouse
                                                                   -------------          --------------
                                                                       Three                 Three
                                                                    Months Ended          Months Ended
                                                                   April 30, 1997        April 30, 1996
                                                                   --------------        --------------
<S>                                                               <C>                    <C> 
Sales                                                              $  59,929,000          $  69,372,000
Rental revenue                                                        13,254,000             18,118,000
                                                                    -------------          --------------
                                                                      73,183,000             87,490,000

Cost of sales                                                         38,281,000             44,971,000
Costs of rentals, including amortization  (Note 5)                     7,831,000              7,047,000
                                                                    -------------          --------------
                                                                      46,112,000             52,018,000 
                                                                           
Selling, general and administrative expenses                          25,979,000             33,248,000
Depreciation and amortization                                          1,616,000              3,469,000
                                                                    -------------          --------------

Income (loss) from operations                                           (524,000)            (1,245,000)
                                                                          
Interest expense                                                         111,000                189,000
Interest income                                                         (189,000)               (52,000)
                                                                    -------------          --------------

Income (loss) before reorganization items & income taxes                (446,000)            (1,382,000)

Reorganization items
                  Professional fees                                       -----                 853,000
                  Provision for store closing costs                       -----                  31,000
                                                                    -------------          --------------
                                                                          -----                 884,000
                                                                    -------------          --------------
Income (loss) before income taxes                                       (446,000)             (2,266,000)
                                                                    -------------          --------------
Provision (benefit) for income taxes                                    (160,000)                 -----
                                                                    -------------          --------------
Net income (loss)                                                    $  (286,000)          $  (2,266,000)
                                                                    -------------          --------------
                                                                    -------------          --------------
Net income (loss) per share                                          $     (0.03)
                                                                    -------------
                                                                    -------------
Weighted average shares outstanding                                   10,297,808
                                                                    -------------
                                                                    -------------

</TABLE>
              See accompanying notes to Condensed Financial Statements

                                       5


<PAGE>

                          WHEREHOUSE ENTERTAINMENT, INC.
                         CONDENSED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                      New                    Old
                                                                   Wherehouse             Wherehouse
                                                                  -------------          --------------
                                                                      Three                 Three
                                                                   Months Ended          Months Ended
                                                                  April 30, 1997         April 30, 1996
                                                                  -------------          --------------
<S>                                                              <C>                    <C> 
OPERATING ACTIVITIES:
  Net income (loss)                                               $  (286,000)          $  (2,266,000)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Depreciation and amortization                                   1,617,000               9,388,000
    Rental amortization, included in cost of rental                 6,544,000
    Book value of rental inventory dispositions,
      included in cost of rental                                    1,397,000               1,127,000

    Changes in operating assets and liabilities:
      Receivables                                                     618,000                (191,000)
      Prepaid inventory deposits                                    4,192,000               6,413,000
      Merchandise inventory                                         3,273,000              (1,564,000)
      Other current assets                                            599,000                 241,000
      Accounts payable, accrued expenses and
        other liabilities                                           1,388,000              (1,555,000)
      Liabilities subject to compromise                                -----               (2,228,000)
      Rental inventory purchases                                   (6,271,000)             (9,028,000)
                                                                --------------            ------------

         Net cash provided by operating activities                 13,071,000                 337,000


INVESTING ACTIVITIES:
  Acquisition of property, equipment and improvements                (553,000)               (392,000)
  Decrease (increase) in other assets and intangibles                  10,000                (397,000)
                                                                --------------            ------------
         Net cash used in investing activities                       (543,000)               (789,000)

FINANCING ACTIVITIES:
   Principal payments on capital lease obligations
     and long-term debt                                              (214,000)               (209,000)
                                                                --------------            ------------
         Net cash used in financing activities                       (214,000)               (209,000)

Net increase (decrease) in cash                                    12,314,000                (661,000)

Cash at beginning of the period                                     6,178,000               7,353,000
                                                                --------------            ------------
Cash at end of the period                                       $  18,492,000            $  6,692,000
                                                                --------------            ------------
                                                                --------------            ------------

Supplemental disclosures of cash flow information:
   Cash paid during the period for:
      Interest                                                 $      26,000            $    152,000
      Income taxes                                                    -----                   2,000
      Reorganization items                                         7,260,000                  66,000

</TABLE>

         See accompanying notes to Condensed Financial Statements

                                       6

<PAGE>

                            WHEREHOUSE ENTERTAINMENT, INC.

                       NOTES TO CONDENSED FINANCIAL STATEMENTS

                                     (UNAUDITED)

1.   BASIS OF PRESENTATION

     The accompanying unaudited condensed financial statements have been 
prepared in accordance with generally accepted accounting principles for 
interim financial information and with the instructions to Form 10-Q and 
Article 10 of Regulation S-X.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting 
principles for complete financial statements.  In the opinion of management, 
all adjustments (consisting of normal recurring accruals) considered 
necessary for a fair presentation have been included.  Operating results for 
the three month period ended April 30, 1997 are not necessarily indicative of 
the results that may be expected for the year ended January 31, 1998.  
Certain reclassifications of balances have been made to the 1996 amounts to 
conform to the 1997 presentation.  For further information, refer to the 
financial statements and footnotes thereto included in the Company's annual 
report on Form 10-K for the year ended January 31, 1997.  

2.   REORGANIZATION UNDER CHAPTER 11

     The Company's Plan of Reorganization, (the "Plan") was confirmed by an 
order of the Bankruptcy Court entered on January 7, 1997.  The effective date 
of the Plan occurred on January 31, 1997.

     Pursuant to the Plan, Wherehouse Entertainment, Inc. (New Wherehouse) 
was incorporated on November 15, 1996, as WEI Acquisition Co.  On January 31, 
1997, New Wherehouse acquired (the Acquisition) substantially all the assets 
of Wherehouse Dissolution Co. (Old Wherehouse), and its parent company, WEI 
Holdings, Inc.,.  Prior to the Acquisition, Old Wherehouse was known as 
"Wherehouse Entertainment, Inc.," and after the Acquisition, Old Wherehouse 
changed its name to Wherehouse Dissolution Co.  After the Acquisition, New 
Wherehouse changed its name to Wherehouse Entertainment, Inc."  New 
Wherehouse and Old Wherehouse are collectively referred to as the Company or 
Wherehouse where the discussion relates to the continuing business operations 
of Old Wherehouse and New Wherehouse.

     Since the Plan Effective Date, the Bankruptcy Court has retained 
jurisdiction over certain claims and other matters relating to the Debtors' 
Bankruptcy estates, but the Company has been and is free to carry out its 
business without oversight by the Bankruptcy Court.

     For a summary of the Plan of Reorganization, reference is made to the 
Company's Annual Report on Form 10-K for the year ended January 31, 1997.

                                       7

<PAGE>


3.   FRESH START REPORTING

     On January 31, 1997, the Company implemented the recommended accounting 
principles for entities emerging from Chapter 11 set forth in the American 
Institute of Certified Public Accountants Statement of Position 90-7 on 
Financial Reporting by Entities in Reorganization under the Bankruptcy Code 
(SOP 90-7).  This resulted in the use of fresh start reporting, since the 
reorganization value, as defined, was less than the total of all 
post-petition liabilities and pre-petition claims, and holders of voting 
shares immediately before confirmation of the Plan received less than fifty 
percent of the voting shares of the emerging entity.  Under this concept, all 
assets and liabilities were restated to reflect the reorganization value of 
the reorganized entity, which approximated its fair value at the date of 
reorganization.  In addition, the accumulated deficit of the Company was 
eliminated and its capital structure was recast in conformity with the Plan.  
As such, the accompanying Company balance sheet as of January 31, 1997, 
represents that of a successor company which, in effect, is a new entity with 
assets, liabilities and a capital structure having carrying values not 
comparable with prior periods and with no beginning retained earnings or 
deficit.  In addition, the Company selected certain accounting policies 
adopted at New Wherehouse's inception which are not consistent with those 
used by Old Wherehouse.  Accordingly, the results of operations of New 
Wherehouse may not be comparable to those of Old Wherehouse.

4.   REVOLVING CREDIT FACILITY

     Pursuant to the Plan, the Company entered into a loan and security 
agreement with Congress Financial Corporation (Western) (the Congress 
Facility), which provides a borrowing capacity of up to $30,000,000 with a 
letter of credit subfacility of $10,000,000, subject to borrowing base 
limitations based upon, among other things, the value of certain eligible 
merchandise inventory.  The Congress facility prohibits the Company from 
declaring or paying dividends on its classes of capital stock, including the 
common stock, in excess of an aggregate of $6 million, unless certain 
financial performance targets set forth in the Congress Facility are met.  As 
of April 30, 1997, there were no borrowings outstanding under the Congress 
Facility, although $700,000 of letters of credit were outstanding.

5.   RENTAL INVENTORY AMORTIZATION

     On January 31, 1997, the Company adopted an accelerated method of 
amortization which amortizes rental inventory using the straight-line method 
over a three-month period with a salvage value of $3.00.  The previous method 
amortized rental inventory over three years for video cassettes and two years 
for video games.  The new method generated higher rental amortization (and, 
therefore, lower gross profit) in the first quarter of the fiscal year ending 
January 31, 1998 as compared to the method used in the first quarter of the 
fiscal year ended January 31, 1997.

                                       8

<PAGE>


6.   RESTATEMENT OF QUARTERS

     The Company is amending this Form 10-Q for the period ended April 30, 
1997 to reflect adjustments to depreciation and amortization expense 
resulting principally from changes in the initial allocation of assets 
related to the Company's fresh start reporting.  These changes were based on 
analysis and appraisals received, by the Company, during the third quarter.

     The earnings impact on the first quarter of the fiscal year ending 
January 31, 1998 was as follows:

                                 THREE MONTHS ENDED
                                   APRIL 30, 1997
                                          

                                         Previously
                                          Reported               Restated
                                         ---------               --------

     Income (loss) from operations      $(1,430,000)             $(524,000)
     Net income (loss)                     (830,000)              (286,000)
     Net income (loss) per share        $      (.08)             $    (.03)


                                       9

<PAGE>
                                       
                        WHEREHOUSE ENTERTAINMENT, INC.

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


INTRODUCTION

     This discussion should be read in conjunction with the financial 
statements, related notes and Management's Discussion and Analysis of 
Financial Condition and Results of Operation contained in the Company's 
Annual Report on Form 10-K for the year ended January 31, 1997.

RESULTS OF OPERATIONS

FOR THE QUARTERS ENDED APRIL 30, 1997 AND APRIL 30, 1996

     Net revenues were $73.2 million and $87.5 million for the quarters ended 
April 30, 1997 and 1996, respectively.  The Company believes that the 
decrease of $14.3 million, or 16.4%, was principally due to the closing of 63 
stores during fiscal year 1997 and 7 stores during the first quarter of 
fiscal year 1998, as well as continued competitive and economic pressures in 
certain of the Company's markets.

     A summary of total net merchandise sales and rental revenues, by product 
category, is provided below:

                NET MERCHANDISE SALES AND RENTAL REVENUES
                         BY MERCHANDISE CATEGORY
                      (DOLLAR AMOUNTS IN MILLIONS)
                                                        Quarter Ended
                                                           April 30,
                                                      1997           1996 
                                                      -----         -----
Net Merchandise Sales:
     
     Music                                            $ 51.8       $ 58.8
     Other, principally sales of new video
        cassettes, video game software and hardware,
        General merchandise and ticket commissions.      8.1         10.6
                                                       -----        -----
          Total merchandise sales                     $ 59.9       $ 69.4

Videocassette and other rental revenue                  13.3         18.1
                                                       -----        -----
               Total revenues                         $ 73.2       $ 87.5
                                                       -----        -----
                                                       -----        -----

                                       10

<PAGE>

     The sale of pre-recorded music, new video cassettes, video game software 
and hardware and general merchandise continue to represent the greatest 
portion of the Company's revenues.  For the quarter ended April 30, 1997, net 
merchandise sales represented 81.9% of aggregate revenues.  On a same-store 
basis net merchandise sales increased by 0.7% during the quarter ended April 
30, 1997 as compared to the quarter ended April 30, 1996.  (It should be 
noted that February, 1996 had 29 days as compared to 28 days for February, 
1997.  After excluding the impact of the difference in days, net merchandise 
sales increased by 1.8% on a same-store basis.)  Net merchandise sales were 
$59.9 million versus $69.4 million for the quarters ended April 30, 1997 and 
April 30, 1996, respectively, representing an overall decrease of 13.6%.  The 
decrease of $13.6% was largely the result of the closure of 63 stores during 
fiscal year 1997.   

     Rental revenue includes the rental of videocassettes, video games and 
game players, audiocassette books, and laserdiscs; and sales of previously 
viewed videocassettes and previously played video games.  Approximately 189 
of the Company's stores currently offer rental products.  Rental revenue was 
$13.3 million versus $18.1 million during the quarters ended April 30, 1997 
and April 30,  1996, respectively, representing a decrease of $4.9 million or 
26.8%.  On a same-store basis rental revenue decreased approximately 17.0% as 
compared to the prior year.  After excluding the impact of the difference in 
days as mentioned in the above paragraph, rental revenue decreased by 16.1% 
on a same-store basis. The Company believes that the decrease in same-store 
rental revenue was attributable to continued competition and general 
softening in rental consumer spending nationwide.  During the quarter ended 
April 30, 1997, the Company decreased its purchases of video rental product 
by $2.8 million or 30.5% versus the same quarter of the prior year.

     Cost of sales decreased $6.7 million to $38.3 million for the quarter 
ended April 30, 1997 versus $45.0 million for the quarter ended April 30, 
1996, representing a decrease of 14.9%.  As a percentage of net merchandise 
sales, costs of sales decreased 0.9% to 63.9% during the quarter ended April 
30, 1997 versus 64.8% during the quarter ended April 30, 1996.  The 0.9% 
decrease in cost of sales as a percentage of net merchandise sales was 
principally due to decreases in the cost of merchandise inventory and higher 
prompt payment discounts.

     Cost of rentals, including amortization, increased to $7.8 million 
during the quarter ended April 30, 1997, an increase of $0.8 million or 
11.0%, versus $7.0 million during the quarter ended April 30, 1996.  As a 
percentage of rental revenue, cost of rentals increased to 59.1% during the 
quarter ended April 30, 1997 versus 38.9% during the quarter ended April 30, 
1996, representing an increase of 20.1%.  The 20.1% increase in cost of 
rentals is primarily due to the adoption by New Wherehouse of a more 
accelerated amortization method versus the method used by Old Wherehouse 
during the quarter ended April 30, 1996.  If Old Wherehouse had adopted this 
accelerated method of amortization as of January 31, 1996, cost of rentals 
during the quarter ended April 30, 1996 would have been higher (and gross 
profit lower) by approximately $2.7 million.

     Merchandise sales as a percentage of aggregate net revenues increased 
2.6% to 81.9% during the quarter ended April 30, 1997 versus 79.3% during the 
quarter ended April 30, 1996.

                                       11

<PAGE>


     Several major retail chains, including Best Buy, Blockbuster 
Entertainment and Hollywood Video have increased their retail store presence 
in the Company's markets.  This trend may continue and it is anticipated the 
Company may, in future periods, experience increased competition and that 
such competition may result in continued pressure on revenues and gross 
profit margins.

     Selling, general and administrative expenses, were $26.0 million versus 
$33.2 million for the quarters ended April 30, 1997 and April 30, 1996, 
respectively, a decrease of $7.2 million or 21.9%.  As a percentage of net 
revenues, selling, general and administrative expenses, were 35.5% during the 
quarter ended April 30, 1997 versus 38.0% during the quarter ended April 30, 
1996, representing a decrease of 2.5%.  The 2.5% decrease was principally due 
to reductions in rent and occupancy costs, and to a lesser extent, 
advertising expense.  During the quarter ended April 30, 1997, rent and 
occupancy costs decreased in absolute dollars by $3.8 million versus the 
quarter ended April 30, 1996. 

     Loss from operations for April 30, 1997 was $0.5 million as compared to 
$1.2 million for April 30, 1996, an improvement of $0.7 million.  As 
mentioned previously, the Company adopted an accelerated method of 
amortization for rental inventory at January 31, 1997.  If the Company would 
have adopted the accelerated method at January 31, 1996, loss from operations 
for the quarter ended April 30, 1996 would have been $3.9 million.  Excluding 
the impact of the change in the method of amortization of rental inventory, 
loss from operations for the period ended April 30, 1997 was lower than that 
experienced for the period ended April 30, 1996.  The improvement in loss 
from operations was primarily the result of the closure of 63 underperforming 
stores during fiscal year 1997, reductions in rent and occupancy costs 
through landlord concessions, and decreases in other selling, general and 
administrative expenses that occurred as a result of the closure of stores.

     Reorganization items include costs related to the bankruptcy case 
including professional fees for legal and financial advisors, costs related 
to the closing of stores, and the estimated cost associated with the 
rejection of certain executory contracts.  For the quarter ended April 30, 
1996, the Company reported total reorganization items of $0.9 million which 
was primarily comprised of professional fees.  The Company does not expect to 
record any reorganization items during fiscal year ended January 31, 1998.

     The Company recorded a tax benefit of $0.2 million for quarter ended 
April 30, 1997 but did not record any tax benefit for quarter ended April 30, 
1996. Should Wherehouse realize pre-tax income in future quarters it will be 
subject to Federal and State tax.  The benefit represents an effective tax 
rate of 40% which the Company estimates will be its effective tax rate for 
the year ended January 31, 1998.

     The Company is currently under audit by the California Franchise Tax 
Board ("FTB")  for tax years January 31, 1992, 1993 and 1994.  The Company 
believes that it has made adequate provision in the financial statements for 
this audit.

                                       12

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     During the quarter ended April 30, 1997, the Company's net cash provided 
by operating activities increased by $12.8 million to $13.1 million from $0.3 
million for the corresponding quarter of the prior fiscal year, due to 
decreases in merchandise inventory, lower purchases of rental inventory and 
other factors, offset by the change in prepaid inventory deposits.

     Cash used in investing activities decreased by $0.3 million to $0.5 
million during the quarter ended April 30, 1997 from $0.8 million during the 
quarter ended April 30, 1996, principally due to lower increases in other 
assets and intangibles offset by increased acquisitions of property, 
equipment and improvements. 

     Cash used in financing activities remained approximately the same for 
the quarter ended April 30, 1997 as compared to the quarter ended April 30, 
1996.

     While the Company believes that the current borrowing facility (see Note 
4 under Notes to Condensed Financial Statements) is adequate to support 
operations for the remainder of the current fiscal year, there can be no 
assurance as to the effect which any future changes in the Company's 
operations may have on its liquidity.

     As of April 30, 1997 the Company has not signed any lease commitments to 
open new stores during the next twelve months.

SEASONALITY

     The Company's business is seasonal, and revenues and operating income 
are highest during the fourth quarter.  Bank borrowings have historically 
been highest in October and November due to cumulative capital expenditures 
for new stores and the building of inventory for the holiday season.

     
INFLATION

     The Company believes that, except for changes in the minimum wage 
mandated by the Federal government, inflation has not had a material effect 
on its operations and its internal and external sources of liquidity and 
working capital.  

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<PAGE>

                                     PART II

                                OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

     (I)  McMahan and Related Actions

          In January 1988, holders of approximately $17.0 million in 
principal amount of the Company's 6-1/4% Convertible Subordinated Debentures 
commenced an action entitled McMahan & Company, et al. v. Wherehouse 
Entertainment, Inc., et al., 88 Civ. 0321 (S.D.N.Y.).  This lawsuit, and a 
related lawsuit filed in January 1989 and consolidated with the McMahan 
lawsuit, alleged that the Company, six of its former directors, the former 
controlling shareholder of the Company and others, issued a prospectus in 
connection with the offering of the Convertible Debentures that violated 
Section 10(b) of the Securities Exchange Act of 1934. According to the 
plaintiffs, the prospectus failed to disclose that the Company's independent 
directors retained the right to approve any merger proposal, and thereby 
prevent any right of holders to redeem the Convertible Debentures from 
arising, whether or not such proposal was in the best interests of the 
Debentureholders.  Although all claims of the McMahan plaintiffs were 
discharged in the Wherehouse Plan of Reorganization for no consideration, 
Wherehouse and the other parties are attempting to resolve the litigation 
procedurally, which should have no adverse impact on the Company.  On 
December 23, 1996, the parties entered into a Settlement Agreement pursuant 
to which the lawsuits have been settled.  This settlement, which was approved 
by the court on June 5, 1997, provides for the release of all claims against 
the Company and the other defendants in exchange for a payment of $7 million 
to plaintiffs.  Under the terms of the Settlement Agreement, none of the 
settlement consideration will be paid by the Company. 

     (ii) Other.

          The Company is a party to various other claims, legal actions and 
companies arising in the ordinary course of its business.  In the opinion of 
management, all such matters are without merit or involve such moments that 
unfavorable disposition will not have a material impact on the financial 
position an results of operations of the Company.

ITEM 2.   CHANGES IN SECURITIES

          None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None

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<PAGE>

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

          Not applicable.


ITEM 5.   OTHER INFORMATION

          In its Annual Report on Form 10-K, filed on May 16, 1997, the 
Company erroneously stated that Mr. Gallen, a Director of the Company, had 
worked for Cerberus Partners, L.P., during the period of February 1993 
through February 1994.  Mr. Gallen spent this period on the premises of 
Feinberg Management, L.P. ("FMLP"), under the tutelage of Stephen Feinberg, 
the principal of FMLP, observing, training and learning investment 
techniques, procedures and philosophies.  Mr. Gallen received no compensation 
from FMLP.

     
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

          27.0 Financial Data Schedule

          (b)  Current Reports on Form 8-K

               None.


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<PAGE>


                                       
                                  SIGNATURES
                                          
Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report on Form 10-Q to be signed on its 
behalf by the undersigned thereunto duly authorized.

                         WHEREHOUSE ENTERTAINMENT, INC.


Date:      December 30, 1997       /s/ Antonio C. Alvarez 
                                   ----------------------------------
                                   ANTONIO C. ALVAREZ
                                   Chairman of the Board and Chief
                                   Executive Officer, and Director
                                   (Principal Executive Officer)

                                   
Date:     December 30, 1997        /s/ Robert S. Kelleher             
                                   ----------------------------------
                                   ROBERT S. KELLEHER
                                   Senior Vice President and Chief Financial 
                                   Officer
                                   (Principal Financial and Accounting 
                                   Officer)  



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