UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                  FORM 10-K

             [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended January 30, 1999

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

                      Commission File Number:  33-86690
                                               --------

                         STAR MARKETS COMPANY, INC.
                         --------------------------
           (Exact name of registrant as specified in its charter)

      MASSACHUSETTS                                04-3243710
      -------------                                ----------
(State or other jurisdiction of      (I.R.S. Employer Identification Number)
 incorporation or organization)

      625 MT. AUBURN STREET, CAMBRIDGE, MA              02138
      ------------------------------------              -----
         (Address of principal executive offices)    (Zip Code)

                               (617) 528-2550
                               --------------
            (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 and (2) has been subject to such 
filing requirements for the past 90 days. Yes  X   No
                                              ---    ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. [ X ]

Aggregate market value of the voting stock held by nonaffiliates of the 
registrant at April 20, 1999:  None

Number of shares of the issuer's common stock, outstanding as of April 20, 
1999:  5,000 shares

Documents incorporated by reference:  None

                                   PART I

Item 1. Business
----------------

Throughout this report, the "Company" or "Star" refers to Star Markets 
Company, Inc., which acquired the assets and business of the Star Market 
Company operating division of Jewel Food Stores, Inc. ("Predecessor" or 
"Star Markets"), a wholly owned subsidiary of American Stores Company (the 
"Parent" or "ASC"). Star Markets Company, Inc., a Massachusetts corporation, 
is a wholly-owned subsidiary of Star Markets Holdings, Inc., ("Holdings"), a 
Massachusetts corporation. Both the Company and Holdings were formed for 
purposes of the acquisition.

Historical financial information of Predecessor is presented as if it 
existed as a separate entity during the periods presented.

The Company is a leading regional food retailer, with 53 stores (at the end 
of fiscal 1998) located in Eastern Massachusetts. Thirty-three of the 
Company's 53 stores are located inside Route 128, an area which includes 
many of the most densely populated and affluent communities in the 
metropolitan Boston area. The Company also operates a wholesale food 
business serving locations in New England and New York. The Company employs 
approximately 10,000  people.

On September 8, 1994, the Company acquired the business and assets of Star 
Markets from ASC (the "Acquisition"). The Company was formed to acquire Star 
Markets on behalf of affiliates of INVESTCORP SA ("Investcorp"), management 
and certain other investors.

Pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement") by 
and among the Company, Holdings, and J Sainsbury plc ("Sainsbury") dated as 
of November 25, 1998, Sainsbury has agreed to acquire all of the issued and 
outstanding voting securities of Holdings. Pursuant to the Stock Purchase 
Agreement, all other shares of capital stock of Holdings will also be either 
purchased or redeemed.  The value of the transaction is approximately $490.0 
million (including assumed debt), subject to adjustment.  The transaction 
has been approved by the boards of directors of the Company, Holdings and 
Sainsbury.  Consummation of the transaction is subject to customary 
conditions including regulatory approvals.

Store formats
-------------

The Company currently operates three food retailing formats: superstores, 
conventional stores, and Wild Harvest stores.

Superstores
-----------

The Company's 24 superstores offer a wider range of goods and services than 
its conventional stores. In addition to traditional supermarket offerings, 
the Company's superstores contain most of the following specialty service 
areas: full-service bakeries, delicatessens with prepared foods, self-
service salad bars, floral departments, pharmacies, "Peticulars" pet food 
and accessories departments, "Wild Harvest" natural foods departments, and 
full-service kitchens offering a variety of freshly prepared meal 
selections. Prepared foods include store-cooked meats and poultry, salads 
and baked goods.

During 1998, the Company opened one new superstore and remodeled one 
existing superstore.

Conventional Stores
-------------------

The Company currently operates 25 conventional stores which offer a wide 
selection of national brands and private label products as well as high-
quality produce, meat, seafood, and a select line of general merchandise. 
Conventional stores typically contain one or more specialty service 
departments, such as floral, seafood, bakery or delicatessen. 

Wild Harvest Stores
-------------------

The Company's four Wild Harvest stores offer an extensive selection of 
natural foods, natural meats and seafood, bulk foods, and fresh fruits and 
vegetables, including certified organic, pesticide-free, conventional and 
locally grown produce. Wild Harvest stores also offer: "Wild Juices," a 
California style juice bar; "Harvest Grain," a scratch bakery where bakers 
make their own dough from unbleached and unbromated flours; a Granola 
Factory where 12 different granolas are made on-site and baked fresh daily; 
"Harvest Table," a selection of healthy, prepared foods for time-starved 
consumers; and a Wellness Department, which offers a complete assortment of 
natural vitamins, nutritional supplements, herbal and homeopathic remedies 
and natural personal care products. In addition to the items mentioned 
above, Wild Harvest stores feature a selection of the most popular grocery 
items sold in traditional supermarkets, allowing consumers one shopping 
destination. 

Marketing
---------

The Company's marketing strategy emphasizes its long-standing reputation for 
quality perishable goods and superior customer service. The Company's 
advertising also highlights its broad selection of national brand and 
private label merchandise via weekly circulars and through radio and 
television commercials. The Wild Harvest advertising programs emphasize 
fresh affordable natural foods as well as the convenience of one-stop 
shopping. The Company was the first food retailer in the metropolitan Boston 
area to introduce a card-based marketing and merchandising program designed 
to increase customer loyalty. The Star Advantage Card offers customers 
promotional benefits and eliminates the need to clip Star circular coupons. 
Wild Harvest stores offer the Wild Card with benefits similar to the Star 
Advantage Card.  During 1998, the Company continued to utilize both cards, 
which also track customers' purchasing data, to target specific customers 
for certain promotional events.

Information Systems
-------------------

The Company's management information systems and point-of-sale scanning 
technology reduce labor costs attributable to product pricing and customer 
check-out, and provide management with information that facilitates 
purchasing, receiving and management of inventory and accounts payable. The 
Company has point-of-sale scanning technology in all of its stores. All 
stores use electronic systems for employee time and attendance records. The 
Company believes that its information systems enable management to operate 
efficiently in product procurement, store delivery scheduling, inventory 
management and pricing accuracy.  In conjunction with the Acquisition, the 
Company developed a plan to upgrade and/or replace a significant portion of 
its information systems architecture to state-of-the-art technology. During 
1998, the Company continued the implementation of new core application 
software within its purchasing and distribution systems.  The project 
included the implementation of new buying, merchandising and inventory 
management systems for dairy operations, non-perishable categories, 
distribution systems and a new pricing system.

Distribution
------------

The Company operates a warehouse and distribution complex in Norwood, 
Massachusetts that supplies both the Company's retail and wholesale 
operations with dry grocery, dairy and perishable products. This facility 
provides approximately 14.5 million cubic feet of storage space, or capacity 
for approximately 1.6 million cases of product. Management believes this 
facility has sufficient capacity to support the Company's growth plans over 
the next several years. The Norwood complex is conveniently located within 
the Company's market area and provides efficient distribution of product 
with a fleet of 30 tractors and 380 trailers. The Norwood complex also 
includes a corrugated paper recycling facility that reclaims packaging 
materials from the stores and prepares it for sale to processors of 
corrugated paper products.

Competition
-----------

The retail food industry is highly competitive. It is characterized by 
narrow profit margins and, accordingly, earnings are dependent on high sales 
volume and operating efficiency. The Company's competitors include regional 
and local supermarket chains and natural food stores, independent grocery 
stores, specialty food stores, warehouse club stores, other mass 
merchandisers, drug stores and convenience stores. Supermarket chains 
generally compete on the basis of location, quality of products, service, 
price, product variety and store condition. The Company's principal 
competitor is Stop & Shop. The Company also competes in certain locations 
with B.J.'s Wholesale Club, Bread & Circus, Costco, Demoulas, Johnnie's 
Foodmaster, Roche Bros., Shaw's, Wal-Mart and others.

Merchandising Programs
----------------------

The Company's merchandising programs are designed to increase gross margins 
and optimize product assortment. The key elements of the Company's 
merchandising strategy are to (i) provide its superstores with a wider range 
of non-grocery items, such as home office products, kitchen and bath items, 
books and magazines and other general merchandise, (ii) introduce high-
quality prepared foods departments, (iii) provide an expanded selection of 
high-quality perishable products from its existing in-store bakeries, 
seafood, floral, and produce departments, (iv) expand the Company's 
offerings of natural, organic and ethnic foods, and (v) establish specialty 
departments, such as juice bars, prepared foods, "Peticulars" pet food and 
accessories departments, and "Wild Harvest" natural food departments, where 
space permits. In addition, the Company is implementing strategies to 
increase its sales of private label products. The Company intends to 
increase sales of private label products by offering a wider range of 
private label products and improving the marketing and merchandising of such 
products. Further, the Company has exclusive distribution rights within its 
trade area for the President's Choice brand of products, a line of high-
quality packaged products.

Wholesale Operations
--------------------

The Company's wholesale operations principally involve the distribution of 
grocery and perishable products to locations in New England and New York.  
Seven of these locations are contractually allowed to operate under the 
"Star" name, provided that the customer complies with certain operating 
covenants intended to protect the value of the "Star" trade name by insuring 
that the customer's stores are clean and well-run. The existing contracts 
are generally terminable by the Company on 30 days notice. In addition to 
providing product distribution, the Company also offers marketing and 
advertising programs to wholesale customers for an incremental charge. The 
Company does not generally provide financing to its wholesale customers, 
other than payment terms for product purchases.

Item 2. Properties
------------------

At the end of fiscal 1998, the Company owned five stores and its office in 
Cambridge, Massachusetts. In addition, as of the end of fiscal 1998, the 
Company owned one property held for development located in Dorchester, 
Massachusetts. The Company has granted mortgages on all of its real estate 
to the lenders under its Senior Credit Facility to secure the Company's 
obligations thereunder. The Company completed a sale-leaseback for two of 
its operating properties and its warehouse and distribution complex during 
1998.  In February 1999, subsequent to fiscal 1998, the Company completed 
the sale of one of its operating properties and plans to close the location 
in June 1999.

At the end of fiscal 1998, the Company leased 48 stores throughout the 
metropolitan Boston area and Cape Cod, Massachusetts. The leases for the 48 
stores have an average life of approximately 34 years until final 
expiration.

Item 3. Legal Proceedings
-------------------------

From time to time, the Company has been involved in various legal 
proceedings. Management believes that all of such litigation is routine in 
nature and incidental to the conduct of the Company's business, and that 
none of such litigation, if determined adversely to the Company, would have 
a material adverse effect on the financial condition or results of 
operations of the Company.

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

No matters were submitted to a vote of security holders during the 13-week 
period ended January 30, 1999.

                                   PART II

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

There is no established public trading market for the Company's common 
equity. The authorized common stock of the Company consists of 10,000 shares 
of common stock, par value $.01 per share ("Common Stock"). At April 20, 
1999, there were 5,000 shares of Common Stock issued and outstanding, all of 
which are held of record by Holdings. All outstanding shares of Common Stock 
are pledged to secure the Company's obligations under its Senior Credit 
Facility and, pursuant to restrictions contained therein, the Company is not 
expected to be able to pay dividends on its Common Stock for the foreseeable 
future, other than certain limited dividends permitted under the Senior 
Credit Facility.

The Company's 13% Senior Subordinated Notes due 2004 (the "Subordinated 
Notes") were issued pursuant to an indenture (the "Indenture") containing 
certain covenants that also restrict the payment of dividends, the 
repurchase of capital stock and the making of other Restricted Payments (as 
defined in the indenture), subject to certain exceptions similar to those 
contained in the Senior Credit Facility.

Item 6. Selected Financial Data
-------------------------------

The following table sets forth summary historical financial data of Star 
Markets and the Company for the five fiscal years ended January 30, 1999. 
For financial statement purposes, the Acquisition was accounted for as a 
purchase effective September 10, 1994. As a result, the Company has adopted 
a new basis of accounting that reflects estimated fair values for assets and 
liabilities at that date.

<TABLE>
<CAPTION>
                                    Predecessor(1)                                   The Company
                                    --------------------------------------------------------------------------------------------
                                                                         (53 Weeks)     (52 Weeks)     (52 Weeks)     (52 Weeks)
                                    32-Week Period    20-Week Period    Fiscal Year    Fiscal Year    Fiscal Year    Fiscal Year
                                       Ended             Ended             Ended       Ended          Ended             Ended
                                     September 10,      January 28,     February 3,    February 1,    January 31,    January 30,
                                         1994              1995            1996           1997           1998           1999
                                    --------------------------------------------------------------------------------------------
                                                                                (Dollars in thousands)
                                    --------------------------------------------------------------------------------------------

<S>                                 <C>               <C>               <C>            <C>            <C>            <C>
Operating Data:
Revenues
  Retail                            $  427,762        $  268,617        $  763,513     $  877,827     $  965,845     $1,002,616
  Wholesale                             69,227            39,687            90,991         76,704         68,343         61,622
                                    --------------------------------------------------------------------------------------------
Total revenues                         496,989           308,304           854,504        954,531      1,034,188      1,064,237

Gross profit
  Retail                               104,249            65,293           191,418        234,514        267,350        281,623
  Wholesale                              4,058             2,230             6,273          4,927          5,040          4,773
                                    --------------------------------------------------------------------------------------------
Total gross profit                     108,307            67,523           197,691        239,441        272,390        286,396

Depreciation and amortization            8,295             7,218            19,326         22,178         23,792         24,837
Operating income                        15,266             6,384            19,642         19,949         21,890         24,098
Interest expense                            27             9,781            28,382         28,894         30,177         29,486
Income (loss) before
 extraordinary loss                      8,592            (3,507)           (8,890)        (9,336)        (8,565)        (5,677)
Extraordinary loss                                        (2,094)
Net income (loss)                        8,592            (5,601)           (8,890)        (9,336)        (8,565)        (5,677)

Store Data (Period End):
Number of stores                            33                33                38             48             52             53
Total square footage                 1,096,544         1,119,990         1,639,015      2,034,603      2,240,966      2,290,307
Selling square footage                 842,146           859,773         1,144,486      1,419,013      1,567,976      1,602,830

Balance Sheet Data (Period End):
Total assets                        $  208,084        $  421,355        $  425,503     $  453,270     $  452,542     $  412,971
Long-term debt                                           240,057           257,400        271,827        276,327        259,037
Redeemable preferred stock                                10,037            10,134         10,230         10,326         10,421

<FN>
<F1>  For financial statement purposes, the Acquisition was accounted for as 
      a purchase effective September 10, 1994.  The acquisition resulted in 
      a new basis of accounting reflecting estimated fair values for assets 
      and liabilities at that date.  Accordingly, the financial statements 
      for the periods subsequent to September 10, 1994, are presented on the 
      Company's new basis of accounting, while the financial statements at 
      September 10, 1994 and the prior period are presented on the 
      Predecessor's historical cost basis of accounting.  The assets and 
      business were acquired for an aggregate purchase price of $293.3 
      million, exclusive of related fees and expenses.
</FN>
</TABLE>


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

Fiscal 1998 and Fiscal 1997

Revenues
--------

Revenues from retail operations for the 52-week period ended January 30, 
1999 increased 3.8% to $1,002.6 million from $965.8 million for the 52-week 
period ended January 31, 1998. The increase in revenues from retail 
operations was due to an increase in the number of stores operated. For 
stores open more than one year ("same store sales"), revenues decreased by 
0.6% from the prior period. Revenues from wholesale operations for the 52-
week period ended January 30, 1999 declined 9.8% to $61.6 million from $68.3 
million for the 52-week period ended January 31, 1998.

Gross Profit
------------

Gross profit from retail operations for the 52-week period ended January 30, 
1999 increased 5.3% to $281.6 million from $267.3 million for the 52-week 
period ended January 31, 1998 primarily due to the increase in revenues. 
Gross profit as a percentage of revenues for retail operations for the 52-
week period ended January 30, 1999 increased to  28.1% from 27.7% for the 
52-week period ended January 31, 1998. The increase in gross profit as a 
percentage of revenues was primarily attributable to improvements in 
perishable margins and reduced distribution costs. Gross profit from 
wholesale operations for the 52-week period ended January 30, 1999 decreased 
5.3% to $4.8 million from $5.0 million for the 52-week period ended January 
31, 1998. Gross profit as a percentage of revenues for wholesale operations 
for the 52-week period ended January 30, 1999 increased to 7.7% from 7.4% 
for the 52-week period ended January 31, 1998, primarily due to improvement 
in product margins and reduced distribution costs.

Operating and Administrative Expenses
-------------------------------------

Operating and administrative expenses for the 52-week period ended January 
30, 1999 increased by 4.7% to $237.5 million from $226.7 million for the 52-
week period ended January 31, 1998. Operating and administrative expenses as 
a percentage of total revenues for the 52-week period ended January 30, 1999 
increased to 22.3% from  21.9% for the 52-week period ended January 31, 
1998. The increase in operating and administrative expenses as a percentage 
of total revenues was due to an increase in store labor attributable to new 
store formats with additional service intensive departments, an increase in 
rent associated with new locations and the sale-leaseback of three 
properties in March 1998 and an impairment loss resulting from the intended 
sale of an operating location. The increases were offset in part by reduced 
self-insurance expenses for worker's compensation and general liability 
resulting from improvements in claims management practices, and an 
adjustment to reduce the reserves recorded at the time of the Acquisition 
for worker's  compensation and general liability. 

Depreciation and Amortization
-----------------------------

Depreciation and amortization expense, which includes the amortization of 
goodwill, was 2.3% of total revenues for the 52-week period ended January 
30, 1999 and the 52-week period ended January 31, 1998.

Non-Operating Expenses
----------------------

Interest expense for the 52-week period ended January 30, 1999 decreased to 
$29.5 million from $30.2 million for the 52-week period ended January 31, 
1998. The Company recorded state income tax expense of $0.4 million for the 
52-week period ended January 30, 1999 and the 52-week period ended January 
31, 1998. The Company did not record a federal or state tax benefit 
associated with the losses recorded in the 52-week period ended January 30, 
1999 and the 52-week period ended January 31, 1998.

Fiscal 1997 and Fiscal 1996

Revenues
--------

Revenues from retail operations for the 52-week period ended January 31, 
1998 increased 10.0% to $965.8 million from $877.8 million for the 52-week 
period ended February 1, 1997. The increase in revenues from retail 
operations was due to both an increase in the number of stores operated and 
to increased revenues from existing stores. For stores open more than one 
year ("same store sales"), revenues increased by 0.5% from the prior period. 
Revenues from wholesale operations for the 52-week period ended January 31, 
1998 declined 10.9% to $68.3 million from $76.7 million for the 52-week 
period ended February 1, 1997. The decrease in wholesale revenues was 
primarily due to the loss of certain wholesale accounts which ceased 
operations.

Gross Profit
------------

Gross profit from retail operations for the 52-week period ended January 31, 
1998 increased 14.0% to $267.3 million from $234.5 million for the 52-week 
period ended February 1, 1997 primarily due to the increase in revenues. 
Gross profit as a percentage of revenues for retail operations for the 52-
week period ended January 31, 1998 increased to  27.7% from 26.7% for the 
52-week period ended February 1, 1997. The increase in gross profit as a 
percentage of revenues was primarily attributable to improvements in 
perishable margins and leveraged distribution costs. Gross profit from 
wholesale operations for the 52-week period ended January 31, 1998 increased 
2.3% to $5.0 million from $4.9 million for the 52-week period ended February 
1, 1997. Gross profit as a percentage of revenues for wholesale operations 
for the 52-week period ended January 31, 1998 increased to 7.4% from 6.4% 
for the 52-week period ended February 1, 1997, primarily due to an increase 
in non-perishable gross margin rates, as well as a decrease in distribution 
costs.

Operating and Administrative Expenses
-------------------------------------

Operating and administrative expenses for the 52-week period ended January 
31, 1998 increased by 14.9% to $226.7 million from $197.3 million for the 
52-week period ended February 1, 1997. Operating and administrative expenses 
as a percentage of total revenues for the 52-week period ended January 31, 
1998 increased to 21.9% from 20.7% for the 52-week period ended February 1, 
1997. The increase in operating and administrative expenses as a percentage 
of total revenues was due to an increase in store labor attributable to new 
store formats with additional service intensive departments and an increase 
in rent including both rent for new locations and rent associated with the 
February, 1997 sale-leaseback of one operating location.

Depreciation and Amortization
-----------------------------

Depreciation and amortization expense, which includes the amortization of 
goodwill, was 2.3% of total revenues for the 52-week period ended January 
31, 1998 and the 52-week period ended February 1, 1997.

Non-Operating Expenses
----------------------

Interest expense for the 52-week period ended January 31, 1998 increased to 
$30.2 million from $28.9 million for the 52-week period ended February 1, 
1997. The Company recorded state income tax expense of $0.4 million for the 
52-week period ended January 31, 1998 and $0.4 million for the 52-week 
period ended February 1, 1997. The Company did not record a federal or state 
tax benefit associated with the losses recorded in the 52-week period ended 
January 31, 1998 and the 52-week period ended February 1, 1997.

Liquidity and Capital Resources
-------------------------------

The Company's liquidity needs arise primarily from debt service on the 
indebtedness incurred in connection with the Acquisition, the funding of the 
Company's store acquisitions, capital expenditures and working capital 
requirements.

The Company's total indebtedness as of April 20, 1999 was $254.9 million, 
which includes $110.0 million of Subordinated Notes due November 1, 2004, 
$142.7 million due under the Senior Credit Facility, and a $2.2 million note 
payable. The Senior Credit Facility provides for a $108.0 million term loan 
facility and a $75.0 million revolving credit facility. As of April 20, 
1999, the Company had $7.2 million drawn under the letter of credit 
facilities of the Senior Credit Facility and $53.8 million drawn under the 
revolving credit portion of the Senior Credit Facility leaving an aggregate 
of $14.0 million of unused revolving credit availability under the Senior 
Credit Facility. The Company paid $19.6 million in aggregate principal 
amount in 1998. The Company will pay $1.1 million in aggregate principal 
amount in 1999.

Capital expenditures for fiscal 1998 were $20.6 million as compared to $41.1 
million in fiscal 1997 and $54.8 million in fiscal 1996. The Company's 
capital expenditures have been funded through cash flow from operations, 
proceeds from sale-leaseback transactions, proceeds from the sale of 
nonoperating properties, and borrowings under the revolving portion of its 
Senior Credit Facility. In February 1999, the Company completed the sale of 
one of its operating properties for a gross proceeds of $5.4 million.  $5.1 
million of such amount will be used to pay down the revolving credit 
facility and $0.3 million to pay transaction expenses. 

The Company currently anticipates making capital expenditures of 
approximately $14.7 million in fiscal 1999. Capital expenditures will 
include remodeling two existing stores and converting two conventional 
stores to  superstores. Planned capital expenditures for fiscal 1999 include 
approximately $4.4 million for maintenance, systems, and distribution.

The Company believes that funds generated from operations, proceeds from 
additional sale-leaseback transactions, sale of non-operating assets, and 
borrowings under the Senior Credit Facility will provide sufficient 
resources through fiscal 1999 to permit it to meet its working capital 
requirements, to make all interest and principal payments due and payable on 
the Subordinated Notes and its existing indebtedness and to fund planned 
capital expenditures. However, if the Company's cash flow and capital 
resources are insufficient to fund its debt service obligations, the Company 
may be required to reduce or delay planned capital expenditures, sell 
assets, obtain additional equity capital or restructure its debt.

Borrowings under the Senior Credit Facility are subject to variable interest 
rates, which could cause the Company to be vulnerable to future increases in 
prevailing interest rates. To the extent that the Company is required to 
dedicate materially greater amounts of its cash flow from operations and 
other capital resources to pay interest on its outstanding indebtedness as a 
result of future interest rate increases, it will reduce the funds available 
for other purposes.

Year 2000
---------

During 1997, the Company began a review process to address the Year 2000 
issue that encompasses the Company's operating and administrative areas.  
Information technology professionals are working to identify and resolve 
Year 2000 issues in a timely and effective manner.  The Company's executive 
management monitors the status of the Year 2000 remediation plans as they 
relate to internally used software, computer hardware and use of computer 
applications.  The Company will also be implementing notification of Year 
2000 compliance requirements to key vendors.

While management has not specifically determined the costs of its Year 2000 
efforts, the total cost to obtain Year 2000 compliance is not expected to 
exceed $1.5 million.

While the Company believes it is taking steps to assure Year 2000 
compliance, it is also dependent on key vendor compliance.  If the 
implementation is not completed on a timely basis, or key vendors fail to 
resolve all significant Year 2000 issues in a timely and effective manner, 
the Year 2000 issue could have a material adverse impact on the Company.  
The Company is in the process of establishing contingency plans that would 
minimize the impact to the Company in the event that the Company or its 
major vendors fail to implement a Year 2000 solution on a timely basis.  The 
cost of implementing the contingency plans, while not specifically 
determined, is not expected to be material.

Item 8. Consolidated Financial Statements and Supplementary Data
----------------------------------------------------------------

The consolidated financial statements and supplementary data are included 
under Item 14 of this Report.

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

None.

                                  Part III

Item 10. Directors and Executive Officers of the Registrant
-----------------------------------------------------------

The following table sets forth the name, age and position of each current 
director and executive officer of the Company. Each director of the Company 
will hold office until the next annual meeting of shareholders of the 
Company or until his or her successor has been elected and qualified. 
Officers of the Company are elected by the Board of Directors of the Company 
and serve at the discretion of the Board of Directors. 

<TABLE>
<CAPTION>
Name                     Age    Positions
----                     ---    ---------

<S>                       <C>   <S>
Henry J. Nasella          52    Chairman of the Board of Directors, 
                                 President and Chief Executive Officer
Edward Albertian          46    Executive Vice President, Operations and 
Chief Operating Officer
Carole O'Connor Gates     41    Executive Vice President, Marketing
                
Stephen R. Winslow        39    Senior Vice President, Finance
                
William P. Paul           52    Executive Vice President, Merchandising
</TABLE>


Henry J. Nasella became Chairman of the Board of Directors, President and 
Chief Executive Officer of the Company in September 1994 upon the 
consummation of the Acquisition. Prior to joining the Company, Mr. Nasella 
was Chief Executive Officer of Staples, the Office Superstore Division of 
Staples, Inc., a leading office products retailer, during 1993, and 
President of Staples, Inc. from 1988 through 1993. Mr. Nasella is also a 
director of Au Bon Pain Co., Inc.

Edward Albertian became Executive Vice President, Operations, and Chief 
Operating Officer in May 1996. He joined the Company in May 1995 as Senior 
Vice President, Operations. Prior to joining the Company, Mr. Albertian 
served as Senior Vice President, Eastern Operations for Staples, Inc. from 
1992.

Carole O'Connor Gates became Executive Vice President, Marketing in April 
1996. She joined the Company in November 1994 as Senior Vice President, 
Marketing. Prior to joining the Company, she served as Senior Vice 
President, Advertising of BayBank, Inc. from January 1990.

Stephen R. Winslow became Senior Vice President, Finance in October 1996.  
Prior to joining the Company, he served as Vice President, 
Finance/Controller, Contract and Commercial Division of Staples, Inc. from 
January 1996.  Mr. Winslow served as Vice President, Planning, Analysis and 
Reporting and Chief Accounting Officer from 1995, and Vice President, 
Planning and Analysis from 1993 for Staples, Inc.

William P. Paul became Executive Vice President, Merchandising in April 
1996.  He joined the Company in May 1995 as Senior Vice President, 
Merchandising.  Prior to joining the Company, he served as Vice President of 
Merchandising of Staples, International from February 1994 to May 1995, and 
Vice President of Merchandising of Staples, Inc. from September 1990 to 
February 1994.

Director Compensation
---------------------

The Company pays no remuneration to its employees for serving as directors. 
See "Management--Executive Compensation." There are no family relationships 
among any of the directors or executive officers.

Item 11. Executive Compensation
-------------------------------

The following table sets forth certain information concerning the 
compensation of the Company's Chief Executive Officer and the four other 
most highly compensated executive officers for fiscal years 1998, 1997 and 
1996.

                         Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                             Long Term
                                                                                            Compensation
                                                                                          ----------------
                                      Annual Compensation                                      Awards
                             --------------------------------------                       Number of Shares
   Name and Principal                                                   Other Annual         Underlying           All Other
        Position              Year      Salary(2)($)    Bonus(2)($)    Compensation($)    Options/SARs(#)     Compensation(3)($)
------------------------      ----      ------------    -----------    ---------------    ----------------    ------------------

<S>                          <C>          <C>             <C>                 <C>              <C>                  <C>
Henry J. Nasella             1998         325,000         390,000             0                     0               11,069
Chairman, President and      1997         320,833         148,129             0                     0                8,319
Chief Executive Officer      1996         300,000               0             0                     0               12,046
--------------------------------------------------------------------------------------------------------------------------

Edward Albertian             1998         270,833         130,000             0                19,587                8,116
Executive Vice President,    1997         220,833          88,333             0                     0                6,375
Operations and Chief         1996         197,583          63,238             0                   500                7,998
Operating Officer
--------------------------------------------------------------------------------------------------------------------------

Carole O'Connor Gates        1998         197,500          94,800             0                 8,764                6,113
Executive Vice President,    1997         182,500          73,000             0                     0                5,767
Marketing                    1996         168,333          51,667             0                     0                7,495
--------------------------------------------------------------------------------------------------------------------------

Stephen R. Winslow           1998         176,253          74,026             0                 2,860                4,781
Senior Vice President,       1997         168,334          58,917             0                     0                1,004
Finance                      1996(1)       46,667          56,000             0                 1,500                  118
--------------------------------------------------------------------------------------------------------------------------

William P. Paul              1998         166,000          79,680             0                     0                8,321
Executive Vice President,    1997         165,000          48,180             0                     0                6,659
Merchandising                1996         159,167          32,142             0                     0                8,381
--------------------------------------------------------------------------------------------------------------------------

<FN>
<F1>  Date on which employment commenced was October 15, 1996 for Mr. 
      Winslow.
<F2>  Represents amounts paid for the relevant fiscal year. Bonuses are 
      reported in the fiscal year earned and typically paid during the 
      following fiscal year.
<F3>  The compensation reported represents: amounts contributed by the 
      Company under the 401(k) Savings Plan and imputed income on the value 
      of Company provided term life insurance in excess of $50,000.
</FN>
</TABLE>


-     Company contributions under the 401(k) Savings Plan for fiscal 1998 
      were as follows: $5,735 for Mr. Nasella, $5,735 for Mr. Albertian, 
      $5,013 for Ms. O'Connor Gates, $4,151  for Mr. Winslow and $5,735 for 
      Mr. Paul. Imputed income on the value of Company provided term life 
      insurance in excess of $50,000 in fiscal 1998 was as follows: $5,334 
      for Mr. Nasella, $2,381 for Mr. Albertian, $1,100 for Ms. O'Connor 
      Gates, $630 for Mr. Winslow and $2,586 for Mr. Paul.

-     Company contributions under the 401(k) Savings Plan for fiscal 1997 
      were as follows: $5,100 for Mr. Nasella, $5,100 for Mr. Albertian, 
      $5,100 for Ms. O'Connor Gates, $397  for Mr. Winslow and $5,100 for 
      Mr. Paul. Imputed income on the value of Company provided term life 
      insurance in excess of $50,000 in fiscal 1997 was as follows: $3,219 
      for Mr. Nasella, $1,275 for Mr. Albertian, $667 for Ms. O'Connor 
      Gates, $607 for Mr. Winslow and $1,559 for Mr. Paul.

-     Company contributions under the 401(k) Savings Plan for fiscal 1996 
      were as follows: $5,458 for Mr. Nasella, $6,898 for Mr. Albertian, 
      $6,898 for Ms. O'Connor Gates, $0 for Mr. Winslow and $6,898 for Mr. 
      Paul.  Imputed income on the value of Company provided term life 
      insurance in excess of $50,000 in fiscal 1996 was as follows: $6,588 
      for Mr. Nasella, $1,100 for Mr. Albertian, $597 for Ms. O'Connor 
      Gates, $118  for Mr. Winslow and $1,483 for Mr. Paul.

Option Grants

The Company made stock option grants of 31,211 in respect of Class C Stock 
of Star Markets Holdings, Inc. ("Holdings") during the fiscal year ended 
January 30, 1999 to the executive officers named in the Summary Compensation 
Table.

Option Exercises and Holdings

The following table sets forth certain information related to stock options 
in respect of Class C Stock of Holdings for the fiscal year ended January 
30, 1999 for each of the executive officers named in the Summary 
Compensation Table; and the number and value of options held by each of 
these executives on January 30, 1999.

<TABLE>
<CAPTION>
                      Number of                     Number of Shares of
                       Shares                     Common Stock Underlying         Value of Unexercised In-
                       Common                      Unexercised Options at           The-Money Options at
                        Stock                         Fiscal Year End                Fiscal Year End(1)
                     Acquired on     Value      ----------------------------    ----------------------------
        Name          Exercise      Realized    Exercisable    Unexercisable    Exercisable    Unexercisable
        ----         -----------    --------    -----------    -------------    -----------    -------------

<S>                       <C>          <C>        <C>             <C>           <C>                 <C>
Henry J. Nasella          0            $0         45,744          30,495        $1,429,500          $0
Edward Albertian          0             0            823          23,378                 0           0
Carole O'Connor Gates     0             0          1,095          13,146                 0           0
Stephen R. Winslow        0             0              0           4,360                 0           0
William P. Paul           0             0            666           2,662                 0           0

<FN>
<F1>  Underlying shares are not publicly traded and are subject to 
      repurchase by Holdings under certain circumstances at the employee's 
      cost or at the then current value of the underlying share, as 
      determined by the Holding's Board of Directors upon the termination of 
      the employee's employment with the Company. Only those options granted 
      to Mr. Nasella at an exercise price of $37.50 per share are classified 
      as in-the-money for purposes of this table based on an estimated value 
      of such shares of $75.00 per share.
</FN>
</TABLE>


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

All of the Company's issued and outstanding capital stock is owned by 
Holdings. Class D Stock, par value $.01 per share, is the only class of 
Holdings' stock that currently possesses voting rights. At January 30, 1999 
there were 5,000 shares of Holdings' Class D Stock issued and outstanding. 
Members of the Company's management own 38,374 shares, and have the right to 
acquire an additional 54,764 shares subject to presently exercisable 
options, of Holdings' Class C Stock, par value $.01 per share, which stock 
has no voting rights except in certain limited circumstances. The following 
tables set forth the beneficial ownership of each class of issued and 
outstanding securities of Holdings by each director of the Company, each of 
the executive officers of the Company listed under "Management," the 
directors and executive officers of the Company as a group and each person 
who beneficially owns more than 5% of the outstanding shares of any class of 
voting securities of Holdings.

<TABLE>
<CAPTION>
                                            Number of        Voting
Class D Voting Stock:                       Shares(1)     Percentage(1)
---------------------                       ---------     -------------

<S>                                           <C>            <C>
INVESTCORP S.A.(2)(6)                         5,000          100.0%
37 rue Notre-Dame,
Luxembourg

SIPCO Limited(3)                              5,000          100.0%
P.O. Box 1111
West Wind Building
George Town, Grand Cayman
Cayman Islands

CIP Limited(4)(5)                             4,600           92.0%
P.O. Box 1111
West Wind Building
George Town, Grand Cayman
Cayman Islands

Ballet Limited(4)(5)                            460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Denary Limited(4)(5)                            460            9.2%
West Wind Building
George Town, Grand Cayman
Cayman Islands

Gleam Limited(4)(5)                             460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Highlands Limited(4)(5)                         460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Noble Limited(4)(5)                             460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Outrigger Limited(4)(5)                         460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Quill Limited(4)(5)                             460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Radial Limited(4)(5)                            460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Shoreline Limited(4)(5)                         460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

Zinnia Limited(4)(5)                            460            9.2%
P.O. Box 2197
West Wind Building
George Town, Grand Cayman
Cayman Islands

INVESTCORP Investment Equity Limited(6)         400            8.0%
P.O. Box 1111
West Wind Building 
George Town, Grand Cayman
Cayman Islands

<FN>
<F1>  As used in this table, beneficial ownership means the sole or shared 
      power to vote, or to direct the voting of a security, or the sole or 
      shared power to dispose, or direct the disposition of, a security.
<F2>  Investcorp does not directly own any stock in Holdings. The number of 
      shares shown as owned by Investcorp includes all of the shares owned 
      by INVESTCORP Investment Equity Limited (see (6) below). Investcorp 
      owns no stock in Ballet Limited, Denary Limited, Gleam Limited, 
      Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, 
      Radial Limited, Shoreline Limited, Zinnia Limited, or in the 
      beneficial owners of these entities. Investcorp may be deemed to share 
      beneficial ownership of the shares of voting stock held by these 
      entities because the entities have entered into revocable management 
      services or similar arrangements with an affiliate of Investcorp 
      pursuant to which each of such entities has granted such affiliate the 
      authority to direct the voting and disposition of the Holdings voting 
      stock owned by such entity for so long as such agreement is in effect. 
      Investcorp is a Luxembourg corporation.
<F3>  SIPCO Limited may be deemed to control Investcorp through its 
      ownership of a majority of a company's stock that indirectly owns a 
      majority of Investcorp's shares.
<F4>  CIP Limited ("CIP") owns no stock in Holdings. CIP owns less than 0.1%       
      of the stock in each of Ballet Limited, Denary Limited, Gleam Limited, 
      Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, 
      Radial Limited, Shoreline Limited and Zinnia Limited (see (5) below). 
      CIP may be deemed to share beneficial ownership of the shares of 
      voting stock of Holdings held by such entities because CIP acts as a 
      director of such entities and the ultimate beneficial shareholders of 
      each of those entities have granted CIP revocable proxies in companies 
      that own those entities' stock. None of the ultimate beneficial owners 
      of such entities beneficially owns individually more than 5% of 
      Holdings' voting stock.
<F5>  CIP, Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited, 
      Noble Limited, Outrigger Limited, Quill Limited, Radial Limited, 
      Shoreline Limited and Zinnia Limited each is a Cayman Islands 
      corporation.
<F6>  INVESTCORP Investment Equity Limited is a Cayman Islands corporation, 
      and a wholly-owned subsidiary of Investcorp.
</FN>

<CAPTION>
                                            Number of
Class C Non-Voting Stock:                   Shares(1)
-------------------------                   ---------

<S>                                         <C>
Henry J. Nasella                            72,411(2)
625 Mount Auburn Street
Cambridge, MA  02138

Edward Albertian                             1,423(3)
625 Mount Auburn Street
Cambridge, MA  02138

Carole O'Connor Gates                        1,735(4)
625 Mount Auburn Street
Cambridge, MA  02138

Stephen R. Winslow                             600
625 Mount Auburn Street
Cambridge, MA  02138

William P. Paul                              1,266(5)
625 Mount Auburn Street
Cambridge, MA  02138
                                            ------

All directors and executive officers 
of the Company as a group (5) persons       77,435
                                            ======

<FN>
<F1>  As used in this table, beneficial ownership means the sole or shared 
      power to vote, or direct the voting of a security, or the sole or 
      shared power to dispose, or direct the disposition of, a security. 
      Each of the persons listed is deemed to beneficially own shares 
      issuable upon the exercise of stock options that are currently 
      exercisable ("Presently Exercisable Options").
<F2>  Includes 45,744 shares subject to Presently Exercisable Options.
<F3>  Includes 823 shares subject to Presently Exercisable Options.
<F4>  Includes 1,095 shares subject to Presently Exercisable Options.
<F5>  Includes 666 shares subject to Presently Exercisable Options
</FN>
</TABLE>

Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------

In connection with the Acquisition, the Company entered into an agreement 
for management advisory and consulting services (the "Management Agreement") 
with International pursuant to which the Company agreed to pay International 
$750,000 per annum for a five-year term. At the closing of the Acquisition, 
the Company paid International approximately $2.3 million for the first 
three years in accordance with the terms of the Management Agreement, with 
the remaining two years due in quarterly installments.  Upon consummation of 
the transaction contemplated by the Stock Purchase Agreement, International 
and the Company shall terminate the Management Agreement by mutual written 
consent.

                                   PART IV

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

(a) 1.    The financial statements listed in the List of Financial 
          Statements on page F-2 are filed as part of this Annual Report on 
          Form 10-K.

(a) 2.    Financial Statement Schedules
          All schedules are omitted as the required information is 
          inapplicable or are presented in the financial statements or 
          related notes.

(a) 3.    List of Exhibits:

Exhibit 
Number    Description of Exhibits
------    -----------------------

3(a)      Amended and Restated Articles of Organization of the Company, 
          dated as of September 6, 1994 (filed as Exhibit 3(a) to the 
          Registration Statement (No. 33-86690) on Form S-4 (the 
          "Registration Statement") and incorporated herein by reference).

3(b)      By-laws of the Company (filed as Exhibit 3(b) to the Registration 
          Statement and incorporated herein by reference).

3(c)      Certificate of Designation relating to the Preferred Stock of the 
          Company, dated September 7, 1994 (filed as Exhibit 3(c) to the 
          Registration Statement and incorporated herein by reference).

4(a)      Indenture between the Company and State Street Bank and Trust 
          Company, as Trustee, dated as of November 1, 1994 (filed as 
          Exhibit 4(a) to the Registration Statement and incorporated herein 
          by reference).

4(b)      Exchange and Registration Rights Agreement among the Company, 
          Chemical Securities Inc. and BT Securities Corporation, dated 
          November 2, 1994 (filed as Exhibit 4(b) to the Registration 
          Statement and incorporated herein by reference).

10(a)     Asset Purchase Agreement between Jewel Food Stores, Inc. and Star 
          Acquisition Corp., dated July 28, 1994 (filed as Exhibit 10(a) to 
          the Registration Statement and incorporated herein by reference).

10(b)     First Amendment to Asset Purchase Agreement between Jewel Food 
          Stores, Inc. and Star Acquisition Corp., dated August 3, 1994 
          (filed as Exhibit 10(b) to the Registration Statement and 
          incorporated herein by reference).

10(c)     Second Amendment to Asset Purchase Agreement between Jewel Food 
          Stores, Inc. and the Company, dated September 8, 1994 (filed as 
          Exhibit 10(c) to the Registration Statement and incorporated 
          herein by reference).

10(d)     Purchase Agreement among the Company, Chemical Securities Inc. and 
          BT Securities Corporation, dated October 26, 1994 (filed as 
          Exhibit 10(d) to the Registration Statement and incorporated 
          herein by reference).

10(e)     Credit Agreement among the Company, Chemical Bank, as 
          Administrative Agent, and the lenders party thereto, dated as of 
          September 8, 1994 (filed as Exhibit 10(e) to the Registration 
          Statement and incorporated herein by reference).

10(f)     Security Agreement made by the Company in favor of Chemical Bank, 
          as Administrative Agent, dated as of September 8, 1994 (filed as 
          Exhibit 10(f) to the Registration Statement and incorporated 
          herein by reference).

10(g)     Transition Services Agreement between Jewel Food Stores, Inc. and 
          the Company, dated as of September 8, 1994 (filed as Exhibit 10(g) 
          to the Registration Statement and incorporated herein by 
          reference).

10(h)     Interim Limited Management Agreement between the Company and Star 
          Market Liquors, Inc., dated as of September 8, 1994 (filed as 
          Exhibit 10(h) to the Registration Statement and incorporated 
          herein by reference).

10(i)     Agreement for Management Advisory and Consulting Services between 
          Investcorp International, Inc. and the Company, dated as of 
          September 8, 1994 (filed as Exhibit 10(i) to the Registration 
          Statement and incorporated herein by reference).

10(j)     Employment Agreement between the Company and Henry Nasella, dated 
          as of September 8, 1994 (filed as Exhibit 10(j) to the 
          Registration Statement and incorporated herein by reference).

10(k)     Trust Agreement between the Company and Fidelity Management Trust 
          Company, dated as of September 8, 1994 (filed as Exhibit 10(m) to 
          the Registration Statement and incorporated herein by reference).

10(l)     Third Amendment to Asset Purchase Agreement between Jewel Food 
          Stores, Inc. and Star Acquisition Corp., dated January 13, 1995 
          (filed as Exhibit 10(n) to the Registration Statement and 
          incorporated herein by reference).

10(m)     Star Markets Retirement Estates plan description dated November 7, 
          1994 (filed as Exhibit 10(o) to the Registration Statement and 
          incorporated herein by reference).

10(n)     1994 Stock Incentive Plan of Holdings, dated September 8, 1994 
          (filed as Exhibit 10(p) to the Registration Statement and 
          incorporated herein by reference).

10(o)     First Amendment to Credit Agreement among the Company, Chemical 
          Bank, as Administrative Agent, and the lenders party thereto, 
          dated as of January 16, 1996 (filed as Exhibit 10(q) to the 
          Company's 1995 Form 10-K and incorporated herein by reference).

10(p)     Second Amendment to Credit Agreement among the Company, Chemical 
          Bank, as Administrative Agent, and the lenders party thereto, 
          dated as of June 25, 1996 (filed as Exhibit 10(p) to the company's 
          1996 Form 10-K and incorporated herein by reference).

10(q)     Third Amendment to Credit Agreement among the Company, Chase 
          Manhattan, as Administrative Agent, and the lenders party thereto, 
          dated as of April 21, 1997 (filed as Exhibit 10(q) to the 
          company's 1996 Form 10-K and incorporated herein by reference).

10(r)**   Fourth Amendment to Credit Agreement among the Company, Chase 
          Manhattan, as Administrative Agent, and the lenders party thereto, 
          dated as of August 17, 1998.

10(s)**   Stock Purchase Agreement among Star Market Holdings, Inc., Star 
          Market Company, Inc. and J Sainsbury plc, dated as of November 25, 
          1998.

27**      Financial Data Schedule for the 52 weeks ended January 30, 1999.

(b)   No reports were filed on Form 8-K for the 13-week period ended January 
      30, 1999.

[FN]
<F**>  As filed herewith.
</FN>

                                 Signatures
                                 ----------

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


                                     Star Markets Company, Inc.

DATE:  April 30, 1999                BY: /s/ Henry J. Nasella
-----                                ------------------------
                                         Henry J. Nasella
                                         Chairman of the Board of Directors
                                         President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report has 
been signed below by the following persons on behalf of the registrant and 
in the capacities and on the dates indicated:

Signature                  Title                                 Date
---------                  -----                                 ----

/s/ Henry J. Nasella       Chairman of the Board of Directors    April 30, 1999
--------------------       President and Chief Executive 
Henry J. Nasella           Officer (Principal Executive Officer)

Signature                  Title                                 Date
---------                  -----                                 ----

/s/ Stephen R. Winslow     Senior Vice President, Finance        April 30, 1999
----------------------     chief accounting officer
Stephen R. Winslow 


SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO 
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES 
PURSUANT TO SECTION 12 OF THE ACT.

Not Applicable. No Annual Report or proxy material has been sent to holders 
of the Registrant's securities.


                         Annual Report on Form 10-K
                           Item 8, Item 14 (a) 1.
                        List of Financial Statements
                            Financial Statements
                                   Exhibit
                       52 weeks ended January 30, 1999
                       52 weeks ended January 31, 1998
                       52 weeks ended February 1, 1997

                         Star Markets Company, Inc.
                                Cambridge, MA

                         Form 10-K - Item 14 (a) 1.

                          Star Markets Company, Inc.

                       52 weeks ended January 30, 1999
                       52 weeks ended January 31, 1998
                       52 weeks ended February 1, 1997

List of Financial Statements

The following financial statements of Star Markets Company, Inc. ("The 
Company") are included herein:

      Balance sheets - January 30, 1999 and January 31, 1998

      Statements of operations - 52 weeks ended January 30, 1999, 52 weeks 
      ended January 31, 1998 and 52 weeks ended February 1, 1997 

      Statements of equity - 52 weeks ended January 30, 1999, 52 weeks ended 
      January 31, 1998 and 52 weeks ended February 1, 1997

      Statements of cash flows - 52 weeks ended January 30, 1999, 52 weeks 
      ended January 31, 1998 and 52 weeks ended February 1, 1997

      Notes to financial statements - January 30, 1999


              Report of Ernst & Young LLP, Independent Auditors

Shareholder and Board of Directors 
Star Markets Company, Inc.

We have audited the accompanying balance sheets of Star Markets Company, 
Inc. (the "Company") as of January 30, 1999 and January 31, 1998 and the 
related statements of operations, equity, and cash flows for each of the 
three years in the period ended January 30, 1999. These financial statements 
are the responsibility of the Company's management. Our responsibility is to 
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, 
in all material respects, the financial position of Star Markets Company, 
Inc. at January 30, 1999 and January 31, 1998 and the results of its 
operations and its cash flows for each of the three years in the period 
ended January 30, 1999 in conformity with generally accepted accounting 
principles.



                                       /s/ Ernst & Young LLP



Boston, Massachusetts
March 26, 1999

                         Star Markets Company, Inc.

                               Balance Sheets

                  (Amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                                   January 30,     January 31,
                                                                      1999            1998
                                                                   -----------     -----------

<S>                                                                 <C>             <C>
Assets
Current assets:
  Accounts receivable, net of reserve for doubtful accounts of
   $1,331 in 1999 and $1,391 in 1998                                $ 18,277        $ 21,001
  Inventory                                                           64,914          71,524
  Prepaid expenses                                                     4,483           4,465
                                                                    ------------------------
Total current assets                                                  87,674          96,990

Property and equipment at cost:
  Land                                                                15,256          21,287
  Building                                                            31,712          51,452
  Equipment & fixtures                                               123,757         112,010
  Leasehold improvements                                              69,675          61,644
                                                                    ------------------------
Total property & equipment                                           240,400         246,393
  Less accumulated depreciation and amortization                      70,645          52,692
                                                                    ------------------------
Net property and equipment                                           169,755         193,701

Other assets, net                                                     28,537          31,287
Goodwill, net                                                        127,005         130,564
                                                                    ------------------------

Total Assets                                                        $412,971        $452,542
                                                                    ========================

Liabilities and Shareholder's Equity
Current liabilities:
  Accounts payable                                                  $ 38,246        $ 46,091
  Accrued payroll & benefits                                          14,399          13,195
  Current portion self-insurance                                       6,286           8,266
  Accrued interest                                                     5,762           6,092
  Other current liabilities                                           14,585          16,503
                                                                    ------------------------
Total current liabilities                                             79,278          90,147

Self-insurance reserves, less current portion                         12,243          18,523
Other liabilities                                                      7,454           5,687
Long-term debt                                                       259,037         276,327

Redeemable preferred stock, redemption value $11,000                  10,421          10,326

Shareholder's equity:
  Common stock, $.01 par value, 10,000 shares authorized and
   5,000 shares outstanding                                                0               0
  Additional paid-in-capital                                          82,606          83,924
  Retained earnings (deficit)                                        (38,069)        (32,392)
                                                                    ------------------------
Total shareholder's equity                                            44,537          51,532
                                                                    ------------------------

Total Liabilities and Shareholder's Equity                          $412,971        $452,542
                                                                    ========================
</TABLE>


See accompanying notes.

                         Star Markets Company, Inc.

                          Statements of Operations

                           (Amounts in thousands)

<TABLE>
<CAPTION>
                                           52 Weeks        52 Weeks        52 Weeks
                                             Ended           Ended           Ended
                                          January 30,     January 31,     February 1,
                                             1999            1998            1997
                                          -----------     -----------     -----------

<S>                                       <C>             <C>              <C>
Total revenues                            $1,064,235      $1,034,188       $954,531
Cost of goods sold                           777,842         761,798        715,090
                                          -----------------------------------------

Gross profit                                 286,393         272,390        239,441

Operating and administrative expenses        237,460         226,708        197,314
Depreciation and amortization                 24,837          23,792         22,178
                                          -----------------------------------------

Operating profit                              24,096          21,890         19,949

Interest expense                              29,486          30,177         28,894
Other income (expenses), net                      76              87            (13)
                                          -----------------------------------------

Loss before income taxes                      (5,314)         (8,200)        (8,958)

Income taxes                                     363             365            378
                                          -----------------------------------------

Net loss                                  $   (5,677)     $   (8,565)      $ (9,336)
                                          =========================================
</TABLE>


See accompanying notes.


                         Star Markets Company, Inc.

                            Statements of Equity

                           (Amounts in thousands)

<TABLE>
<CAPTION>
                                              Additional
                                   Common      Paid-In-      Retained
                                   Stock       Capital       Earnings       Total
                                   ------     ----------     --------       -----

<S>                                 <C>        <C>           <C>           <C>
Balance at February 3, 1996         $  0       $73,692       $(14,491)     $59,201
  Net loss                                                     (9,336)      (9,336)
  Accretion of preferred stock                     (96)                        (96)
  Preferred stock dividend                      (1,230)                     (1,230)
  Deferred compensation                            556                         556
  Equity contribution, net of 
   issuance costs                               11,985                      11,985
                                    ----------------------------------------------

Balance at February 1, 1997            0        84,907        (23,827)      61,080
Net loss                                                       (8,565)      (8,565)
Accretion of preferred stock                       (97)                        (97)
Preferred stock dividend                        (1,226)                     (1,226)
Deferred compensation                              340                         340
                                    ----------------------------------------------

Balance at January 31, 1998            0        83,924        (32,392)      51,532
Net loss                                                       (5,677)      (5,677)
Accretion of preferred stock                       (96)                        (96)
Preferred stock dividend                        (1,222)                     (1,222)
                                    ----------------------------------------------

Balance at January 30, 1999         $  0       $82,606       $(38,069)     $44,537
                                    ==============================================
</TABLE>


                         Star Markets Company, Inc.

                          Statements of Cash Flows

                           (Amounts in thousands)

<TABLE>
<CAPTION>
                                                            52 Weeks        52 Weeks        52 Weeks
                                                              Ended           Ended           Ended
                                                           January 30,     January 31,     February 1,
                                                              1999            1998            1997
                                                           -----------     -----------     -----------

<S>                                                         <C>             <C>             <C>
Operating activities
Net loss                                                    $ (5,677)       $ (8,565)       $ (9,336)
Adjustments to reconcile net loss to net cash provided
 by operating activities:
  Amortization of deferred financing costs                     1,688           1,648           1,543
  Depreciation and amortization                               24,835          23,792          22,178
  Impairment loss                                              2,700
  Loss (gain) on sale or disposal of property and
   equipment                                                     (69)            (87)             15
  Changes in operating assets and liabilities:
    Accounts receivable                                        2,721             814          (8,271)
    Inventories                                                6,609          (5,974)         (2,636)
    Prepaid expenses                                             (16)            494              85
    Accounts payable                                          (7,846)           (707)          7,028
    Accrued payroll and benefits                               1,205             353             333
    Self-insurance reserves                                   (8,254)           (291)           (571)
    Accrued interest                                            (331)             89             870
    Other current liabilities                                 (1,925)          3,491           2,754
    Other                                                      1,822           1,267             524
                                                            ----------------------------------------
Net cash provided by operating activities                     17,462          16,324          14,516

Investing activities
Purchases of property and equipment                          (20,621)        (41,058)        (34,762)
Proceeds from sale of property and equipment                  21,658          22,381           4,365
Decrease in restricted cash                                                                    6,028
Acquisition of leasehold interests                                                           (20,064)
                                                            ----------------------------------------
Net cash provided by ( used in) investing activities           1,037         (18,677)        (44,433)

Financing Activities
Net proceeds from revolving credit facility                    2,299           4,600          12,400
Proceeds from long-term debt                                                                   4,087
Repayment of long-term debt                                  (19,576)           (722)         (1,340)
Preferred dividends paid                                      (1,222)         (1,226)         (1,230)
Deposits refunded                                                                500           4,000
Equity contribution                                                                           12,000
Deferred financing costs                                                        (799)
                                                            ----------------------------------------
Net cash (used in) provided by financing activities          (18,499)          2,353          29,917

Net increase in cash and cash equivalents                          0               0               0
Cash and cash equivalents beginning of period                      0               0               0
                                                            ----------------------------------------
Cash and cash equivalents end of period                     $      0        $      0        $      0
                                                            ========================================

Supplemental disclosure of cash flow information:
  Cash paid for interest                                    $ 27,124        $ 28,440        $ 26,374
  Cash paid for taxes                                            362             365             370
</TABLE>


See accompanying notes.


                         Star Markets Company, Inc.

                        Notes to Financial Statements

                              January 30, 1999

1.  Background
Star Markets Company, Inc., a Massachusetts corporation (the "Company"), is 
a leading food retailer in the metropolitan Boston area and operated 53 
stores as of January 30, 1999. Additionally, the Company operates a 
wholesale business which provides warehousing, distribution and certain 
administrative services to independent store locations throughout the New 
England area.

The Company is a wholly-owned subsidiary of Star Markets Holdings, Inc., a 
Massachusetts corporation ("Holdings"). Both Holdings and the Company were 
formed for purposes of the acquisition described below.

2.  Sale of Stock
Pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement") by 
and among the Company, Holdings, and J Sainsbury plc ("Sainsbury") dated as 
of November 25, 1998, Sainsbury has agreed to acquire all of the issued and 
outstanding voting securities of Holdings. Pursuant to the Stock Purchase 
Agreement, all other shares of capital stock of Holdings will also be either 
purchased or redeemed.  The value of the transaction is approximately $490.0 
million (including assumed debt), subject to adjustment.  The transaction 
has been approved by the boards of directors of the Company, Holdings and 
Sainsbury.  Consummation of the transaction is subject to customary 
conditions including regulatory approvals.

3.  Acquisitions
Star Market Company ("Predecessor") was operated as a division of Jewel Food 
Stores, Inc. ("Jewel"), a wholly-owned subsidiary of American Stores Company 
("ASC"). On September 8, 1994, the Company acquired all of the business and 
assets of Predecessor from Jewel and other affiliates of ASC (the 
"Acquisition").

For financial statement purposes, the Acquisition was accounted for as a 
purchase effective September 10, 1994. The assets and business were acquired 
for an aggregate purchase price of $293.3 million, exclusive of related fees 
and expenses.

The purchase price, including approximately $11.0 million in related fees 
and expenses, has been allocated based upon the fair value of the Company's 
assets and liabilities as follows (in millions):


<TABLE>

<S>                                         <C>
Historical basis of net assets acquired     $126.4
Fair value and other adjustments:
  Property, plant and equipment               40.9 
  Inventory                                    5.6 
  Accounts receivable                         (1.1)
  Liabilities                                 (5.1)
                                            ------
Fair market value of net assets              166.7 
Goodwill                                     137.6 
                                            ------
Total purchase price                        $304.3 
                                            ======
</TABLE>

During 1998, the Company adjusted the self-insurance reserves for worker's 
compensation and general liability insurance recorded at the time of the 
Acquisition by $5.0 million.  The $5.0 million, represents the excess 
reserve based on current actuarial estimates of unpaid claims related to 
losses incurred prior to the Acquisition. The adjustment was recorded in 
operating and administrative expenses as an increase to net income.

4.  Significant Accounting Policies

Reclassification 
Certain amounts in the historical financial statements of the Company have 
been reclassified to conform with the Company's current method of 
presentation.

Fiscal Year
The fiscal year of the Company ends on the Saturday nearest to January 31. 
All references herein to "1998", "1997" and "1996", mean the 52-week fiscal 
year ended January 30, 1999, 52-week fiscal year ended January 31, 1998 and 
the 52-week fiscal year ended February 1, 1997, respectively.

Revenue Recognition
Revenue from retail operations is recognized at the point of sale.  The 
Company allows for merchandise to be returned under most circumstances.  The 
Company does not provide for a reserve for estimated returns, as the amount 
does not have a material impact on the financial statements. Revenue from 
wholesale operations is recognized upon shipment of merchandise to wholesale 
customers.  Sales to wholesale customers are considered final upon 
acceptance of delivery, however, the Company does allow merchandise returns 
under certain circumstances. The Company does not provide for a reserve for 
estimated returns, as occurrence is infrequent and the amount does not have 
a material impact on the financial statements.

Inventories
Inventories are stated at the lower of cost, using the FIFO (first-in, 
first-out) and weighted average cost methods, or market.

Goodwill
Goodwill represents the excess of the cost of the purchased businesses over 
the fair value of the net underlying assets and is being amortized using the 
straight-line method over 40 years. Accumulated amortization at January 30, 
1999 and January 31, 1998 was $15.4 million and $11.8  million, 
respectively. At each balance sheet date, management assesses whether there 
has been a permanent impairment in the value of goodwill by comparing 
anticipated undiscounted future cash flows from operating activities with 
the carrying value of the goodwill. The amount of any resulting impairment 
is calculated using the same undiscounted cash flows from operating 
activities. The factors considered by management in this assessment include 
operating results, trends and prospects, as well as the effects of demand, 
competition and other economic factors.

Use of Estimates
The preparation of financial statements in conformity with generally 
accepted accounting principles requires management of the Company to make 
estimates and assumptions that affect the amounts reported in the financial 
statements and accompanying notes. Actual results could differ from those 
estimates.

Deferred Financing Costs
Deferred financing costs, included in other assets, are amortized over the 
term of the related financing. Amortization of deferred financing costs is 
included in interest expense in the Statement of Operations. Accumulated 
amortization at January 30, 1999 and January 31, 1998 was $7.0 million and 
$5.3 million, respectively.

Depreciation and Amortization
Depreciation and amortization is provided on a straight-line basis over the 
estimated useful lives of owned assets. Leasehold improvements are amortized 
over the estimated useful life of the property or over the term of the 
lease, whichever is shorter. Depreciation begins when the asset is placed in 
service.  

The useful lives of owned assets for purposes of computing depreciation are:

<TABLE>
<CAPTION>
                                              Years
                                              -----

         <S>                             <C>
         Building                        39
         Equipment and fixtures          3 - 8
         Leasehold improvements          Minimum of lease
                                         term or 20 years
</TABLE>


Costs of Opening and Closing Stores
The costs of opening new stores are charged against operations as incurred. 
When a store is closed, the remaining investment, net of salvage value, is 
charged against operations and, for leased stores, a provision is made for 
the remaining lease liability, net of expected sublease income.

Recently Issued Accounting Pronouncements
During 1997, the Financial Accounting Standards Board issued Statement No. 
130, "Reporting Comprehensive Income" ("Statement 130").  The Company 
adopted the provisions of Statement 130 during Fiscal 1998.  Comprehensive 
income is generally defined as all changes in stockholder's equity exclusive 
of transactions with owners such as capital investments and dividends. The 
adoption of Statement 130 had no impact on the Company's financial statement 
disclosures.

In June 1997, the Financial Accounting Standards Board issued Statement No. 
131, "Disclosures About Segments of an Enterprise and Related Information" 
("Statement 131"), which is required to be adopted for years beginning after 
December 15, 1997.  The Company adopted the provisions of Statement 131 
during 1998.  The adoption of Statement 131 had no impact on the Company's 
financial statement disclosures.

Advertising Expense
Total advertising expense amounted to $10.7 million, $11.8 million and $10.5 
million in 1998, 1997 and 1996, respectively. The Company expenses all 
advertising costs as incurred.

5.  Financial Instruments

The following methods and assumptions were used by the Company to estimate 
the fair value of its financial instruments:

Receivables, and accounts payable and other current liabilities: the 
carrying amounts reported in the balance sheet approximate fair value. Long-
term debt:  the fair value of the Company's 13% Senior Subordinated Notes is 
based on quoted market prices; the fair value of other long-term debt 
approximates carrying amounts.

The carrying amounts and fair values of the Company's financial instruments 
are as follows (in thousands):

<TABLE>
<CAPTION>
                            January 30, 1999            January 31, 1998
                         -----------------------     -----------------------
                         Carrying                    Carrying
                          Amount      Fair Value      Amount      Fair Value
                         --------     ----------     --------     ----------

      <S>                <C>           <C>           <C>           <C>
      Long-term debt     $260,147      $272,247      $277,427      $291,727
</TABLE>


6.  Long-term Debt


Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                       January 30, 1999     January 31, 1998
                                       ----------------     ----------------

<S>                                        <C>                  <C>
Senior Credit Facility:
  Term Loan:  Tranche B                    $ 32,824             $ 39,750
              Tranche C                      24,588               29,750
              Additional Tranche C           31,789               38,500
  Revolving credit facility                  58,700               56,400
                                           -----------------------------
Total Senior Credit Facility                147,901              164,400
13% Senior subordinated notes               110,000              110,000
8% Note Payable                               2,246                3,027
                                           -----------------------------
Total                                       260,147              277,427
Less current maturities                       1,109                1,100
                                           -----------------------------
                                           $259,038             $276,327
                                           =============================
</TABLE>


The following table presents the maturities of the long-term debt for the 
next five fiscal years and thereafter (in thousands) as of January 30, 1999:

<TABLE>

<S>                             <C>
Fiscal   1999                      1,109
         2000                      9,333
         2001                     83,968
         2002                     24,465
         2003 and thereafter     141,272
                                --------
         Total                  $260,147
                                ========
</TABLE>


Senior Credit Facility
The Senior Credit Facility provides for a total of $183.0 million of term 
and revolving loan credit (the "loans"). In order to reflect the impact of 
the sale/leaseback of three properties completed in March, 1998, certain 
financial covenants of the Senior Credit Facility were amended on August 17, 
1998.

The availability under the revolving credit facility may be utilized to meet 
the Company's current working capital requirements, including issuance of 
letters of credit. The Company can also utilize the remaining availability 
to fund capital expenditures. The revolving credit facility expires on 
December 31, 2001. At January 30, 1999, the Company had outstanding letters 
of credit totaling $7.2 million as required by certain contracts relating to 
inventory and self-insurance, which reduced the amount available under the 
revolving credit facility.

The loans are secured by a first priority security interest in substantially 
all the assets of the Company and a pledge of all the issued and outstanding 
stock of the Company. In addition, the loans are guaranteed by Holdings.

Borrowings under the loans accrue interest at a floating interest rate, 
which at the option of the Company is either (a) the greater of (i) the 
bank's announced reference rate, (ii) a rate which fluctuates with the 
secondary market rate for certificates of deposits, plus 1% or (iii) the 
federal funds rate, plus 0.5%, in each case plus a margin varying from 1.25% 
to 2.25% depending on the type and maturity of the loan, or (b) LIBOR, plus 
a margin varying from 2.50% to 3.50% depending on the type and maturity of 
the loan.

At January 30, 1999, the interest rates on the term loan facility ranged 
from 8.13% to 8.75% and the weighted average interest rate on amounts 
outstanding under the revolving credit facility at January 30, 1999 and 
January 31, 1998 were  7.93% and 8.40%, respectively.

13% Senior Subordinated Notes
On November 2, 1994, the Company issued $110 million of Senior Subordinated 
Notes ("Notes"), due November 1, 2004. The Notes were offered and sold 
pursuant to Rule 144A under the Securities Act and net proceeds were used as 
follows:  (i) approximately $75.8 million was used to repay the outstanding 
indebtedness under the Company's Subordinated Loan Facility and all accrued 
and unpaid interest thereon, (ii) approximately $25.1 million was used to 
repay outstanding indebtedness under the term loan portion of the Company's 
Senior Credit Facility and all accrued and unpaid interest due thereon and 
(iii) the remaining proceeds were retained by the Company for general 
corporate purposes, including working capital.

8% Note Payable
The Company issued a $4.0 million note payable in connection with the store 
locations acquired in 1996. The note payable bears interest at 8.00% per 
annum and requires quarterly payments of principal and interest through July 
2001.

Capitalized interest totaled $130,165, $161,000 and $55,000 for 1998, 1997 
and 1996, respectively.

7.  Preferred Stock

The Company is authorized to issue 10,000 shares of preferred stock, par 
value $.01 per share. In connection with the 1994 Acquisition, the Company 
issued 5,000 preferred shares for $11.0 million, and concurrently paid an 
issuance fee of $1.0 million on behalf of Holdings. All of the outstanding 
preferred shares are held by Holdings.

Dividends on the preferred stock accrue at a rate of 11% per annum. 
Dividends are cumulative and are payable when declared by the Board of 
Directors of the Company, out of assets legally available therefor, on April 
30 and October 31 of each year, commencing on October 31, 1994. The 
Company's Board of Directors declared, and the Company has paid, all 
required dividends on the Company's cumulative preferred stock through 
January 30, 1999. To the extent that dividends are accrued, but have not 
been declared and paid, such undeclared and unpaid dividends will accrue 
additional dividends from the date upon which such dividends accrued until 
the date upon which they are paid at the rate of 13% per annum.

The shares of preferred stock are redeemable at the option of the Company at 
a redemption price of $2,200 per share plus accrued and unpaid dividends 
thereon to the date fixed for redemption. On December 31, 2005, the Company 
is required to redeem all outstanding shares of preferred stock at $2,200 
per share plus accrued and unpaid dividends thereon to the date fixed for 
redemption.

8.  Leases

The Company leases retail stores and equipment. The store leases have an 
average life of approximately 34 years until final expiration. The store 
leases generally have renewal options and provide for contingent rent based 
on sales levels in excess of specified levels.

In March 1998, the Company entered into a three property sale-leaseback 
transaction. The Company sold two of its stores and its distribution complex 
in Norwood, MA for a gross selling price of $21.6 million.  Concurrent with 
the sale, the Company leased the properties back for an initial term of 25 
years.  No gain or loss was recognized as a result of the transaction. 

The summary below shows the aggregate future minimum lease commitments at 
January 30, 1999. Operating leases are shown net of an aggregate $8.8 
million of minimum rental income under noncancelable subleases.

<TABLE>
<CAPTION>
                                     Operating
                                       Leases
                                   --------------
                                   (In thousands)

<S>                                   <C>
1999                                   30,602
2000                                   28,788
2001                                   29,436
2002                                   28,725
2003                                   28,175
Thereafter                            365,330
                                      -------
Total minimum rent commitments        511,056
                                      =======
</TABLE>

Rent expense for real property was as follows:

<TABLE>
<CAPTION>
         Minimum     Sublease                 Contingent      Total
          Rent         Rent         Net          Rent         Rent
         ----------------------------------------------------------
                               (In thousands)

<S>      <C>         <C>          <C>            <C>         <C>
1998     $27,349     $(1,475)     $25,874        $203        $26,077
1997     $22,284     $(1,298)     $20,986        $329        $21,315
1996     $16,639     $  (970)     $15,669        $338        $16,007
</TABLE>


Additionally, rent expense for personal property totaled approximately $4.4 
million, $3.5 million and $2.1 million, for 1998, 1997 and 1996,  
respectively.

Leasehold interests were acquired in connection with the 10 locations 
acquired during 1996 and represent the present value of the excess of market 
rents over actual rents payable over the remaining lives of the leases. The 
leasehold interests are being amortized on the straight-line method over the 
remaining lives of the leases. Accumulated amortization at January 30, 1999 
was $2.2 million.

9.  Income Taxes

Federal and state income taxes charged to earnings are summarized below:

<TABLE>
<CAPTION>
                 1998     1997     1996
                 ----------------------

<S>              <C>      <C>      <C>
Current:
  Federal        $  0     $  0     $  0
  State           363      365      378
                 ----------------------
Income taxes     $363     $365     $378
                 ======================
</TABLE>


The effective income tax rate differs from the statutory federal income tax 
rate as follows:

<TABLE>
<CAPTION>
                                                          1998        1997        1996
                                                         ------------------------------

<S>                                                      <C>         <C>         <C>
Statutory federal income tax rate                        (34.0%)     (34.0%)     (34.0%)
State income taxes, net of federal income tax effect       6.4         4.5         4.2
Unbenefitted Losses / Loss Carryforward                   34.0        34.0        34.0
                                                         ------------------------------
Effective income tax rate                                  6.4%        4.5%        4.2%
                                                         ==============================
</TABLE>


Deferred tax assets and liabilities as of 1998 and 1997 related to the 
following temporary differences (in thousands):

<TABLE>
<CAPTION>
                                      January 30,     January 31,
                                         1999            1998
                                      ---------------------------

<S>                                    <C>             <C>
Deferred tax liabilities:
  Goodwill                             $ (7,670)       $ (4,939)
  Basis in fixed assets                  (5,470)         (4,548)
  Other, net                             (1,585)         (1,327)
                                       ------------------------
Total deferred tax liabilities          (14,725)        (10,814)
                                       ------------------------
Deferred tax assets:
  Self-insurance reserves                 7,684          10,605
  Net operating loss carryforward        26,774          20,435
  Compensation and benefits               2,021           2,088
  Miscellaneous accruals                    852           1,032
  Other, net                              3,299           2,239
                                       ------------------------
Total deferred tax assets                40,630          36,399
Valuation allowance                     (25,905)        (25,585)
                                       ------------------------
Net deferred tax assets                  14,725          10,814
                                       ------------------------
                                       $      0        $      0
                                       ========================
</TABLE>

The Company has tax net operating loss carryforwards of $67.0 million that 
expire through 2018. For financial reporting purposes, a valuation allowance 
has been recognized to offset deferred tax assets in excess of deferred tax 
liabilities since the Company has only incurred losses since inception and 
realization of such assets is not probable at January 30, 1999.


10.  Retirement Plans 
The Company established a defined contribution retirement plan, Star Markets 
Retirement Estates ("SMRE"). This plan is authorized by the Board of 
Directors for the purpose of providing retirement benefits for associates of 
the Company. The plan covers associates meeting age and service eligibility 
requirements, except those represented by a labor union, unless the 
collective bargaining agreement provides for participation. Contributions to 
SMRE are made at the discretion of the Board of Directors. 

The Company also contributes to multi-employer defined benefit retirement 
plans in accordance with the provisions of the various labor contracts that 
govern the plans. The plans cover all associates represented by a labor 
union. The multi-employer plan contributions are generally
based on the number of hours worked. Information about these plans as to 
vested and nonvested accumulated benefits and net assets available for 
benefits is not available.

Retirement plan expense in each period was as follows (in thousands):

<TABLE>
<CAPTION>
                             1998       1997       1996
                            ----------------------------

<S>                         <C>        <C>        <C>
Company-sponsored plans     $2,345     $1,859     $2,685
Multi-employer plans         2,315      2,457      2,102
                            ----------------------------
                            $4,660     $4,316     $4,787
                            ============================
</TABLE>


11.  Related-Party Transactions
During fiscal 1995, the Company entered into two sale-leaseback transactions 
with affiliates of INVESTCORP S.A. ("Investcorp"). The Company sold six of 
its stores for an aggregate gross selling price of $53.4 million. Concurrent 
with the sale, the Company leased the properties back for an initial term of 
20 years. No gain or loss was recorded in connection with the sale-leaseback 
transactions.

In connection with the Acquisition, the Company entered into an agreement 
for management advisory and consulting services (the "Management Agreement") 
with Investcorp International Inc. ("International") pursuant to which the 
Company agreed to pay International $750,000 per annum for a five-year term. 
At the closing of the Acquisition, the Company paid International 
approximately $2.3 million for the first three years in accordance with the 
terms of the Management Agreement, with the remaining two years due in 
quarterly installments.  

12.  Commitments and Contingencies
The Company has identified environmental contamination sites related 
primarily to underground petroleum tanks at various store, warehouse, and 
office facilities. At most identified locations, remediation is either 
underway or completed. Charges against earnings for environmental 
remediation were not significant in any of the periods presented.

Pursuant to the asset purchase agreement, ASC would indemnify the Company 
for the costs and expenses related to environmental contamination provided 
that the Company paid the first $1 million of such costs. However, for costs 
and expenses related to any non-governmental claim filed by a third-party, 
ASC was not liable until the aggregate of such costs and expenses exceeded 
$6 million. ASC's obligation to indemnify the Company expired on the second 
anniversary of the Closing Date, except for those locations and claims for 
which ASC has received specific notification from the Company.

Although the ultimate outcome and expense of environmental remediation is 
uncertain, the Company believes that required remediation and continuing 
compliance with environmental law will not have a material adverse effect on 
the financial position or results of operations of the Company.

From time to time, the Company has been involved in various legal 
proceedings. Management believes that all of such litigation is routine in 
nature and incidental to the conduct of the Company's business, and that 
none of such litigation, if determined adversely to the Company, would have 
a material adverse effect on the financial condition or results of 
operations of the Company.

13.  Subsequent  Event

During 1998, the Company initiated a plan to dispose of one operating 
location.  The sale of the assets was completed on February 11, 1999, 
subsequent to January 30, 1999.  At January 30, 1999, in connection with the 
plan of disposal, the Company determined that the carrying value of the 
assets exceeded their fair values.  Accordingly, a loss of $2,700,000, which 
is included as part of operating and administrative expenses, and represents 
the excess of the carrying value of $7,800,000 over the fair value of 
$5,100,000, has been charged to operations in 1998.  The net proceeds of the 
sale were applied to the revolving credit facility in fiscal year 1999.