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 February 1, 1997

           [ ] 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
    incorporation or organization)             Identification Number)

 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 21, 1997:  None

Number of shares of the issuer's common stock, outstanding as of April 21, 
1997:  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. ("Successor"), 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 statements of Predecessor are presented as if it 
existed as a separate entity during the periods presented.

The Company is a leading regional food retailer, with 48 stores (at the end 
of fiscal 1996) located in Eastern Massachusetts. Thirty-one of the 
Company's 48 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 9,400 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. In connection with the Acquisition, the Company 
acquired rights to expand into certain adjacent store sites and to acquire 
and develop certain additional store sites. In addition, management 
negotiated extensions for a number of its store leases.

In July 1996, the Company acquired 10 supermarket locations, comprising 
three stores in greater Boston and seven stores on Cape Cod, Massachusetts, 
from The Stop & Shop Companies, Inc. ("Stop & Shop"). Nine of the locations, 
comprising four superstores and five conventional, opened late in the second 
quarter ended August 2, 1996. The remaining location opened as the first 
free-standing Wild Harvest store in October 1996. One of the new superstores 
is a replacement store for a conventional store which closed in the second 
quarter of 1996 and reopened as a Wild Harvest store in December 1996.

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

Superstores
-----------
The Company's 20 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, "Petcetera" 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.

Four of the locations acquired from Stop & Shop are superstores, one of 
which replaced a conventional store which closed in 1996. The Company 
remodeled two of its existing superstores during 1996.

Conventional Stores
-------------------
The Company currently operates 26 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. During 1996, 
the Company acquired five conventional stores and replaced a conventional 
store with an acquired superstore during 1996.

Wild Harvest Stores
-------------------
The Company introduced a new format in two locations during 1996. The 
Medford Wild Harvest location was acquired from Stop & Shop and the Saugus 
Wild Harvest location was previously a Star conventional store. 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. In November 1995, 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 1996, the Company 
utilized 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 1996, the Company successfully 
completed and implemented the first phase of replacing the core application 
software within its buying, merchandising and inventory management systems. 
The project is scheduled for completion in fiscal 1997. The Company made 
infrastructure upgrades during 1996 to its store network resulting in more 
timely information and better customer service.

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 421 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, 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 competitors include Stop & Shop, Shaw's, 
Roche Bros., Bread & Circus, and Demoulas.

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, "Petcetera" 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. 
Approximately 17 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 the Company's standard payment terms for product 
purchases.

Item 2. Properties
------------------
At the end of fiscal 1996, the Company owned eight stores, its office in 
Cambridge, Massachusetts and its warehouse and distribution complex in 
Norwood, Massachusetts. In addition, as of the end of fiscal 1996, the 
Company owned one non-operating retail site located in Rhode Island. 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 sold one non-operating retail site during fiscal 1996, and in 
February 1997, subsequent to fiscal 1996, the Company completed a sale-
leaseback transaction for one of its operating properties.

At the end of fiscal 1996, the Company leased 40 stores throughout the 
metropolitan Boston area and Cape Cod, Massachusetts. The leases for the 40 
stores have an average life of approximately 32 years until final 
expiration, and only one lease has a remaining term of less than five years. 
The Company will continue to evaluate additional sale-leaseback transactions 
for properties owned, and the sale of the remaining non-operating property 
to partially finance the anticipated growth of the Company.

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 February 1, 1997.

                                   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 21, 
1997, 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 such 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 February 1, 1997. 
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. For additional information, see the Financial 
Statements included elsewhere in this report.

<TABLE>
<CAPTION>
                                                       Predecessor                                  The Company
                                         -----------------------------------------   -----------------------------------------
                                         (52 Weeks)    (52 Weeks)                                   (53 Weeks)    (52 Weeks)
                                         Fiscal Year   Fiscal Year      32-Week        20-Week      Fiscal Year   Fiscal Year
                                            Ended         Ended      Period Ended    Period Ended      Ended         Ended
                                         January 30,   January 29,   September 10,   January 28,    February 3,   February 1,
                                            1993          1994           1994           1995           1996          1997
                                         ------------------------------------------------------------------------------------
                                                                       (Dollars in thousands)
                                         ------------------------------------------------------------------------------------

<S>                                        <C>          <C>            <C>             <C>          <C>           <C>
Operating Data:
  Revenues
    Retail                                 $703,622     $716,979       $427,762        $268,617     $  763,513    $  877,827
    Wholesale                               122,794      119,326         69,227          39,687         90,991        76,704
                                           ---------------------------------------------------------------------------------
Total revenues                              826,416      836,305        496,989         308,304        854,504       954,531

Gross profit
  Retail                                    171,613      176,408        104,249          65,293        191,418       234,514
  Wholesale                                   5,704        6,156          4,058           2,230          6,273         4,927
                                           ---------------------------------------------------------------------------------
Total gross profit                          177,317      182,564        108,307          67,523        197,691       239,441

Depreciation and amortization                12,557       12,841          8,295           7,218         19,326        22,178
Operating income                             26,715       29,705         15,266           6,384         19,642        19,949
Interest expense                                350           79             27           9,781         28,382        28,894
Income (loss) before extraordinary loss      15,905       17,476          8,592          (3,507)        (8,890)       (9,336)
Extraordinary loss                                                                       (2,094)
Net income (loss)                            15,905       17,476          8,592          (5,601)        (8,890)       (9,336)

Store Data (Period End):
  Number of stores                               31           32             33              33             38            48
  Selling square footage                    752,496      797,346        842,146         859,773      1,144,486     1,419,013

Balance Sheet Data (Period End):
  Total assets                             $186,440     $209,445       $208,084        $421,355     $  425,503    $  453,270
  Long-term debt                                                                        240,057        257,400       271,827
  Redeemable preferred stock                                                             10,037         10,134        10,230

</TABLE>

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

Fiscal 1996 and Fiscal 1995

Revenues
--------
Revenues from retail operations for the 52-week period ended February 1, 
1997 increased 15.0% to $877.8 million from $763.5 million for the 53-week 
period ended February 3, 1996. 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"), adjusted to reflect a 52-week comparison, 
revenues increased by 3.2% from the prior period. Revenues from wholesale 
operations for the 52-week period ended February 1, 1997 declined 15.7% to 
$76.7 million from $91.0 million for the 53-week period ended February 3, 
1996. The decrease in wholesale revenues was primarily due to the loss of 
certain wholesale accounts which ceased operations due to increased 
competition in their respective trading areas.

Gross Profit
------------
Gross profit from retail operations for the 52-week period ended February 1, 
1997 increased 22.5% to $234.5 million from $191.4 million for the 53-week 
period ended February 3, 1996 primarily due to the increase in revenues. 
Gross profit as a percentage of revenues for the retail operations for the 
52-week period ended February 1, 1997 increased to 26.7% from 25.1% for the 
53-week period ended February 3, 1996. The increase in gross profit as a 
percentage of revenues was primarily attributable to an increase in the 
gross margin rate in the perishable categories. Gross profit from wholesale 
operations for the 52-week period ended February 1, 1997 decreased 21.5% to 
$4.9 million from $6.3 million for the 53-week period ended February 3, 
1996. Gross profit as a percentage of revenues for wholesale operations for 
the 52-week period ended February 1, 1997 decreased to 6.4% from 6.9% for 
the 53-week period ended February 3, 1996.

Operating and Administrative Expenses
-------------------------------------
Operating and administrative expenses for the 52-week period ended February 
1, 1997 increased by 24.3% to $197.3 million from $158.7 million for the 53-
week period ended February 3, 1996. Operating and administrative expenses as 
a percentage of total revenues for the 52-week period ended February 1, 1997 
increased to 20.7% from 18.6% for the 53-week period ended February 3, 1996. 
The increase in operating and administrative expenses as a percentage of 
total revenues was attributable to a number of factors:  continued 
investment in increased service levels in the stores; an increase in retail 
operations which incur a higher rate of operating and administrative 
expenses than wholesale operations; an increase in rent expense as a result 
of sale-leaseback transactions which occurred in October 1995 and January 
1996; the acquisition of 10 locations during the period; the opening of the 
two new Wild Harvest stores as well as the operating and administrative 
infrastructure established to support existing and future Wild Harvest 
locations; and additional administrative costs as the Company continues to 
grow.

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 February 
1, 1997 and the 53-week period ended February 3, 1996.

Non-Operating Expenses
----------------------
Interest expense for the 52-week period ended February 1, 1997 increased to 
$28.9 million from $28.4 million for the 53-week period ended February 3, 
1996. The Company recorded state income tax expense of $0.4 million for the 
52-week period ended February 1, 1997 and $0.3 million for the 53-week 
period ended February 3, 1996. The Company did not record a federal or state 
tax benefit associated with the losses recorded in the 52-week period ended 
February 1, 1997 and the 53-week period ended February 3, 1996.

Fiscal 1995 and Fiscal 1994

Revenues
--------
Revenues from retail operations for the 53-week period ended February 3, 
1996 increased 9.6% to $763.5 million from $696.4 million for the 52-week 
period ended January 28, 1995. For stores open more than one year ("same 
store sales"), adjusted to reflect a 52-week comparison, revenues declined 
by 1.0% from fiscal 1994. Same store sales results by quarter for the 
adjusted period ending February 3, 1996, were -3.7%, -4.5%, 0.3%, and 4.0%, 
respectively. The decline in same store sales during the first two quarters 
was primarily due to reduced promotional activity as compared to the prior 
year. Revenues from wholesale operations for the 53-week period ended 
February 3, 1996 declined 16.5% to $91.0 million from $108.9 million for the 
52-week period ended January 28, 1995. The decrease in wholesale revenues 
was primarily due to the loss of certain wholesale accounts which ceased 
operations due to increased competition in their respective trading areas.

Gross Profit
------------
Gross profit from retail operations for the 53-week period ended February 3, 
1996 increased 12.9% to $191.4 million from $169.5 million for the 52-week 
period ended January 28, 1995 primarily due to the increase in revenues. 
Gross profit as a percentage of revenues for retail operations for the 53-
week period ended February 3, 1996 increased to 25.1% from 24.4% for the 52-
week period ended January 28, 1995. The increase in gross profit as a 
percentage of revenues was primarily attributable to an increase in the 
gross margin rate in the non-perishable categories. Gross profit from 
wholesale operations for the 53-week period ended February 3, 1996 was $6.3 
million, substantially the same as the 52-week period ended January 28, 
1995. Gross profit as a percentage of revenues for wholesale operations for 
the 53-week period ended February 3, 1996 increased to 6.9% from 5.8% for 
the 52-week period ended January 28, 1995.

Operating and Administrative Expenses
-------------------------------------
Operating and administrative expenses for the 53-week period ended February 
3, 1996 increased by 15.3% to $158.7 million from $137.7 million for the 52-
week period ended January 28, 1995. Operating and administrative expenses as 
a percentage of total revenues for the 53-week period ended February 3, 1996 
increased to 18.6% from 17.1% for the 52-week period ended January 28, 1995. 
The increase in operating and administrative expenses as a percentage of 
total revenues was primarily attributable to continued investment in 
increased service levels in the stores, the opening of two new superstores, 
and the acquisition of three conventional stores during fiscal 1995.

Depreciation and Amortization
-----------------------------
Depreciation and amortization expense, which includes the amortization of 
goodwill, was 2.3% of total revenues for the 53-week period ended February 
3, 1996 and 1.9% of total revenues for the 52-week period ended January 28, 
1995.

Non-Operating Expenses
----------------------
Interest expense for the 53-week period ended February 3, 1996 increased to 
$28.4 million from $9.8 million for the 52-week period ended January 28, 
1995. The increase in interest expense was attributable to indebtedness 
incurred in connection with the Acquisition, the issuance of Subordinated 
Notes, and borrowings under the revolving credit facility to fund fixed 
asset and working capital requirements for new stores, acquisitions and 
expansions. Income tax expense for the 53-week period ended February 3, 1996 
decreased to $0.3 million from $6.1 million for the 52-week period ended 
January 28, 1995. The Company recorded state income tax expense of $.3 
million for the 53-week period ended February 3, 1996 and $0.1 million for 
the 20-week period ended January 28, 1995. The Company did not record a 
federal or state tax benefit associated with the losses recorded in the 53-
week period ended February 3, 1996 and the 20-week period ended January 28, 
1995.

Extraordinary Loss.
-------------------
The Company recorded an extraordinary loss of $2.1 million for the 20-week 
period ended January 28, 1995, resulting from the write-off of deferred 
financing costs related to the repayment of indebtedness under the Company's 
$75.0 million Subordinated Loan Facility dated September 8, 1994 (the 
"Subordinated Loan Facility") with the proceeds from the offering of the 
Subordinated Notes. The Company entered into the Subordinated Loan Facility 
in connection with the Acquisition.

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

The Company's total indebtedness as of April 21, 1997 was $259.0 million, 
which includes $110.0 million of Subordinated Notes due November 1, 2004, 
$145.4 million due under the Senior Credit Facility, and a $3.6 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 21, 
1997, the Company had $8.8 million drawn under the letter of credit 
facilities of the Senior Credit Facility and $37.4 million drawn under the 
revolving credit portion of the Senior Credit Facility leaving an aggregate 
of $28.8 million of unused revolving credit availability under the Senior 
Credit Facility. The Company paid $1.3 million in aggregate principal amount 
which matured in 1996. An additional $0.9 million in aggregate principal 
amount will mature in 1997.

During 1996, the Company acquired 10 supermarket locations from Stop & Shop 
for an aggregate purchase price of $28.0 million, excluding related fees and 
inventory. In January 1996, the Company's lenders executed an amendment to 
the Senior Credit Facility which allowed the Company to utilize $12.0 
million in proceeds from the sale of assets to fund a portion of this 
acquisition. The amendment to the Senior Credit Facility contemplated one 
additional location not included in the final agreement with Stop & Shop. 
Accordingly, the terms of the Senior Credit Facility were amended a second 
time in June 1996 to reflect the final agreement with Stop & Shop regarding 
the acquired locations. In addition, the Company incurred approximately $4.0 
million in long-term debt payable to Stop & Shop over five years and the 
balance of the purchase price was funded by an equity contribution of $12.0 
million from Holdings.

On April 21, 1997, the Company completed an amendment to the Senior Credit 
Facility in order to accommodate continued investment in new store growth. 
The amendment provides for a $108.0 million term loan facility and a $75.0 
revolving credit facility, extends the revolving credit facility by two 
years to December 31, 2001, amends certain covenant levels, and replaces a 
term loan that was due in 1999 with a new term loan due in 2003.

Capital expenditures for fiscal 1996 were $54.8 million as compared to $65.3 
million in fiscal 1995 and $29.8 million in fiscal 1994. Predecessor's 
capital expenditures were funded through cash flow from operations. 
Successor's capital expenditures have been funded through cash flow from 
operations, proceeds from sale-leaseback transactions, proceeds from the 
sale of non-operating properties, and borrowings under the revolving credit 
portion of its Senior Credit Facility. Subsequent to the end of fiscal 1996, 
the Company completed a sale-leaseback transaction for one of its stores for 
a gross selling price of $21.0 million.

The Company currently anticipates making capital expenditures of 
approximately $43.2 million in fiscal 1997. Capital expenditures will 
include opening two new superstores, opening a new superstore to replace an 
existing conventional store, remodeling six existing stores, converting one 
conventional store to a superstore, and opening two new Wild Harvest stores. 
Planned capital expenditures for fiscal 1997 include approximately $6.1 
million for maintenance, systems, and distribution.

The Company believes that funds generated from operations, proceeds from 
additional sale-leaseback transactions and borrowings under the Senior 
Credit Facility will provide sufficient resources through fiscal 1997 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.

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. The size of the Board 
of Directors may be increased from time to time.

<TABLE>
<CAPTION>

Name                     Age    Positions
----                     ---    ---------

<S>                      <C>    <C>
Henry J. Nasella         50     Chairman of the Board of Directors, 
                                President and Chief Executive Officer
Robert R. Spellman       49     Director, Executive Vice President, 
                                Administration, and Chief Financial Officer
Edward Albertian         44     Executive Vice President, Operations and 
                                Chief Operating Officer
Carole O'Connor Gates    39     Executive Vice President, Marketing
William P. Paul          50     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.

Robert R. Spellman became a Director, Executive Vice President, 
Administration, and Chief Financial Officer of the Company in October 1994 
upon the consummation of the Acquisition. Prior to joining the Company, he 
served as Senior Vice President, Finance of Staples, Inc. from September 
1988, Secretary of Staples, Inc. from December 1988 through March 1993 and 
was Treasurer of Staples, Inc. from September 1989 through August 1993.

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.

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 or to executives of 
Investcorp or any of its wholly-owned subsidiaries 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 1996 and 1995, 
and the short fiscal year ended January 28, 1995.

                         Summary Compensation Table

<TABLE>
<CAPTION>

                                                                             Long Term
                        Annual Compensation                                 Compensation
                        -------------------                                 ------------
                                                                               Awards
---------------------------------------------------------------------------------------
                                                                              Number of
                                                                Other          Shares
                                                                Annual       Underlying       All Other
   Name and Principal                 Salary(2)   Bonus(3)   Compensation   Options/SARs   Compensation(4)
        Position            Year(1)      ($)        ($)          ($)            (#)              ($)
----------------------------------------------------------------------------------------------------------

<S>                          <C>      <C>         <C>               <C>             <C>       <C>
Henry J. Nasella             1996     300,000           0           0               0         12,046
Chairman, President and      1995     300,000     100,000           0               0         13,140
Chief Executive Officer      1994     125,000     115,500           0          76,239         10,026
----------------------------------------------------------------------------------------------------------
Robert R. Spellman           1996     250,000      50,000           0               0          9,334
Executive Vice President,    1995     250,000      50,000           0               0          9,368
Administration and Chief     1994      83,333      38,500           0           8,083         18,892(5)
Financial Officer
----------------------------------------------------------------------------------------------------------
Edward Albertian             1996     197,583      63,238           0             500          7,998
Executive Vice President,    1995     131,396      26,279           0           4,114          5,868
Operations and Chief
Operating Officer
----------------------------------------------------------------------------------------------------------
Carole O'Connor Gates        1996     168,333      51,667           0               0          7,495
Executive Vice President,    1995     160,000      32,000           0           5,477          1,181
Marketing                    1994      42,540      75,000           0               0             95
----------------------------------------------------------------------------------------------------------
William P. Paul              1996     159,167      32,142           0               0          8,381
Executive Vice President,    1995     109,792      21,958           0           3,328          4,928
Merchandising
----------------------------------------------------------------------------------------------------------

<F1>   Star Markets Company, Inc. began operations on September 9, 1994, as 
       successor to the Star Market Company operating division of Jewel Food 
       Stores, Inc.

<F2>   Represents salary paid since date of employment. Dates on which the 
       employment of each named executive commenced were September 1, 1994 
       for Mr. Nasella, October 1, 1994 for Mr. Spellman, October 26, 1994 
       for Ms. O'Connor Gates, May 15, 1995 for Mr. Albertian and May 15, 
       1995 for Mr. Paul.

<F3>   Represents amounts paid for the relevant fiscal year. Bonuses are 
       reported in the fiscal year earned and typically paid during the
       following fiscal year.

<F4>   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.

       -   Company contributions under the 401(K) Savings Plan for fiscal 
           1994 were as follows: $5,190 for Mr. Nasella and Mr. Spellman, 
           and $0 for Ms. O'Connor Gates. Imputed income on the value of 
           Company provided term life insurance in excess of $50,000 in 
           fiscal 1994 was as follows: $4,836 for Mr. Nasella, $508 for Mr. 
           Spellman, and $95 for Ms. O'Connor Gates.

       -   Company contributions under the 401(K) Savings Plan for fiscal 
           1995 were as follows: $6,332 for Mr. Nasella, $6,932 for Mr. 
           Spellman, $5,095 for Mr. Albertian, $613 for Ms. O'Connor Gates 
           and $4,025 for Mr. Paul. Imputed income on the value of Company 
           provided term life insurance in excess of $50,000 in fiscal 1995 
           was as follows: $6,808 for Mr. Nasella, $2,436 for Mr. Spellman, 
           $773 for Mr. Albertian, $568 for Ms. O'Connor Gates, and $903 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. 
           Spellman, $6,898 for Mr. Albertian, $6,898 for Ms. O'Connor Gates 
           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, $2,436 for Mr. Spellman, 
           $1,100 for Mr. Albertian, $597 for Ms. O'Connor Gates, and $1,483 
           for Mr. Paul.

<F5>   Includes a $13,194 reimbursement of certain amounts forfeited in 
       connection with termination of prior employment.

</TABLE>

Option Grants

The following table sets forth certain information concerning grants of 
stock options in respect of Class C Stock of Star Markets Holdings, Inc. 
("Holdings") during the fiscal year ended February 1, 1997 to the executive 
officers named in the Summary Compensation Table.

                            Option Grants in 1996

                              Individual Grants
                              -----------------

<TABLE>
<CAPTION>

                         Number of   Percent of
                         Shares of     Total                                Potential Realized Value at
                          Class C     Options                              Assumed Annual Rates of Stock
                           Stock     Granted to                            Price Appreciation for Option
                        Underlying   Employees    Exercise                            Term(2)
                         Options     in Fiscal    Price per   Expiration
       Name              Granted        Year      Shares($)      Date         0%($)     5%($)     10%($)
---------------------------------------------------------------------------------------------------------
<S>                       <C>          <C>           <C>       <C>              <C>     <C>       <C>
Henry J. Nasella            0            -            -           -             -         -         -
---------------------------------------------------------------------------------------------------------
Robert R. Spellman          0            -            -           -             -         -         -
---------------------------------------------------------------------------------------------------------
Edward Albertian          500(1)       41.7          75        7/19/06          0       23,584    59,765
---------------------------------------------------------------------------------------------------------
Carole O'Connor Gates       0            -            -           -             -         -         -
---------------------------------------------------------------------------------------------------------
William Paul                0            -            -           -             -         -         -
---------------------------------------------------------------------------------------------------------

<F1>   Each option becomes exercisable on a cumulative basis in five equal 
       annual installments beginning on the last day of fiscal year 1996, 
       provided the optionee continues to be employed by the Company on such 
       dates, and subject to the achievement of certain earnings targets. In 
       addition, the exercisability of stock options will accelerate upon an 
       initial public offering and may accelerate upon a change of control.

<F2>   In accordance with the rules of the Securities and Exchange 
       Commission, the amounts shown on this table represent hypothetical 
       gains that could be achieved for the respective options if exercised 
       at the end of the option term. These gains are based on assumed rates 
       of stock appreciation of 0%, 5% and 10% compounded annually from the 
       date the respective options were granted to their expiration date. 
       The gains shown are net of the option exercise price, but do not 
       include deductions for taxes or other expenses associated with the 
       exercise. Actual gains, if any, on stock option exercises will depend 
       on many factors, including the future performance of the Company, the 
       option holder's continued employment through the option period, and 
       the date on which the options are exercised.

</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 February 
1, 1997 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 February 1, 1997.

<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          7,624          68,615            $0          $1,429,500
---------------------------------------------------------------------------------------------------------------
Robert R. Spellman           0              0          1,617           6,466             0                   0
---------------------------------------------------------------------------------------------------------------
Edward Albertian             0              0            823           3,791             0                   0
---------------------------------------------------------------------------------------------------------------
Carole O'Connor Gates        0              0          1,095           4,382             0                   0
---------------------------------------------------------------------------------------------------------------
William Paul                 0              0            666           2,662             0                   0
---------------------------------------------------------------------------------------------------------------

<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. Neither Holdings 
       nor the Company has established any recent valuations for such 
       shares.

</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 February 1, 1997 
there were 5,000 shares of Holdings' Class D Stock issued and outstanding. 
Members of the Company's management own 38,935 shares, and have the right to 
acquire an additional 19,149 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>

Class D Voting Stock:
---------------------
                                           Number of       Voting
                                           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

<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.
</TABLE>

<TABLE>
<CAPTION>

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

<S>                                         <C>
Henry J. Nasella                            34,291(2)
625 Mount Auburn Street
Cambridge, MA  02138

Robert R. Spellman                           4,950(3)
625 Mount Auburn Street
Cambridge, MA  02138

Edward Albertian                             1,423(4)
625 Mount Auburn Street
Cambridge, MA  02138

Carole O'Connor Gates                        1,735(5)
625 Mount Auburn Street
Cambridge, MA  02138

William P. Paul                              1,266(6)
625 Mount Auburn Street
Cambridge, MA  02138                        ------

All directors and executive officers of
 the Company as a group (5) persons         43,665
                                            ======

<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 7,624 shares subject to Presently Exercisable Options.

<F3>   Includes 1,617 shares subject to Presently Exercisable Options.

<F4>   Includes 823 shares subject to Presently Exercisable Options.

<F5>   Includes 1,095 shares subject to Presently Exercisable Options.

<F6>   Includes 666 shares subject to Presently Exercisable Options.

</TABLE>

Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------
Holdings was originally capitalized with $75.0 million of equity contributed 
by Investcorp, its affiliates, other international and domestic investors 
and senior management of the Company and $10.0 million in the form of $11.0 
million principal amount of junior subordinated indebtedness (the "Junior 
Notes") provided, and acquired at a discount, by Invifin S.A. ("Invifin"), 
an affiliate of Investcorp. Holdings capitalized the Company with $86.0 
million in exchange for 100% of the outstanding common and redeemable 
preferred stock of the Company in connection with the consummation of the 
Acquisition. This capital contribution to the Company, in addition to 
borrowings under the Senior Credit Facility and the Subordinated Loan 
Facility, provided the sources of the consideration for the Acquisition and 
related costs and fees. In connection with the Acquisition, the Company paid 
Investcorp International, Inc. ("International") advisory fees of $5.7 
million. The Company also paid approximately $5.1 million to International 
for arranging the commercial bank financing and $165,000 in commitment fees 
to Invifin in connection with the Junior Notes.

In July 1996, Holdings issued an additional $12.0 million of equity 
securities to affiliates of Investcorp. Holdings contributed the proceeds 
from the issuance of securities as additional paid-in-capital to the Company 
to partially fund the acquisition of 10 supermarket locations from Stop & 
Shop in July 1996.

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.

                                   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:

Each management contract or compensatory plan or arrangement required to be 
filed as an exhibit to this Form 10-K is identified with an asterisk ("*") 
below.

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.

10(q)**  Third Amendment to Credit Agreement among the Company, Chemical 
         Bank, as Administrative Agent, and the lenders party thereto, 
         dated as of April 21, 1997.

27**     Financial Data Schedule for the 52 weeks ended February 1, 1997.

(b)   No reports were filed on Form 8-K for the 13-week period ended 
February 1, 1997.


** As filed herewith.

                                 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: May 2, 1997                  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:

<TABLE>
<CAPTION>

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

<S>                          <C>                                             <C>
/s/ Henry J. Nasella
-------------------------
    Henry J. Nasella         Chairman of the Board of Directors              May 2, 1997
                             President and Chief Executive Officer
                             (Principal Executive Officer)

</TABLE>

<TABLE>
<CAPTION>

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

<S>                          <C>                                             <C>
/s/ Robert R. Spellman
-------------------------
    Robert R. Spellman       Director                                        May 2, 1997
                             Executive Vice President, Administration
                             Chief Financial Officer
                             (Principal Financial and Accounting Officer)

</TABLE>

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 February 1, 1997,
                         53 weeks ended February 3, 1996,
                         20 weeks ended January 28, 1995, and
                         32 weeks ended September 10, 1994

                         Star Markets Company, Inc.
                         Cambridge, MA


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

                         Star Markets Company, Inc.

                      52 weeks ended February 1, 1997,
                      53 weeks ended February 3, 1996,
                    20 weeks ended January 28, 1995, and
                      32 weeks ended September 10, 1994

List of Financial Statements

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

      Balance sheets - February 1, 1997 and February 3, 1996

      Statements of operations - 52 weeks ended February 1, 1997, 53 weeks 
      ended February 3, 1996 and 20 weeks ended January 28, 1995

      Statements of equity - 52 weeks ended February 1, 1997, 53 weeks ended 
      February 3, 1996 and 20 weeks ended January 28, 1995

      Statements of cash flows - 52 weeks ended February 1, 1997, 53 weeks 
      ended February 3, 1996 and 20 weeks ended January 28, 1995

      Notes to financial statements - February 1, 1997.

The following financial statements of Star Markets ("Predecessor") are 
included herein:

      Statement of operations - 32 weeks ended September 10, 1994

      Statement of equity - 32 weeks ended September 10, 1994

      Statement of cash flows - 32 weeks ended September 10, 1994.



              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. ("Successor") as of February 1, 1997 and February 3, 1996 and the 
related statements of operations, changes in equity, and cash flows for the 
52 week period ended February 1, 1997, the 53 week period ended February 3, 
1996, and the 20 week period ended January 28, 1995 ("Successor periods"). 
We have also audited the accompanying statements of operations, changes in 
equity, and cash flows of Star Market Company ("Predecessor") for the 32 
week period ended September 10, 1994 ("Predecessor period"). 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 February 1, 1997 and February 3, 1996 and the results of its 
operations and its cash flows for the Successor periods and the Predecessor 
period in conformity with generally accepted accounting principles.



                                       /s/ Ernst & Young LLP
                                       ---------------------
                                       Ernst & Young LLP

Boston, Massachusetts
March 28, 1997, except for
Note 5, as to which the date is
April 21, 1997


                         Star Markets Company, Inc.

                               Balance Sheets

                  (Amounts in thousands, except share data)

<TABLE>
<CAPTION>

                                                      February 1,    February 3,
                                                         1997           1996
                                                      -----------    -----------
Assets
<S>                                                    <C>            <C>
Current assets:
  Accounts receivable, net of reserve for doubtful
   accounts of $1,589 in 1996 and $1,779 in 1995       $ 21,815       $ 13,544
  Inventory                                              65,550         62,915
  Prepaid expenses                                        4,959          5,044
                                                       -----------------------
Total current assets                                     92,324         81,503

Property and equipment at cost:
  Land                                                   31,015         32,402
  Building                                               66,603         68,876
  Equipment & fixtures                                   88,623         71,148
  Leasehold improvements                                 44,024         28,670
                                                       -----------------------
Total property & equipment                              230,265        201,096
  Less accumulated depreciation and amortization         35,569         19,423
                                                       -----------------------
Net property and equipment                              194,696        181,673

Other assets, net                                        33,058         25,885
Goodwill, net                                           133,192        136,442
                                                       -----------------------
Total Assets                                           $453,270       $425,503
                                                       =======================

Liabilities and Shareholder's Equity
Current liabilities:
  Accounts payable                                     $ 46,798       $ 39,770
  Accrued payroll & benefits                             12,842         12,509
  Current portion self-insurance                          8,121          7,967
  Accrued interest                                        6,003          5,133
  Other current liabilities                              13,637         10,170
                                                       -----------------------
Total current liabilities                                87,401         75,549

Self-insurance reserves, less current portion            18,960         19,687
Other liabilities                                         3,772          3,532
Long-term debt                                          271,827        257,400

Redeemable preferred stock, redemption
 value $11,000                                           10,230         10,134

Shareholder's equity:
  Common stock, $.01 par value, 10,000 shares
   authorized and 5,000 shares outstanding                    0              0
  Additional paid-in-capital                             84,907         73,692
  Retained earnings (deficit)                           (23,827)       (14,491)
                                                       -----------------------
Total shareholder's equity                               61,080         59,201
                                                       -----------------------
Total Liabilities and Shareholder's Equity             $453,270       $425,503
                                                       =======================
</TABLE>

See accompanying notes.


                         Star Markets Company, Inc.

                          Statements of Operations

                           (Amounts in thousands)

<TABLE>
<CAPTION>
                                                          The Company                    Predecessor
                                           -----------------------------------------    -------------
                                            52 Weeks       53 Weeks       20 Weeks        32 Weeks
                                              Ended          Ended,         Ended           Ended
                                           February 1,    February 3,    January 28,    September 10,
                                              1997           1996           1995            1994
                                           -----------    -----------    -----------    -------------

<S>                                         <C>            <C>            <C>             <C>
Total revenues                              $954,531       $854,504       $308,304        $496,989
Cost of goods sold                           715,090        656,813        240,781         388,682
                                            ------------------------------------------------------
Gross profit                                 239,441        197,691         67,523         108,307

Operating and administrative expenses        197,314        158,723         53,921          83,823
Depreciation and amortization                 22,178         19,326          7,218           8,295
                                            ------------------------------------------------------
                                              19,949         19,642          6,384          16,189

Parent charges                                                                                 923
Interest expense                              28,894         28,382          9,781              27
Other income (expenses), net                     (13)           100            (10)           (676)
                                            ------------------------------------------------------

Income (loss) before income taxes and
 extraordinary items                          (8,958)        (8,640)        (3,407)         14,563

Income taxes                                     378            250            100           5,971
                                            ------------------------------------------------------

Income (loss) before extraordinary items      (9,336)        (8,890)        (3,507)          8,592

Extraordinary loss                                                          (2,094)
                                            ------------------------------------------------------

Net income (loss)                           $ (9,336)      $ (8,890)      $ (5,601)       $ 8,592
                                            =====================================================
</TABLE>

See accompanying notes.

                         Star Markets Company, Inc.

                            Statements of Equity

                           (Amounts in thousands)
<TABLE>
<CAPTION>
                                                      Additional
                                            Common     Paid-In-     Retained
              The Company                   Stock      Capital      Earnings    Total
              -----------                   ------    ----------    --------    -----

<S>                                         <C>        <C>          <C>         <C>
Balance at September 10, 1994
(Inception)                                   -            -            -          -
  Proceeds from issuance of common stock               $ 75,000                 $75,000
  Net loss                                                          $ (5,601)    (5,601)
  Accretion of preferred stock                              (37)                    (37)
  Preferred stock dividend                                 (483)                   (483)
                                            -------------------------------------------
Balance at January 28, 1995                 $    0       74,480       (5,601)    68,879
  Net loss                                                            (8,890)    (8,890)
  Accretion of preferred stock                              (97)                    (97)
  Preferred stock dividend                               (1,248)                 (1,248)
  Deferred compensation                                     557                     557
                                            -------------------------------------------
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
                                            ===========================================

</TABLE>

<TABLE>
<CAPTION>
                                                       Division
                  Predecessor                           Equity
                  -----------                          --------

<S>                                                    <C>
Balance at January 29, 1994                            $ 83,906
  Net income                                              8,592
                                                       --------
Balance at September 10, 1994 (Pre-acquisition)          92,498
  Cancellation of Predecessor equity                    (92,498)
                                                       --------
Balance at September 10, 1994 (Post-acquisition)       $      0
                                                       ========
</TABLE>

See accompanying notes.

                         Star Markets Company, Inc.

                          Statements of Cash Flows

                           (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                    The Company                    Predecessor
                                                     -----------------------------------------     -----------
                                                      52 Weeks       53 Weeks       20 Weeks        32 Weeks
                                                        Ended          Ended,         Ended           Ended
                                                     February 1,    February 3,    January 28,    September 10,
                                                        1997           1996           1995            1994
                                                     ----------------------------------------------------------

<S>                                                   <C>            <C>           <C>              <C>
Operating activities
Net income (loss)                                     $ (9,336)      $ (8,890)     $  (5,601)       $  8,592
Adjustments to reconcile net loss to net
 cash provided by operating activities:
  Extraordinary loss                                                                   2,094
  Amortization of deferred financing costs               1,543          1,564            914
  Depreciation and amortization                         22,178         19,326          7,218           8,295
  Loss (gain) on sale or disposal of
   property and equipment                                   15            (93)            16             305
  Changes in operating assets and liabilities:
    Accounts receivable                                 (8,271)         2,008         (1,588)          2,160
    Inventories                                         (2,636)        (3,529)        (3,926)           (165)
    Prepaid expenses                                        85         (1,888)        (2,463)           (217)
    Accounts payable                                     7,028          1,139          9,744          (2,637)
    Accrued payroll and benefits                           333          1,686          2,192             585
    Self-insurance reserves                               (571)        (2,445)           838              36
    Accrued interest                                       870          1,231          3,902
    Other current liabilities                            2,754         (1,604)         3,458         (11,323)
    Other                                                  524         (4,263)           393              (1)
                                                      ------------------------------------------------------
Net cash provided by operating activities               14,516          4,242         17,191           5,630
Investing activities
Purchases of property and equipment                    (34,762)       (60,710)       (25,494)         (4,319)
Proceeds from sale of property and equipment             4,365         56,296                             36
Decrease (increase) in restricted cash                   6,028         (6,028)
Purchase of other intangibles                                                           (500)
Purchase of Cape Ann Market, Inc.                                      (5,293)
Acquisition of leasehold interests                     (20,064)
Purchase of business and assets net of cash
 acquired                                                                           (299,416)
                                                      ------------------------------------------------------
Net cash used in investing activities                  (44,433)       (15,735)      (325,410)         (4,283)
Financing Activities
Net proceeds from revolving credit facility             12,400         18,400
Proceeds from long-term debt                             4,087                       341,000
Repayment of long-term debt                             (1,340)        (1,000)      (100,000)
Net proceeds from issuance of redeemable
 preferred stock                                                                      10,000
Net proceeds from issuance of common stock                                            75,000
Preferred dividends paid                                (1,230)        (1,226)          (178)
Deposits refunded (made)                                 4,000         (4,500)
Equity contribution                                     12,000
Deferred financing costs                                                 (181)       (17,603)
Change in due from/to Parent and affiliates                                                            6,578
                                                      ------------------------------------------------------
Net cash provided by financing activities               29,917         11,493        308,219           6,578

Net increase in cash and cash equivalents                    0              0              0           7,925
Cash and cash equivalents beginning of period                0              0              0          (3,079)
                                                      ------------------------------------------------------
Cash and cash equivalents end of period               $      0       $      0      $       0        $  4,846
                                                      ======================================================
Supplemental disclosure of cash flow information:
  Cash paid for interest                              $ 26,374       $ 25,382      $   5,939        $      0
  Cash paid for income taxes                               370            359              0               0

</TABLE>

See accompanying notes.


                         Star Markets Company, Inc.

                        Notes to Financial Statements

                              February 1, 1997

1.  Background
Star Markets Company, Inc., a Massachusetts corporation (the "Company"), is 
a leading food retailer in the metropolitan Boston area and operated 48 
stores as of February 1, 1997. 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.  Acquisitions
Star Market Company ("Predecessor") was operated as a division of Jewel Food 
Stores, Inc. ("Jewel"), a wholly-owned subsidiary of American Stores Company 
(the "Parent" or "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 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.

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 1995, the Company adjusted the amount of goodwill initially recorded 
by approximately $3.0 million as a result of the resolution of contingencies 
identified as part of the original purchase price allocation.

In May 1995, the Company purchased the operations, which consisted of three 
conventional supermarkets, and certain assets of Cape Ann Market, Inc. for 
an aggregate purchase price of $5.0 million, exclusive of related fees and 
expenses.

3.  Significant Accounting Policies

Basis of Presentation
The historical financial statements of Predecessor for the 32-week period 
ended September 10, 1994 are presented as if Predecessor existed as a 
separate entity from Jewel/ASC during the period presented and include 
financial information directly related to its operations.

Reclassification 
Certain amounts in the historical financial statements of the Company and 
Predecessor 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 "1996", "1995", the "20 week period", the "32 week 
period", and "1994", mean the 52-week fiscal year ended February 1, 1997, 
the 53-week fiscal year ended February 3, 1996, the 20-week period ended 
January 28, 1995, and the 32-week period ended September 10, 1994, 
respectively. The effect of the additional week on 1995 results of 
operations was not material.

Cash and Cash Equivalents
The Company considers all highly liquid investments with an initial maturity 
of three months or less to be cash equivalents.

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 February 1, 
1997 and February 3, 1996 was $8.3 million and $4.8 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 February 1, 1997 and February 3, 1996 was $3.6 million and 
$2.1 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.

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
Effective February 4, 1996, the Company adopted Statement of Financial 
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived 
Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121). SFAS No. 
121 requires impairment losses to be recorded on long-lived assets used in 
operations when indicators of impairment are present and the undiscounted 
cash flows estimated to be generated by those assets are less than the 
assets' carrying amounts. SFAS No. 121 also addresses the accounting for 
long-lived assets that are expected to be disposed of. There was no effect 
on the financial statements due to the adoption of the provisions of this 
statement.

Advertising Expense
Total advertising expense amounted to $10.5 million, $9.8 million, $3.3 
million, and $5.3 million in 1996, 1995, the 20 week period, and the 32 week 
period, respectively. The Company expenses all advertising costs as 
incurred.

4.  Financial Instruments

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

Cash and cash equivalents, 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>

                     February 1, 1997        February 3, 1996
                  ---------------------    --------------------
                  Carrying                 Carrying
                   Amount    Fair Value     Amount    Fair Value
                  ----------------------------------------------
<S>               <C>         <C>          <C>         <C>
Long-term debt    $273,548    $287,298     $258,400    $260,325

</TABLE>

5.  Long-term Debt

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

<TABLE>
<CAPTION>

                                     April 21, 1997    February 1, 1997    February 3, 1996
                                     --------------    ----------------    ----------------

<S>                                     <C>                <C>                 <C>
Senior Credit Facility:
  Term Loan:   Tranche A                                   $ 38,500            $ 39,250
               Tranche B                $ 39,750             39,750              39,875
               Tranche C                  29,750             29,750              29,875
               Additional Tranche C       38,500                  0                   0
  Revolving credit facility               37,400             51,800              39,400
                                        -----------------------------------------------
Total Senior Credit Facility             145,400            159,800             148,400
13% Senior subordinated notes            110,000            110,000             110,000
8% Note Payable                            3,573              3,748                   0
                                        -----------------------------------------------
Total                                    258,973            273,548             258,400
Less current maturities                    1,054              1,721               1,000
                                        -----------------------------------------------
                                        $257,919           $271,827            $257,400
                                        ===============================================
</TABLE>

The following table presents the maturities of the long-term debt for the 
next five fiscal years and thereafter (in thousands) as of April 21, 1997, 
after the third amendment to the Senior Credit Facility:

<TABLE>

<S>                             <C>
Fiscal   1997                   $    865
         1998                      1,099
         1999                      1,163
         2000                     20,796
         2001 and thereafter     235,050
                                --------
         Total                  $258,973
                                ========

</TABLE>

Senior Credit Facility
The Senior Credit Facility (as first amended in January 1996, amended again 
in June 1996, and further amended on April 21, 1997), dated as of September 
8, 1994, provides for a total of $183.0 million of term and revolving loan 
credit (the "loans").

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 February 1, 1997, the Company had outstanding letters 
of credit totaling $8.8 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 .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 February 1, 1997, the interest rates on the term loan facility ranged 
from 8.00% to 9.00% and the weighted average interest rate on amounts 
outstanding under the revolving credit facility at February 1, 1997 and 
February 3, 1996 were 8.11% and 8.50%, respectively.

The loans require that under certain circumstances, proceeds from the 
issuance of certain debt or equity or specified asset sales, exchanges or 
excess cash flow are required to prepay indebtedness under the loan 
facility. The terms of the Senior Credit Facility have been amended to allow 
for certain proceeds from the sale of assets to be used to partially fund 
acquired store locations. The Company also obtained a waiver to the Senior 
Credit Facility for the fourth quarter ended February 1, 1997, relating to 
certain financial covenants. In order to accommodate continued investment in 
new store growth, the terms of the Senior Credit Facility were further 
amended on April 21, 1997. This amendment, dated April 21, 1997, provides 
for a $108.0 million term loan facility and a $75.0 revolving credit 
facility, extends certain term loans, extends the revolving credit facility 
by two years to December 31, 2001, and amends certain financial covenants.

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.

On November 22, 1994, the Company filed a registration statement on Form S-4 
under the Securities Act of 1933 which was declared effective on March 9, 
1995 pursuant to which an exchange offering was completed to exchange the 
Notes for a series of notes of the Company with terms substantially 
identical to the Notes.

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

Subordinated Loan Facility
The Subordinated Loan Facility, dated September 8, 1994, provided for 
borrowings of $75.0 million of unsecured subordinated loans. The 
indebtedness under the Subordinated Loan Facility was repaid in 1994 prior 
to its maturity out of the proceeds of the Notes offering. Accordingly, the 
write-off of deferred financing costs has been reflected as an extraordinary 
item in the Statement of Operations for the 20-week period. The Subordinated 
Loan Facility was subject to interest at a rate of 11.75% per annum.

Capitalized interest totaled $55,000, $1,839,000, $835,000, and $15,000 for 
1996, 1995, the 20 week period, and the 32 week period, respectively.

6.  Preferred Stock
The Company is authorized to issue 10,000 shares of preferred stock, par 
value $.01 per share. During the 20-week period ended January 28, 1995, 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 therefore, 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 
February 1, 1997. 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.

7.  Leases
The Company leases retail stores and equipment. The store leases have an 
average of approximately 32 years until final expiration, with only one 
store having less than five years until final maturity. The store leases 
generally have renewal options and provide for contingent rent based on 
sales levels in excess of specified levels.

The summary below shows the aggregate future minimum lease commitments at 
February 1, 1997. Operating leases are shown net of an aggregate $4.8 
million of minimum rental income under noncancelable subleases.

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

<S>                                 <C>
1997                                $ 20,306
1998                                  20,220
1999                                  19,446
2000                                  17,674
2001                                  18,690
Thereafter                           215,472
                                    --------
Total minimum rent commitments      $311,808
                                    ========
</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>
1996        $16,639   $(970)     $15,669   $  338   $16,007
1995          9,876    (560)       9,316      431     9,747
20 weeks      3,030    (168)       2,862      220     3,082
32 weeks      3,877    (201)       3,676    1,170     4,846

</TABLE>

Additionally, rent expense for personal property totaled approximately $2.1 
million, $1.7 million, $0.6 million, and $0.9 million for 1996, 1995, the 20 
week period, and the 32 week period, 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 February 1, 1997 
was $0.4 million.

8.  Income Taxes

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

<TABLE>
<CAPTION>
                           The Company         Predecessor
                      ------------------------------------
                      1996   1995   20 weeks    32 weeks
                      ------------------------------------

<S>                   <C>    <C>    <C>          <C>
Current:
Federal                                          $5,097
State                 $378   $250   $100            874
                      ---------------------------------
Income taxes          $378   $250   $100         $5,971
                      =================================

</TABLE>

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

<TABLE>
<CAPTION>
                                                  The Company              Predecessor
                                           ----------------------------    -----------
                                            1996      1995     20 weeks    32 weeks
                                           -------------------------------------------

<S>                                        <C>       <C>       <C>          <C>
Statutory federal income tax rate          (34.0%)   (34.0%)   (34.0%)      35.0%
State income taxes, net of federal
 income tax effect                           4.2       2.9        1.8        6.0
Unbenefitted Losses / Loss Carryforward     34.0      34.0       34.0
                                           -------------------------------------
Effective income tax rate                    4.2%      2.9%       1.8%      41.0%
                                           =====================================
</TABLE>

Deferred tax assets and liabilities as of 1996 and 1995 related to the 
following temporary differences (in thousands):

<TABLE>
<CAPTION>
                                     February 1,    February 3,
                                        1997           1996
                                     --------------------------

<S>                                   <C>           <C>
Deferred tax liabilities:
  Goodwill                            ($3,393)      ($2,008)
  Basis in fixed assets                (3,786)       (1,558)
  Other, net                           (1,489)       (1,313)
                                      ---------------------
Total deferred tax liabilities         (8,668)       (4,879)
Deferred tax assets:
  Self-insurance reserves              14,522        13,367
  Net operating loss carryforward      13,816         7,794
  Compensation and benefits             2,194         2,010
  Miscellaneous accruals                  575           988
  Other, net                            1,777           940
                                      ---------------------
Total deferred tax assets              32,884        25,099
Valuation allowance                   (24,216)      (20,220)
                                      ---------------------
Net deferred tax assets                 8,668         4,879
                                      ---------------------
                                     $      0      $      0
                                     ======================

</TABLE>

The Company has tax net operating loss carryforwards of $36.0 million that 
expire through 2012. 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 February 1, 1997.

9.  Postretirement Health Care Benefits
Prior to January 1, 1996, it was the Company's practice that employees were 
eligible to participate in a plan that provided certain health care benefits 
to eligible retirees of certain defined employee groups under two unfunded 
plans, a defined dollar and a full coverage benefit plan. Effective January 
1, 1996 the Company revised its retiree health care practice. Eligible 
retirees desiring health care coverage may now purchase it directly from a 
local provider of such coverages. While the benefits provided to the 
retirees remained essentially unchanged, none of the costs are borne by the 
Company. As a result, the Company's postretirement benefit liability was 
reduced by $1.5 million at February 3, 1996.

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. Prior to 
September 10, 1994, employees of Predecessor participated in and contributed 
to a Parent-sponsored defined contribution retirement plan, American Stores 
Retirement Estates, which was substantially identical to the SMRE.

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>

                                   The Company             Predecessor
                           ----------------------------    -----------
                            1996      1995     20 weeks     32 weeks
                           -----------------------------------------

<S>                        <C>       <C>        <C>          <C>
Company-sponsored plans    $2,685    $2,271     $1,701       $3,463
Multi-employer plans        2,102     1,929        685        1,127
                           ----------------------------------------
                           $4,787    $4,200     $2,386       $4,590
                           ========================================

</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 paid Investcorp and its 
affiliates $13.2 million for acquisition, financing, management advisory and 
consulting services.

Prior to September 10, 1994, Predecessor incurred parent company charges 
which represented costs related to corporate salaries, benefits, 
administrative, data processing, interest expense, and miscellaneous income 
and expenses. Charges were allocated based upon relative operating profit of 
Predecessor and other factors at the discretion of the management of the 
Parent.

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.