FORM 10-Q


                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549


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


                For the quarterly period ended August 1, 1998

                        Commission file number 0-6319


                             JACOBSON STORES INC.
            (Exact name of registrant as specified in its charter)



                   Michigan                          38-0686330
    (State or other jurisdiction of                 (IRS Employer 
    incorporation or organization)               Identification Number)

                  3333 Sargent Road, Jackson, Michigan 49201
        (Address of principal executive offices, including zip code)

                                (517) 764-6400
             (Registrant's telephone number, including area code)

                                Not Applicable
             (Former name, former address and former fiscal year,
                        if changed since last report)


            Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

                                Yes [X] No [ ]

            Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                         Common Stock ($1 Par Value):
            5,785,646-2/3 Shares outstanding as of August 1, 1998



<PAGE>


              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                                  FORM 10-Q

                       For Quarter Ended August 1, 1998


                                    INDEX


                                                                        Page
PART I:    FINANCIAL INFORMATION

    Item 1.  Financial Statements

       . Consolidated Balance Sheets - August 1, 1998 and
         January 31, 1998                                                  1

       . Consolidated Statements of Earnings - Thirteen and Twenty-Six
         Week Periods Ended August 1, 1998 and July 26, 1997               2

       . Consolidated Statements of Cash Flows - Twenty-
         Six Week Periods Ended August 1, 1998 and July 26, 1997           3

       . Notes to Consolidated Financial Statements                        4

       Review by Independent Public Accountants                            7

       Exhibit:

       . Report of Independent Public Accountants                          8

    Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations                           9

    Item 3.  Quantitative and Qualitative Disclosures About Market Risk   13

PART II:   OTHER INFORMATION

    Item 4.  Submission of Matters to a Vote of Security Holders          14

    Item 5.  Other Information                                            15

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

        All items except those set forth above are inapplicable and have been
omitted.


SIGNATURES                                                                16

INDEX OF EXHIBITS



<PAGE>
<TABLE>
<CAPTION>


              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                         CONSOLIDATED BALANCE SHEETS
                                (in thousands)
                                 (unaudited)

                                                   August 1,     January 31,
                                                     1998            1998
                                                   ---------     -----------
<S>                                                <C>             <C>      
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                       $   3,005       $   3,883
   Receivables from customers, net                    27,544          34,124
   Merchandise inventories                            78,614          86,075
   Prepaid expenses and other assets                   1,340           1,333
   Deferred taxes                                      3,696           3,696
                                                   ---------       ---------

           Total current assets                      114,199         129,111
                                                   ---------       ---------
PROPERTY AND EQUIPMENT, NET                           84,781          83,707
                                                   ---------       ---------
OTHER ASSETS                                          20,663          20,461
                                                   ---------       ---------
                                                   $ 219,643       $ 233,279
                                                   =========       =========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt               $   3,655       $   3,972
   Accounts payable                                   29,545          32,108
   Accrued expenses                                   14,076          13,856
   Accrued income taxes                                 --               360
                                                   ---------       ---------
           Total current liabilities                  47,276          50,296
                                                   ---------       ---------
LONG-TERM DEBT                                        98,214         104,138
                                                   ---------       ---------
DEFERRED TAXES                                         3,538           5,262
                                                   ---------       ---------
OTHER LIABILITIES                                      4,183           4,382
                                                   ---------       ---------
SHAREHOLDERS' EQUITY:
   Common stock                                        5,973           5,966
   Paid-in surplus                                     7,183           7,109
   Retained earnings                                  53,675          56,525
   Treasury stock                                       (399)           (399)
                                                   ---------       ---------
                                                      66,432          69,201
                                                   ---------       ---------
                                                   $ 219,643       $ 233,279
                                                   =========       =========
<FN>

       The accompanying notes are an integral part of these statements.
</TABLE>

                                    - 1 -

<PAGE>
<TABLE>
<CAPTION>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                     CONSOLIDATED STATEMENTS OF EARNINGS
                     (in thousands except per share data)
                                 (unaudited)



                                         Thirteen Weeks Ended       Twenty-Six Weeks Ended
                                         ----------------------   ------------------------
                                          August 1,     July 26,     August 1,     July 26,
                                            1998         1997          1998         1997  
                                          ---------     --------     ---------     --------
<S>                                       <C>          <C>          <C>          <C>      
NET SALES                                 $  95,256    $  95,938    $ 210,081    $ 207,846
                                          ---------    ---------    ---------    ---------

COSTS AND EXPENSES:
   Cost of merchandise sold, buying and
       occupancy expenses                    70,184       72,381      142,946      144,695
   Selling, general and administrative
       expenses                              31,390       30,561       67,594       64,361
   Interest expense, net                      1,978        2,289        3,926        4,737
   Store closing costs (credit)                --           (340)        --           (340)
                                          ---------    ---------    ---------    ---------

         Total costs and expenses           103,552      104,891      214,466      213,453
                                          ---------    ---------    ---------    ---------

EARNINGS (LOSS) BEFORE INCOME
   TAXES                                     (8,296)      (8,953)      (4,385)      (5,607)

PROVISION (CREDIT) FOR INCOME
   TAXES                                     (2,904)      (3,134)      (1,535)      (1,963)
                                          ---------    ---------    ---------    ---------


NET EARNINGS (LOSS)                       $  (5,392)   $  (5,819)   $  (2,850)   $  (3,644)
                                          =========    =========    =========    =========



EARNINGS (LOSS) PER COMMON SHARE:
   Basic and diluted                      $   (0.93)   $   (1.00)   $   (0.49)   $   (0.63)
                                          =========    =========    =========    =========

<FN>

       The accompanying notes are an integral part of these statements.
</TABLE>

                                    - 2 -

<PAGE>
<TABLE>
<CAPTION>


              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                 (unaudited)

                                                          Twenty-Six Weeks Ended
                                                          ----------------------
                                                           August 1,      July 26,
                                                              1998          1997
                                                          -----------   --------
<S>                                                       <C>         <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                               $ (2,850)   $ (3,644)
   Adjustments to reconcile net loss to cash provided
   by operating activities:
      Depreciation and amortization                          4,228       4,685
      Deferred taxes                                        (1,724)     (1,939)
      Other liabilities                                       (199)        228

      Change in:
         Receivables from customers, net                     6,580      11,207
         Merchandise inventories                             7,461      20,643
         Prepaid expenses and other assets                      (7)        648
         Accounts payable and accrued expenses              (2,343)    (14,596)
         Current income taxes                                 (360)       --
                                                          --------    --------

              Net cash provided by operating activities     10,786      17,232
                                                          --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property and equipment                      (5,302)       (861)
   Other non-current assets                                   (202)        (67)
                                                          --------    --------

              Net cash used in investing activities         (5,504)       (928)
                                                          --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Additions to long-term debt                                --        49,500
   Reduction of long-term debt                              (6,241)    (67,561)
   Proceeds of exercise of stock options                        81        --
                                                          --------    --------

              Net cash used in financing activities         (6,160)    (18,061)
                                                          --------    --------

INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS                                                   (878)     (1,757)

   Cash and cash equivalents, beginning of period            3,883       4,871
                                                          --------    --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                  $  3,005    $  3,114
                                                          ========    ========

<FN>

       The accompanying notes are an integral part of these statements.
</TABLE>

                                    - 3 -

<PAGE>


              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (unaudited)


                       For Quarter Ended August 1, 1998




        The condensed financial statements included herein have been prepared
        by the Company without audit and reflect all adjustments which are,
        in the opinion of management, necessary to achieve a fair statement
        of results for the interim periods. All adjustments are of a normal
        and recurring nature.

        Because of the nature of the specialty department store business, the
        results for the twenty-six week periods ended August 1, 1998 and July
        26, 1997 (which do not include the Christmas holiday season) are not
        indicative of the results for the year as a whole.

        Certain information in footnote disclosures normally included in
        financial statements prepared in accordance with generally accepted
        accounting principles has been condensed or amended, although the
        Company believes that the disclosures are adequate to make the
        information presented not misleading. It is suggested that these
        condensed financial statements be read in conjunction with the
        financial statements and notes to consolidated financial statements
        included in the Company's latest annual report on Form 10-K.

  (1)   STORE CLOSING COSTS

        In March 1997, the Company closed under-performing stores in Jackson,
        Kalamazoo and Dearborn, Michigan. The Company incurred a $4,200,000
        pre-tax charge in fiscal 1996 to effect the closings and to state
        property and equipment at estimated fair value. For the twenty-six
        weeks ended August 1, 1998, store closing reserve activity was as
        follows:
<TABLE>
<CAPTION>

                           (in thousands)
                           --------------

                           <S>                                 <C>
                           Reserve at January 31, 1998         $  2,623
                           Payments against reserve                 207
                                                               --------
                           Reserve at August 1, 1998           $  2,416
                                                               ========
</TABLE>

                                    - 4 -

<PAGE>


              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (unaudited)


                       For Quarter Ended August 1, 1998



        At August 1, 1998, $2,210,000 of the store closing reserve is
        attributable to property and equipment and is reflected as a
        reduction of property and equipment on the consolidated balance
        sheets. The balance of the store closing reserve is included in
        accrued expenses and represents estimated expense to hold closed
        facilities pending disposition.

  (2)   EARNINGS PER SHARE

        Basic earnings per share are computed by dividing reported earnings
        available to common shareholders by weighted average common shares
        outstanding. Diluted earnings per share give effect to potential
        common shares represented by stock options and the Company's 6-3/4%
        Convertible Subordinated Debentures due 2011, except if
        anti-dilutive. Earnings per common share are calculated as follows:
<TABLE>
<CAPTION>

                                                    Thirteen Weeks      Twenty-Six Weeks
        (dollars and shares in thousands)           1998      1997         1998      1997
        ---------------------------------------    --------------------------------------

        <S>                                       <C>        <C>        <C>       <C>     
        Net loss                                  $(5,392)   $(5,819)   $(2,850)  $(3,644)
                                                  =======    =======    =======   =======

        Weighted average common shares
            outstanding                             5,782      5,779      5,781     5,779
        Dilutive stock options                        225         18        213         5
                                                  -------    -------    -------   -------

            Shares used to calculate diluted
               loss per common share                6,007      5,797      5,994     5,784
                                                  =======    =======    =======   =======

        Loss per common share:
            Basic and diluted                      $ (.93)   $ (1.00)   $  (.49)  $ (.63)
                                                  =======    =======    =======   =======
</TABLE>


  (3)   CUSTOMER CREDIT AND RECEIVABLES
<TABLE>
<CAPTION>

        Receivables from customers were as follows:
                                                                    August 1,   January 31,
        (in thousands)                                                 1998         1998
        ------------------------------------                       ---------------------

        <S>                                                         <C>          <C>      
        Receivables from customers                                  $  28,012    $  34,761
        Less reserve for doubtful accounts                                468          637
                                                                    ---------    ---------

                                                                    $  27,544    $  34,124
                                                                    =========    =========
</TABLE>

                                    - 5 -

<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (unaudited)


                       For Quarter Ended August 1, 1998



   (4)  MERCHANDISE INVENTORIES

        Merchandise inventories were as follows:
<TABLE>
<CAPTION>

                                                                  August 1,   January 31,
        (in thousands)                                              1998         1998
        ----------------------------------------------            -----------------------

        <S>                                                       <C>           <C>      
        Inventories at first-in, first out (FIFO) cost            $ 97,855      $ 104,708
        Less LIFO reserves                                          19,241         18,633
                                                                  --------      ---------

                                                                  $ 78,614      $  86,075
                                                                  ========      =========
</TABLE>

  (5)   PROPERTY AND EQUIPMENT

        Property and equipment are set forth below:
<TABLE>
<CAPTION>

                                                                  August 1,   January 31,
        (in thousands)                                              1998         1998
        ----------------------------------------------           ------------------------

        <S>                                                      <C>            <C> 
        Property and equipment                                   $ 177,110      $ 171,808
        Less accumulated depreciation and amortization              92,329         88,101
                                                                 ---------      ---------

                                                                 $  84,781      $  83,707
                                                                 =========      =========
</TABLE>

  (6)   STOCK OPTIONS

        At their Annual Meeting on May 28, 1998, the Company's shareholders
        approved an amendment to the Jacobson Stock Option Plan of 1994 which
        increased the available shares under the plan to 1,400,000 shares.


  (7)   SUPPLEMENTARY CASH FLOW INFORMATION

        The Company considers all short-term investments with a maturity at
        date of purchase of three months or less to be cash equivalents.

        Interest paid (net of interest capitalized) totaled $3,959,000 and
        $4,945,000 in the twenty-six week periods ended August 1, 1998 and
        July 26, 1997, respectively. The Company paid income taxes totaling
        $548,000 in the twenty-six week period ended August 1, 1998, and
        received income tax refunds of $30,000 in the twenty-six week period
        ended July 26, 1997.

                                    - 6 -

<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                        PART I: FINANCIAL INFORMATION

                       For Quarter Ended August 1, 1998






  (8)   FINANCING

        In June 1998, the Company and the lender under its Revolving Credit
        Agreement amended the Agreement to extend the maturity date by one
        year to March 24, 2001. As amended, each year, beginning in 1999, the
        Company may request a one-year extension of the maturity date,
        subject to lender approval.

        REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS

        Arthur Andersen LLP, independent public accountants, have performed a
        limited review of the condensed consolidated financial statements for
        the twenty-six week period ended August 1, 1998. Since they did not
        perform an audit, they express no opinion on the financial statements
        referred to above.

                                    - 7 -

<PAGE>

                                                                      EXHIBIT

                             ARTHUR ANDERSEN LLP




                   Report of Independent Public Accountants




To Jacobson Stores Inc.:

            We have reviewed the accompanying condensed consolidated balance
            sheet of JACOBSON STORES INC. (a Michigan corporation) and
            subsidiaries as of August 1, 1998, and the related condensed
            consolidated statements of earnings and cash flows for the
            twenty-six week period then ended. These financial statements are
            the responsibility of the Company's management.

            We conducted our review in accordance with standards established
            by the American Institute of Certified Public Accountants. A
            review of interim financial information consists principally of
            applying analytical procedures to financial data and making
            inquiries of persons responsible for financial and accounting
            matters. It is substantially less in scope than an audit
            conducted in accordance with generally accepted auditing
            standards, the objective of which is the expression of an opinion
            regarding the financial statements taken as a whole. Accordingly,
            we do not express such an opinion.

            Based on our review, we are not aware of any material
            modifications that should be made to the condensed consolidated
            financial statements referred to above for them to be in
            conformity with generally accepted accounting principles.

            We have previously audited, in accordance with generally accepted
            auditing standards, the consolidated balance sheet of Jacobson
            Stores Inc. and subsidiaries as of January 31, 1998, and the
            related consolidated statements of earnings, shareholders' equity
            and cash flows for the year then ended (not presented herein),
            and, in our report dated March 6, 1998, we expressed an
            unqualified opinion on those consolidated financial statements.
            In our opinion, the information set forth in the accompanying
            consolidated balance sheet as of January 31, 1998, is fairly
            stated, in all material respects, in relation to the consolidated
            balance sheet from which it has been derived.



                                                      /s/ ARTHUR ANDERSEN LLP

Detroit, Michigan
August 14, 1998

                                    - 8 -

<PAGE>


              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                        PART I: FINANCIAL INFORMATION

                       For Quarter Ended August 1, 1998




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

            The registrant, Jacobson Stores Inc., a Michigan corporation and
            successor to a business founded in 1868, offers distinctive
            apparel and accessories for women, men and children, as well as
            decorative accents for the home. The Company operates 24
            specialty stores in Michigan, Indiana, Kansas, Kentucky, Ohio and
            Florida, catering to discerning customers with preferences for
            quality merchandise and personalized service provided by
            knowledgeable sales associates.

            The Company owns a substantial portion of the real property used
            in its business, primarily through its consolidated, wholly-owned
            real estate subsidiary, Jacobson Stores Realty Company ("Jacobson
            Realty"). The Company also has a consolidated wholly-owned
            finance subsidiary, Jacobson Credit Corp. ("Jacobson Credit"). As
            used in this report, the terms "registrant", "Company" and
            "Jacobson's" refer to Jacobson Stores Inc. and its subsidiaries
            unless the context indicates otherwise.

            Jacobson's operates in two regions and maintains separate staffs
            of buyers for each region in order to better respond to
            customers' lifestyles and merchandise preferences. The principal
            merchandising and distribution functions are performed through
            regional facilities. Functions common to all stores, such as
            management coordination, sales promotion, data processing and
            accounting, are centralized at the corporate headquarters in
            Jackson, Michigan.

        a.  OPERATING  RESULTS:  THIRTEEN  WEEKS ENDED AUGUST 1, 1998  
            COMPARED TO THIRTEEN  WEEKS ENDED JULY 26, 1997

            Sales for the quarter ended August 1, 1998, totaled $95,256,000,
            a decrease of 0.7% from 1997. Sales from comparable stores
            (excluding a store closed in May 1997) increased 0.3%. By region,
            Midwest sales decreased 2.2% (0.8% decrease in comparable stores)
            and Florida sales increased 2.7%.

            The Company's gross profit percentage increased to 26.3% for the
            thirteen weeks this year from 24.6% in 1997, reflecting
            principally lower markdowns and higher markup.

            Selling, general and administrative expenses, expressed as a
            percentage of sales, increased to 33.0% in the quarter from 31.9%
            one year ago. The increase is due primarily to higher payroll and
            sales promotion expense, partially offset by reduced benefit
            expense (pension and health care).

                                    - 9 -

<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                        PART I: FINANCIAL INFORMATION

                       For Quarter Ended August 1, 1998



            Interest expense, expressed as a percentage of sales, decreased
            to 2.1% for the quarter from 2.4% one year ago, primarily due to
            lower borrowings under the revolving credit facility.

            1998 net loss for the thirteen weeks totaled $5,392,000, or 93
            cents per common share, compared to $5,819,000, or $1.00 per
            common share, last year. As a percent of sales, net loss was 5.7%
            in 1998 compared to 6.1% in 1997.

        b.  OPERATING  RESULTS:  TWENTY-SIX  WEEKS ENDED  AUGUST 1, 1998  
            COMPARED  TO  TWENTY-SIX WEEKS ENDED JULY 26, 1997

            Sales for the twenty-six weeks ended August 1, 1998, totaled
            $210,081,000, an increase of 1.1% from 1997. Sales from
            comparable stores (excluding four stores closed in 1997)
            increased 5.0%. By region, Midwest sales decreased 0.7% (5.5%
            increase in comparable stores) and Florida comparable store sales
            increased 4.1%.

            The Company's gross profit percentage increased to 32.0% for the
            twenty-six weeks this year from 30.4% in 1997, reflecting
            principally lower markdowns and higher markup.

            Selling, general and administrative expenses, expressed as a
            percentage of sales, increased to 32.2% for the twenty-six weeks
            from 31.0% one year ago. The increase is due primarily to higher
            payroll and sales promotion expense, partially offset by reduced
            benefit expense (pension and health care).

            Interest expense, expressed as a percentage of sales, decreased
            to 1.9% from 2.3% in 1997, primarily due to lower borrowings
            under the revolving credit facility and other long-term debt.

            The Company established a $4,200,000 reserve in 1996 due to the
            closing of three under-performing stores in March 1997. In the
            twenty-six weeks ended July 26, 1997, the Company recognized a
            $340,000 pre-tax credit to write-off the remaining severance and
            benefit reserves after all payments were made and to adjust the
            property and equipment reserve after sale of a portion of the
            related property at greater than the original estimated value.

            1998 net loss for the twenty-six weeks totaled $2,850,000, or 49
            cents per common share, compared to $3,644,000, or 63 cents per
            common share, last year. As a percent of sales, net loss was 1.4%
            in 1998 compared to 1.8% in 1997.

            Store closing promotions conducted at the three stores closed in
            March 1997 reduced the net loss for the twenty-six weeks last
            year by $788,000, or 14 cents per share.

                                    - 10 -

<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                        PART I: FINANCIAL INFORMATION

                       For Quarter Ended August 1, 1998



     c.     LIQUIDITY AND CAPITAL RESOURCES

            At August 1, 1998, the Company's current ratio was 2.42 to 1 and
            working capital totaled $66,923,000, including $3,005,000 of cash
            and cash equivalents. At January 31, 1998, the current ratio was
            2.57 to 1 and working capital totaled $78,815,000, including
            $3,883,000 of cash and cash equivalents.

            The Company utilizes cash flows from operations and revolving
            credit line borrowings to fund its seasonal working capital
            needs. To support its present and planned working capital
            requirements, the Company has a $100,000,000 revolving credit
            facility under a Revolving Credit Agreement with a commercial
            lender. The revolving credit facility currently provides for
            borrowings of up to $80,000,000, subject to a borrowing base
            limitation and lender reserves. The Company may, at its option,
            increase the maximum available borrowings under the revolving
            credit facility to up to $100,000,000 in the aggregate, subject
            to the borrowing base limitation and lender reserves. As of
            August 1, 1998, the Company had borrowed $30,054,000 under this
            facility and had $49,946,000 of borrowing availability. For the
            twenty-six weeks ended August 1, 1998, the daily weighted average
            interest rate on borrowings under the Revolving Credit Agreement
            was 8.2%. In June 1998, the Agreement was amended to extend the
            maturity date by one year to March 24, 2001. As amended, each
            year, beginning in 1999, the Company may request a one-year
            extension of the maturity date, subject to lender approval.

        d.  CASH FLOWS

            Cash and cash equivalents decreased $878,000 in the twenty-six
            weeks ended August 1, 1998, compared to a decrease of $1,757,000
            in the twenty-six weeks ended July 26, 1997. Cash flows are
            impacted by operating, investing and financing activities. In the
            twenty-six weeks this year, cash provided by operating activities
            totaled $10,786,000, compared to $17,232,000 in 1997, primarily
            due to increased July merchandise receipts this year versus
            reduced inventory and accounts receivables in stores closed last
            year. These charges were partially offset by a smaller decrease
            in payables this year and payments against store closing reserves
            in 1997.

            Investing activities used cash of $5,504,000 in the twenty-six
            weeks this year compared to $928,000 used in 1997. Capital
            expenditures totalled $5,302,000 in the first twenty-six weeks of
            1998 compared to $861,000 in the comparable 1997 period.

                                    - 11 -

<PAGE>


              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                        PART I: FINANCIAL INFORMATION

                       For Quarter Ended August 1, 1998


            Financing activities used cash of $6,160,000 in the twenty-six
            weeks this year compared to $18,061,000 used last year. In the
            twenty-six weeks in 1998, reduction of long-term debt
            ($6,241,000) reflects repayment of $4,978,000 under the Revolving
            Credit Agreement, purchase of $324,000 in principal amount of 6
            3/4% Convertible Subordinated Debentures toward satisfaction of
            the December 1998 sinking fund requirement of $1,725,000, and
            scheduled debt maturities. In March 1997, the Company borrowed
            $49,500,000 under its current Revolving Credit Agreement to repay
            the then outstanding principal balance under its former Credit
            Agreement. Also in the twenty-six weeks in 1997, reduction of
            long-term debt reflects repayment of $9,823,000 under the current
            Revolving Credit Agreement, a $5,642,000 principal pre-payment on
            a mortgage obligation, purchase of $1,530,000 principal amount of
            6 3/4% Convertible Subordinated Debentures toward satisfaction of
            the $1,725,000 annual sinking fund payment due in December 1997,
            and scheduled debt maturities.

            The Company believes its cash flows from operations, along with
            its borrowing capacity and access to financial markets are
            adequate to fund its operations and debt maturities.

        e.  CORPORATE DEVELOPMENT

            The Company has no commitments for any new store locations at the
            present time. The Company reviews the performance of its less
            profitable existing stores from time to time to determine whether
            it would be in the Company's best interest to close any of these
            stores. Store closings could have a significant impact on the
            Company's sales, expenses and capital requirements and would
            likely entail additional significant one-time charges to effect
            the closing and to recognize any impairment of assets resulting
            from the closing decision.

            In 1997, the Company sold its Store for the Home in Grosse
            Pointe, Michigan. In July 1998, the Company consolidated
            operations in its existing Grosse Pointe apparel store.

            The Year 2000 issue results from early computer programming that
            used two digits rather than four to define the applicable year.
            If not corrected, this defect could, as we move to the Year 2000,
            result in systems failures or miscalculations leading to
            disruptions in a company's operation. The Company has taken
            actions to address this potential problem. In 1997, the Company
            established a task force which identified areas of concern and
            assigned a risk factor and priority to each area. Specific action
            plans have been developed to fix or replace all non-compliant
            software and hardware that could pose a significant risk to the
            Company's operations. The total amount estimated to be spent to
            remediate the Company's Year 2000 issues is not expected to be
            material to its business, operations, or financial condition.

                                    - 12 -

<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                        PART I: FINANCIAL INFORMATION

                       For Quarter Ended August 1, 1998




            Each of the above statements regarding future revenues, expenses
            or business plans (including statements regarding the sufficiency
            of the Company's capital resources to fund future operations) may
            be a "forward looking statement" within the meaning of the
            Securities Exchange Act of 1934. Such statements are subject to
            important factors and uncertainties that could cause actual
            results to differ materially from those in the forward-looking
            statement, including the continued support of the Company's trade
            creditors and factors, the risks inherent in the level of the
            Company's long-term debt compared to its equity, the Company's
            ability to reduce its operating expenses, general trends in
            retail clothing apparel purchasing, especially during the
            Christmas season, and the factors set forth in this Management's
            Discussion and Analysis of Financial Condition and Results of
            Operations.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

            Not applicable.

                                    - 13 -

<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                          PART II: OTHER INFORMATION

                       For Quarter Ended August 1, 1998




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

            The Annual Meeting of Shareholders of the Company was held on May
            28, 1998. At the Annual Meeting, Kathleen M. Lewis, Michael T.
            Monahan, Richard Z. Rosenfeld and James L. Wolohan were elected
            as Directors to serve until the 2001 Annual Meeting of
            Shareholders and until their successors are elected and
            qualified. The following votes were cast for or were withheld
            from voting with respect to the election of each of the following
            persons:
<TABLE>
<CAPTION>

                                                     Votes
                                            -----------------------
                                                          Authority
                        Name                  For          Withheld
                 ------------------         ---------     ---------

                  <S>                       <C>             <C>    
                  Kathleen M. Lewis         4,924,232       407,872
                  Michael T. Monahan        4,923,819       408,285
                  Richard Z. Rosenfeld      4,920,124       411,980
                  James L. Wolohan          4,924,176       407,928
</TABLE>

            There were no abstentions or broker non-votes in connection with
            the election of the directors at the Annual Meeting.

            In addition, at the Annual Meeting, the shareholders voted to
            amend the Jacobson Stock Option Plan of 1994 to increase the
            number of shares of Common Stock eligible for issuance on
            exercise of options to 1,400,000 shares. The following table
            shows the number of votes for and against the proposal and the
            number of votes abstaining with respect to the proposal:
<TABLE>
<CAPTION>

                             For       Against     Abstain
                        ---------      -------     -------
                        <S>             <C>         <C>
                         3,980,288      651,028     18,960
</TABLE>

            There were broker non-votes representing 681,828 common shares in
            connection with the amendment of the option plan at the Annual
            Meeting.

                                    - 14 -

<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

                          PART II: OTHER INFORMATION

                       For Quarter Ended August 1, 1998


            In addition, at the Annual Meeting, the shareholders voted to
            appoint Arthur Andersen LLP, independent certified public
            accountants, as auditors for the fiscal year ending January 30,
            1999. The following table shows the number of votes for and
            against the proposal and the number of votes abstaining with
            respect to the proposal:
<TABLE>
<CAPTION>

                                 For       Against     Abstain
                           ---------       -------     -------

                            <S>             <C>          <C>  
                            5,318,459       10,852       2,793
</TABLE>

            There were no broker non-votes in connection with the appointment
            of the Company's auditors at the Annual Meeting.

ITEM 5.     OTHER INFORMATION

            The company must receive notice of any proposals of shareholders
            that are intended to be presented at the Company's 1999 Annual
            Meeting of Shareholders, but that are not intended to be
            considered for inclusion in the Company's Proxy Statement and
            Proxy related to that meeting, no later than February 24, 1999 to
            be considered timely. Such proposals should be addressed to
            Secretary, Jacobson Stores Inc., 3333 Sargent Road, Jackson,
            Michigan 49201-8847 by certified mail, return receipt requested.
            If the Company does not have notice of the matter by that date,
            the Company's form of proxy in connection with that meeting may
            confer discretionary authority to vote on that matter, and the
            persons named in the Company's form of proxy will vote the shares
            represented by such proxies in accordance with their best
            judgment.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

             4   Amendment to Revolving Credit Agreement, dated June 8, 1998
            10   Release and Waiver Agreement dated May 26, 1998 between
                 Jacobson Stores Inc. and Herman J. Heinle
            15   Letter from Independent Public Accountants
            27   Financial Data Schedule

      (b)   Reports on Form 8-K

            The Company did not file any reports on Form 8-K during its
            fiscal quarter ended August 1, 1998.

All exhibits except as set forth above have been omitted as not applicable or
not required.

                                     -15-
<PAGE>
              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                       For Quarter Ended August 1, 1998



                                  SIGNATURES

Pursuant to the requirements 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.







                                                      JACOBSON STORES INC.
                                                      --------------------
                                                              (Registrant)



Date:     September 11   ,  1998       BY: /s/ P. Gerald Mills
        ---------------------------        -----------------------
                                           P. GERALD MILLS
                                           Chairman of the Board, President and
                                           Chief Executive Officer



Date:     September 11  ,  1998        BY: /s/  Paul W. Gilbert
        ---------------------------        -----------------------
                                           PAUL W. GILBERT
                                           Vice Chairman of the Board
                                           (Principal Financial Officer)


                                    - 16 -


<PAGE>

              JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES


                              INDEX OF EXHIBITS








          4  Amendment to Revolving Credit Agreement, dated June 8, 1998 
         10  Release and Waiver Agreement dated May 26, 1998 between Jacobson
             Stores Inc. and Herman J. Heinle
         15  Letter from Independent Public Accountants
         27  Financial Data Schedule



   All exhibits except as set forth above have been omitted as not applicable
or not required.