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                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549
                                                
                                   FORM 10-Q
                               QUARTERLY REPORT
                    PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                            

          FOR THE QUARTERLY PERIOD       COMMISSION FILE NUMBER:  0-3777
           ENDED JUNE 30, 1997 
                                         

                       PETRIE STORES LIQUIDATING TRUST
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          NEW YORK                                     22-6679945  
          (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)

          70 ENTERPRISE AVENUE
          SECAUCUS, NEW JERSEY                          07094 
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)     (ZIP CODE)

          REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 422-0496

          FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF
          CHANGED SINCE LAST REPORT: 

               Not Applicable.

          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
          registrant's classes of common stock as of the latest
          practicable date:  As of August 12, 1997, there were
          52,350,238 Units of Beneficial Interest outstanding.


                        PETRIE STORES LIQUIDATING TRUST
                   (SUCCESSOR TO PETRIE STORES CORPORATION)

                              INDEX TO FORM 10-Q

          PART I - FINANCIAL INFORMATION
                                                               Page
          Item 1.  Financial Statements (unaudited) 
                   Statements of Net Assets in Liquidation
                        - June 30, 1997 and December 31,
                        1996  . . . . . . . . . . . . . . . . .   2
                   Statements of Changes in Net Assets in
                        Liquidation - For the Three Months
                        ended June 30, 1997 and 1996, the
                        Six Months ended June 30, 1997 and 
                        the Period from January 23, 1996
                        to June 30, 1996  . . . . . . . . . . .   3
                   Notes to Financial Statements  . . . . . . .   4
          Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of
                   Operations . . . . . . . . . . . . . . . . .  10

          PART II - OTHER INFORMATION

          Item 1.  Legal Proceedings  . . . . . . . . . . . . .  14
          Item 6.  Exhibits and Reports on Form 8-K . . . . . .  14


                        PETRIE STORES LIQUIDATING TRUST
                   (SUCCESSOR TO PETRIE STORES CORPORATION)

                    STATEMENTS OF NET ASSETS IN LIQUIDATION

                                  (UNAUDITED)
                                (IN THOUSANDS)

                                                                  
                                                     June 30,   December 31,
                                                       1997         1996
                                                                
      Assets
      Cash and cash equivalents                   $      1,042  $      229
      U.S. Treasury Obligations                         98,831      56,943
      U.S. Treasury Obligations held in escrow          37,500      67,500
      Investments in common stock (including
        3,493,450 shares of Toys "R" Us common        
        stock held in escrow)                          141,945     151,035
                                                  ------------   ---------
      Total assets                                     279,318     275,707

      Liabilities
      Accrued expenses and other liabilities            40,386      52,378
                                                  ------------   ---------
      Total liabilities                                 40,386      52,378

      Commitments and contingencies
                                                  ------------   ---------
      Net assets in liquidation                     $  238,932    $223,329
                                                  ============   =========

     See accompanying notes.


                        PETRIE STORES LIQUIDATING TRUST
                   (SUCCESSOR TO PETRIE STORES CORPORATION)

              STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION

                                  (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

                                                                   Period
                                                                    from
                                 Three      Three                  January
                                Months      Months    Six Months  23, 1996
                                Ended       Ended       Ended        to
                               June 30,    June 30,    June 30,   June 30,
                                 1997        1996        1997       1996
                              ----------------------------------------------
      Net assets in
      liquidation 
        at beginning
        of period              $205,616    $232,541    $223,329   $202,594
                              ---------    --------    --------   ---------
      Investment income           2,325      1,721       4,233      2,982
      Corporate overhead         (1,557)   (16,775)     (8,686)   (17,791)
      Income tax refund           3,965        -         3,965        -   
      Net realized and
        unrealized gain
        on investments           28,583      7,583      16,091     37,285
                              ---------    --------    --------   ---------

      Net income (loss) 
        for the period           33,316     (7,471)     15,603     22,476
                              =========    ========    =======    =======
      Net assets in
        liquidation at
        end of period         $238,932    $225,070    $238,932   $225,070
                              =========    ========    =======    =======

      Net income
        (loss) per unit       $    .64   $    (.14)   $    .30   $    .43
                              =========    ========    =======    =======

      Weighted average
        number of units         52,350       52,350     52,350     52,350
                              =========    ========    =======    =======

     See accompanying notes.


                        PETRIE STORES LIQUIDATING TRUST
                   (SUCCESSOR TO PETRIE STORES CORPORATION)

                         NOTES TO FINANCIAL STATEMENTS

                                  (UNAUDITED)

                                 JUNE 30, 1997

     1.   INTERIM REPORTING

          The accompanying unaudited financial statements of Petrie
     Stores Liquidating Trust (the "Liquidating Trust") have been
     prepared in accordance with generally accepted accounting principles
     for interim financial information and with the instructions to Form
     10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
     include all of the information and footnotes required by generally
     accepted accounting principles for complete financial statements. In
     the opinion of the Liquidating Trust, all adjustments (consisting of
     only normal recurring accruals) considered necessary for a fair
     presentation have been included. Results for the six months ended
     June 30, 1997 are not necessarily indicative of the results that may
     be expected for the current fiscal year. For further information,
     reference is made to the financial statements and footnotes thereto
     included in the Liquidating Trust's Annual Report on Form 10-K for
     the period ended December 31, 1996.

     2.   BASIS OF PRESENTATION

          The Liquidating Trust is the successor to Petrie Stores
     Corporation ("Petrie"). Prior to December 9, 1994, Petrie operated a
     chain of retail stores that specialized in women's apparel and were
     located throughout the United States (including Puerto Rico and the
     U.S. Virgin Islands). At Petrie's Annual Meeting, held on December
     6, 1994, Petrie's shareholders approved the sale of Petrie's retail
     operations (the "Sale"). At Petrie's Reconvened Annual Meeting, held
     on January 24, 1995, Petrie's shareholders approved (i) an exchange
     of shares of Toys "R" Us, Inc. ("Toys 'R' Us") common stock ("Toys
     Common Stock") with Toys "R" Us (Note 3) and (ii) the liquidation
     and dissolution of Petrie pursuant to a plan of liquidation and
     dissolution (the "Plan of Liquidation").

          Pursuant to the Plan of Liquidation and the Agreement and
     Declaration of Trust, dated as of December 6, 1995 (the "Liquidating
     Trust Agreement"), between Petrie and the trustees named therein
     (the "Liquidating Trustees"), effective as of the close of business
     on January 22, 1996 (the "Succession Date"), Petrie transferred its
     remaining assets (then consisting of approximately $131 million in
     cash and cash equivalents and 5,055,576 shares of Toys Common Stock)
     to, and its remaining fixed and contingent liabilities were assumed
     by (the "Succession"), the Liquidating Trust. The assets of the
     Liquidating Trust are subject to various contingent liabilities, the
     status of which is presently unclear (Note 4), as well as the terms
     of a letter agreement with Toys "R" Us (Note 3) pursuant to which
     the Liquidating Trust is required to retain a substantial portion of
     its assets to provide for its liabilities. Accordingly, the
     Liquidating Trustees have determined not to approve any
     distributions of Toys Common Stock or other assets of the
     Liquidating Trust to beneficiaries of the Liquidating Trust until
     the status of such contingent liabilities is clarified.

          Beginning with the period ended December 31, 1996, the
     Liquidating Trust adopted the calendar year as its fiscal year. A
     liquidation basis of accounting was implemented as of January 28,
     1995. The statements of net assets in liquidation at June 30, 1997
     and December 31, 1996 do not distinguish between current and
     long-term balances as would be reflected if such statements had been
     prepared on a going-concern basis.

          At the Succession Date, and as a result of the Succession,
     Petrie ceased to be a taxable entity. The Liquidating Trust is a
     complete pass-through entity for federal income taxes and,
     accordingly, is not itself subject to income tax. Instead, each
     holder of units of beneficial interest in the Liquidating Trust is
     required to take into account, in accordance with such holder's
     method of accounting, his pro rata share of the Liquidating Trust's
     items of income, gain, loss, deduction or credit, regardless of the
     amount or timing of distributions to such holder.

     3.   INVESTMENTS IN COMMON STOCK

          At June 30, 1997, the Liquidating Trust's investments in common
     stock consist of 4,055,576 shares, which are carried at market
     value, of Toys R Us, which operates a chain of specialty retail
     stores principally engaged in the sale of toys and children's
     clothing in the United States and abroad.

          On January 24, 1995, pursuant to the terms of an Acquisition
     Agreement dated as of April 20, 1994, and amended as of May 10, 1994
     (the "Toys Acquisition Agreement"), between Petrie and Toys "R" Us,
     Petrie exchanged (the "Exchange") with Toys "R" Us all of its shares
     of Toys Common Stock (39,853,403 shares), plus $165 million in cash,
     for 42,076,420 shares of Toys Common Stock (approximately 15.0% of
     the outstanding Toys Common Stock at January 28, 1995).

          Simultaneously with the closing of the Exchange, Petrie placed
     3,493,450 shares of its Toys Common Stock into an escrow account
     (the "Escrow Account") pursuant to the terms of an escrow agreement,
     dated as of January 24, 1995, between Petrie and Custodial Trust
     Company, as Escrow Agent (the "Escrow Agreement"). The shares of
     Toys Common Stock placed into the Escrow Account pursuant to the
     Escrow Agreement secure the payment of certain obligations of the
     Liquidating Trust, as successor to Petrie, to Toys "R" Us arising
     (i) under (x) the Toys Acquisition Agreement, (y) the Seller
     Indemnification Agreement, dated as of December 9, 1994, among
     Petrie, Toys "R" Us, Petrie Retail, Inc. ("Petrie Retail"), PS
     Stores Acquisition Corp. ("PS Stores"), and certain subsidiaries of
     PS Stores and (z) the Retail Operations Stock Purchase Agreement,
     dated as of August 23, 1994 and amended on November 3, 1994 (the
     "Retail Operations Stock Purchase Agreement"), between Petrie and PS
     Stores, and (ii) otherwise.

          The assets of the Liquidating Trust are subject to the terms of
     a letter agreement, dated as of January 24, 1995, pursuant to which
     Petrie agreed with Toys "R" Us that, until such time as a hedge or
     similar arrangement is in place, Petrie will retain, either
     individually or in combination, (i) cash in an amount of at least
     $177.5 million (the "Reserved Amount") or (ii) shares of Toys Common
     Stock having a market value (using the per share price on January
     20, 1995) of at least twice the Reserved Amount, to secure the
     payment of Petrie's contingent liabilities (Note 4). Pursuant to the
     terms of the letter agreement, the Liquidating Trust, as successor
     to Petrie, is presently required to retain substantially all of its
     assets.

          Petrie had also placed 3,200,082 shares of Toys Common Stock in
     a collateral account (the "Collateral Account") pursuant to the
     terms of an Amended and Restated Cash Collateral and Pledge
     Agreement, dated as of December 9, 1994 and amended as of January
     24, 1995, among Petrie, PS Stores, certain subsidiaries of PS
     Stores, and Custodial Trust Company, as Collateral Agent (the
     "Amended and Restated Cash Collateral Agreement"). On December 19,
     1995, the Amended and Restated Cash Collateral Agreement was further
     amended and restated and, pursuant thereto, the 3,200,082 shares of
     Toys Common Stock held in the Collateral Account were released to
     Petrie in exchange for Petrie's deposit of $67.5 million in U.S.
     Treasury obligations into the Collateral Account. In connection with
     the previously disclosed settlement of a dispute with the Internal
     Revenue Service (the IRS ), on May 20, 1997, approximately $32
     million in U.S. Treasury obligations held in the Collateral Account
     were transferred to the Liquidating Trust, and the Liquidating Trust
     is now required to maintain at least $37.5 million in the Collateral
     Account. The U.S. Treasury obligations currently held in the
     Collateral Account pursuant to the Amended and Restated Cash
     Collateral Agreement secure the payment of certain obligations of
     the Liquidating Trust, as successor to Petrie, to PS Stores arising
     under (i) the Retail Operations Stock Purchase Agreement and (ii)
     the Cross-Indemnification and Procedure Agreement, dated as of
     December 9, 1994, between Petrie and PS Stores (Note 4).

          As previously disclosed, at various times between January 23,
     1997 and February 5, 1997, the Liquidating Trust sold an aggregate
     of 1,000,000 shares of Toys Common Stock for approximately $25.5
     million in proceeds.

          The price per share of Toys Common Stock, as reported on the
     New York Stock Exchange Composite Tape, decreased from $29-7/8 per
     share at December 31, 1996 to $28 per share at March 31, 1997 and
     then increased to $35 per share at June 30, 1997. As of August 12,
     1997, the price per share of Toys Common Stock was $34.

     4.   COMMITMENTS AND CONTINGENCIES

          As successor to Petrie, the Liquidating Trust has certain
     contingent liabilities with respect to existing or potential claims,
     lawsuits and other proceedings, which primarily relate to (i)
     guarantees of certain retail store leases, expiring at various times
     through 2011 to which Petrie Retail or an affiliate thereof is a
     party, and certain other liabilities that were assumed by Petrie
     Retail (but as to which Petrie's liability has not been released) in
     connection with the Sale (collectively, the "Assumed Obligations") to
     the extent that Petrie Retail fails to perform; and (ii) Petrie's
     agreement with Petrie Retail to indemnify it for certain liabilities
     relating to Petrie Retail's withdrawal from the United Auto Workers
     District 65 Security Plan Pension Fund (the "Multiemployer Plan").
     The Liquidating Trust accrues liabilities when it is probable that
     future costs will be incurred and when such costs can be reasonably
     estimated. Such accruals are based on developments to date, the
     Liquidating Trust's estimates of the outcome of these matters and
     its experience (including that of its predecessor, Petrie) in
     contesting, litigating and settling matters. At both June 30, 1997
     and December 31, 1996, the Liquidating Trust, as successor to
     Petrie, had accrued approximately $35 million and $38 million,
     respectively, for contingent liabilities. As the scope of these
     liabilities becomes better defined, there may be changes in the
     estimates of future costs, which could have a material effect on the
     Liquidating Trust's financial condition, liquidity and future
     ability to make liquidating distributions.

          On October 12, 1995, Petrie Retail filed a voluntary petition
     for reorganization relief under Chapter 11 of the United States
     Bankruptcy Code with the U.S. Bankruptcy Court for the Southern
     District of New York (the "Bankruptcy Court"). As a result of its
     bankruptcy filing, Petrie Retail has failed to perform or make
     payment with respect to certain of the Assumed Obligations,
     including, but not limited to, Assumed Obligations relating to store
     leases to which Petrie Retail or an affiliate thereof is a party,
     state taxes, employment agreements, insurance premiums and certain
     other claims and contractual obligations. Accordingly, the
     Liquidating Trust has been and may continue to be required to make
     payments in respect of certain of the Assumed Obligations. The
     Liquidating Trust intends to file claims in the Bankruptcy Court
     against Petrie Retail in respect of any such payments. The
     Liquidating Trust is unable to predict the timing or probability of
     the collection of these claims against Petrie Retail. No amounts
     have been accrued as receivables for potential reimbursement or
     recoveries from Petrie Retail.

          On February 28, 1997, an adversary complaint was filed by
     Petrie Retail in the Bankruptcy Court alleging that Petrie and the
     Liquidating Trust were improperly withholding tax refunds
     aggregating $7,579,998 (plus interest thereon) from Petrie Retail.
     Such tax refunds, which relate to taxes paid by Petrie prior to the
     Sale, were being held in an escrow account pursuant to an order of
     the Bankruptcy Court. By an order dated June 25, 1997, the
     Bankruptcy Court approved a settlement of the action, pursuant to
     which the tax refunds (with accrued interest) were released from
     escrow and shared equally by the Liquidating Trust and Petrie Retail
     in offset of certain claims that the Liquidating Trust had against
     Petrie Retail. In addition, pursuant to the settlement, Petrie
     Retail and the Liquidating Trust have agreed to share equally in the
     proceeds of any similar tax refunds received in the future. The
     Liquidating Trust has expressly reserved the right to assert future
     claims against Petrie Retail to the extent that such claims (i) were
     not offset pursuant to the settlement or (ii) relate to amounts in
     excess of the amounts permitted for offset in the settlement.

          Since filing its petition for bankruptcy protection, Petrie
     Retail has, according to its filings with the Bankruptcy Court,
     closed more than 830 of the roughly 1600 stores it operated prior to
     filing the petition, including approximately 220 stores closed since
     January 1, 1997. According to such filings, of the more than 830
     closed stores, approximately 520 relate to rejected leases,
     approximately 35 relate to leases that were assigned to third party
     retailers and the remainder of the leases generally have expired or
     were terminated by mutual landlord and tenant consent. Additionally,
     approximately 10 closed store leases may be assigned to third
     parties or rejected, subject to Bankruptcy Court resolution. After
     taking into account settlements and releases obtained from
     landlords, the Liquidating Trust, as successor to Petrie, remains a
     guarantor of 54 of the rejected leases and its aggregate guarantee
     liability with respect to these leases, without giving effect to any
     present value discount and assuming the landlord in each case is
     unable to mitigate its damages, is approximately $25 million, which
     amount is included in the Liquidating Trust's accrued expenses and
     other liabilities at June 30, 1997. In addition, subject to the same
     assumptions, the 10 closed store leases which have not been rejected
     or terminated represent a maximum aggregate guarantee liability of
     approximately $6 million, which amount has been included in the
     Liquidating Trust's accrued expenses and other liabilities at June
     30, 1997.

          According to Petrie Retail's filings with the Bankruptcy Court,
     Petrie Retail is now operating approximately 770 stores and plans to
     close 12 additional stores within the next few months. No assurance
     can be given that Petrie Retail will not close additional stores or
     as to the number of additional stores to be closed by Petrie Retail
     with respect to which the Liquidating Trust has guarantee liability.
     If Petrie Retail were to close every store for which the Liquidating
     Trust believes it has liability as a lease guarantor (giving effect
     to all the lease guarantee releases executed by landlords) and every
     store for which the Liquidating Trust disputes its guarantor
     liability (as more fully discussed in the following paragraph),
     assuming that no mitigation or defense were successful, the
     Liquidating Trust's theoretical exposure relating to such leases,
     without giving effect to any present value discount, would be
     approximately $86 million. Such exposure includes the approximately
     $25 million in aggregate liability relating to the rejected leases
     described above. With respect to the approximately $61 million of
     liability relating to leases that have not yet expired or been
     assigned, rejected or terminated (including the $6 million of
     guarantor liability related to stores that have been closed where
     the related leases have not been rejected or assigned),
     approximately $5 million is due in the remainder of the year ending
     December 31, 1997, approximately $12 million is due in 1998,
     approximately $12 million is due in 1999, approximately $10 million
     is due in 2000 and approximately $22 million is due thereafter.

          The Liquidating Trust, on the one hand, and Petrie Retail and
     its affiliates, on the other, are in dispute as to whether the
     Liquidating Trust, as successor to Petrie, or Petrie Retail and its
     affiliates are responsible as guarantor of 43 leases. The
     Liquidating Trust has settled its liability with the landlords (but
     not Petrie Retail and its affiliates) with respect to 19 of these
     leases. The following amounts, which have been calculated using the
     same assumptions set forth above and without giving effect to any
     present value discount, have been included in the Liquidating
     Trust's lease liability calculations in the preceding paragraphs
     with respect to the disputed leases: (i) the $25 million in
     liability with respect to rejected leases includes $8 million in
     guarantee liability with respect to the disputed leases; and (ii)
     the $86 million in maximum theoretical exposure includes $17 million
     with respect to 24 disputed leases where the Liquidating Trust has
     not settled its liability with the landlord.

          Landlords under leases relating to 135 stores operated by
     Petrie Retail or an affiliate thereof have alleged in a complaint
     that the Liquidating Trust, as successor to Petrie, has liability as
     a guarantor of certain leases notwithstanding Petrie's receipt from
     these landlords of releases of guarantees with respect to
     substantially all of such leases. Without giving effect to any
     present value discount, but giving effect to rental payments made by
     Petrie Retail since the complaints were filed and assuming that all
     of the 135 stores which are the subject of these landlords' claims
     are closed and that the landlord in each case is unable to mitigate
     its damages, the Liquidating Trust estimates that the alleged
     guarantor liability currently represents approximately $64 million
     in lease payments. As previously disclosed, on April 7, 1997, the
     trial court dismissed the landlords' claims for fraud and negligent
     misrepresentation with respect to the releases of the guarantees,
     and the landlords have filed a notice of appeal of such dismissal.
     The parties are currently engaged in discovery with respect to the
     landlords' remaining claims for breach of contract and declaratory
     judgment. The Liquidating Trust believes it has substantial legal
     defenses to the landlords' claims and is vigorously contesting such
     claims. While a decision by a court in favor of such landlords could
     have a material adverse effect on the Liquidating Trust's liquidity
     and financial condition, based on available information and
     developments to date, the Liquidating Trust believes that such an
     outcome is unlikely.

          The Liquidating Trust's lease exposure calculations reflect the
     estimated sum of all base rent and additional rent (such as taxes
     and common area charges) due under a lease through the end of the
     current lease term, but do not reflect potential penalties, interest
     and other charges to which a landlord may be entitled. Such
     additional charges (which may in part be unenforceable) are not
     expected to materially increase the Liquidating Trust's lease
     guarantee liability.

          A significant number of leases discussed above under which a
     landlord might claim that the Liquidating Trust, as successor to
     Petrie, has liability as a lease guarantor either expressly contain
     mitigation provisions or relate to property in states that imply
     such provisions as a matter of law. Mitigation generally requires,
     among other things, that a landlord of a closed store seek to reduce
     its damages, including by attempting to locate a new tenant.

          As previously disclosed, on October 23, 1995, Petrie Retail
     notified three former executives of Petrie that, as a result of
     Petrie Retail's bankruptcy filing, Petrie Retail would no longer
     honor its obligations under the employment agreements each executive
     had entered into with Petrie which had been assumed by Petrie Retail
     in connection with the sale of the retail operations. On April 25,
     1996, the Liquidating Trust entered into settlement agreements with
     two of the former executives and on January 27, 1997 entered into a
     settlement agreement with the estate of the third executive.
     Pursuant to such settlement agreements, the Liquidating Trust agreed
     to pay each substantially all the amounts due under their respective
     agreements with Petrie. The total cost of these settlements to the
     Liquidating Trust was approximately $3.2 million, of which
     approximately $700,000 (relating to certain unfunded pension
     obligations) remained unpaid and was included in the Liquidating
     Trust's accrued expenses and other liabilities at June 30, 1997.

          As previously disclosed, effective January 31, 1995, Petrie
     Retail withdrew from the Multiemployer Plan. Due to underfunding of
     the Multiemployer Plan, Petrie Retail and its affiliates have
     incurred withdrawal liability under the Employee Retirement Income
     Security Act of 1974, as amended. By letter dated May 30, 1996 (the
     "Assessment Letter"), the Multiemployer Plan assessed withdrawal
     liability against Petrie Retail in the amount of approximately $9.4
     million plus interest, to be paid in quarterly installments of
     approximately $317,000 commencing August 1, 1996 through and
     including August 1, 2006, with a final payment of approximately
     $18,000 due on November 1, 2006. In addition, the Multiemployer Plan
     assessed liability against Petrie Retail of approximately $2 million
     attributable to the Multiemployer Plan's failure to meet certain
     Internal Revenue Code minimum funding standards, which amount was
     payable on August 1, 1996. To the knowledge of the Liquidating
     Trust, Petrie Retail has not made any payments with respect to such
     liabilities. In the event of a mass withdrawal by contributing
     employers from the Multiemployer Plan, the withdrawal liability
     allocated to Petrie Retail and its affiliates may be higher.
     Pursuant to the Retail Operations Stock Purchase Agreement, Petrie
     Retail and its affiliates are responsible for the first $10 million
     in withdrawal and related liabilities, with the next $50 million of
     such liabilities allocated 75 percent to the Liquidating Trust, as
     successor to Petrie, and 25 percent to Petrie Retail and its
     affiliates. It is unclear what effect, if any, Petrie Retail's
     bankruptcy filing may have upon the timing and amount of any
     payments the Liquidating Trust may be required to make under the
     agreement with respect to the Multiemployer Plan, but in no event
     will the Liquidating Trust's maximum contractual liability be
     increased as a result of Petrie Retail's bankruptcy filing.

          As previously disclosed, Zurich Insurance Company ("Zurich"),
     an insurer of Petrie, billed the Liquidating Trust, as successor to
     Petrie, $1,554,836 in respect of retrospective premium adjustments
     pursuant to insurance agreements between Zurich and Petrie. The
     amount claimed by Zurich related to policy terms 1988/1989 through
     and including 1994/1995, and was based on the value of claims made
     as of December 31, 1996. On June 27, 1997, the Liquidating Trust
     paid Zurich $1,520,589 in respect of the retrospective premium
     adjustments based on the value of claims made as of December 31,
     1996. Such amount is in addition to the $1,728,183 in retrospective
     premium adjustments paid to Zurich on April 14, 1997 based on the
     value of claims made as of December 31, 1994 and 1995. As discussed
     above, the Liquidating Trust intends to file a claim in the
     Bankruptcy Court against Petrie Retail in respect of the $1,520,589
     paid to Zurich.

          The Liquidating Trust believes adequate accruals have been
     established in the accompanying financial statements to provide for
     any losses that may be incurred with respect to the aforementioned
     contingencies.

          In addition to the contingent liabilities discussed above, the
     Liquidating Trust or Petrie is a defendant in various other legal
     proceedings relating to Petrie Retail's failure to perform certain
     retail store leases and other liabilities assumed by Petrie Retail
     (but as to which Petrie's liability has not been released) in
     connection with Petrie's sale of the retail operations. While the
     Liquidating Trust cannot predict with any certainty what its
     liability will be from the disposition of these legal proceedings,
     based on developments to date, the Liquidating Trust's estimate of
     the likely outcome of these matters and its experience (including
     that of its predecessor, Petrie) in contesting, litigating and
     settling matters, the Liquidating Trust believes that it has made
     adequate accruals for the likely outcome of such proceedings.


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

          The following discussion should be read in conjunction with the
     Financial Statements and the Notes thereto provided herein.

          As previously disclosed, Petrie sold its retail operations to
     PS Stores on December 9, 1994, and on January 24, 1995 (the date on
     which Petrie's shareholders approved the Plan of Liquidation),
     Petrie commenced its liquidation. As a result, effective January 28,
     1995, Petrie changed its basis of accounting from a going-concern
     basis to a liquidation basis. During the six months ended June 30,
     1997 and the period from January 23, 1996 to June 30, 1996, the
     Liquidating Trust's activities have been limited to continuing
     Petrie's liquidation in furtherance of the Plan of Liquidation.
     Beginning with the period ended December 31, 1996, the Liquidating
     Trust adopted the calendar year as its fiscal year.

     RESULTS OF OPERATIONS

          The Liquidating Trust's net income for the three and six months
     ended June 30, 1997 was $33,316,000 and $15,603,000, respectively,
     as compared to a net loss of $7,471,000 for the three months ended
     June 30, 1996 and net income of $22,476,000 for the period from
     January 23, 1996 to June 30, 1996.

          As of August 12, 1997, the most recent practicable date prior
     to the filing of this Form 10-Q, the closing price per share of Toys
     Common Stock as reported on the New York Stock Exchange Composite
     Tape was $34 per share. In applying a liquidation basis of
     accounting, the Liquidating Trust has given effect in its results of
     operations to fluctuations in the market price of its Toys Common
     Stock, and has recorded a net unrealized gain on the Toys Common
     Stock for the three and six months ended June 30, 1997 of
     $28,389,000 and $20,802,000 respectively, as compared to an
     unrealized gain of $7,583,000 and $37,285,000 for the three months
     ended June 30, 1996 and the period from January 23, 1996 to June 30,
     1996, respectively. In addition, at various times between January
     23, 1997 and February 5, 1997, the Liquidating Trust sold an
     aggregate of 1,000,000 shares of Toys Common Stock for approximately
     $25.5 million. As a result of the sale, the Liquidating Trust
     realized a loss with respect to such sale of approximately
     $4,375,000 for the six months ended June 30, 1997.

          For the three and six months ended June 30, 1997, the
     Liquidating Trust incurred corporate overhead of $1,557,000 and
     $8,686,000, as compared to $16,775,000 and $17,791,000 for the three
     months ended June 30, 1996 and the period from January 23, 1996 to
     June 30, 1996. Corporate overhead generally consists of costs and
     expenses related to the liquidation and dissolution of Petrie
     including, but not limited to, costs and expenses that the
     Liquidating Trust has incurred as a result of Petrie Retail's
     failure to perform its obligations as a result of its bankruptcy
     filing, legal fees, insurance, accounting fees, salaries for the
     Liquidating Trust's two part-time employees, trustee fees, real
     estate advisory fees, transfer agent fees and printing and
     shareholder communications expenses. The decrease in corporate
     overhead charges during the three and six months ended June 30, 1997
     was primarily due to accruals of $15 million made during the three
     month period ended June 30, 1996 for contingent guarantee
     liabilities relating to store leases with respect to which Petrie
     Retail announced going-out-of-business sales. Included in corporate
     overhead charges for the six months ended June 30, 1997 are accruals
     made for additional costs and expenses that the Liquidating Trust
     incurred in connection with Petrie Retail's failure to perform its
     obligations as a result of its bankruptcy filing, including
     approximately $4 million relating to the liability of the
     Liquidating Trust, as successor to Petrie, as a guarantor of certain
     leases which Petrie Retail or one of its affiliates has failed to
     perform and approximately $1.5 million in respect of retrospective
     insurance premium adjustments. See "Notes to Financial Statements."

          The Liquidating Trust intends to file claims against Petrie
     Retail in the Bankruptcy Court in respect of certain payments which
     are made by the Liquidating Trust for obligations that Petrie Retail
     or an affiliate thereof fails to perform. The Liquidating Trust is
     unable to predict the timing or probability of the collection of
     these claims against Petrie Retail.

          On February 28, 1997, an adversary complaint was filed by
     Petrie Retail in the Bankruptcy Court alleging that Petrie and the
     Liquidating Trust were improperly withholding tax refunds
     aggregating $7,579,998 (plus interest thereon) from Petrie Retail.
     Such tax refunds, which relate to taxes paid by Petrie prior to the
     Sale, were being held in an escrow account pursuant to an order of
     the Bankruptcy Court. By an order dated June 25, 1997, the
     Bankruptcy Court approved a settlement of the action, pursuant to
     which the tax refunds (with accrued interest) were released from
     escrow and shared equally by the Liquidating Trust and Petrie Retail
     in offset of certain claims that the Liquidating Trust had against
     Petrie Retail. In addition, pursuant to the settlement, Petrie
     Retail and the Liquidating Trust have agreed to share equally in the
     proceeds of any similar tax refunds received by the Liquidating
     Trust in the future. The Liquidating Trust has expressly reserved
     the right to assert future claims against Petrie Retail to the
     extent that such claims (i) were not offset pursuant to the
     settlement or (ii) relate to amounts in excess of the amounts
     permitted for offset in the settlement.

          During the three and six months ended June 30, 1997, the
     Liquidating Trust earned $2,325,000 and $4,233,000 in investment
     income, as compared to $1,721,000 and $2,982,000 earned during the
     three months ended June 30, 1996 and the period from January 23,
     1996 to June 30, 1996. The increase in investment income during the
     three and six months ended June 30, 1997 is principally the result
     of the Liquidating Trust's sale of shares of Toys Common Stock and
     the investment of the proceeds therefrom in U.S. Treasury
     obligations.

     LIQUIDITY AND CAPITAL RESOURCES

     GENERAL

          As previously disclosed, 3,493,450 shares of Toys Common Stock
     are held by the Liquidating Trust in an escrow account and
     approximately $37.5 million in U.S. Treasury obligations are held by
     the Liquidating Trust in a collateral account. These assets secure
     Petrie's obligations relating to certain contingent liabilities
     pursuant to the terms of the Toys Acquisition Agreement, the Retail
     Operations Stock Purchase Agreement and other agreements with Toys
     "R" Us and/or PS Stores. See " Contingent Liabilities."

          The assets of the Liquidating Trust are subject to the terms of
     a letter agreement dated as of January 24, 1995 (the "Side Letter
     Agreement"), pursuant to which Petrie agreed with Toys "R" Us that,
     until such time as a hedge or similar arrangement is in place,
     Petrie would retain, either individually or in combination, (i) cash
     in an amount of at least $177.5 million (the "Reserved Amount") or
     (ii) shares of Toys Common Stock having a market value (using the
     per share price on January 20, 1995) of at least twice the Reserved
     Amount, to secure the payment of Petrie's contingent liabilities.
     Pursuant to the terms of this letter agreement, the Liquidating
     Trust, as successor to Petrie, is presently required to retain
     substantially all of its assets.

          As of August 12, 1997, the most recent practicable date prior
     to the filing of this Form 10-Q, the Liquidating Trust's 4,055,576
     shares of Toys Common Stock had a market value of approximately
     $137.9 million, based upon a closing price per share of $34, as
     reported on the New York Stock Exchange Composite Tape on such date.
     During the fifty-two weeks prior to August 12, 1997, the price per
     share of Toys Common Stock has fluctuated from a low of $24 3/8 to a
     high of $37 5/8. No assurance can be given as to the future market
     prices of Toys Common Stock.

          As of August 12, 1997, the Liquidating Trust had approximately
     $137 million in cash and cash equivalents and investments in U.S.
     Treasury obligations (including those held in escrow). The
     Liquidating Trust believes that it has sufficient liquid funds
     available to satisfy the liabilities of the Liquidating Trust that
     are likely to occur in the near future (including, without
     limitation, costs and expenses related to the administration of the
     Liquidating Trust such as legal fees, insurance, accounting fees,
     salaries, real estate advisory fees, transfer agent fees and
     printing and shareholder communication expenses). To the extent that
     the Liquidating Trust's liquid funds are insufficient to satisfy
     such liabilities, however, the Liquidating Trust will sell some or
     all of the remaining shares of Toys Common Stock that it holds. The
     Liquidating Trust has not made any liquidating distributions since
     its establishment. The Liquidating Trustees have determined not to
     approve any further distributions of cash or shares of Toys Common
     Stock to holders of Units of Beneficial Interest until the status of
     the Liquidating Trust's contingent liabilities is clarified. See "
     Contingent Liabilities."

     CONTINGENT LIABILITIES

          As more fully described in Item 1 of Part I, the Liquidating
     Trust, as successor to Petrie, has certain contingent liabilities
     with respect to existing or potential claims, lawsuits and other
     proceedings, which primarily relate to (i) guarantees of certain
     retail store leases, expiring at various times through 2011 to which
     Petrie Retail or an affiliate thereof is a party, and certain other
     liabilities that were assumed by Petrie Retail (but as to which
     Petrie's liability has not been released) in connection with the
     Sale to the extent that Petrie Retail fails to perform; and (ii)
     Petrie's agreement with Petrie Retail to indemnify it for certain
     liabilities relating to Petrie Retail's withdrawal from the United
     Auto Workers District 65 Security Plan Pension Fund. At June 30,
     1997, the Liquidating Trust, as successor to Petrie, had accrued
     approximately $35 million for contingent liabilities. As the scope
     of these liabilities becomes better defined, there may be changes in
     the estimates of future costs, which could have a material effect on
     the Liquidating Trust's financial condition, liquidity and future
     ability to make liquidating distributions. See "Notes to Financial
     Statements."

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

          Except for historical matters, the matters discussed in this
     Form 10-Q are forward-looking statements that involve risks and
     uncertainties. Forward-looking statements include, but are not
     limited to, statements relating to the Liquidating Trust's
     contingent liabilities contained above in "Management's Discussion
     and Analysis of Financial Condition and Results of Operations" and
     "Notes to Financial Statements."

          The Liquidating Trust wishes to caution readers that in
     addition to factors that may be described elsewhere in this Form
     10-Q, the following important factors, among others, could cause the
     Liquidating Trust's assets and liabilities to differ materially from
     those expressed in any forward-looking statements made by, or on
     behalf of, the Liquidating Trust, and could materially affect the
     Liquidating Trust's financial condition and liquidity:

          (1)  A decision by Petrie Retail to close additional stores
               for which the Liquidating Trust, as successor to
               Petrie, has liability as a guarantor; 

          (2)  A decision by Petrie Retail to liquidate while in
               Chapter 11 or the conversion of Petrie Retail's
               bankruptcy case from Chapter 11 to a case under Chapter
               7; 

          (3)  Other actions by Petrie Retail which cause the default
               of obligations assumed by Petrie Retail in connection
               with the Sale for which the Liquidating Trust, as
               successor to Petrie, may be deemed to have liability as
               the primary obligor; 

          (4)  A decision by a court that the Liquidating Trust, as
               successor to Petrie, has liability as a guarantor of
               certain leases notwithstanding Petrie's receipt from
               the landlords thereof of releases of guarantees with
               respect to such leases; 

          (5)  A material decline in the price per share of Toys
               Common Stock; 

          (6)  An adverse material change in general economic
               conditions and the interest rate environment; 

          (7)  The effects of, and changes in, laws and regulations
               and other activities of federal and local governments,
               agencies and similar organizations; and 

          (8)  The costs and other effects of other legal and
               administrative cases and proceedings, settlements and
               claims relating to the Liquidating Trust's contingent
               liabilities.


                       PART II - OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDINGS.

          The description of legal proceedings involving the Liquidating
     Trust provided in Item 1 of Part I is herein incorporated by
     reference as though fully set forth herein.

          Zurich Insurance Company et al. v. Petrie Stores Corporation et
     al. As previously disclosed, on or about October 30, 1996, a
     complaint was filed in New York State Supreme Court by an insurance
     company and its affiliates against Petrie and the Liquidating Trust,
     as successor to Petrie, seeking payment of retrospective premium
     adjustments relating to insurance agreements entered into by Petrie
     for the policy terms 1988/1989 through and including 1994/1995,
     based on the value of claims as of December 31, 1994 and December
     31, 1995. The plaintiffs sought an amount no less than $1,728,183
     with interest from October 31, 1996 plus damages in respect of
     defendants' alleged anticipatory breach of their obligations to pay
     future premium adjustments and attorneys' fees and costs. This
     action was settled on April 14, 1997 for the principal amount
     claimed, without interest, fees or other costs. The amount paid in
     such action is in addition to the $1,520,589 in retrospective
     premium adjustments paid by the Liquidating Trust to Zurich on June
     27, 1997 based on the value of claims made as of December 31, 1996.
     See "Notes to Financial Statements."

          Roseville Square Partners v. Carlsbad Apparel Corporation et
     al. As previously disclosed, on or about November 7, 1996, a
     complaint was filed in the Superior Court of Orange County,
     California, California against Carlsbad Apparel Corporation (a
     former subsidiary of Petrie), Petrie and certain unnamed agents or
     employees of the defendants. The complaint alleged breach of
     contract and sought to recover past rent, common area maintenance
     charges, taxes, interest, late charges, attorneys' fees and costs,
     and the additional amount due under the remainder of the lease,
     which totaled in excess of $562,000. The parties have settled the
     case for an amount not deemed material to the Liquidating Trust.

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

          (a)  LIST OF EXHIBITS

               Exhibit 27 -- Financial Data Schedule

          (b)  REPORTS ON FORM 8-K

               None. 


                                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.

                              PETRIE STORES LIQUIDATING TRUST

     Dated: August 14, 1997        By /s/ STEPHANIE R. JOSEPH     
                                   ------------------------------------
                                   Stephanie R. Joseph
                                   Manager and Chief Executive Officer

     Dated: August 14, 1997        By /s/ H. BARTLETT BROWN         
                                   ------------------------------------
                                   H. Bartlett Brown
                                   Assistant Manager and Chief
                                   Financial Officer