SECURITIES AND EXCHANGE COMMISSION

                               Washington, DC 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) 
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended May 29, 1998

Commission File No. 1-5548

Penobscot Shoe Company
(Exact name of registrant as specified in its charter)

Maine
(State or other jurisdiction of incorporation or organization)

01-0139580
(IRS Employer identification no.)

450 North Main Street, Old Town Maine   
(Address of principal executive offices)

04468
(Zip code)

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

Registrant's telephone number, including area code:  (207) 827-4431

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.  Yes __X__
                                            No _____

Common stock of 1,374,991 shares, $1 par value, was outstanding at 
May 29, 1998.
<PAGE>
<TABLE>
                        PENOBSCOT SHOE COMPANY
                        CONDENSED BALANCE SHEET
                           (In thousands)
<CAPTION>
                                  May 29, 1998         November 28, 1997
                                   (Unaudited)             (Note (a))
<S>                                   <C>                   <C>
CURRENT ASSETS:
  Cash & Cash Equivalents            $ 1,097               $   403
  Marketable Securities                3,463                 3,457
  Accounts receivable                  3,238                 3,753
  Inventories (Note 2)                 4,043                 4,283
  Other current assets                   478                   382
                                     _______               _______
        TOTAL CURRENT ASSETS         $12,319               $12,278

PROPERTY AND EQUIPMENT, AT COST:
  Buildings                          $ 1,437               $ 1,437
  All Other                              489                   474
  Less accumulated depreciation
    and amortization                   1,671                 1,618
                                     _______               _______ 
        NET PROPERTY AND EQUIPMENT   $   254               $   293
                                     _______               _______
  TOTAL ASSETS                       $12,573               $12,571
                                     =======               =======                
LIABILITIES AND SHAREHOLDERS' EQUITY: 

CURRENT LIABILITIES:
  Accounts payable                   $ 1,086               $   597
  Notes payable			           0	      	       750
  Other current liabilities              366                   431
                                     _______               _______ 
        TOTAL CURRENT LIABILITIES    $ 1,452               $ 1,778

DEFERRED INCOME TAXES                $   109               $   109

SHAREHOLDERS' EQUITY:
  Common stock, $1 par value:
    authorized 2,000,000 shares:
    issued 1,533,042                 $ 1,533               $ 1,533
  Capital in excess of par value       1,109                 1,109
  Retained earnings                    8,735                 8,392
  Add net unrealized gain on 
    available-for-sale securities        495                   449
  Less treasury stock at cost 
   158,051 and 148,051 shares            859                   799

         NET SHAREHOLDERS' EQUITY    _______               _______
           (Note 3)                  $11,012               $10,684

TOTAL LIABILITIES AND SHARE-         _______               _______
  HOLDERS' EQUITY                    $12,573               $12,571
                                     =======               =======
<FN>
Note: (a) The balance sheet at November 27, 1998, has been derived from
          the audited financial statements at that date.

      

See notes to the condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
                        PENOBSCOT SHOE COMPANY
                         STATEMENT OF INCOME
               (In thousands, except per share amounts)
                             (Unaudited)
<CAPTION>                             
                                    For the                     For the
                              Second Quarter Ended          Six Months Ended         
                               May 29      May 30         May 29        May 30
                                1998        1997           1998          1997    
<S>                           <C>          <C>            <C>            <C>
Net Sales                      $4,236        $2,439       $9,020         $6,541

Cost and operating expenses:

  Cost of sales                 2,933         1,594        6,106          4,367
  Selling and administrative 
    expenses                    1,111           984        2,380          2,130
                               _______       _______      _______        _______
Operating income                  192          (140)         534             44

Other income                       27            45          265            107
                               _______       _______      _______        _______
Income before income taxes        219           (95)         799            151

Income taxes                       86           (40)         319             57
                               _______       _______      _______        _______
Net income                      $ 133         $ (55)       $ 481          $  94
                               =======       =======      =======        =======
Earnings Per Share:

  Basic                         $0.10        $(0.04)       $0.35          $0.07
  Diluted                       $0.10        $(0.04)       $0.35          $0.07
     
  Cash dividends per share       0.05          0.05         0.10           0.10 

Average number of common shares 
  outstanding               1,374,991     1,388,864    1,375,433      1,391,989
<FN>
See notes to the condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
                        PENOBSCOT SHOE COMPANY
                        STATEMENT OF CASH FLOWS
          For Six Months Ended May 29, 1998 and May 30, 1997
                            (In thousands)
<CAPTION>
                                        1998                  1997
<S>                                    <C>                   <C>
Cash flows from operating 
  activities:

  Net cash provided by 
    operating activities               $ 905                 $  996

Cash flows from investing
  activities:

  Proceeds from sale of assets             0                      0

  Capital expenditures                   (14)                  (170)
                                       _______                _______
    Net cash (used) by 
      investing activities               (14)                  (170)

Cash flows from financing activities:

  Dividends paid                        (137)                  (139)  

  Purchase of treasury stock             (60)                   (44)

    Net cash (used) by                _______                _______
      financing activities              (197)                  (183)

    Net increase in                   _______                _______
      cash and cash equivalents          694                    643

Cash and cash equivalent at 
  beginning of period                    403                    548            
 
Cash and cash equivalent at           _______                _______
  end of period                       $ 1,097                $ 1,191  
                                      =======                =======


Supplemental Disclosure of Cash Flow Information
  Cash paid during the period for:

    Interest                          $  17                 $    0 

    Income taxes                        535                    384
</TABLE>
<PAGE>
                        PENOBSCOT SHOE COMPANY
               NOTES TO CONDENSED FINANCIAL STATEMENTS
                             (Unaudited)

1.  CONDENSED FINANCIAL STATEMENTS

    The condensed balance sheet as of May 29, 1998, the statements of 
income for the second quarter ended May 29, 1998 and May 30, 1997, 
and the condensed statements of cash flows for the six-month periods then 
ended have been prepared by the Company, without audit.  In the opinion of 
management, all necessary adjustments, which include normal recurring 
adjustments, have been made to present fairly the financial position, results 
of operations, and cash flows at May 29, 1998 and for the other periods 
presented.  The results of operations for the period ended May 29, 1998 
are not necessarily indicative of operating results for the full year.

2.  INVENTORIES

    Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                            5/29/98     11/28/97      5/30/97 
<S>                          <C>         <C>          <C>
FIFO Cost:                      
    finished shoes           $4,315       $4,386       $4,156
    raw materials                21           15           17  
                             _______     _______      _______
                             $4,336       $4,401       $4,173  
Excess of FIFO cost over
LIFO inventory value           (293)        (117)        (140)   
                             _______     _______      _______
                             $4,043       $4,283       $4,033
                             =======     =======      =======
</TABLE>   

    The Company uses the LIFO method because it more realistically
reflects operating results by charging current costs against current
revenues. 

3.  SHAREHOLDERS' EQUITY

    During the six months ended May 29, 1998, shareholders' equity 
changed due to the net income of $481,000, dividends declared of $137,000,
purchases of treasury stock of $60,000 and a $46,000 increase in the net
unrealized gain an available-for-sale securities held by the Company.  


4.  EARNINGS PER SHARE

    The weighted average number of shares outstanding used to compute basic
earnings per share were 1,374,991 and 1,388,864 for the quarter ended
May 29, 1998 and May 30, 1997, respectively, and for computing diluted
earnings per share were 1,386,011 and 1,400,930 for the same respective periods.
For the six months year-to-date ended May 29, 1998 and May 30, 1997, the shares
used to compute basic earnings per share were 1,375,433 and 1,391,989 and for
diluted earnings per share were 1,385,562 and 1,404,561, respectively. Basic
earnings per share are calculated based on the weighted average number of
shares outstanding.  Diluted earnings per share are calculated based on the same
number of shares plus additional shares representing stock distributable under
stock-based plans computed using the treasury stock method.  The implememtation 
of Statement of Accounting Standards No. 128 "Earnings per Share" did not have
a material impact on the financial statements.

<PAGE>
                        PENOBSCOT SHOE COMPANY
     MANAGEMENT DISCUSSION AND ANALYSIS OF THE SUMMARY OF OPERATIONS

Forward Looking Statements:

     This report contains certain forward looking statements regarding the
Company.  The Company desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 and in that regard is
cautioning the readers of this report that a number of important risk factors
could affect the Company's actual results of operations and may cause changes
in the Company's strategy with the result that the Company's operations and
results may differ materially from those expressed in any forward looking
statements made by, or on behalf of, the Company.  These risk factors include,
among others, general economic and market conditions, the rate of growth in the
footwear market and consumer acceptance of the Company's product line, and the
risk factors that are discussed from time-to-time in the Company's SEC reports,
including, but not limited to, the report on Form 10-Q for the quarter ended
May 29, 1998.


Liquidity and Capital Resources:

     At May 29, 1998, Penobscot Shoe Company had working capital of 
approximately $10,868,000 versus approximately $10,499,000 at November 
28, 1997, an increase of $369,000.  8.55.2 to 1, compared to 6.9 to 1, at 
November 28, 1997.

     The statement of cash flows for the six months ended May 29, 1998, 
shows an increase of $694,000 in cash and cash equivalents since November 
28, 1997.  The Company's operations provided $905,000 since November 28, 
1997, including net income of $481,000 and ordinary fluctuations in various
current asset and liability accounts.  The fluctuations included an increase in 
accounts payable, and decreases in inventory and accounts receivable, all
mainly as a result of timing. The Company's quarterly dividend amounted to a
use of $137,000 during the period. The Company used $14,000 for purchases of 
capital equipment and used $60,000 to purchase treasury stock.

     Management believes that Penobscot Shoe Company remains financially well 
structured to consider a variety of financing options should the need arise and
will make choices depending on economic conditions at the time.  Options 
available include conversion of marketable securities held by the Company into
cash and cash equivalents.  The Company also has an established line of credit
with a major bank available for direct borrowing at the prime rate minus 1.5%
should the need arise.


Results of Operations:

      Net sales for the second quarter ended May 29, 1998, were $4,236,000, up
74% from $2,439,000 last year.  Net income for the current quarter $133,000,
or $.10 per share, compared to the net loss of $55,000, or $.04 per share
incurred in the second quarter last year.  Net income in the second quarter last
year benefited from a LIFO gain of approximately $41,000, or $.03 per share.
The current year had no such LIFO gain.

      For the six-months year-to-date, net sales were $9,020,000, up 38% from
$6,541,000 a year ago.  Net income for the year-to-date period was $481,000, or
$.35 per share, versus $94,000, or $.07 per share last year.  In the first six
months last year, net income included LIFO gains totaling approximately
$157,000, or $.11 per share.  The current year-to-date period did not benefit
from any LIFO gain.  For the six months year-to-date periods, gains from the
sales of securities amounted to approximately $125,000, or $.09 per share in
1998, and $6,000, or less than $.01 per share in 1997.

      The increase in sales versus last year was due to the continued success of
our Spring '98 line at retail.  At-once orders for the collection are double
those of the corresponding period in 1997.  The sales growth was a result of
volume and not due to an increase in average selling price.  Currently, advance
bookings of Fall '98 merchandise to be delivered in the second half of the year
are slightly ahead of last year.

      Cost of sales was 69.2% in the second quarter compared to 65.4% in the
same period last year, resulting in gross profit margins of 30.8% and 34.6% in
the 1998 and 1997 quarters respectively.  During the second quarter last year a
LIFO liquidation gain of $69,000, pre-tax, benefited margins.  Without that LIFO
gain, the gross profit margin in the second quarter of 1997 would have been
31.8%.  No LIFO gains have been realized in the current quarter.

      Selling and administrative costs in the second quarter were approximatley
$127,000 higher that last year.  Approximatley 66% of this increase was based on
costs variable on sales volume.  The balance of the higher costs reflects
investment in new sales and marketing efforts.
 
<PAGE>
PART II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K

            (a) Exhibits          
 
                Exhibit 27.  Financial Data Schedule

            (b) Reports on Form 8-K

                No reports on Form 8-K have been filed during the
                last quarter of the period covered by this report.
<PAGE>
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 under-
signed thereunto duly authorized.




                                          Penobscot Shoe Company
                                         _________________________
                                              (Registrant)


Date:    June 22, 1998                         Paul Hansen
                                         _________________________
                                         By:   Paul Hansen 
                                         President and
                                         Chief Executive Officer

Date:    June 22, 1998                         David L. Keane
                                         _________________________  
                                         By:   David L. Keane
                                         Vice President/Finance and
                                         Administration