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 August 29, 1997

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 1,387,691 shares, $1 par value, was outstanding at 
August 29, 1997
<PAGE>
<TABLE>
                        PENOBSCOT SHOE COMPANY
                        CONDENSED BALANCE SHEET
                           (In thousands)
<CAPTION>
                                 August 29, 1997      November 29, 1996
                                   (Unaudited)             (Note (a))
<S>                                   <C>                   <C>
CURRENT ASSETS:
  Cash & Cash Equivalents             $  659                $  548
  Marketable Securities                3,223                 3,299
  Accounts receivable                  3,168                 3,319
  Inventories (Note 2)                 5,383                 4,036
  Other current assets                   487                   433
                                     _______               _______
        TOTAL CURRENT ASSETS         $12,921               $11,635

PROPERTY AND EQUIPMENT, AT COST:
  Buildings                          $ 1,436               $ 1,417
  All Other                              541                   368  
  Less accumulated depreciation
    and amortization                   1,659                 1,584
                                     _______               _______ 
        NET PROPERTY AND EQUIPMENT   $   318               $   201
                                     _______               _______
  TOTAL ASSETS                       $13,239               $11,836
                                     =======               =======                
LIABILITIES AND SHAREHOLDERS' EQUITY: 

CURRENT LIABILITIES:
  Accounts payable                   $   822               $   503
  Notes payable                        1,360                     0
  Other current liabilities              384                   740
                                     _______               _______ 
        TOTAL CURRENT LIABILITIES    $ 2,566               $ 1,243

DEFERRED INCOME TAXES                $    99               $    99 

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                    8,313                 8,234
  Add net unrealized gain on 
    available-for-sale securities
    (Note (b))                           400                   355
  Less treasury stock at cost 
   145,351 and 137,877 shares;           782                   737

         NET SHAREHOLDERS' EQUITY    _______               _______
           (Note 3)                  $10,574               $10,494

TOTAL LIABILITIES AND SHARE-         _______               _______
  HOLDERS' EQUITY                    $13,239               $11,836
                                     =======               =======
<FN>
Note: (a) The balance sheet at November 29, 1996, has been derived from
          the audited financial statements at that date.

      (b) The Company adopted Statement of Accounting Standard No. 115
          "Accounting for Certain Investments in Debt and Equity Securities"
          effective November 26, 1994.  

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
                                            Third Quarter Ended             Nine Months Ended         
                                           August         August          August        August 
                                          29, 1997       23, 1996        29, 1997      23, 1996                
<S>                                        <C>            <C>            <C>           <C>
Net Sales                                  $3,864          $3,865       $10,405       $11,114

Cost and operating expenses:

  Cost of sales                             2,634           2,697         7,001         7,610
  Selling and administrative   
    expenses                                1,091             996         3,221         3,179
                                            ______        _______        _______       _______
Operating income                              139             172           183           325

Other income                                  180             154           287           423 
                                            ______        _______        _______       _______
Income before income taxes                    320             327           470           748

Income taxes                                  126             131           183           297
                                            _______       _______        _______       _______
Net income                                 $  193          $  196        $  287        $  451
                                            =======       =======        =======       =======
Per Common Share:

  Net income                               $ 0.14          $ 0.13        $ 0.21        $ 0.31
     
  Dividends                                   0.05           0.05          0.15          0.15 

Average number of common shares 
  outstanding                           1,387,796       1,461,833     1,390,589     1,472,605
<FN>
See notes to the condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
                        PENOBSCOT SHOE COMPANY
                        STATEMENT OF CASH FLOWS
       For Nine Months Ended August 29, 1997 and August 23, 1996
                            (In thousands)
<CAPTION>
                                        1997                  1996
<S>                                    <C>                   <C>
Cash flows from operating 
  activities:

  Net cash provided (used) by 
    operating activities              $  556                 $ (633)
Cash flows from investing
  activities:

  Proceeds from sale of assets             0                     67

  Capital expenditures                  (191)                   (16)
                                      _______                _______
    Net cash provided (used) by
      investing activities              (191)                    51

Cash flows from financing activities:

  Dividends paid                        (209)                  (221)  

  Purchase of treasury stock             (45)                  (119)

    Net cash provided (used) by       _______                _______
      financing activities              (254)                  (340)

    Net increase (decrease) in        _______                _______
      cash and cash equivalents          111                   (922)

Cash and cash equivalent at 
  beginning of period                    548                  1,301            
 
Cash and cash equivalent at           _______                _______
  end of period                       $  659                $   379  
                                      =======                =======


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

    Interest                          $   9                 $    0 

    Income taxes                        387                    444
</TABLE>
<PAGE>
                        PENOBSCOT SHOE COMPANY
               NOTES TO CONDENSED FINANCIAL STATEMENTS
                             (Unaudited)

1.  CONDENSED FINANCIAL STATEMENTS

    The condensed balance sheet as of August 29, 1997, the statements of 
income for the third quarter ended August 29, 1997 and August 23, 1996, 
and the condensed statements of cash flows for the nine-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 August 29, 1997 and for the other periods 
presented.  The results of operations for the period ended August 29, 1997 
are not necessarily indicative of operating results for the full year.

2.  INVENTORIES

    Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                            8/29/97      11/29/96     8/23/96
<S>                          <C>         <C>          <C>
FIFO Cost:                      
    finished shoes           $5,478       $4,465       $4,815
    raw materials                14           20           43  
                             _______     _______      _______
                             $5,492       $4,485       $4,858  
Excess of FIFO cost over
LIFO inventory value           (108)        (449)        (739)   
                             _______     _______      _______
                             $5,383       $4,036      $ 4,118
                             =======     =======      =======
</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 nine months ended August 29, 1997, shareholders' equity 
changed due to the net income of $287,000, dividends declared of $209,000,
treasury stock purchases of $45,000 and a $45,000 increase in the net
unrealized gain on available-for-sale securities held by the Company. 
Effective November 26, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", necessitating the inclusion of this 
unrealized gain on the balance sheet. 

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

Liquidity and Capital Resources:

     At August 29, 1997, Penobscot Shoe Company had working capital of 
approximately $10,355,000 versus approximately $10,392,000 at November 
29, 1996, a decrease of $37,000.  The ratio of current assets to current 
liabilities at August 29, 1997, was 5.0 to 1, compared to 9.4 to 1, at 
November 29, 1996.  The change in the current ratio since November 29,
1996 was attributable to seasonal use of the credit line as discussed
below.

     The statement of cash flows for the nine months ended August 29, 1997, 
shows an increase of $111,000 in cash and cash equivalents since November 
29, 1996.  The Company's operating activities provided $556,000 since
November 29,1996, due mainly to the use of an existing credit line established
with a major bank.  To fund short-term seasonal growth in inventory the Company
uses an established line of credit for short-term borrowings rather than to
liquidate marketable securities held by the Company.  Increases in inventory
and accounts payable as well as decreases in accounts receivable and other
current liabilities were due primarily to seasonal fluctuations.  Uses of cash
in the nine month period included the payment of the Company's quarterly
dividend which amounted to $209,000, and capital expenditures for property and
equipment which totaled $191,000 during the period.  The increase in property
and equipment reflects the purchase of new data processing hardware and software
and the upgrading of existing equipment.

     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 should the 
need arise.

Results of Operations:

      Net sales for the third quarter ended August 29, 1997, were $3,864,000,
approximately equal to the net sales of $3,865,000 in the same quarter last
year. Net income in the current quarter was $193,000, or $.14 per share,
compared to net income of $196,000, or $.13 per share, a year ago.

      For the nine months year-to-date, net sales were $10,405,000, down 6%
from $11,114,000 a year ago. Net income for the year-to-date period was
$287,000, or $.21 per share, versus $451,000, or $.31 per share last year.

      Cost of sales was 68.2% of net sales in the third quarter compared to 
69.8% a year ago resulting in gross profit margins of 31.8% and 30.2% in the
1997 and 1996 quarters, respectively.  Last year, during the third quarter the
Company ceased production at its plant in Old Town, Maine.  A restructuring 
charge of approximately $150,000, pre-tax, was taken as a result of this
closure.  Without the impact of that charge, the gross profit margin in the
third quarter of 1996 would have been 32.9%.  The remaining differences in the
gross margin were due mostly to timing of shipments.

      Selling and administrative costs in the third quarter were approximately
10% higher that last year.  New marketing and sales programs amounted to about
half of the increase.  The balance of the increase was a combination of many
factors including costs related to maintaining the factory building which was
closed a year ago, and which is currently on the real estate market, and higher
freight and warehousing costs due to the UPS strike.

      Other income in the current quarter included gains from the sales of
securities which amounted to approximately $147,000, pre-tax, compared to $4
pre-tax, a year ago.  Last year's third quarter other income was enhanced
by a favorable settlement of litigation, which amounted to $100,000,
pre-tax.            
  
      


<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:    September 26, 1997                    Paul Hansen
                                         _________________________
                                         By:   Paul Hansen 
                                         President and
                                         Chief Executive Officer

Date:    September 26, 1997                    David L. Keane
                                         _________________________  
                                         By:   David L. Keane
                                         Vice President/Finance and
                                         Administration