SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


     X    Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
 -------  Exchange Act of 1934

          For  the  quarterly  period ended  December 27, 1997  Commission  File
          Number 0-27050 
                 -------

          Transition  report  pursuant to Section 13 or 15(d) of the  Securities
 -------  Exchange Act of 1934

          For the transition period from          to
                                         --------    --------

                                  PHAR-MOR,INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          PENNSYLVANIA                                        25-1466309
---------------------------------------------------     ------------------------
          (State or other jurisdiction of                 (I.R.S. Employer
           incorporation or organization)                  Identification No.)


          20 Federal Plaza West, Youngstown, Ohio             44501-0400
---------------------------------------------------     ------------------------
          (Address of principal executive offices)            (Zip code)


Registrant's telephone number, including area code:        (330) 746-6641
                                                        ------------------------
         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 by check mark whether the  registrant  has filed all documents
and reports  required to be filed by Sections 12, 13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                                            YES     X         No
                                                 -------         -------
As of January 30, 1998,  12,230,865 shares of the registrant's common stock were
outstanding.



<PAGE>2


                         PHAR-MOR, INC. AND SUBSIDIARIES

                                    FORM 10-Q

                     FOR THE QUARTER ENDED DECEMBER 27, 1997


                                    I N D E X


                                                                            Page

Part I:  Financial Information

         Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets as of  December 27, 
              1997 and June 28, 1997                                          3

              Condensed Consolidated Statements of Operations for the
              Thirteen Weeks Ended December 27, 1997 and December 28, 
              1996                                                            4

              Condensed Consolidated Statements of Operations for the
              Twenty-six Weeks Ended December 27, 1997 and December 28,
              1996                                                            5

              Condensed Consolidated Statements of Cash Flows for the 
              Twenty-six Weeks Ended December 27, 1997 and December 28,
              1996                                                            6

              Notes to Condensed Consolidated Financial Statements            7

         Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                  8

Part II: Other Information

         Item 1.  Legal Proceedings                                          10

         Item 2.  Changes in Securities                                      10

         Item 3.  Defaults Upon Senior Securities                            10

         Item 4.  Submission of Matters to a Vote of Security Holders        10

         Item 5.  Other Information                                          10

         Item 6.  Exhibits and Reports on Form 8-K                           10

         Signatures                                                          11

         Exhibit Index                                                       12


<PAGE>3


                         PHAR-MOR, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                (Unaudited)
                                                                December 27,    June 28,
                                                                    1997          1997
                                                                  ---------    ---------
<S>                                                               <C>          <C>    
ASSETS

Current assets:
 Cash and cash equivalents                                        $  60,230    $  79,847
 Accounts receivable - net                                           25,018       21,614
 Merchandise inventories                                            183,369      169,103
 Prepaid expenses and other current assets                            4,597        5,743
                                                                  ---------    ---------
     Total current assets                                           273,214      276,307

Property and equipment - net                                         76,151       72,835
Deferred tax asset                                                    9,255        9,255
Other assets                                                          4,873        4,208
                                                                  ---------    ---------
     Total assets                                                 $ 363,493    $ 362,605
                                                                  =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                                 $  69,444    $  61,808
 Accrued expenses and other current liabilities                      41,776       40,534
 Current portion of long-term debt and capital lease obligations      9,140        9,155
                                                                  ---------    ---------
     Total current liabilities                                      120,360      111,497

Long-term debt and capital lease obligations                        135,625      140,213
Long-term self insurance reserves                                     8,062        8,098
Deferred rent and unfavorable lease liability - net                  13,655       12,493
                                                                  ---------    ---------
     Total liabilities                                              277,702      272,301
                                                                  ---------    ---------

Commitments and contingencies                                           --           --

Minority interests                                                      535          535
                                                                  ---------    ---------

Stockholders' equity:
 Preferred stock                                                        --           --
 Common stock                                                           122          122
 Additional paid-in capital                                          89,682       89,402
 Retained (deficit) earnings                                         (4,548)         245
                                                                  ---------    ---------
     Total stockholders' equity                                      85,256       89,769
                                                                  ---------    ---------

Total liabilities and stockholders' equity                        $ 363,493    $ 362,605
                                                                  =========    =========

</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.

<PAGE>4



                         PHAR-MOR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                     Thirteen             Thirteen
                                                                    Weeks Ended          Weeks Ended
                                                                 December 27, 1997    December 28, 1996
                                                                 -----------------    -----------------

<S>                                                              <C>                  <C>              
Sales                                                            $         292,212    $         290,933

Less:
 Cost of goods sold, including occupancy and
    distribution costs                                                     234,220              235,943
 Selling, general and administrative expenses                               45,766               43,644
 Chief Executive Officer severance expenses                                    234                 --
 ShopKo business combination expenses                                         --                  2,185
 Depreciation and amortization                                               5,717                5,339
                                                                 -----------------    -----------------
Income from operations before interest expense and
income taxes                                                                 6,275                3,822

Interest expense - net                                                       3,497                2,906
                                                                 -----------------    -----------------
Income before income taxes                                                   2,778                  916

Income tax expense                                                            --                  1,464
                                                                 -----------------    -----------------

Net income (loss)                                                $           2,778    $            (548)
                                                                 =================    =================

Earnings (loss) per common share                                 $             .23    $            (.05)
                                                                 =================    =================
Diluted earnings (loss) per common share                         $             .23    $            (.05)
                                                                 =================    =================

Weighted average number of common shares outstanding                    12,165,353           12,157,054
                                                                 =================    =================
Weighted average number of common shares outstanding - diluted          12,212,527           12,157,054
                                                                 =================    =================
</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.

<PAGE>5


                         PHAR-MOR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                    Twenty-six            Twenty-six
                                                                    Weeks Ended          Weeks Ended
                                                                 December 27, 1997    December 28, 1996
                                                                 -----------------    -----------------

<S>                                                              <C>                  <C>              
Sales                                                            $         548,544    $         555,484

Less:
 Cost of goods sold, including occupancy and
    distribution costs                                                     442,422              455,034
 Selling, general and administrative expenses                               87,598               84,916
 Chief Executive Officer severance expenses                                  5,667                 --
 ShopKo business combination expenses                                         --                  2,185
 Depreciation and amortization                                              11,055               10,247
                                                                 -----------------    -----------------

Income from operations before interest expense and
income taxes                                                                 1,802                3,102

Interest expense - net                                                       6,595                5,845
                                                                 -----------------    -----------------

Loss before income taxes                                                    (4,793)              (2,743)

Income taxes                                                                  --                   --
                                                                 -----------------    -----------------

Net loss                                                         $          (4,793)   $          (2,743)
                                                                 =================    =================

Loss per common share                                            $            (.39)   $            (.23)
                                                                 =================    =================

Diluted loss per common share                                    $            (.39)   $            (.23)
                                                                 =================    =================

Weighted average number of common shares outstanding                    12,162,276           12,157,054
                                                                 =================    =================

Weighted average number of common shares outstanding - diluted          12,162,276           12,157,054
                                                                 =================    =================
</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


<PAGE>6


                         PHAR-MOR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                               Twenty-six            Twenty-six
                                                              Weeks Ended           Weeks Ended
                                                            December 27, 1997    December 28, 1996
                                                            -----------------    -----------------
<S>                                                        <C>                  <C>               
OPERATING ACTIVITIES
Net loss                                                   $          (4,793)   $          (2,743)
Adjustments to reconcile net loss to net cash (used for)
 provided by operating activities:
 Items not requiring the outlay of cash:
  Depreciation                                                         6,982                5,753
  Amortization of video rental tapes                                   4,073                4,494
  Amortization of deferred financing costs                               210                  198
  Deferred income taxes                                                 --                   (120)
  Deferred rent                                                        1,162                  831
 Changes in assets and liabilities:
  Accounts receivable                                                 (3,404)              (4,639)
  Merchandise inventories                                            (13,992)             (17,196)
  Prepaid expenses                                                     1,146                  952
  Other assets                                                          (898)                (208)
  Accounts payable                                                     7,636               34,995
  Accrued expenses and other current liabilities                       1,207                2,407
                                                           -----------------    -----------------
Net cash (used for) provided by operating activities                    (671)              24,724
                                                           -----------------    -----------------

INVESTING ACTIVITIES
  Additions to rental videotapes                                      (4,324)              (4,723)
  Additions to property and equipment                                (10,299)             (11,431)
                                                           -----------------    -----------------
Net cash used for investing activities                               (14,623)             (16,154)

FINANCING ACTIVITIES
  Proceeds from issuance of common stock                                 280                 --
  Principal payments on long-term debt                                (1,093)              (1,734)
  Principal payments on capital lease obligations                     (3,510)              (2,943)
                                                           -----------------    -----------------
Net cash used for financing activities                                (4,323)              (4,677)

(Decrease) increase in cash and cash equivalents                     (19,617)               3,893
Cash and cash equivalents, beginning of period                        79,847              104,265
                                                           -----------------    -----------------
Cash and cash equivalents, end of period                   $          60,230    $         108,158
                                                           =================    =================
</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.

<PAGE>7



PHAR-MOR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
--------------------------------------------------------------------------------

1.       BASIS OF PRESENTATION
         The accompanying  unaudited  interim condensed  consolidated  financial
         statements  have been prepared in accordance  with  generally  accepted
         accounting  principles for interim financial  information.  They do not
         include  all  information  and  footnotes  which  would be  required by
         generally  accepted   accounting   principles  for  complete  financial
         statements.  In the opinion of  management  of  Phar-Mor,  Inc. and its
         subsidiaries  (the  "Company"),   these  interim  financial  statements
         contain all adjustments considered necessary for a fair presentation of
         financial  position,  results  of  operations  and cash  flows  for the
         periods  presented.  Reference  should be made to the Company's  Annual
         Report  on Form  10-K for the  fiscal  year  ended  June  28,  1997 for
         additional disclosures, including a summary of the Company's accounting
         policies. Operating results for the thirteen and twenty-six weeks ended
         December 27, 1997 are not  necessarily  indicative  of the results that
         may be expected for the fifty-two weeks ending June 27, 1998.

2.       REORGANIZATION
         On August 17,  1992,  the  Company  filed  petitions  for relief  under
         Chapter 11 of the United States  Bankruptcy  Code ("Chapter  11"). From
         that time until  September 11, 1995, the Company  operated its business
         as a  debtor-in-possession  subject to the  jurisdiction  of the United
         States  Bankruptcy  Court  for  the  Northern  District  of  Ohio  (the
         "Bankruptcy  Court").  On September 11, 1995, the Company  emerged from
         reorganization   proceedings   under   Chapter  11   pursuant   to  the
         confirmation  order entered on August 29, 1995 by the Bankruptcy  Court
         confirming the Third Amended Joint Plan of Reorganization dated May 25,
         1995.


3.       CHIEF EXECUTIVE OFFICER RESIGNATION
         On September 19, 1997, the Company  entered into a Severance  Agreement
         with Robert Haft whereby he resigned  his  positions as Chairman of the
         Company's  Board of  Directors  and as the  Company's  Chief  Executive
         Officer and received a lump sum cash payment of $4,417. Under the terms
         of the  Severance  Agreement,  the  Company  will  continue  to provide
         benefits to him through  September  19,  2000.  He is  indemnified  and
         entitled to  reimbursement  for any tax payments he is required to make
         that constitute excess parachute payments under Federal Income Tax laws
         resulting from the severance benefits he received.

4.       PROPOSED BUSINESS COMBINATION
         The Company entered into an Agreement and Plan of Reorganization  dated
         September  7, 1996 (as  amended as of  October  9,  1996)  with  ShopKo
         Stores, Inc.  ("ShopKo"),  a retailer  specializing in prescription and
         vision benefit  management and health  decision  support  services,  to
         combine the  respective  companies  under  Cabot  Noble,  Inc.  ("Cabot
         Noble"),  a newly  organized  Delaware  holding  company (the "Proposed
         Transaction").

         On April 1, 1997,  the Company,  ShopKo and Cabot Noble  entered into a
         Termination  Agreement  mutually  terminating the Agreement and Plan of
         Reorganization effective as of April 1, 1997.

5.       ADOPTION OF ACCOUNTING PRONOUNCEMENT
         For the quarter  ended  December  27,  1997,  the  Company  adopted the
         provisions of Statement of Financial  Accounting Standards ("SFAS") No.
         128,  "Earnings per Share," which  establishes  standards for computing
         and presenting earnings per share. This statement requires  restatement
         of all prior  period  earnings  per  share  data  presented.  The basic
         earnings  per share and diluted  earnings  per share as defined by SFAS
         No. 128 approximates  the historically  presented net income (loss) per
         common share.


<PAGE>8


PHAR-MOR, INC. AND SUBSIDIARIES
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS



RESULTS OF OPERATIONS (all dollar amounts in thousands)

Thirteen Weeks Ended December 27, 1997 versus
    Thirteen Weeks Ended December 28, 1996

Sales for the second quarter of fiscal year 1998 ("Fiscal 1998")  increased 0.4%
compared to the second quarter of fiscal year 1997 ("Fiscal  1997").  Comparable
store sales for the second quarter  decreased 1.4% from $289,905 for Fiscal 1997
to  $285,851  for Fiscal  1998.  The  decrease  in  comparable  store  sales was
primarily due to the  discontinuance  of certain  promotional  discount programs
since the second quarter of fiscal year 1997.

Cost of sales as a  percentage  of sales was 80.2% in Fiscal  1998  compared  to
81.1% in Fiscal 1997, a 0.9%  decrease.  This decrease is primarily due to lower
inventory  shrinkage,  higher vendor income and higher cash discounts  partially
offset by higher  warehouse  and  transportation  expenses  and store  occupancy
costs. In August 1997 the Company discontinued  purchasing grocery products from
a wholesaler and began distributing these products from its distribution center.
The increase in warehouse and  transportation  costs associated with this change
was more than offset by higher  product  margins,  increased  cash discounts and
increased vendor income.

Selling, general and administrative expenses as a percentage of sales were 15.7%
in Fiscal 1998  compared to 15.0% in Fiscal  1997.  This  increase was due to an
increase  in  wages  caused  by the  increase  in the  minimum  wage,  increased
advertising  expenses and higher corporate  overhead  expenses.  The increase in
corporate overhead expenses was primarily due to increased professional fees and
severance costs.

Depreciation  and  amortization  expense was $5,717 in Fiscal  1998  compared to
$5,339 in Fiscal  1997,  an  increase  of $378.  The  increase  is the result of
depreciation  on capital  expenditures  made since the second  quarter of Fiscal
1997.

Net interest  expense was $3,497 in Fiscal 1998 compared to net interest expense
of $2,906 in Fiscal 1997, a $591 increase.  The increase in net interest expense
was primarily due to a decrease in interest income in Fiscal 1998 resulting from
lower cash balances.


Twenty-six Weeks Ended December 27, 1997 versus
    Twenty-six Weeks Ended December 28, 1996

Sales for the  twenty-six  weeks ended December 27, 1997 decreased 1.2% compared
to the twenty-six weeks ended December 28, 1996.  Comparable store sales for the
twenty-six  weeks  ended  December  27,  1997  decreased  3.0% from  $554,457 to
$537,795.  The  decrease  in  comparable  store sales was  primarily  due to the
discontinuance of certain  promotional  discount programs since the beginning of
fiscal year 1997.

Cost of sales as a percentage of sales was 80.7% in the  twenty-six  weeks ended
December  27, 1997  compared to 81.9% in the prior year, a 1.2%  decrease.  This
decrease is primarily due to lower inventory shrinkage,  higher product margins,
higher  vendor  income  and higher  cash  discounts  partially  offset by higher
warehouse and transportation expenses and store occupancy costs.

Selling, general and administrative expenses as a percentage of sales were 16.0%
in the  twenty-six  weeks ended December 27, 1997 compared to 15.3% in the prior
year.  This  increase  was due to an increase in wages caused by the increase in
the minimum wage, preopening costs associated with the opening of two new stores
in the  current  year  versus  one new  store in the  previous  year and  higher
corporate  overhead  expenses.  The increase in corporate  overhead expenses was
primarily due to increased professional fees and severance costs.

<PAGE>9


FINANCIAL CONDITION AND LIQUIDITY (all dollar amounts in thousands)

The Company's  cash position as of December 27, 1997 was $60,230.  The Company's
cash  position may fluctuate as a result of seasonal  merchandise  purchases and
timing of payments.

On September 11, 1995, the Company  entered into the Revolving  Credit  Facility
(the  "Facility") with  BankAmerica  Business Credit,  Inc., as agent, and other
financial institutions (collectively,  the "Lenders"), that established a credit
facility in the maximum amount of $100,000.

Borrowings  under the Facility may be used for working capital needs and general
corporate  purposes.  Up to $50,000 of the  Facility at any time may be used for
standby and documentary  letters of credit.  The Facility includes  restrictions
on, among other things,  additional  debt,  capital  expenditures,  investments,
dividends  and other  distributions,  mergers  and  acquisitions,  and  contains
covenants  requiring the Company to meet a specified  quarterly  minimum  EBITDA
Coverage Ratio (the sum of earnings before  interest,  taxes,  depreciation  and
amortization,  as defined, divided by interest expense), calculated on a rolling
four quarter basis, and a monthly minimum net worth test. As of the date hereof,
the Company is in compliance with all such financial covenants.

Credit  availability  under  the  Facility  at any  time  is the  lesser  of the
Aggregate  Availability  (as defined in the Facility) or $100,000.  The Facility
establishes a first priority lien and security interest in the current assets of
the  Company,  including,  among other  items,  cash,  accounts  receivable  and
inventory.  Advances made under the Facility  bear  interest at the  BankAmerica
reference rate plus 0.50% or, at the option of the Company, the London Interbank
Offered Rate ("LIBOR") plus the applicable  margin (as defined in the Facility),
which  ranges  between  1.50% and 2.00%.  Under the terms of the  Facility,  the
Company is required to pay a commitment  fee of 0.28125% per annum on the unused
portion of the  Facility,  letter of credit fees and certain  other fees.  As of
December 27, 1997,  letters of credit totaling $5,709 were outstanding under the
Facility. The Facility expires on September 10, 1998.

Twenty-six weeks ended December 27, 1997

During the twenty-six weeks ended December 27, 1997, the Company's cash position
decreased by $19,617.  Net cash used by operating activities was $671. The major
uses of cash  from  operating  activities  were  for a net  loss of  $4,793,  an
increase  in  seasonal  and  grocery  warehouse  inventories  of $13,992  and an
increase in accounts  receivable of $3,404,  which were  partially  offset by an
increase in accounts payable of $7,636 and non-cash expenses of $12,427.

Capital  expenditures  of $10,299 and  additions to video rental tapes of $4,324
were paid for with the Company's excess cash position.

Net cash used for financing  activities of $4,323 consists of principal payments
on lease  obligations  of $3,510 and  principal  payments on term debt of $1,093
partially  offset by the proceeds  from the issuance of common stock as a result
of the exercise of stock options.





<PAGE>10


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

                  None.

ITEM 2.  CHANGES IN SECURITIES

                  None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  None.

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

                  None.

ITEM 5.  OTHER INFORMATION

                  None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  See Exhibit Index on page 12.

         (b)      Reports on Form 8-K

                  The  following  reports  on  Form  8-K  were  filed  with  the
                  Securities  and Exchange  Commission  during the quarter ended
                  December 27, 1997:

                  None.


<PAGE>11



                                   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.




                                       PHAR-MOR, INC.


Date:  February 3, 1998            By:   /s/ Sankar Krishnan
                                         ---------------------------------------
                                             Sankar Krishnan
                                             Senior Vice President and Chief
                                                Financial Officer



Date:  February 3, 1998            By:   /s/ John R.Ficarro
                                         ---------------------------------------
                                             John R. Ficarro
                                             Senior Vice President and Chief
                                                Administrative Officer


<PAGE>12






                                 PHAR-MOR, INC.

                                INDEX TO EXHIBITS


Exhibit No.

*3.1       Amended and Restated Articles of Incorporation

*3.2       By-laws

*4.1       Indenture dated September 11, 1995 between Phar-Mor, Inc. and IBJ
           Schroder Bank & Trust Company

*4.2       Warrant Agreement dated September 11, 1995 between Phar-Mor, Inc. 
           and Society National Bank

27         Financial Data Schedule
-----------------------------------------------------------------
*   Previously filed in connection with the filing of Phar-Mor's Form 10, on
      October 23, 1995