SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C.  20549
                             FORM 10-K
(Mark One)
  [ X ]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
                           For the fiscal year ended February 1, 1997
                                                        OR
  [    ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
                       Commission file Number 0-14681

                          J. BAKER, INC.
        (Exact name of registrant as specified in its charter)

    Massachusetts                                 04-2866591
(State of Incorporation)               (I.R.S. Employer Identification Number)
            555 Turnpike Street, Canton, Massachusetts  02021
                (Address of principal executive offices)

                           (617) 828-9300
           (Registrant's telephone number, including area code)

       Securities  registered  pursuant to Section 12(b) of the Act:
                                  NONE

       Securities registered pursuant to Section 12(g) of the Act:
                 Common Stock, par value $.50 per share
                7% Convertible Subordinated Notes Due 2002
                     Preferred Stock Purchase Rights
                          (Title of Class)

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of the registrant's  knowledge,  in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

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
The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
registrant was approximately $120,895,749 as of April 1, 1997 (based on the last
reported sales price of the registrant's stock in the over-the-counter market on
such date).

The number of shares outstanding of the registrant's common stock as of April 1,
1997 was 13,892,910.

                      DOCUMENTS INCORPORATED BY REFERENCE
Certain  portions of the definitive  proxy statement for the 1997 Annual Meeting
of Stockholders  (the "Proxy  Statement") are  incorporated by reference in Part
III.


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                                J. Baker, Inc.
                               Form 10-K Report
                         Year Ended February 1, 1997
                                   Part I


DESCRIPTION OF BUSINESS
General
         J. Baker,  Inc. ("J. Baker" or the "Company",  which term shall include
all  subsidiaries  of the  Company) is engaged in the retail sale of apparel and
footwear. The Company is engaged in the retail sale of apparel through its chain
of Casual  Male Big & Tall men's  stores  which sell  fashion,  casual and dress
clothing  and  footwear to the big and tall man and through its chain of Work 'n
Gear work  clothing  stores  which sell a wide  selection of workwear as well as
health care  apparel and  uniforms  for  industry  and service  businesses.  The
Company sells footwear  through  self-service  licensed shoe departments in mass
merchandising  department  stores.  In  all of  these  operations,  the  Company
emphasizes the sale of quality products at comparatively low prices.

         During the fourth quarter of fiscal 1997, the Company  restructured its
footwear operations in order to focus its efforts on the management, development
and growth of its Casual Male Big & Tall and Work 'n Gear apparel businesses. In
connection  with the  restructuring,  in March,  1997 the Company  completed the
sales of its Shoe Corporation of America ("SCOA") and Parade of Shoes divisions,
and has begun to downsize its Licensed  Discount footwear  division.  As part of
the  restructuring,  the Company made a  determination  that it would reduce its
investment in its Licensed  Discount  footwear  business.  The Company currently
intends to concentrate  the Licensed  Discount  division's  efforts on its major
licensors  while  exploring  future  strategic  options for this  business.  For
additional  information on the restructuring,  see Industry Segments,  Footwear,
Restructuring and Note 2 to the Consolidated Financial Statements.

         On  January  13,  1997,  the  Company  announced  that it had  signed a
definitive  agreement  for the sale of its Parade of Shoes  division  to Payless
ShoeSource, Inc. ("Payless") of Topeka, Kansas. The transaction was completed on
March 10, 1997.  For  additional  information on the sale of the Parade of Shoes
division,  see Industry  Segments,  Footwear,  Parade of Shoes and Note 2 to the
Consolidated Financial Statements.

         On March  5,  1997,  the  Company  announced  that it had sold its SCOA
division to an entity formed by CHB Capital  Partners of Denver,  Colorado along
with  Dennis  B.  Tishkoff,  President  of SCOA,  and  certain  members  of SCOA
management.  For  additional  information  on the  sale of  SCOA,  see  Industry
Segments,  Footwear, Shoe Corporation of America, and Note 2 to the Consolidated
Financial Statements.

         During  fiscal  1996,  the  Company  disposed  of  its  Fayva  footwear
division.  For additional information on the disposal of the Fayva division, see
Industry  Segments,  Footwear,  Fayva  Footwear  Division  and  Note  2  to  the
Consolidated Financial Statements.

         The  Company's  businesses  are  seasonal.  The Casual  Male Big & Tall
division  generates  its largest sales  volumes in June  (Father's  Day) and the
Christmas  season,  and the Work 'n Gear stores  generate  their  largest  sales
volume during the second half of the fiscal year. The Company's largest footwear
volume is generated in the Easter,  back to school and Christmas  seasons.  On a
combined  basis,  the Company's sales during the second half of each fiscal year
have consistently exceeded those during the first half of the year. Unseasonable
weather  may  affect  sales of  shoes  and  boots  as well as of work  clothing,
especially during the traditional high-volume periods.

         The Company is required to carry a  substantial  inventory  in order to
provide prompt  deliveries to its Casual Male Big & Tall and Work 'n Gear stores
and its licensed shoe departments.  Order backlogs, however, are not material to
the Company's business. The inventories needed in the operation of the Company's
apparel  and  footwear  businesses  are  currently  available  from a number  of
domestic and overseas  sources,  with no single source  accounting for more than
nine percent of the Company's merchandise.

         The  Company  benefits by "most  favored  nation"  provisions  in trade
agreements  between  the  United  States  and  certain  countries  in which  the
Company's  suppliers are located.  From time to time, the United States Congress
has proposed legislation which could result in such provisions being struck from
particular trade agreements, which could, in turn, result

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<PAGE>
in higher costs to the Company.  There has been extensive  Congressional  debate
with  respect to the "most  favored  nation"  provision  of the trade  agreement
between the United States and China which was renewed for one year in July, 1992
and has since been extended through June, 1997. The failure of this provision to
be renewed would likely result in  substantially  increased costs to the Company
in the purchase of footwear from China.  However,  the Company believes that all
of its competitors in the footwear industry would be similarly affected.

Industry Segments

         The Company is engaged in the sale of apparel and footwear manufactured
by others. Financial information with respect to the Company's industry segments
can be found in Note 13 to the Consolidated Financial Statements.

Apparel

Casual Male Big & Tall Division
         Casual Male Big & Tall is the  Company's  chain of big and tall apparel
stores providing fashion, casual and dress clothing and footwear for the big and
tall man. The chain specializes in big sizes,  featuring waist sizes from 44" to
64" and tall sizes, generally for men 6'3" or taller and with inseams up to 38".
According to retailer and  manufacturer  estimates as well as Company  research,
big and tall men currently represent  approximately 12% to 15% of the adult male
population  in the United  States,  compared to  approximately  10% to 11% three
years ago. The Company  believes  that the clothing  demands of these  customers
have historically not been met through traditional men's apparel stores. The big
and tall customer  frequently  has difficulty  finding an adequate  selection of
apparel in his size in department and men's specialty stores. Furthermore,  only
a limited number of big and tall  specialty  stores exist,  and these  typically
have a narrow selection of current sportswear fashions.

         Casual Male Big & Tall stores offer private label as well as some brand
name casual  sportswear  and dress wear in a wide variety of styles,  colors and
fabrics with a focus on basic merchandise such as sports coats,  dress pants and
shirts and a wide  variety of casual  clothes,  including  footwear.  The stores
target the middle income customer  seeking good value at moderate prices and, as
a result,  the  Casual  Male  limits  the  amount of  high-fashion-oriented  and
low-turnover  tailored clothing offered and focuses primarily on basic items and
classic  fashion  sportswear,  thereby  minimizing  fashion risk and  markdowns.
Management  believes that the type and selection of its  merchandise,  favorable
prices and  ability  to obtain  desirable  store  locations  are key  factors in
enabling it to compete  effectively.  Casual Male Big & Tall started fiscal 1997
with 400  stores  and ended the year with 440  stores  (including  one  licensed
department),  having  opened 49 stores and  closed 9 stores.  The 440 stores are
located in 45 states throughout the United States.  Sales in the Casual Male Big
& Tall  stores  accounted  for  26.9%,  21.0% and 17.4% of the  Company's  total
revenues for the years ended February 1, 1997,  February 3, 1996 and January 28,
1995,  respectively.  On a proforma  basis,  excluding  sales  generated  by the
Company's  SCOA and Parade of Shoes  divisions,  sales in the Casual  Male Big &
Tall  stores  accounted  for 40.4% of the  Company's  sales  for the year  ended
February 1, 1997.

         The Company's Casual Male Big & Tall division faces  competition from a
variety of sources  including  department  stores,  specialty  stores,  discount
stores and off price and other retailers who sell big and tall  merchandise.  In
addition, sales of clothing through catalogs and home shopping networks or other
electronic  media provide  additional  sources of  competition.  The Casual Male
faces  competition  on a local  level  from  independent  retailers  and  small,
regional  retail  chains,  as well as on a national  scale from  chains  such as
Rochester Big & Tall, and Repp, Ltd., a division of Edison Brothers,  Inc. Repp,
Ltd.,   one  of  Casual  Male's  largest   competitors,   operates  a  chain  of
approximately  175 big and tall  stores.  While  Casual  Male  has  successfully
competed   on  the  basis  of   merchandise   selection,   including   inventory
replenishment  on an  ongoing  basis by color and size,  favorable  pricing  and
desirable store  locations,  there can be no assurance that other retailers will
not adopt purchasing and marketing  concepts similar to those of the Casual Male
Big & Tall chain. In addition, discount retailers with significant buying power,
such as  Wal-Mart,  K-Mart,  Venture  stores and  Target  stores,  represent  an
increasing  source of competition  for Casual Male. The bulk of the  merchandise
carried by these department  stores is classified as commodity or "basic" items,
but their buying power  provides them with a competitive  edge and an ability to
charge low prices for such items.

         In  deciding to open Casual Male  stores,  the Company  reviews  market
demographics, drive-by visibility for customers, store occupancy costs and costs
to build  and  stock  each  location.  Considering  these  factors  and  others,
management of the Company  projects sales volumes and estimates  operating costs
for each  location and decides to open a store if such  projections  demonstrate
that an acceptable return on the Company's  inventory and fixed asset investment
can be realized.  New Casual Male stores require an average  inventory and fixed
asset investment of approximately $170,000

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<PAGE>
to $200,000,  composed of approximately $85,000 to $100,000 for fixed assets and
$85,000 to $100,000 for inventory.

         The  Company  makes  decisions  to close  Casual  Male  locations  when
management  believes that these locations are not generating  acceptable  profit
levels. Most store closings occur at lease expiration,  unless lease buyout is a
more economical  option for the Company.  The costs to close stores are expensed
at time of closing.

Work 'n Gear Division
         The Work 'n Gear  division  is the  Company's  specialty  retail  chain
focused entirely on workwear, uniforms and footwear. Work 'n Gear carries a wide
selection of workwear  products,  including  rugged  specialty  outerwear,  work
shirts and pants,  and cold weather  accessories  as well as a complete  line of
health care  apparel and  uniforms  for  industry  and service  businesses.  The
Company  started  fiscal  1997 with 69 stores and ended the year with 66 stores,
having  closed  3  stores.  The  66  stores  are  located  in 13  states  in the
northeastern and midwestern United States.

         The Bureau of Labor Statistics  ("BLS") estimates that there were 126.5
million people in the work force in 1996. Of this number,  approximately 40%, or
49.2  million,  wear  work  clothes  or  uniforms,  according  to  the  National
Association of Uniform  Manufacturers and Distributors.  Although  manufacturing
industries are generally on the decline in the United States, service industries
are among the fastest  growing.  For example,  the BLS cites security and health
care as two of the service  industries  where there will be  significant  growth
over the next five  years.  The Work 'n Gear stores seek to address the needs of
three major groups:  (i) those customers who buy work clothing to be worn on the
job, including industrial tops and bottoms,  jeans, work boots, rugged outerwear
and other  accessories,  (ii)  those  industrial  customers  who  either  supply
uniforms  or  provide  a  clothing  allowance  to their  employees  to  purchase
uniforms,  and (iii) those  customers  who work in the health care  industry and
related fields.

         Traditional  competition  for  the  sale  of  workwear  is  fragmented.
Traditional Army and Navy stores offer a large assortment of workwear items, but
supplement  with fishing,  hunting and other product  lines.  Other  competitors
include large specialty chains such as Bob's Stores and full service  department
stores which typically have more narrow product  offerings and are  increasingly
discontinuing  this line of apparel.  To the  Company's  knowledge,  no specific
specialty store similar to Work 'n Gear exists on a national basis.  Competition
for industrial  workwear (purchased by employers) comes from large manufacturers
such as  WearGuard/ARAMARK,  Uniforms to You, Crest Uniform and Fashion Seal, as
well as small "mom and pop" uniform  dealers.  In the medical uniform  business,
competition  is  dominated  by three  entities:  (i) Life  Uniform,  the largest
retailer with  approximately  300 stores,  (ii) catalog  operations led by J. C.
Penney and including Tafford,  Uniform World, Sears Roebuck & Company and Jasco,
and  (iii)  approximately   2,600  independent   operators  of  medical  uniform
businesses.  Management  believes  that its  strategy  of  servicing  all  three
segments  of the  workwear  market -  consumer,  industrial  and  health  care -
combined  with  its  retail  expertise,  affords  Work  'n  Gear  a  significant
competitive advantage in the marketplace.

         Work 'n Gear stores are generally  located in strip shopping centers or
are free  standing.  Locations in active strip  centers are a criterion for site
selection,  as the close  proximity to other stores  increases  traffic into the
Work 'n Gear stores, particularly for health care apparel and accessories.  Site
locations must take into  consideration  proximity of major medical  facilities,
active retail environments,  population density, business presence in the market
and competition.

         Sales in the Work 'n Gear stores  accounted for 5.9%,  4.8% and 4.2% of
the Company's  total revenues for the years ended February 1, 1997,  February 3,
1996 and January 28, 1995,  respectively.  On a proforma basis,  excluding sales
generated by the Company's SCOA and Parade of Shoes divisions, sales in the Work
'n Gear  stores  accounted  for 8.8% of the  Company's  sales for the year ended
February 1, 1997.

Footwear

Restructuring
         During the fourth quarter of fiscal 1997, the Company  restructured its
footwear operations in order to focus its efforts on the management, development
and growth of its Casual Male Big & Tall and Work 'n Gear apparel businesses. In
connection  with the  restructuring,  in March,  1997 the Company  completed the
sales of its SCOA and Parade of Shoes  divisions,  and has begun to downsize its
Licensed Discount footwear division.  As part of the restructuring,  the Company
made a  determination  that it  would  reduce  its  investment  in its  Licensed
Discount  footwear  business.  The Company  currently intends to concentrate the
Licensed  Discount  division's  efforts on its major  licensors  while exploring
future  strategic  options for this  business.  The  Company  recorded a pre-tax
charge of $166.6 million  ($117.1  million,  or $8.42 per share, on an after-tax
basis)  related  to the  sales of the SCOA and  Parade of Shoes  divisions,  the
write-down to realizable value of certain

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<PAGE>
assets  related to its  Licensed  Discount  shoe  division,  and  severance  and
consolidation  costs related to the  downsizing of the Company's  administrative
areas and  facilities.  Of the pre-tax  charge,  $122.3 million is included as a
separate  component  of  results of  operations  in the  Company's  Consolidated
Statement of Earnings for the year ended  February 1, 1997,  and the majority of
the remaining  charge,  which relates to the reduction of the Licensed  Discount
division's  inventory  valuation,  is included in cost of sales. Also, in fiscal
1996,  the  Company  recorded a  restructuring  charge of $69.3  million  ($41.6
million,  or $3.00 per share, on an after-tax  basis) related to the disposal of
its Fayva footwear division. Further information on the divisional components of
the restructuring of the Company's  footwear business follows.  Also, see Note 2
to the Consolidated Financial Statements.

Licensed Discount Shoe Division
         In a licensed  shoe  department  operation,  the store and the  Company
enter into a license  agreement  under which the Company has the exclusive right
to operate a shoe department in the store for a period of years.  The department
is operated under the store name in space  supplied by the store,  and the store
collects  payments from customers and credits the Company.  The Company pays the
store a license  fee,  generally  a  percentage  of net sales,  for the right to
operate the department and for the use of the space.  The license fee ordinarily
covers utilities,  janitorial service,  cash collection and handling,  packaging
and  advertising.  In some  circumstances,  the license fee also covers staffing
costs.

         In its licensed shoe  department  operations,  the Company sells a wide
variety of family  footwear,  including  men's,  women's and  children's  dress,
casual and  athletic  footwear as well as work shoes and  slippers.  Most of the
shoes  offered by the  Company in its  licensed  departments  are sold under the
Company's  trademarks or on an unbranded basis,  although the Company also sells
name brand merchandise at discounted prices in its mass  merchandising  licensed
accounts.

         The  Company's   licensed  shoe   departments  in  mass   merchandising
department  stores are operated on a self-serve  basis. The Company's  personnel
employed in particular  departments  are  responsible for stocking and layout of
shelves,  responding to customer inquiries and related  administrative tasks. In
certain  accounts,  the  Company's  shoe  departments  are serviced in a similar
manner by employees of the licensor.

         As part of the  restructuring of its footwear  operations,  the Company
made a  determination  that it  would  reduce  its  investment  in its  Licensed
Discount  footwear  business.  The Company  currently intends to concentrate the
division's  efforts on its major  licensors  while  exploring  future  strategic
options for this business.  As a result,  the Company undertook an evaluation of
the value of the assets in the Licensed  Discount footwear  business,  and wrote
off certain assets which did not benefit future  operations and wrote down other
assets  to  expected  realizable  value.  For  additional   information  on  the
restructuring of the Company's Licensed Discount footwear  division,  see Note 2
to the Consolidated Financial Statements.

         The  Company  and  its   predecessors   have  operated   licensed  shoe
departments in mass  merchandising  department stores for more than forty years.
Sales in the Licensed Discount division  accounted for 33.8%, 34.5% and 38.5% of
the Company's  total revenues in the years ended  February 1, 1997,  February 3,
1996 and January 28, 1995,  respectively.  On a proforma basis,  excluding sales
generated  by the  Company's  SCOA and Parade of Shoes  divisions,  sales in the
Licensed  Discount  division  accounted for 50.8% of the Company's sales for the
year ended February 1, 1997. At February 1, 1997,  the Company  operated a total
of 937 licensed  shoe  departments  under license  agreements  with 21 different
discount  department store operators.  During fiscal 1997, the Company opened 38
departments  and closed 188,  representing  a net  decrease of 150 units for the
year. As previously indicated,  the Company intends to concentrate its resources
in this  division  on the  major  chains  in which  it  operates  licensed  shoe
departments. As a result, the Company may continue to experience declines in the
number of licensed  departments  it operates.  The Company's  licensed  discount
departments are located in 40 states and in the District of Columbia.

         The Company conducts its licensed  department  operations under written
agreements  for fixed terms.  Of the 937  licensed  shoe  departments  which the
Company  operated at February 1, 1997,  635, or 68%,  are covered by  agreements
with terms  expiring  in less than five years and 302,  or 32%,  are  covered by
agreements with terms expiring in more than ten years.

         Of the Company's  licensed  departments  at February 1, 1997,  302 were
operated under license with Ames Department Stores, Inc. ("Ames"),  a major mass
merchandising  retailer in the eastern United States.  For the fiscal year ended
February 1, 1997, Ames accounted for 10.5% of the Company's total revenues. On a
proforma  basis,  excluding  sales generated by the Company's SCOA and Parade of
Shoes  divisions,  sales in Ames accounted for 15.8% of the Company's  sales for
the year ended February 1, 1997.


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<PAGE>
         On June 23, 1995, Bradlees Stores, Inc. ("Bradlees"), a licensor of the
Company,  filed for protection under Chapter 11 of the United States  Bankruptcy
Code. At the time of the bankruptcy filing, the Company had outstanding accounts
receivable of  approximately  $1.8 million due from Bradlees.  Under  bankruptcy
law,  Bradlees has the option of  continuing  (assuming)  the  existing  license
agreement  with the  Company or  terminating  (rejecting)  that  agreement.  The
Company does not expect this filing under the Bankruptcy Code to have a material
adverse effect on future earnings. The Company's sales in the Bradlees chain for
the  fiscal  year ended  February  1, 1997 were $57.7  million.  For  additional
information, see Note 3 to the Consolidated Financial Statements.

         On October 18, 1995, Jamesway Corporation ("Jamesway"), then a licensor
of the  Company,  filed for  protection  under  Chapter 11 of the United  States
Bankruptcy Code. Jamesway liquidated its inventory, fixed assets and real estate
and has ceased  operation of its  business in all of its 90 stores.  The Company
participated   in  Jamesway's   going  out  of  business  sales  and  liquidated
substantially all of its footwear inventory in the 90 Jamesway stores during the
going out of business sales. At the time of the bankruptcy  filing,  the Company
had  outstanding  accounts  receivable  of  approximately  $1.4 million due from
Jamesway.  Because  Jamesway  ceased  operation of its  business,  the Company's
license  agreement was rejected.  The Company has negotiated a settlement of the
amount of its claim with  Jamesway  which has been  approved  by the  Bankruptcy
Court. It is anticipated that, if approved, a partial distribution of the amount
owed to the Company under the settlement  will be made during the second half of
fiscal 1998.

         The Company's  licensed shoe department  business faces  competition at
two levels:  (1) for sales to retail  customers  and (2) for the business of the
department  store chains which are its shoe  licensor  customers.  The Company's
success in its licensed  department  operations is substantially  dependent upon
the  success  of the  department  store  chains  in which the  Company  operates
licensed  departments.  Within the particular  market that is served by the mass
merchandising  department  store chains,  the Company  believes that the primary
competitive  factors  are the  price  and the  breadth  and  suitability  of the
selection of footwear that is offered.

         The  Company  also  faces  potential   competition  from  the  in-house
operational  capabilities  of its licensors.  Because of the large scale of many
licensing  arrangements  and years of commitment that are involved,  the Company
has observed that changes in these  arrangements do not frequently occur and are
more often  initiated  by  external  factors  such as  mergers  or  acquisitions
involving the licensors or business terminations by other licensees, rather than
by  competition  among  licensees for the business of a licensor.  To the extent
that there is active  competition  for new  business  in this area,  the Company
believes  that the  principal  factors  weighed by a potential  licensor are the
quality of the licensee's  operations,  as reflected by sales  results,  and the
price paid to the licensor in the form of the license fee.

Shoe Corporation of America Division
         The Company's Shoe  Corporation of America ("SCOA")  division  operated
full-service,   semi-service  and  self-service  licensed  shoe  departments  in
department and specialty stores.  SCOA was acquired by the Company in the fourth
quarter of fiscal  1994.  As of February 1, 1997,  SCOA  operated  454  licensed
footwear departments in twelve chains with locations in 31 states throughout the
United States. Sales in the SCOA licensed departments accounted for 19.8%, 18.0%
and 12.1% of the Company's  revenues in the fiscal years ended February 1, 1997,
February 3, 1996 and January 28, 1995, respectively.

         On March  5,  1997,  the  Company  announced  that it had sold its SCOA
division to an entity formed by CHB Capital  Partners of Denver,  Colorado along
with  Dennis  B.  Tishkoff,  President  of SCOA,  and  certain  members  of SCOA
management.  The  decision  to  divest  the SCOA  division  was a result  of the
refocusing  of  the  Company's  management  efforts  primarily  on  its  apparel
businesses   and  the  desire  of  SCOA   management  to  operate  the  division
independently.  The  transaction  involved  the  transfer  to the  buyer  of the
division's inventory, fixed assets, intellectual property and license agreements
for the various  department and specialty  store chains serviced by SCOA as well
as the assumption by the buyer of certain liabilities of the SCOA division.  Net
cash proceeds from the transaction of  approximately  $40.0 million were used to
pay down the Company's bank debt. For additional  information on the sale of the
Company's SCOA division, see Note 2 to the Consolidated Financial Statements.

Parade of Shoes Division
         The  Company's  Parade of Shoes  division,  which the Company  began in
1985,  operated a chain of 188 stores in 13 states and the  District of Columbia
at February 1, 1997. Parade of Shoes stores provided primarily leather dress and
casual  shoes and  athletic  footwear at everyday  value  prices  available  for
selection  in a casual,  self-service  atmosphere.  Sales in the Parade of Shoes
stores  accounted for 13.7%,  11.3% and 11.3% of the  Company's  revenues in the
fiscal  years  ended  February 1, 1997,  February 3, 1996 and January 28,  1995,
respectively.


                                       6

<PAGE>
         On  January  13,  1997,  the  Company  announced  that it had  signed a
definitive  agreement  for the sale of its Parade of Shoes  division  to Payless
ShoeSource,  Inc.  ("Payless") of Topeka,  Kansas. The Company decided to divest
the Parade of Shoes division in order to refocus management efforts primarily on
the Company's apparel businesses. The transaction,  which was completed on March
10, 1997,  involved the transfer to Payless of the division's  inventory,  fixed
assets,  intellectual  property and leases on the 186 then  remaining  Parade of
Shoes stores.  Net cash proceeds from the  transaction  of  approximately  $20.0
million  were  used  to  pay  down  the  Company's  bank  debt.  For  additional
information on the sale of the Company's Parade of Shoes division, see Note 2 to
the Consolidated Financial Statements.

Fayva Footwear Division
         On September 5, 1995,  the Company  announced  its intent to dispose of
its Fayva footwear division, which was completed by the end of fiscal 1996. When
the Company acquired all of the outstanding stock of Morse Shoe, Inc. ("Morse"),
an operator of licensed  footwear  departments  and of the Fayva chain of family
shoe stores in early 1993,  it did so  primarily  for the  strategic  fit of the
Morse and Baker licensed footwear divisions.  In addition, the Company believed,
at that time,  that it could improve the  operations of Morse's Fayva  division.
However,  after operating Fayva for two and one half years,  the Company decided
to dispose  of Fayva due to the  continued  operating  losses  generated  by the
division,  along with  Fayva's  declining  market  share in an  already  crowded
discount retail footwear industry. For additional information on the disposal of
the Fayva division, see Note 2 to the Consolidated Financial Statements.

Trademarks

         The Company  has no  patents,  franchises  or  concessions,  except for
agreements  granting it the right to operate licensed  departments.  The Company
owns  certain  trademarks  which it uses in its  business.  The Company does not
consider these trademarks to be materially important to its business.

Research and Development

         The  Company  does not  engage  in any  Company-sponsored  research  or
customer-sponsored research.

Environment

         The  Company  has not  been  required  to  make  any  material  capital
equipment  expenditures,  or suffered  any  material  effect on its  earnings or
competitive  position,  as a result of compliance  with federal,  state or local
environmental laws.

Employees

         As of  February  1, 1997,  the  Company  employed  approximately  5,037
persons  full-time  and 5,304 persons  part-time,  of whom  approximately  4,119
full-time and 5,218 part-time employees were engaged in retail operations at the
store  level.  Approximately  461  of  the  Company's  full-time  and  part-time
employees are covered by collective bargaining agreements.  The Company believes
that its employee  relations are good. In connection with the divestiture of the
SCOA and Parade of Shoes divisions and certain corporate downsizing, the Company
reduced its work force during the first quarter of fiscal 1998 by  approximately
3,481  employees,  of whom  approximately  1,693 were  full-time  and 1,788 were
part-time.

Executive Officers of the Company
<TABLE>
         <S>                                <C>               <C>
         Name                               Age               Office

         Sherman N. Baker                    77               Chairman of the Board
         Alan I. Weinstein                   54               President and Chief Executive Officer
         James Lee                           50               Executive Vice President and President of the Licensed
                                                              Discount Division
         Harold Leppo                        59               Interim President of The Casual Male, Inc.
         Stuart M. Needleman                 49               Executive Vice President and President of Work 'n Gear
         Philip G. Rosenberg                 47               Executive Vice President, Chief Financial Officer and
                                                              Treasurer
</TABLE>

         Mr. Baker has been the Chairman of the Board of the Company since
March, 1990.  From 1970 until March, 1990, Mr. Baker served as Chief Executive
Officer of the Company and its predecessor.

                                        7

<PAGE>
         Mr. Weinstein has held the positions of President and Chief Executive
Officer since November, 1996 and March, 1997, respectively.  From September,
1996 through March, 1997, Mr. Weinstein served as Acting Chief Executive Officer
of the Company.  From July, 1985 through September, 1996, Mr. Weinstein held
the positions of Senior Executive Vice President, Chief Financial Officer and
Secretary of the Company. He was also appointed Chief Administrative Officer in
1988.  Mr. Weinstein joined the Company's predecessor in 1968 as Assistant
Controller and has held a variety of positions of increasing responsibility in
finance and administration since that time.

         Mr. Lee has held the positions of Executive Vice President of the
Company and President of the Company's Licensed Discount Division since
January, 1995.  From August, 1994 through December, 1994, Mr. Lee was Senior
Vice President and Director of Distribution for the Company's Fayva division.
Prior to joining the Company, Mr. Lee was Senior Vice President and General
Merchandise Manager of Caldor Stores.

         Mr.  Leppo was named  Interim  President  of The Casual  Male in March,
1997,  having  previously  served as President of Lord & Taylor for eleven years
and as a consultant  to the Company's  Board of Directors  from 1990 until 1992.
Mr. Leppo has over 38 years  experience  in the retail  industry  and  currently
serves on the Board of Directors for Filene's  Basement,  Inc.,  The Napier Co.,
Royce Hosiery Co., Salant Corp. and Bradlees.

         Mr. Needleman has held the positions of Executive Vice President of the
Company and President of the  Company's  Work 'n Gear  division  since  October,
1993. From 1989 through October,  1993, Mr Needleman held the position of Senior
Vice President and Director of Operations of The Casual Male, Inc.

         Mr. Rosenberg has held the position of Executive Vice President since
September, 1996 and was appointed Chief Financial Officer in March, 1997.  From
September, 1996 through March, 1997, Mr. Rosenberg served as Acting Chief
Financial Officer of the Company.  In addition, Mr. Rosenberg has held the
positions of Treasurer and Chief Accounting Officer since June, 1992.  Mr.
Rosenberg joined the Company's predecessor in May, 1970 and has held a variety
of positions of increasing responsibility in finance and administration since
that time.

PROPERTIES

         The  Company's  executive,  buying and  general  offices and one of its
footwear   distribution   centers   ("home   office")  are  located  in  Canton,
Massachusetts.  This  facility  is  located  at  555  Turnpike  Street,  Canton,
Massachusetts  on 37 acres of land and is  owned  by JBAK  Canton  Realty,  Inc.
("Realty"),  a subsidiary  of JBAK Holding,  Inc. and an indirect,  wholly-owned
subsidiary of the Company. On December 30, 1996, Realty obtained a $15.5 million
mortgage  loan  from The  Chase  Manhattan  Bank  secured  by the  real  estate,
buildings and other improvements  located at the home office.  Realty leases the
property to JBI, Inc., a wholly-owned subsidiary of the Company. The home office
contains  approximately  750,000 square feet of space,  including  approximately
150,000 square feet of office space.

         The Company leases  approximately 33,000 square feet of warehouse space
at 40  Industrial  Drive,  Canton,  Massachusetts.  The  lease on this  facility
expires on June 30,  1997.  The Company has notified the lessor of its intent to
vacate the building at the expiration of the current lease term.

         The  Company  leases  a  building  at  65  Sprague  Street,  Readville,
Massachusetts that serves as the administrative offices for Casual Male and Work
'n Gear, and as the distribution  center for the Casual Male Big & Tall and Work
'n Gear stores. The building contains approximately 75,000 square feet of office
space and approximately 375,000 square feet of warehouse/distribution space. The
Company plans to move the administrative staff and distribution  capabilities of
the Work 'n Gear  division to its Canton  facility  by the third  quarter of the
current  fiscal year.  The lease on this facility  expires on May 31, 1999.  The
Company has two consecutive five year options to renew the lease.

         As of February 1, 1997, the Company operated 440 Casual Male Big & Tall
stores,  all in leased  premises  ranging from 1,710 to 6,050 square feet,  with
average   space  of   approximately   3,310  square  feet  and  total  space  of
approximately  1,456,000  square  feet. A majority of the leases run for initial
terms of five years.  Most are renewable at the option of the Company for one or
more five year terms.

         As of February 1, 1997,  the Company  operated 66 Work 'n Gear  stores,
all in leased premises ranging from 3,258 square feet to 6,200 square feet, with
average   space  of   approximately   4,365  square  feet  and  total  space  of
approximately  288,000  square  feet.  A majority  of the leases run for initial
terms of five years.  Most are renewable at the option of the Company for one or
more five year terms.

                                        8

<PAGE>
         As of February 1, 1997, the Company had 188 Parade of Shoes stores, all
operating in leased premises. In connection with the sale of the Parade of Shoes
division in March,  1997, the Company  remains  contingently  liable for certain
store lease obligations. See Note 2 to the Consolidated Financial Statements.

         See "DESCRIPTION OF BUSINESS - Industry Segments, Footwear, Licensed
Discount Shoe Department Operations",  for information  regarding the Company's
licenses to operate shoe departments in retail stores of its licensors.

LEGAL PROCEEDINGS

         The Company is engaged in the following significant litigation:

         On November  10, 1993,  a federal  jury in  Minneapolis,  MN returned a
verdict assessing royalties of $1,550,000, and additional damages of $1,500,000,
against the Company in a patent  infringement suit brought by Susan Maxwell with
respect to a device used to connect  pairs of shoes.  Certain post trial motions
were  filed  by  Susan  Maxwell  seeking  treble  damages,  attorney's  fees and
injunctive  relief which  motions  were granted on March 10, 1995.  Judgment was
entered for Maxwell.  The Company  appealed the judgment.  On June 11, 1996, the
United  States  Court of Appeals  for the  Federal  Circuit  reversed  the trial
court's  findings  in part,  affirmed  the trial  court's  findings  in part and
vacated the award to Maxwell of treble  damages,  attorney's fees and injunctive
relief.  Maxwell subsequently  requested a rehearing in banc of the matter which
request  was  denied  by order of the  Court  dated  August  28,  1996.  Maxwell
petitioned  the United States Supreme Court for a writ of certiorari to hear the
case which  petition was denied on March 17, 1997. The case has been remanded to
the trial court for a redetermination  of damages consistent with the opinion of
the appellate court.

         A complaint was also filed by Susan  Maxwell in November,  1992 against
Morse Shoe, Inc. ("Morse"),  a subsidiary of the Company,  alleging infringement
of the patent referred to above.  The Morse trial was stayed pending the outcome
of the J. Baker  appeal.  In light of the decision of the Supreme  Court and the
remand to the trial court, it is not clear when a trial date will be set for the
Morse case.

         Other  than as  described  above,  the  Company  is not a party  to any
material legal proceedings.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year covered by this report.



















                                        9

<PAGE>
                                PART II

MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

Market Information
         The Company's Common Stock is traded in the over-the-counter market and
is quoted on the National  Association  of Securities  Dealers,  Inc.  Automated
Quotation System ("NASDAQ") under the symbol "JBAK".

         The  following  table sets forth the high and low last  reported  sales
prices, as reported by NASDAQ, for the Company's Common Stock for each quarterly
period during the years ended  February 1, 1997 and February 3, 1996. The prices
set forth below do not include retail mark-ups, mark-downs or commissions.
<TABLE>

         <S>                                                           <C>             <C>
         Year Ended February 1, 1997                                    High            Low
                                                                        ----            ----
         First Quarter                                                 $ 9 7/8         $ 4 1/8
         Second Quarter                                                 10 1/2           6 3/8
         Third Quarter                                                   7               5 3/8
         Fourth Quarter                                                  7               5 5/16

         Year Ended February 3, 1996                                    High            Low
                                                                        ----            ----
         First Quarter                                                 $15 13/16       $12 1/2
         Second Quarter                                                 13 1/2           9 7/8
         Third Quarter                                                  10               6 1/8
         Fourth Quarter                                                  6 5/8           4 3/8
</TABLE>

Holders

         The  approximate  number of holders of record of the  Company's  Common
Stock as of April 1, 1997 was 431. The Company  believes  that the actual number
of beneficial owners of the Company's Common Stock is substantially greater than
the stated  number of holders of record,  because a portion of the Common  Stock
outstanding is held in "street name".

Dividends
         On March 2,  1987,  the Board of  Directors  of the  Company  adopted a
policy of paying quarterly dividends.  For each quarter thereafter,  the Company
has paid a 1 1/2 cents per share dividend.

         The  Company's  unsecured  revolving  credit  agreement  and its senior
subordinated notes agreement limit the amount of cash dividends that may be paid
to  stockholders.  For  additional  information  see Note 6 to the  Consolidated
Financial Statements.

Other
         On December 15, 1994,  the Board of Directors of the Company  adopted a
Shareholder  Rights Agreement (the "Rights  Agreement")  designed to enhance the
Company's  ability  to  protect   shareholder   interests  and  to  ensure  that
shareholders  receive fair treatment in the event any coercive  takeover attempt
of the Company is made in the  future.  Pursuant  to the Rights  Agreement,  the
Board of  Directors  declared a dividend  distribution  of one  preferred  stock
purchase right (the "Right") for each  outstanding  share of common stock of the
Company  to  shareholders  of record as of the close of  business  on January 6,
1995.  Each  right  entitles  the  holder to  purchase  from the  Company a unit
consisting  of one ten  thousandth  (1/10,000)  of a share  of  Series  A Junior
Participating  Cumulative  Preferred Stock, par value $1.00 per share, at a cash
exercise price of $70 per unit,  subject to  adjustment,  upon the occurrence of
certain  events as are set forth in the Rights  Agreement.  These events include
the earliest to occur of (i) the  acquisition of 15% or more of the  outstanding
shares  of  common  stock  of the  Company  by any  person  or  group,  (ii) the
commencement  of  a  tender  or  exchange  offer  that  would  result  upon  its
consummation in a person or a group becoming the beneficial owner of 15% or more
of the outstanding common stock of the Company or (iii) the determination by the
Board of  Directors  that any person is an "Adverse  Person",  as defined in the
Rights  Agreement.  The  Rights  are not  exercisable  until  or  following  the
occurrence  of one of the above  events and will  expire on December  14,  2004,
unless previously redeemed or exchanged by the Company as provided in the Rights
Agreement.

                                       10

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

         The following selected consolidated  financial data for the Company are
derived from the financial  statements that have been audited and reported on by
KPMG  Peat  Marwick  LLP,  independent  certified  public  accountants,  and are
qualified  in their  entirety by  reference  to the more  detailed  consolidated
financial  statements and the  independent  auditors'  report thereon  appearing
elsewhere in this Form 10-K. J. Baker has acquired a number of specialty  retail
businesses  in recent  years,  sold its SCOA and  Parade of Shoes  divisions  in
fiscal 1998 and disposed of its Fayva  division  during fiscal 1996. The Company
has also  experienced a number of licensor  bankruptcy  filings in recent years.
These acquisitions, the sales of SCOA and Parade of Shoes, the disposal of Fayva
and  licensor  bankruptcy  filings  affect the  comparability  of the  financial
information  herein.  For further  discussions see "DESCRIPTION OF BUSINESS" and
Notes 2 and 3 to the Consolidated Financial Statements.

                                J. BAKER, INC.
                    SELECTED CONSOLIDATED FINANCIAL DATA
              (Dollars in thousands, except per share amounts)

<TABLE>
<S>                                                      <C>           <C>          <C>           <C>          <C>
                                                                                      Year Ended
                                                         ---------------------------------------------------------------
                                                           2/01/97        2/03/96      1/28/95     1/29/94      1/30/93
                                                           -------        -------      -------     -------      -------
Income Statement Data:                                                  (53 weeks)
Net sales                                                $ 897,492     $1,020,413   $1,042,979    $918,878      $532,256
Cost of sales                                              542,247        580,067      579,735     516,855       313,703
                                                          --------      ---------    ---------     -------      --------
      Gross profit                                         355,245        440,346      463,244     402,023       218,553
Selling, administrative and
  general expenses                                         347,977        392,586      389,362     336,283       174,658
Depreciation and amortization                               29,431         32,428       27,883      21,874        14,688
Restructuring and other non-recurring charges              122,309         69,300            -           -             -
                                                           -------        -------      --------    -------       -------
      Operating income (loss)                             (144,472)       (53,968)      45,999      43,866        29,207
Interest income                                                254            526          635         704            80
Interest expense                                           (13,056)       (10,983)      (9,735)     (8,146)       (8,211)
                                                          --------        -------      -------      ------       -------
      Earnings (loss) before taxes and
          extraordinary item                              (157,274)       (64,425)      36,899      36,424        21,076
Income tax expense (benefit)                               (45,846)       (25,823)      13,283      13,113         7,798
                                                          --------       --------      -------     -------       -------
      Earnings (loss) before extraordinary item           (111,428)       (38,602)      23,616      23,311        13,278
Extraordinary item, net of income tax benefit                    -              -            -           -        (2,444)
                                                          --------      ---------      -------    --------       -------
      Net earnings (loss)                                $(111,428)     $ (38,602)    $ 23,616    $ 23,311      $ 10,834
                                                          ========       ========      =======     =======       =======

Earnings (loss) per common share:

Primary:
      Earnings (loss) before extraordinary item          $   (8.02)     $   (2.79)    $   1.71    $   1.70     $    1.25
      Extraordinary item                                         -              -            -           -          (.23)
                                                          --------       --------      -------     -------      --------
                                                         $   (8.02)     $   (2.79)    $   1.71    $   1.70     $    1.02
                                                          ========      =========      =======     =======      ========
Fully diluted:
      Earnings (loss) before extraordinary item          $   (8.02)     $   (2.79)    $   1.46    $   1.45     $    1.11
      Extraordinary item                                         -              -            -           -          (.18)
                                                          --------       --------      -------     -------      --------
                                                         $   (8.02)     $   (2.79)    $   1.46    $   1.45     $     .93
                                                          ========       ========      =======    ========      ========


</TABLE>

                                        11

<PAGE>

                                 J. BAKER, INC.
                      SELECTED CONSOLIDATED FINANCIAL DATA
                (Dollars in thousands, except per share amounts)


<TABLE>
<S>                                             <C>            <C>             <C>             <C>              <C>
                                                                                 As At
                                                 ----------------------------------------------------------------------
                                                 2/01/97        2/03/96         1/28/95         1/29/94         1/30/93
Balance Sheet Data:                              -------        -------         -------         -------         -------
Working capital                                 $182,123       $205,080        $235,948        $187,095         $138,385

Total assets                                     382,521        526,082         578,618         502,496          431,798

Long-term debt                                   214,092        207,766         204,518         154,665           95,864

Stockholders' equity                              71,989        184,037         223,317         200,086          172,610
                                                 =======       ========        ========        ========         ========
Cash dividends declared
      per common share                          $    .06       $    .06        $    .06        $    .06         $    .06
                                                 =======        =======         =======         =======          =======

</TABLE>

Store Openings and Closings:
<TABLE>
<S>                       <C>       <C>        <C>            <C>         <C>    <C>          <C>        <C>    <C>        <C>
                                   Apparel                                            Footwear*
                          ----------------------------        ------------------------------------------------
                                                                                   Total      Parade
                          Casual     Work       Total         Licensed            Licensed      of               Total
                           Male     'n Gear    Apparel        Discount    SCOA   Shoe Dept.   Shoes      Fayva  Footwear   Total
                          ------    -------    -------        --------    ----   ----------   -------    -----  --------   -----

Stores open at
   January 29, 1994         254         52        306           1,368       162      1,530      162        395    2,087    2,393

Openings                     65          9         74              71       321        392       46          2      440      514

Closings                      -          -          -            (197)      (35)      (232)     (17)       (29)    (278)    (278)
                           ----       ----       ----           -----      ----      -----     ----       ----    -----    -----

Stores open at
   January 28, 1995         319         61        380           1,242       448      1,690      191        368    2,249    2,629

Openings                     81          9         90              27        99        126        8          6      140      230

Closings                      -         (1)        (1)           (182)      (42)      (224)     (31)      (374)    (629)    (630)

                           ----       ----      -----           -----      ----      -----     ----       ----    -----    -----
Stores open at
   February 3, 1996         400         69        469           1,087       505      1,592      168          -    1,760    2,229

Openings                     49          -         49              38        56         94       42          -      136      185

Closings                     (9)        (3)       (12)           (188)     (107)      (295)     (22)         -     (317)    (329)
                           ----       ----       ----           -----     -----      -----     ----       ----    -----    -----

Stores open at
   February 1, 1997         440         66        506             937       454      1,391      188          -    1,579    2,085
                           ====       ====       ====           =====      ====      =====     ====       ====    =====    =====
</TABLE>


*     Excludes  wholesale footwear  departments  serviced by the Company (all of
      which were closed during the year ended January 28, 1995).





                                       12

<PAGE>
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                            OF OPERATIONS.

         All  references  herein to fiscal  1997,  fiscal  1996 and fiscal  1995
relate to the years  ended  February  1, 1997,  February 3, 1996 and January 28,
1995,  respectively.  To the extent that the Company may have incurred increased
costs  resulting from inflation,  the Company  believes that it has been able to
offset these costs through higher  revenues.  Accordingly,  the Company believes
that inflation has had no significant impact on the operations of the Company.

Results of Operations

         During the fourth quarter of fiscal 1997, the Company  restructured its
footwear operations in order to focus its efforts on the management, development
and growth of its Casual Male Big & Tall and Work 'n Gear apparel businesses. In
connection  with the  restructuring,  in March,  1997 the Company  completed the
sales of its Shoe Corporation of America ("SCOA") and Parade of Shoes divisions,
and has begun to downsize its Licensed  Discount footwear  division.  As part of
the  restructuring,  the Company made a  determination  that it would reduce its
investment in its Licensed  Discount  footwear  business.  The Company currently
intends to concentrate  the Licensed  Discount  division's  efforts on its major
licensors  while  exploring  future  strategic  options for this  business.  The
Company  recorded a pre-tax charge of $166.6 million ($117.1  million,  or $8.42
per share, on an after-tax basis) related to the sales of the SCOA and Parade of
Shoes divisions, the write-down to realizable value of certain assets related to
its Licensed  Discount shoe  division,  and severance  and  consolidation  costs
related to the downsizing of the Company's  administrative areas and facilities.
Of the pre-tax  charge,  $122.3  million is included as a separate  component of
results of operations as "Restructuring and other non-recurring  charges" in the
Company's  Consolidated  Statement  of Earnings  for the year ended  February 1,
1997.  The Company has also  recorded a charge to cost of sales of $37.3 million
related to a reduction  in the  Licensed  Discount  division's  inventory to net
realizable value. The remaining  components of the charge include an increase in
the  allowance  for  doubtful  accounts  for the  Licensed  Discount  division's
accounts receivable, and losses incurred from actions taken in order to maximize
the cash  proceeds  received for the assets sold in the Parade of Shoes and SCOA
divisions  subsequent  to the  Company's  decision to dispose of each.  Also, in
fiscal 1996, the Company recorded a restructuring charge of $69.3 million ($41.6
million,  or $3.00 per share, on an after-tax  basis) related to the disposal of
its Fayva footwear  division.  While the Company believes that the restructuring
of its footwear  business will serve to improve  operations  in the future,  the
Company  recognizes it is operating in a soft retail  environment  and has taken
steps intended to manage its remaining  businesses in a manner  consistent  with
such  economic  environment.  These steps include  reducing  estimates of future
sales,  increasing  management's focus on merchandise planning and distribution,
cutting expenditures and prudently managing store openings. The Company also has
attempted  to  generate  additional  sales  and  keep  inventories  in  line  by
increasing promotional activities.

                    Fiscal 1997 versus Fiscal 1996

         In fiscal 1997, net sales decreased by $122.9 million or 12.0% from net
sales in fiscal 1996. Sales in the Company's  footwear  operations  decreased by
$153.4  million due to a $106.0  million sales  decrease in the Company's  Fayva
division  (which is primarily  the result of the closing of all 357 Fayva stores
in the third  quarter of fiscal  1996),  a 1.1%  decrease in  comparable  retail
footwear store sales (Comparable retail footwear store sales increases/decreases
are based upon  comparisons of weekly sales volume in licensed  departments  and
Parade  of  Shoes  stores  which  were  open in  corresponding  weeks of the two
comparison  periods),  and a decrease in the number of licensed shoe departments
in operation  during fiscal 1997 versus fiscal 1996 (which was due in large part
to Jamesway ceasing operations in the fourth quarter of fiscal 1996).

         Sales in the Company's specialty apparel operations  increased by $30.5
million  due to an  increase  in the number of Casual Male Big & Tall stores and
Work 'n Gear stores in  operation at the end of fiscal 1997 over fiscal 1996 and
a 2.7%  increase  in  comparable  specialty  apparel  store  sales.  (Comparable
specialty apparel store sales  increases/decreases are based upon comparisons of
weekly  sales  volume in Casual  Male Big & Tall  stores and Work 'n Gear stores
which were open in corresponding weeks of the two comparison periods.)

         Cost of sales  constituted 60.4% of sales in fiscal 1997 as compared to
56.8% in fiscal 1996.  Cost of sales in the Company's  footwear  operations  was
64.4% of sales in fiscal 1997 (which  includes the $37.3  million  write-down of
the Licensed  Discount  division's  inventory)  as compared to 58.8% of sales in
fiscal 1996. Excluding the effect of this $37.3 million charge, cost of sales in
the  Company's  footwear  operations  was  58.3% of sales in  fiscal  1997.  The
decrease in such percentage, from 58.8% of sales in fiscal 1996, is attributable
to lower markdowns as a percentage of sales, partially offset by a lower initial
markup  on  merchandise  purchases.  Cost  of  sales  in the  Company's  apparel
operations was 52.1% of sales

                                       13

<PAGE>
in fiscal  1997 as compared  to 51.2% of sales in fiscal  1996  primarily  due a
lower  initial  markup  on  merchandise  purchases,  partially  offset  by lower
markdowns as a percentage of sales.

         Selling, administrative and general expenses decreased $44.6 million or
11.4% from fiscal  1996,  primarily  due to the closing of the  Company's  Fayva
division in the third quarter of fiscal 1996. As a percentage of sales, selling,
administrative  and  general  expenses  were  38.8% of sales in  fiscal  1997 as
compared to 38.5% of sales in fiscal 1996.  Selling,  administrative and general
expenses in the Company's footwear operations were 38.5% of sales in fiscal 1997
which was comparable to 38.5% of sales in fiscal 1996.  Selling,  administrative
and general expenses in the Company's apparel  operations were 39.4% of sales in
fiscal 1997 as  compared to 38.5% of sales in fiscal  1996.  This  increase  was
primarily the result of a higher  allocation of predominantly  fixed overhead to
the Company's apparel  operations as a result of the  proportionate  increase in
apparel sales to total Company sales.

         Depreciation  and  amortization  expense  decreased  by $3.0 million in
fiscal 1997 from fiscal 1996 primarily due to the write-off of certain fixed and
intangible  assets in the fourth  quarter of fiscal 1997  related to the overall
restructuring  of  the  Company's   footwear  divisions  and  the  write-off  of
furniture, fixtures and leasehold improvements as a result of the closing of the
Company's  Fayva division in the third quarter of fiscal 1996. This decrease was
partially offset by capital expenditures for depreciable and amortizable assets.

         Of the $166.6 million  pre-tax charge recorded in the fiscal year ended
February 1, 1997 for the  divestitures of the SCOA and Parade of Shoes divisions
and the downsizing of the Company's  Licensed Discount  division,  the Company's
administrative  areas and its  corporate  facilities,  $122.3  million  has been
classified  as  restructuring  and other  non-recurring  charges.  Such  charges
include the losses on the sales of the SCOA and Parade of Shoes  divisions,  the
write-off of assets and  obligations  related to the  reduction of the Company's
investment in its Licensed Discount  division,  severance and related costs, and
lease obligations and write-offs of assets for excess corporate facilities.  For
additional information, see Note 2 to the Consolidated Financial Statements.

         During the fiscal  year ended  February 3, 1996,  the Company  recorded
restructuring charges of $69.3 million ($41.6 million, or $3.00 per share, on an
after-tax  basis) related to the disposal of its Fayva footwear  division.  Such
charges included the costs to exit from and dispose of Fayva, including the loss
on disposal of inventory,  severance payments, the write-off of fixed assets and
the costs to dispose of store leases. For additional information,  see Note 2 to
the Consolidated Financial Statements.

         As a result of the above  described  effects,  the Company's  operating
loss increased to $144.5 million  (operating  income of $22.1 million  excluding
the $166.6  million  pre-tax  charge) in fiscal 1997 from an  operating  loss of
$54.0 million  (operating income of $15.3 million excluding the $69.3 million of
restructuring  charges) in fiscal 1996. As a percentage of sales,  the operating
loss was 16.1% of sales (operating  income of 2.5% of sales excluding the $166.6
million  pre-tax charge) in fiscal 1997 as compared to an operating loss of 5.3%
of sales  (operating  income of 1.5% of sales  excluding  the $69.3  million  of
restructuring charges) in fiscal 1996.

         Net interest expense  increased $2.3 million to $12.8 million in fiscal
1997 as compared to $10.5 million in fiscal 1996 due to higher average levels of
borrowings and higher interest rates.

         Income tax  benefit  for fiscal  1997 was $45.8  million,  yielding  an
effective  tax rate of 29.2%,  as  compared  to an income  tax  benefit of $25.8
million in fiscal 1996,  yielding an effective tax rate of 40.1% in fiscal 1996.
The  difference in the effective tax rate  primarily  reflects the impact of the
additional  valuation  reserve  applied  against  deferred  tax  accounts  as of
February  1,  1997.  See Note 7 to the  Consolidated  Financial  Statements  for
further discussion of taxes on earnings.

         The net loss for fiscal  1997 was $111.4  million as  compared to a net
loss of $38.6 million in fiscal 1996.

                     Fiscal 1996 versus Fiscal 1995

         In fiscal 1996,  net sales  decreased by $22.6 million or 2.2% from net
sales in fiscal 1995. Sales in the Company's  footwear  operations  decreased by
$61.1 million due to a sales decrease in the Company's  Fayva division (which is
primarily  the result of the  aforementioned  closing of all 357 Fayva stores in
the third quarter of fiscal 1996),  the elimination of wholesale  footwear sales
(which is a result of the closing of all wholesale footwear departments serviced
by the Company  during the second  quarter of fiscal  1995),  a 7.0% decrease in
comparable retail footwear store sales, and a decrease in the number of discount
licensed  shoe  departments  in operation  during fiscal 1996 versus fiscal 1995
(which was due in large

                                       14

<PAGE>
part to Jamesway ceasing  operations in the fourth quarter of fiscal 1996). This
decrease was partially offset by a sales increase in the Company's SCOA licensed
shoe  division  as a  result  of  SCOA's  beginning  business  in  new  licensed
departments since the first quarter of fiscal 1995.

         Sales in the Company's specialty apparel operations  increased by $38.6
million  due to an  increase  in the number of Casual Male Big & Tall stores and
Work 'n Gear stores in  operation  at the end of fiscal  1996 over fiscal  1995,
partially offset by a 2.7% decrease in comparable specialty apparel store sales.

         Cost of sales  constituted 56.8% of sales in fiscal 1996 as compared to
55.6% in fiscal 1995.  Cost of sales in the Company's  footwear  operations  was
58.8% of sales in fiscal 1996 as compared to 56.8% of sales in fiscal 1995.  The
increase in such percentage was primarily  attributable to higher markdowns as a
percentage  of  sales  and a  decrease  in the  initial  markup  on  merchandise
purchases,  partially  offset by the  elimination of wholesale  footwear  sales,
which have a higher cost of sales than retail footwear  sales.  Cost of sales in
the Company's  apparel  operations was 51.2% of sales in fiscal 1996 as compared
to 51.0% of sales in fiscal 1995. The increase in such  percentage was primarily
attributable to higher markdowns as a percentage of sales, partially offset by a
higher initial markup on merchandise purchases.

         Selling,  administrative and general expenses increased $3.2 million or
0.8% over  fiscal  1995,  primarily  due to a relative  decrease in sales in the
licensed discount division which has lower selling,  administrative  and general
expenses than the Company's other divisions.  As a percentage of sales, selling,
administrative  and  general  expenses  were 38.5% in fiscal 1996 as compared to
37.3% in fiscal  1995.  Selling,  administrative  and  general  expenses  in the
Company's footwear  operations were 38.5% in fiscal 1996 as compared to 37.2% of
sales in fiscal 1995.  This increase was primarily the result of a change in the
relative  mix of  footwear  sales and a decline in  comparable  retail  footwear
sales.  Selling,  administrative  and general expenses in the Company's  apparel
operations  were 38.5% of sales in fiscal  1996 as compared to 37.9% of sales in
fiscal  1995,  primarily  due to an increase in store  level  expenses  from new
stores openings, coupled with comparable store sales declines.

         Depreciation  and  amortization  expense  increased  by $4.5 million in
fiscal  1996 over fiscal  1995 due to an  increase  in average  depreciable  and
amortizable assets.

         During the fiscal  year ended  February 3, 1996,  the Company  recorded
restructuring  charges of $69.3  million  ($41.6  million on an after tax basis)
related to the disposal of its Fayva footwear  division.  Such charges  included
the costs to exit from and dispose of Fayva,  including  the loss on disposal of
inventory,  severance  payments,  the write off of fixed assets and the costs to
dispose of store leases.

         As a result of the above  described  effects,  the Company  reported an
operating loss of $54.0 million (operating income of $15.3 million excluding the
restructuring  charges) in fiscal 1996 versus  operating income of $46.0 million
in fiscal 1995.

         Net interest expense  increased $1.4 million to $10.5 million in fiscal
1996 as compared to $9.1 million in fiscal 1995, primarily due to higher average
levels of borrowings  and higher  interest rates on borrowings in fiscal 1996 as
compared to fiscal 1995.

         For fiscal 1996,  the Company  reported a tax benefit of $25.8 million,
resulting in an effective tax rate of 40.1%, as compared to tax expense of $13.3
million,  yielding an effective tax rate of 36.0% in fiscal 1995.  See Note 7 to
the  Consolidated  Financial  Statements  for  further  discussion  of  taxes on
earnings.

         Net loss for fiscal 1996 was $38.6  million as compared to net earnings
of $23.6 million in fiscal 1995.

Financial Condition

                   February 1, 1997 versus February 3, 1996

         As a result  of the  sales of the  Company's  SCOA and  Parade of Shoes
divisions in March,  1997,  the Company's  balance sheet at February 1, 1997 has
classified certain assets and liabilities of these divisions as "Assets held for
Sale",  primarily accounts receivable,  merchandise  inventories,  net property,
plant and  equipment  and accounts  payable.  Also, as a result of the Company's
overall  restructuring of its footwear  business in fiscal 1997, the Company has
written down the value of  inventory  and  accounts  receivable  in its Licensed
Discount division, written down certain fixed and intangible assets,

                                       15

<PAGE>
and has recorded accruals related to the restructuring.  For additional
information, see Note 2 to the Consolidated Financial Statements.

         Accounts  receivable at February 1, 1997  decreased from the balance at
February 3, 1996 primarily due to the impact of the divestiture of the Company's
SCOA division, the reduction in the number of units operated in January, 1997 as
compared to January, 1996 in the Company's Licensed Discount shoe division,  and
a net increase of $2.1 million in the Company's allowance for doubtful accounts.
The  increase in the  allowance  for  doubtful  accounts,  which was recorded in
conjunction  with the  revaluation  of the Company's  investment in its Licensed
Discount  division,  is primarily due to the reduction in the Company's estimate
of the amounts  expected to be realized from the settlement of Chapter 11 claims
with various licensors.

         Merchandise inventories at February 1, 1997 were lower than at February
3, 1996  primarily due to the impact of the  divestitures  of the Company's SCOA
and Parade of Shoes  divisions and to the  write-down of the Company's  Licensed
Discount division's inventory to net realizable value.

         Income tax  receivable  at February 1, 1997  decreased to zero from the
balance at February 3, 1996  primarily  due to the  collection  of the estimated
federal tax refund during fiscal 1997.

         The decrease in net property,  plant and equipment is the result of the
impact of the  divestitures of the Company's SCOA and Parade of Shoes divisions,
coupled  with the  recording of $21.2  million in  depreciation  expense  during
fiscal 1997,  partially offset by the Company incurring capital  expenditures of
$16.4  million in fiscal 1997,  primarily  for the opening of new stores and the
renovation of existing units.

         The  decrease in other  assets is primarily  due to the  write-offs  of
certain  intangible assets as a result of the divestitures of the Company's SCOA
and Parade of Shoes divisions and the revaluation and reduction of the Company's
investment  in  its  Licensed  Discount  footwear  division,  coupled  with  the
recording of $8.2 million in amortization expense.

         The decrease in accounts  payable is primarily due to the impact of the
divestiture  of the Company's SCOA  division.  The ratio of accounts  payable to
merchandise  inventory  was 39.0% at  February  1, 1997 as  compared to 36.8% at
February 3, 1996. Such increase is primarily the result of the write-down of the
Company's Licensed Discount division's inventory.

         Accrued  expenses  at February  1, 1997  increased  from the balance at
February 3, 1996 primarily due to accruals  related to the  restructuring of the
Company's  footwear  business,  including  the sales of the  Company's  SCOA and
Parade of Shoes divisions,  and the downsizing and restructuring of its Licensed
Discount  division and the Company's  administrative  areas and facilities.  See
Note 2 to the Consolidated  Financial Statements for information on accruals set
up for restructuring and other non-recurring costs.

Liquidity and Capital Resources
         The Company  currently has a revolving  credit facility on an unsecured
basis with Fleet National  Bank,  The First National Bank of Boston,  The Yasuda
Trust and Banking  Company,  Ltd.,  Bank  Hapoalim  B.M.,  National City Bank of
Columbus,  Standard  Chartered  Bank and  Citizens  Bank of  Massachusetts  (the
"Banks").  As  amended  to date,  the  aggregate  commitment  amount  under this
revolving  credit  facility  was reduced  from $205 million to $145 million upon
receipt of the proceeds of the sales of the  Company's  SCOA and Parade of Shoes
divisions in March,  1997.  Borrowings  under the revolving credit facility bear
interest at variable rates and, at the discretion of the Company,  can be in the
form of loans, bankers' acceptances and letters of credit. This facility expires
on May 30, 1998.  The Company had  outstanding  obligations  under the revolving
credit  facility of $155.2 million as of February 1, 1997,  consisting of loans,
obligations under bankers'  acceptances and letters of credit. The Company is in
the  process  of  seeking to  refinance  its  revolving  credit  facility  for a
three-year term.

         On December 30, 1996, JBAK Canton Realty, Inc. ("Realty"), a subsidiary
of JBAK Holding, Inc. and an indirect,  wholly-owned  subsidiary of the Company,
obtained a $15.5 million  mortgage loan from The Chase Manhattan Bank secured by
the real  estate,  buildings  and  other  improvements  owned by  Realty  at 555
Turnpike Street, Canton, Massachusetts.  Realty leases the property to JBI, Inc.
a wholly-owned  subsidiary of the Company. The property is used as the Company's
corporate  headquarters.  Proceeds  of the  mortgage  loan were used to pay down
loans under the Company's revolving credit facility.



                                       16

<PAGE>
         In  June,  1992  the  Company  issued  $70  million  of 7%  convertible
subordinated  notes due 2002. The notes are convertible at a conversion price of
$16.125 per share, subject to adjustment in certain events.

         The  Company  expects to open  approximately  50 Casual Male Big & Tall
stores and 6 Work 'n Gear stores and to close  approximately 1 Casual Male Big &
Tall store in fiscal 1998. As part of the  downsizing  of the Licensed  Discount
shoe division, the Company plans to close approximately 100 licensed departments
in fiscal 1998.

         The Company believes that amounts  available under its revolving credit
facility,  along with internally generated funds, will be sufficient to meet its
current operating and capital requirements under ordinary  circumstances through
the end of the current fiscal year.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
         The Company cautions that any forward-looking  statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995) contained in
this  Form  10-K  or  made  by  management  of the  Company  involve  risks  and
uncertainties, and are subject to change based on various important factors. The
following  factors,  among others, in some cases have affected and in the future
could affect the Company's financial  performance and actual results,  and could
cause actual results for fiscal 1998 and beyond to differ  materially from those
expressed or implied in any such forward-looking statements: changes in consumer
spending  patterns,   consumer  preferences  and  overall  economic  conditions,
availability of credit,  interest rates,  the impact of competition and pricing,
the  weather,  the  financial  condition  of the  retailers  in whose stores the
Company  operates  licensed shoe  departments,  changes in existing or potential
duties,  tariffs  or  quotas,   availability  of  suitable  store  locations  at
appropriate terms and ability to hire and train associates.




















                                       17

<PAGE>

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




                  J. BAKER, INC. AND SUBSIDIARIES
             Index to Consolidated Financial Statements

<TABLE>
<S>                                                                                                      <C>
Consolidated Financial Statements:                                                                       PAGE


         Independent Auditors' Report                                                                      19

         Consolidated balance sheets as of February 1, 1997 and February 3, 1996                           20

         Consolidated statements of earnings for the years ended February 1, 1997,                         21
February 3, 1996 and January 28, 1995

         Consolidated statements of stockholders' equity for the years ended                               22
February 1, 1997, February 3, 1996 and January 28, 1995

         Consolidated statements of cash flows for the years ended February 1, 1997,                       23
February 3, 1996 and January 28, 1995

         Notes to consolidated financial statements                                                        24

</TABLE>

All schedules have been omitted as they are inapplicable or not required, or the
information has been included in the consolidated financial statements or in the
notes thereto.














                                        18

<PAGE>













                       Independent Auditors' Report



The Board of Directors and Stockholders
J. Baker, Inc.:


We have audited the accompanying  consolidated  balance sheets of J. Baker, Inc.
and  subsidiaries  as of February 1, 1997 and February 3, 1996,  and the related
consolidated  statements  of earnings,  stockholders'  equity and cash flows for
each of the  years in the  three-year  period  ended  February  1,  1997.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of J. Baker, Inc. and
subsidiaries  as of  February 1, 1997 and  February 3, 1996,  and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended February 1, 1997 in conformity with generally  accepted  accounting
principles.





                                                 KPMG Peat Marwick LLP


Boston, Massachusetts
March 20, 1997










                                      19

<PAGE>
                      J. BAKER, INC. AND SUBSIDIARIES
                         Consolidated Balance Sheets
                    February 1, 1997 and February 3, 1996
<TABLE>
<S>                                                                                <C>                    <C>
        Assets                                                                            1997                 1996
        ------                                                                            ----                 ----
Current assets:
    Cash and cash equivalents                                                      $   3,969,116          $   3,287,141
    Accounts receivable:
        Trade, net                                                                    14,771,734             19,514,985
        Other                                                                          1,737,786              3,219,862
                                                                                      ----------             ----------
                                                                                      16,509,520             22,734,847
                                                                                      ----------             ----------

    Merchandise inventories                                                          146,045,496            285,703,289
    Prepaid expenses                                                                   6,031,033              8,600,990
    Income tax receivable                                                                      -              7,236,732
    Deferred income taxes                                                             37,548,000              9,198,000
    Assets held for sale                                                              62,255,582                      -
                                                                                     -----------            -----------
             Total current assets                                                    272,358,747            336,760,999
                                                                                     -----------            -----------

Property, plant and equipment, at cost:
    Land and buildings                                                                19,340,925             25,064,423
    Furniture, fixtures and equipment                                                 54,695,398            115,099,770
    Leasehold improvements                                                            42,650,123             43,442,932
                                                                                     -----------            -----------
                                                                                     116,686,446            183,607,125
    Less accumulated depreciation and amortization                                    40,032,801             62,524,262
                                                                                     -----------            -----------
             Net property, plant and equipment                                        76,653,645            121,082,863
                                                                                     -----------            -----------

Deferred income taxes                                                                 26,199,000              6,939,000
Other assets, at cost, less accumulated amortization                                   7,309,411             61,298,880
                                                                                    ------------            -----------
                                                                                    $382,520,803           $526,081,742
                                                                                     ===========            ===========
        Liabilities and Stockholders' Equity
Current liabilities:
    Current portion of long-term debt                                              $   2,012,327          $   1,500,000
    Accounts payable                                                                  57,006,085            105,113,721
    Accrued expenses                                                                  29,837,310             25,066,874
    Income taxes payable                                                               1,380,664                      -
                                                                                    ------------            -----------
             Total current liabilities                                                90,236,386            131,680,595
                                                                                    ------------            -----------

Other liabilities                                                                      6,203,073              2,598,026
Long-term debt, net of current portion                                               140,787,673            133,000,000
Senior subordinated debt                                                               2,951,411              4,412,711
Convertible subordinated debt                                                         70,353,000             70,353,000

Stockholders' equity:
    Common stock, par value $.50 per share, authorized 40,000,000 shares,
      13,892,397 shares issued and outstanding in 1997 (13,872,647 in 1996)            6,946,199              6,936,324
    Preferred stock, par value $1.00 per share, authorized 2,000,000 shares
      (none issued and outstanding)                                                            -                      -
    Series A junior participating cumulative preferred stock, par value $1.00
      per share, authorized 100,000 shares (none issued and outstanding)                       -                      -
    Additional paid-in capital                                                       115,416,223            115,213,017
    Retained earnings (deficit)                                                      (50,373,162)            61,888,069
                                                                                     -----------            -----------
             Total stockholders' equity                                               71,989,260            184,037,410
                                                                                     -----------            -----------
                                                                                    $382,520,803           $526,081,742
                                                                                     ===========            ===========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       20

<PAGE>
                     J. BAKER, INC. AND SUBSIDIARIES
                  Consolidated Statements of Earnings
For the years ended  February  1, 1997,  February 3, 1996 and January 28, 1995


<TABLE>
<S>                                                            <C>                     <C>                  <C>
                                                                     1997                    1996                 1995
                                                                     ----                    ----                 ----

Net sales                                                       $897,491,941           $1,020,412,703       $1,042,978,875

Cost of sales                                                    542,246,938              580,067,086          579,734,911
                                                                 -----------            -------------        -------------

      Gross profit                                               355,245,003              440,345,617          463,243,964

Selling, administrative and general expenses                     347,977,056              392,585,851          389,362,380

Depreciation and amortization                                     29,430,473               32,428,001           27,882,778

Restructuring and other non-recurring charges                    122,309,000               69,300,000                    -
                                                                 -----------            -------------        -------------

      Operating income (loss)                                   (144,471,526)             (53,968,235)          45,998,806

Interest income                                                      253,750                  526,188              635,574

Interest expense                                                 (13,056,127)             (10,983,067)          (9,735,209)
                                                                 -----------             ------------        -------------

      Earnings (loss) before taxes                              (157,273,903)             (64,425,114)          36,899,171

Income tax expense (benefit)                                     (45,846,000)             (25,823,000)          13,283,000
                                                                ------------             ------------        -------------

      Net earnings (loss)                                      $(111,427,903)            $(38,602,114)        $ 23,616,171
                                                                ============              ===========         ============

Earnings (loss) per common share:
      Primary                                                  $       (8.02)          $        (2.79)      $         1.71
                                                                ============            =============        =============
      Fully diluted                                            $       (8.02)          $        (2.79)      $         1.46
                                                                ============            =============        =============

Number of shares used to compute earnings (loss) per common share:
      Primary                                                     13,887,544               13,858,273           13,831,552
                                                                ============             ============        =============
      Fully diluted                                               13,900,633               13,905,545           18,363,042
                                                                ============             ============        =============
</TABLE>








See accompanying notes to consolidated financial statements.

                                       21

<PAGE>



                     J. BAKER, INC. AND SUBSIDIARIES
               Consolidated  Statements of  Stockholders'
         Equity For the years ended February 1, 1997,  February 3,
                       1996 and January 28, 1995

<TABLE>
<S>                                   <C>                <C>              <C>             <C>              <C>
                                                                           Additional        Retained         Total
                                                  Common Stock               Paid-in         Earnings      Stockholders'
                                          Shares            Amount           Capital        (Deficit)         Equity
                                          ------            ------         ----------        --------      ------------


Balance, January 29, 1994              13,792,647        $6,896,324       $114,654,417     $78,535,733     $200,086,474


Net earnings for the year ended
    January 28, 1995                            -                 -                  -      23,616,171       23,616,171
Exercise of stock options                  48,000            24,000            420,405               -          444,405
Dividends paid ($.06 per share)                 -                 -                  -        (830,145)        (830,145)
                                       ----------        ----------        -----------     -----------      -----------
Balance, January 28, 1995              13,840,647         6,920,324        115,074,822     101,321,759      223,316,905
                                       ----------        ----------        -----------     -----------      -----------

Net loss for the year ended
    February 3, 1996                            -                 -                  -     (38,602,114)     (38,602,114)
Exercise of stock options                  32,000            16,000            138,195               -          154,195
Dividends paid ($.06 per share)                 -                 -                  -        (831,576)        (831,576)
                                       ----------         ---------          ---------      ----------       ----------

Balance, February 3, 1996              13,872,647         6,936,324        115,213,017      61,888,069      184,037,410
                                       ----------        ----------        -----------      ----------      -----------


Net loss for the year ended
    February 1, 1997                            -                 -                  -    (111,427,903)    (111,427,903)
Shares issued in connection with the
  acquisition of Shoe Corporation
  of America                                6,001             3,001            104,942               -          107,943
Exercise of stock options                  13,749             6,874             98,264               -          105,138
Dividends paid ($.06 per share)                 -                 -                  -        (833,328)        (833,328)
                                       ----------        ----------         ----------     -----------      -----------

Balance, February 1, 1997              13,892,397        $6,946,199       $115,416,223    $(50,373,162)    $ 71,989,260
                                       ==========        ==========       ============    ============     ============

</TABLE>







See accompanying notes to consolidated financial statements

                                        22

<PAGE>
                    J. BAKER, INC. AND SUBSIDIARIES
                  Consolidated Statements of Cash Flows
       For the years ended  February  1, 1997,  February 3, 1996
                       and January 28, 1995


<TABLE>
<S>                                                                <C>                  <C>                  <C>
                                                                         1997                 1996                 1995
                                                                         ----                 ----                 ----
Cash flows from operating activities:
      Net earnings (loss)                                          $(111,427,903)       $ (38,602,114)       $  23,616,171
      Adjustments to reconcile net earnings (loss) to net cash
        provided by operating activities:
         Depreciation and amortization:
             Fixed assets                                             21,151,307           21,985,599           19,015,776
             Deferred charges, intangible assets and
                deferred financing costs                               8,317,866           10,490,278            8,922,497
         Deferred income taxes                                       (47,610,000)         (20,153,000)           7,955,364
         Loss on disposals and revaluation of assets                  97,815,906           29,900,000                    -
         Change in:
             Accounts receivable                                       2,002,092            3,088,464            8,466,255
             Merchandise inventories                                  52,566,128           36,583,661          (56,854,448)
             Prepaid expenses                                         (1,758,077)          (3,030,223)          (1,449,914)
             Accounts payable                                        (29,177,966)         (15,678,736)          12,529,534
             Accrued expenses                                          5,340,437            9,561,924           (9,986,666)
             Income taxes payable/receivable                           8,617,396           (7,709,089)           1,165,288
             Other liabilities                                         3,724,711           (4,045,342)          (7,267,692)
                                                                     -----------           ----------           ----------
                Net cash provided by
                 operating activities                                  9,561,897           22,391,422            6,112,165
                                                                     -----------           ----------           ----------

Cash  flows from investing activities: Capital expenditures for:
         Property, plant and equipment                               (16,420,644)         (28,062,433)         (44,513,548)
         Other assets                                                 (1,921,816)          (1,379,958)         (12,000,475)
      Payments received on note receivable                             3,888,000            2,900,000                    -
                                                                     -----------          -----------          -----------
                Net cash used in investing activities                (14,454,460)         (26,542,391)         (56,514,023)
                                                                     -----------          -----------          -----------

Cash flows from financing activities:
      Repayment of senior debt                                        (8,700,000)          (1,500,000)          (2,636,300)
      Proceeds from other long term debt                                       -            4,700,000           51,300,000
      Proceeds from mortgage payable                                  15,500,000                    -                    -
      Payment of mortgage escrow                                        (605,215)                   -                    -
      Release of restricted cash                                               -                    -            3,455,357
      Proceeds from issuance of common stock, net of retirements         213,081              154,195              444,405
      Payment of dividends                                              (833,328)            (831,576)            (830,145)
                                                                       ---------           ----------           ----------
                Net cash provided by financing activities              5,574,538            2,522,619           51,733,317
                                                                       ---------           ----------           ----------

Net increase (decrease) in cash and cash equivalents                     681,975           (1,628,350)           1,331,459

Cash and cash equivalents at beginning of year                         3,287,141            4,915,491            3,584,032
                                                                       ---------           ----------           ----------

Cash and cash equivalents at end of year                            $  3,969,116         $  3,287,141         $  4,915,491
                                                                     ===========          ===========          ===========


</TABLE>


See accompanying notes to consolidated financial statements

                                      23

<PAGE>
                    J. BAKER, INC. AND SUBSIDIARIES
                Notes    to    Consolidated    Financial Statements  
             February 1, 1997,  February 3, 1996 and January 28, 1995

(1)      Summary of Significant Accounting Policies
         ------------------------------------------
         Nature of Operations
            J. Baker,  Inc. and  subsidiaries  (the "Company") is engaged in the
            retail sale of apparel  and  footwear.  As of February 1, 1997,  the
            Company's Casual Male Big & Tall, Work 'n Gear and Licensed Discount
            footwear  businesses  operated 1,443  locations in 47 states and the
            District of  Columbia.  The Company  operates the 440 store chain of
            Casual Male Big & Tall men's stores which sell  fashion,  casual and
            dress clothing and footwear to the big and tall man and the 66 store
            chain  of  Work 'n  Gear  work  clothing  stores  which  sell a wide
            selection  of workwear as well as health care  apparel and  uniforms
            for industry and service businesses,  and sells footwear through 937
            self-service   licensed  shoe  departments  in  mass   merchandising
            department   stores.  In  all  of  these  operations,   the  Company
            emphasizes the sale of quality products at comparatively low prices.
            See  Note  2 for  information  regarding  the  divestitures  of  the
            Company's  Shoe  Corporation  of America  (SCOA) and Parade of Shoes
            divisions and the liquidation of the Company's Fayva shoe division.

         Basis of Presentation and Principles of Consolidation
            The consolidated  financial  statements  include the accounts of the
            Company  and  its  wholly  owned   subsidiaries.   All   significant
            intercompany  accounts  and  transactions  have been  eliminated  in
            consolidation.

            The preparation of consolidated  financial  statements in conformity
            with generally accepted accounting principles requires management to
            make estimates and assumptions  that affect the reported  amounts of
            assets and  liabilities  and  disclosure  of  contingent  assets and
            liabilities at the date of the financial statements and the reported
            amounts of revenues and expenses.  Actual  results could differ from
            these estimates.

         Fiscal Year
            The  Company  follows  a 52 - 53  week  fiscal  year  ending  on the
            Saturday  nearest January 31. The fiscal year ended February 3, 1996
            contained 53 weeks.

         Fair Value of Financial Instruments
            The carrying amount of cash, cash equivalents, trade receivables and
            trade payables  approximate fair value because of the short maturity
            of these  financial  instruments.  The fair  value of the  Company's
            long-term  instruments  is  estimated  based on  market  values  for
            similar instruments. At February 1, 1997, the difference between the
            carrying  value of long-term  instruments  and their  estimated fair
            value is not material.

         Cash and Cash Equivalents
            Cash   equivalents   consist  of  highly  liquid   instruments  with
            maturities  of three  months or less and are  stated  at cost  which
            approximates market.

         Merchandise Inventories
            Merchandise  inventories,  which consist entirely of finished goods,
            are valued at the lower of cost or market, principally by the retail
            inventory method.

         Depreciation and Amortization of Property, Plant and Equipment
            Depreciation and amortization of the Company's  property,  plant and
            equipment  are  provided  on  the  straight-line   method  over  the
            following periods:
<TABLE>
                           <S>                                                  <C>
                           Furniture and fixtures                                7 years
                           Machinery and equipment                               7 years
                           Leasehold improvements                               10 years
                           Building, building improvements and
                              land improvements                                 40 years
</TABLE>




                                       24

<PAGE>
                       J. BAKER, INC. AND SUBSIDIARIES
                Notes to Consolidated Financial Statements

            Maintenance  and repairs are charged to expense as  incurred.  Major
            renewals  or  replacements  are  capitalized.  When  properties  are
            retired or  otherwise  disposed  of, the asset and  related  reserve
            account are  relieved  and the  resulting  gain or loss,  if any, is
            credited or charged to earnings.

         Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
            The Company adopted the provisions of SFAS No. 121,  "Accounting for
            the Impairment of Long-Lived  Assets and for Long-Lived Assets to Be
            Disposed  Of", on February 4, 1996.  This  Statement  requires  that
            long-lived assets and certain  identifiable  intangibles be reviewed
            for impairment whenever events or changes in circumstances  indicate
            that  the  carrying  amount  of an  asset  may  not be  recoverable.
            Recoverability  of  assets  to be held  and  used is  measured  by a
            comparison  of the  carrying  amount of an asset to future  net cash
            flows  expected  to be  generated  by the asset.  If such assets are
            considered  to be  impaired,  the  impairment  to be  recognized  is
            measured  by the amount by which the  carrying  amount of the assets
            exceed the fair value of the  assets.  Assets to be  disposed of are
            reported  at the lower of the  carrying  amount or fair  value  less
            costs to sell.  Adoption of this  Statement  did not have a material
            impact on the Company's financial position, results of operations or
            liquidity.  See Note 2 regarding asset write-offs as a result of the
            Company's decision to downsize its footwear operations.

         Earnings Per Common Share
            Earnings  per common  share of the Company is based on the  weighted
            average  number of shares of common  stock  outstanding  during  the
            applicable  period.  Primary  earnings  per  share  is  based on the
            weighted average number of shares of common stock outstanding during
            such  period.  Stock  options and  warrants  are  excluded  from the
            calculation since they have less than a 3% dilutive effect.

            Fully  diluted  earnings per share is based on the weighted  average
            number of shares of common stock  outstanding  during the applicable
            period. Included in this calculation is the dilutive effect of stock
            options and warrants.  Included in this  calculation  for the period
            ended  January  28,  1995 is the  dilutive  effect of  common  stock
            issuable under the 7% convertible  subordinated  notes due 2002. The
            common stock issuable under the 7%  convertible  subordinated  notes
            was not included in the  calculation  for the periods ended February
            1,  1997  and   February  3,  1996   because  its  effect  would  be
            antidilutive.

         Revenue Recognition
            The  Company  recognizes  revenue  at the time of sale in its retail
            stores and licensed departments.

         Store Opening and Closing Costs
            Direct incremental store opening costs are amortized to expense over
            a twelve  month  period.  All costs  related to store  closings  are
            expensed at the time of closing.

         Deferred Lease Acquisition Costs
            Costs  incurred  in  connection  with  the  acquisition  of  license
            agreements were classified as deferred lease  acquisition  costs and
            were being amortized over the terms of the respective leases,  which
            ranged from three to twenty years.

         Stock Options
            Prior to  February  4, 1996,  the  Company  accounted  for its stock
            options in accordance  with the provisions of Accounting  Principles
            Board  ("APB")  Opinion  No.  25,  "Accounting  for Stock  Issued to
            Employees",  and  related  interpretations.  As  such,  compensation
            expense  would be  recorded on the date of grant only if the current
            market price of the underlying stock exceeded the exercise price. On
            February 4, 1996, the Company adopted SFAS No. 123,  "Accounting for
            Stock-Based  Compensation",  which permits  entities to recognize as
            expense  over the vesting  period the fair value of all  stock-based
            awards on the date of grant. Alternatively, SFAS No. 123 also allows
            entities to continue to apply the  provisions  of APB Opinion No. 25
            and provide  proforma  net income and  proforma  earnings  per share
            disclosures for employee stock option grants made in fiscal 1996 and
            future years as if the  fair-value-based  method defined in SFAS No.
            123 had been  applied.  The Company has elected to continue to apply
            the  provisions  of APB  Opinion  No. 25 and  provide  the  proforma
            disclosure provisions of SFAS No. 123.

                                       25

<PAGE>
                         J. BAKER, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

         Income Taxes
            Deferred taxes are provided for using the asset and liability method
            for temporary differences between financial and tax reporting.

(2)      Restructuring and Other Non-Recurring Charges
         --------------------------------------------- 
            During the fourth quarter of fiscal 1997,  the Company  restructured
            its  footwear  operations  in  order  to focus  its  efforts  on the
            management, development and growth of its Casual Male Big & Tall and
            Work  'n  Gear   apparel   businesses.   In   connection   with  the
            restructuring, in March, 1997 the Company completed the sales of its
            Shoe  Corporation of America ("SCOA") and Parade of Shoes divisions,
            and has begun to downsize its Licensed Discount  footwear  division.
            As part of the restructuring,  the Company made a determination that
            it would reduce its  investment  in its Licensed  Discount  footwear
            business.  The Company currently intends to concentrate the Licensed
            Discount  division's  efforts on its major licensors while exploring
            future strategic  options for this business.  The Company recorded a
            pre-tax  charge  of $166.6  million  ($117.1  million,  or $8.42 per
            share,  on an after-tax  basis) related to the sales of the SCOA and
            Parade of Shoes  divisions,  the  write-down to realizable  value of
            certain assets related to its Licensed  Discount shoe division,  and
            severance and  consolidation  costs related to the downsizing of the
            Company's  administrative  areas  and  facilities.  Of  the  pre-tax
            charge,  $122.3  million  is  included  as a separate  component  of
            results of  operations in the  Company's  Consolidated  Statement of
            Earnings for the year ended  February 1, 1997.  The Company has also
            recorded  a charge to cost of sales of $37.3  million  related  to a
            reduction  in the  Licensed  Discount  division's  inventory  to net
            realizable value. The remaining  components of the charge include an
            increase in the  allowance  for  doubtful  accounts for the Licensed
            Discount  division's accounts  receivable,  and losses incurred from
            actions  taken in order to maximize the cash  proceeds  received for
            the assets sold in the Parade of Shoes and SCOA divisions subsequent
            to the Company's decision to dispose of each. In connection with the
            above  events,  the Company  reduced its work force during the first
            quarter of fiscal  1998 by  approximately  3,481  employees  of whom
            approximately 1,693 were full-time and 1,788 were part-time.

            Asset   write-offs   included   in  the   restructuring   and  other
            non-recurring  charges  totaled $99.6 million,  while the balance of
            the charge will require cash outlays,  primarily in fiscal 1998. See
            Note 5 for information  regarding the write-off of certain assets of
            the Company's footwear operations.

            The   significant   components  of  the   restructuring   and  other
            non-recurring  charges and the reserves  remaining as of February 1,
            1997 were as follows:
<TABLE>
                  <S>                                                                <C>                <C>
                                                                                       Charges           Remaining
                                                                                       Recorded          Reserves
                                                                                       ---------         ----------

                  Loss on sales of divisions                                         $ 63,737,000       $ 2,777,000

                  Asset write-offs and obligations related to
                    the reduction of the Company's investment
                    in its Licensed Discount shoe division                             36,739,000         2,800,000

                  Severance and employee benefit costs                                  9,300,000         8,600,000

                  Lease obligations and asset write-offs for
                    excess corporate facilities                                         9,733,000         4,800,000

                  Other                                                                 2,800,000         2,550,000
                                                                                       ----------        ----------

                                                                                     $122,309,000       $21,527,000
                                                                                      ===========        ==========
</TABLE>

                                       26

<PAGE>
                      J. BAKER, INC. AND SUBSIDIARIES
                    Notes to Consolidated Financial Statements

         Sale of Shoe Corporation of America Division
            On  March  5,  1997,  the  Company  announced  it had  sold its SCOA
            division  to an entity  formed  by CHB  Capital  Partners  of Denver
            Colorado,  along with Dennis B.  Tishkoff,  President  of SCOA,  and
            certain members of SCOA  management.  The  transaction  involved the
            transfer to the buyer of the  division's  inventory,  fixed  assets,
            intellectual   property  and  license  agreements  for  the  various
            department  and specialty  store chains  serviced by SCOA as well as
            the  assumption  by the  buyer of  certain  liabilities  of the SCOA
            division.  In connection  with the sale of SCOA,  the Company paid a
            total of $3.0  million  to former  stockholders  of SCOA in order to
            satisfy  a  contractual  contingent  payment  obligation,  based  on
            earnings,  owed to such former SCOA stockholders.  Net cash proceeds
            received  from the sale,  reduced  by the  amount of the  contingent
            payment,  by a $1.4 million two-year escrow account balance,  and by
            transaction  expenses of $1.3 million,  totaled  approximately $40.0
            million.  The Company also remains as guarantor on certain of SCOA's
            license agreements for periods not to exceed two years.

         Sale of Parade of Shoes Division
            On March 10, 1997,  the Company  completed the sale of its Parade of
            Shoes division to Payless  ShoeSource,  Inc.  ("Payless") of Topeka,
            Kansas.  The  transaction  involved  the  transfer to Payless of the
            division's inventory, fixed assets, intellectual property and leases
            on the 186 Parade of Shoes stores.  Net cash proceeds from the sale,
            reduced by a $2.7 million  two-year  escrow account  balance and the
            retained accounts payable of the division,  were approximately $20.0
            million.  The Company remains  contingently  liable under certain of
            the Parade of Shoes store leases assigned to Payless.

         Revaluation and Downsizing of Licensed Discount Shoe Division
            As part of the restructuring of its footwear  business,  the Company
            made a  determination  that it would  reduce its  investment  in its
            Licensed Discount footwear  business.  The Company currently intends
            to concentrate the Licensed Discount division's efforts on its major
            licensors  while  exploring  future   strategic   options  for  this
            business.  As a result,  the Company  undertook an evaluation of the
            value of the assets in the Licensed Discount business, and wrote off
            certain  assets which did not benefit  future  operations  and wrote
            down other  assets to  expected  realizable  value.  Included in the
            restructuring  and other  non-recurring  charges  for the year ended
            February  1, 1997,  are  write-offs  of  intangible  assets of $33.9
            million,  which the Company deems to have no future value,  and $2.8
            million  in  accrued  costs  relating  to  the   repositioning   and
            downsizing  of the Licensed  Discount  business.  In  addition,  the
            Company  has  recorded  a charge of $37.3  million to cost of sales,
            representing  the  write-down  of the Licensed  Discount  division's
            inventory  to net  realizable  value and a charge of $2.2 million to
            selling,   administrative  and  general  expenses,  representing  an
            increase to the Company's allowance for doubtful accounts related to
            amounts  expected to be realized  from the  settlement of Chapter 11
            claims with various licensors.

         Disposal of Fayva Division
            In  the  year  ended   February  3,  1996,   the  Company   recorded
            restructuring  charges  of $69.3  million  (which  had an  after-tax
            effect  of $41.6  million  or $3.00  per  share)  as a result of the
            liquidation of the Company's Fayva footwear division.  Restructuring
            charges  included  actual  costs for  employee  severance  and other
            benefits  of $3.5  million  (a  total of  2,545  full and  part-time
            employees were terminated),  fixed asset write-offs of $18.5 million
            and a loss on the  disposal  of  inventory  of $20.5  million.  Also
            included in  restructuring  charges is a charge of $26.8 million for
            costs related to the disposition of the Fayva store leases.  Accrued
            at  February  1, 1997 are lease  termination  costs of $2.0  million
            which are expected to be paid by the end of fiscal 1998.

(3)      Bankruptcy Filings of Licensors
         -------------------------------
            On June 23, 1995, Bradlees Stores, Inc. ("Bradlees"),  a licensor of
            the Company,  filed for  protection  under  Chapter 11 of the United
            States  Bankruptcy Code. At the time of the bankruptcy  filing,  the
            Company had outstanding  accounts  receivable of approximately  $1.8
            million due from Bradlees.  Under  bankruptcy law,  Bradlees has the
            option of continuing  (assuming) the existing license agreement with
            the  Company  or  terminating  (rejecting)  that  agreement.  If the
            license agreement is assumed,  Bradlees must cure all defaults under
            the agreement  and the Company will collect in full the  outstanding
            past due receivable. The Company has no assurance that the agreement
            will be assumed or that Bradlees will continue in business. Although
            the Company believes that the rejection of the license  agreement or
            the cessation of Bradlees' business is not probable, in the

                                       27

<PAGE>
                      J. BAKER, INC. AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements

            event that the  agreement is rejected or Bradlees  does not continue
            in business,  the Company believes it will have a substantial  claim
            for damages.  If such a claim is necessary,  the amount  realized by
            the  Company,  relative to the carrying  values of  Bradlees-related
            assets,  will be based on the relevant facts and circumstances.  The
            Company  does not expect this filing  under the  Bankruptcy  Code to
            have a material  adverse  effect on future  earnings.  The Company's
            sales in the  Bradlees  chain for the fiscal year ended  February 1,
            1997 were $57.7 million.

            On October  18,  1995,  Jamesway  Corporation  ("Jamesway"),  then a
            licensor of the Company,  filed for  protection  under Chapter 11 of
            the  United  States   Bankruptcy  Code.   Jamesway   liquidated  its
            inventory,  fixed assets and real estate and ceased operation of its
            business  in all  of its 90  stores.  The  Company  participated  in
            Jamesway's going out of business sales and liquidated  substantially
            all of its footwear  inventory in the 90 Jamesway  stores during the
            going out of business sales.  At the time of the bankruptcy  filing,
            the Company had  outstanding  accounts  receivable of  approximately
            $1.4 million due from Jamesway. Because Jamesway ceased operation of
            its business,  the  Company's  license  agreement was rejected.  The
            Company has  negotiated a settlement of the amount of its claim with
            Jamesway  which has been  approved by the  Bankruptcy  Court.  It is
            anticipated that, if approved,  a partial distribution of the amount
            owed to the  Company  under the  settlement  will be made during the
            second half of fiscal 1998.

            On April  26,  1990,  Ames  Department  Stores,  Inc.,  and  related
            entities ("Ames"),  a significant licensor of the Company (see Notes
            5 and 12),  filed for  protection  under  Chapter  11 of the  United
            States  Bankruptcy  Code. On December 18, 1992, the Company and Ames
            executed  Amendment  No. 2 to the  Ames  license  agreement  and the
            Company and Ames executed a certain Stipulation which was filed with
            the United States  Bankruptcy Court for the Southern District of New
            York and approved on January 6, 1993, the consummation date of Ames'
            Plan of  Reorganization.  The Stipulation  provided that the license
            agreement between Ames and the Company shall be modified and amended
            and the license agreement assumed by Ames. Further,  pursuant to the
            Stipulation,  the  Company  settled its $13.7  million  pre-petition
            claim with Ames and, in return,  the Company  received $5 million in
            cash and a  promissory  note  issued  by Ames in the  amount of $8.7
            million bearing  interest at the rate of 6.0% per annum and having a
            final  maturity  on  December  1, 1997.  At  February  1, 1997,  the
            outstanding balance of the Ames promissory note is $2.9 million. The
            Stipulation  further  provided  for a mortgage  lien on and security
            interest  in  the  real   property  and  buildings  in  Rocky  Hill,
            Connecticut comprising the executive offices of Ames, which mortgage
            lien and  security  interest  shall be used as security in repayment
            for the  promissory  note,  and  which  shall be senior to all other
            liens  and  security  interests  except  those  granted  in favor of
            certain banks under a credit agreement with such banks.

(4)      Accounts Receivable
         --------------------
            Trade accounts  receivable are principally  comprised of amounts due
            from  landlords of the  Company's  licensed  shoe  departments.  The
            Company  performs regular credit  evaluations of its licensors,  and
            generally does not require collateral from its licensors.

            The  following is a summary of the activity  affecting the allowance
            for doubtful  accounts  receivable  for the years ended  February 1,
            1997, February 3, 1996 and January 28, 1995:
<TABLE>
            <S>                                                     <C>               <C>              <C>
                                                                        1997             1996             1995
                                                                        ----             ----             ----
            Balance, beginning of year                              $3,217,429        $1,972,723       $  521,922

            Additions charged to expense                             2,200,000         1,413,580        1,450,801

            Write-offs, net of recoveries                             (130,812)         (169,054)               -
                                                                     ---------         ---------        ---------

            Balance, end of year                                    $5,286,617        $3,217,249       $1,972,723
                                                                     =========         =========        =========
</TABLE>
                                       28

<PAGE>
                      J. BAKER, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

(5)      Other Assets
         ------------
            Other assets, net of accumulated  amortization,  at February 1, 1997
            and February 3, 1996 were comprised of:
<TABLE>
                  <S>                                                                       <C>                 <C> 
                                                                                               1997                1996
                                                                                               ----                ----
                  Systems development costs, net of accumulated                                
                      amortization of $4,529,842 and $9,566,062                             $ 4,529,811         $14,165,479
                  Deferred lease acquisition costs, net of accumulated
                      amortization of $18,628,527 at February 3, 1996                                 -          29,799,508
                  Excess of costs over net assets acquired, net of
                      accumulated amortization of $1,828,479 at
                      February 3, 1996                                                                -          10,131,228
                  Notes Receivable, net of current portion of
                      $2,900,000 at February 1, 1997 and
                      February 3, 1996                                                                -           3,888,000
                  Other intangible assets and deferred charges, net of
                      accumulated amortization of $1,157,036 and $2,556,558                   1,814,746           2,372,428
                  Cash surrender value of officers' life insurance, net                          47,279             539,306
                  Deposits                                                                      917,575             402,931
                                                                                             ----------          ----------

                                                                                            $ 7,309,411         $61,298,880
                                                                                             ==========          ==========
</TABLE>
            As of  February  1, 1997,  the  Company  wrote off  certain  assets,
            primarily  systems  development  costs and  excess of costs over net
            assets acquired, in connection with the sales of the SCOA and Parade
            of Shoes  divisions.  In conjunction  with the  restructuring of the
            Company's footwear  operations,  the Company undertook an evaluation
            of  the  value  of the  assets  in the  Licensed  Discount  footwear
            business. As a result, as of February 1, 1997, the Company wrote off
            certain  assets which did not benefit  future  operations  and wrote
            down other assets to expected  realizable value,  including deferred
            lease  acquisition  costs,  systems  development costs and excess of
            costs over net assets acquired.

            Remaining  systems  development  costs  are  being  amortized  on  a
            straight  line basis over eight years.  Deferred  lease  acquisition
            costs  consisted  primarily of payments made in connection  with the
            acquisition of license  agreements and were being amortized over the
            terms of the respective license agreements. The excess of costs over
            net assets  acquired was the result of the  acquisitions  of various
            businesses and was being amortized over periods of fifteen to twenty
            years. Notes receivable consist of a 6.0% note from Ames maturing on
            December 1, 1997 (see Note 3) and a $988,000  (at  February 3, 1996)
            10.25% note from Hills  Department  Store Company.  Other intangible
            assets and deferred charges consist  primarily of costs incurred for
            the issuance of debt and are being  amortized  over periods of three
            to ten years.

(6)      Debt
         ----
         Long-Term Debt
            Long-term  debt at  February  1,  1997  and  February  3,  1996  was
            comprised of:
<TABLE>
                  <S>                                                           <C>                   <C>
                                                                                   1997                   1996
                                                                                   ----                   ----
                  Credit facility (weighted average                             $125,800,000          $133,000,000
                    interest rate of 8.2% in fiscal 1997
                    and 7.9% in fiscal 1996)
                  Mortgage note, net of current portion                           14,987,673                     -
                                                                                 -----------           -----------
                    (interest rate of 9.0%)
                                                                                $140,787,673          $133,000,000
                                                                                 ===========           ===========
</TABLE>

            The  Company  currently  has  a  revolving  credit  facility  on  an
            unsecured basis with Fleet National Bank, The First National Bank of
            Boston,  The Yasuda Trust and Banking  Company,  Ltd., Bank Hapoalim
            B.M.,  National City Bank of Columbus,  Standard  Chartered Bank and
            Citizens Bank of Massachusetts (the "Banks"). The aggregate

                                       29
<PAGE>
                       J. BAKER, INC. AND SUBSIDIARIES
                 Notes to Consolidated Financial Statements

            commitment  amount under this revolving  credit facility was reduced
            from $205  million to $145  million  upon receipt of the proceeds of
            the  sales of the  Company's  SCOA and  Parade  of Shoes  divisions.
            Borrowings   under  the  revolving   credit  facility  can,  at  the
            discretion  of the  Company,  be in the form of any  combination  of
            loans,  bankers'  acceptances and letters of credit. Loans under the
            revolving   credit   facility  bear   interest,   at  the  Company's
            discretion,  at Fleet National Bank of Massachusetts' corporate base
            rate or at the London Interbank  Offered Rate (LIBOR) plus a margin.
            The margin amount,  as well as a commitment fee, is determined based
            on a financial ratio as defined in the revolving credit facility.

            This  facility  expires on May 30,  1998.  At February 1, 1997,  the
            Company  had  $49.8  million  available  for  borrowing  under  this
            facility.

            On  December  30,  1996,  JBAK Canton  Realty,  Inc.  ("Realty"),  a
            subsidiary  of  JBAK  Holding,  Inc.  ("Holding")  and an  indirect,
            wholly-owned  subsidiary  of the Company,  obtained a $15.5  million
            mortgage  loan from The Chase  Manhattan  Bank  secured  by the real
            estate,  buildings and other improvements owned by Realty located at
            555  Turnpike  Street,  Canton,  Massachusetts.  Realty  leases  the
            property to JBI,  Inc.  ("JBI"),  a  wholly-owned  subsidiary of the
            Company.   The   property  is  used  as  the   Company's   corporate
            headquarters.  Neither  Holding nor Realty has agreed to pay or make
            its assets available to pay creditors of the Company or JBI. Neither
            the Company nor JBI have agreed to make their  assets  available  to
            pay  creditors of Holding or Realty.  Proceeds of the mortgage  loan
            were used to pay down loans  under the  Company's  revolving  credit
            facility.

         Senior Subordinated Debt
            In June 1989, the Company issued $35 million of senior  subordinated
            notes with detachable  warrants which enable the holders to purchase
            600,000  shares of the Company's  common stock at a price of $20 per
            share,  subject to adjustments.  At February 1, 1997, the detachable
            warrants enable holders to purchase  approximately 640,000 shares at
            $18.80 per share.  Subject to certain  conditions,  the  Company may
            repurchase all, but not less than all, of the  outstanding  warrants
            for 150% of the then per share warrant  exercise  price.  The senior
            subordinated  notes of $4,451,411 at February 1, 1997 ($5,912,711 at
            February 3, 1996) are presented net of $48,589  ($87,289 at February
            3, 1996),  which reflects the  unaccreted  portion of the $1,710,000
            value originally assigned to the detachable  warrants.  The value of
            the warrants was recorded as additional paid-in capital and is being
            accreted using the effective interest method.

            The senior  subordinated  debt was reduced by $27.5 million in June,
            1992 with proceeds from the $70 million 7% convertible  subordinated
            notes referred to below.  The senior  subordinated  notes are due in
            installments  of $1.5 million per year beginning in May, 1995 with a
            final  payment in May,  1999.  Interest,  currently  at  11.21%,  is
            payable quarterly.

         Convertible Subordinated Debt
            Convertible  subordinated  debt at February 1, 1997 and  February 3,
            1996 was comprised of:
<TABLE>
                  <S>                                                            <C>                   <C>
                                                                                    1997                  1996
                                                                                    ----                  ----
                  7% convertible subordinated notes                              $70,000,000           $70,000,000
                  Convertible debentures                                             353,000               353,000
                                                                                  ----------            ----------
                                                                                 $70,353,000           $70,353,000
                                                                                  ==========            ==========
</TABLE>

            In June  1992,  the  Company  issued $70  million of 7%  convertible
            subordinated  notes due 2002. The notes are convertible  into common
            stock at a  conversion  price  of  $16.125  per  share,  subject  to
            adjustment in certain  events.  The Company used the net proceeds to
            repay all of the $20  million  outstanding  principal  amount of its
            senior  term notes,  $27.5  million  principal  amount of its senior
            subordinated  notes, and a portion of outstanding bank  indebtedness
            under its unsecured revolving credit facility.

            Prior to the Company's  acquisition of Morse Shoe,  Inc.  ("Morse"),
            94% of the Morse convertible  debentures converted into Morse common
            stock.  Since the acquisition of Morse on January 30, 1993,  holders
            of $2.7 million of additional Morse convertible debentures converted
            their  debt  into  49,820  shares  of J.  Baker  common  stock.  The
            remaining  balance of  $353,000  convertible  debentures  accrued no
            interest until January 15, 1997,

                                       30
<PAGE>
                         J. BAKER, INC. AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements

            at which time the rate became 8%, and no  principal  will be payable
            until  January  15,  2002.  The  debt  is  subject,   under  certain
            circumstances,  to mandatory conversion.  Approximately 6,500 shares
            of J. Baker common stock are reserved for any future  conversions of
            the remaining Morse convertible debentures.

            The  Company's  revolving  credit  facility and senior  subordinated
            notes  contain  various   covenants  and   restrictive   provisions,
            including restrictions on the incurrence of additional  indebtedness
            and liens, the payment of dividends and the maintenance of specified
            financial  ratios,  minimum  levels  of  working  capital  and other
            financial criteria. At  February  1,  1997,  the  Company  was in  
            compliance  with such covenants.

            The Company is  restricted,  under  various  debt  agreements,  from
            paying cash  dividends  unless  tangible net worth  exceeds  certain
            required  levels.  As  defined  by the  most  restrictive  of  those
            agreements,  minimum  tangible  net worth,  as so defined,  was $199
            million at February 1, 1997.  At  February  1, 1997,  the  Company's
            tangible net worth, as so defined, was approximately $258 million.

            Scheduled   principal   repayments   of   long-term   debt,   senior
            subordinated  notes and convertible  subordinated  debt for the next
            five fiscal years and thereafter are as follows:
<TABLE>
                           <S>                                                  <C>
                             Fiscal year
                           ending January
                           --------------
                                1998                                            $  2,012,327
                                1999                                             127,860,387
                                2000                                               2,112,955
                                2001                                                 670,455
                                2002                                                 733,348
                                Thereafter                                      $ 82,763,528
</TABLE>

(7)      Taxes on Earnings
         -----------------
            Income tax  expense  (benefit)  attributable  to income  (loss) from
            continuing operations consists of:
<TABLE>
                <S>                                              <C>                    <C>                   <C>
                                                                      Current              Deferred                Total
                                                                      -------              --------                -----
                Year ended February 1, 1997:
                  Federal                                        $           -          $(32,688,000)         $(32,688,000)
                  State and city                                     1,764,000           (14,922,000)          (13,158,000)
                                                                   -----------           -----------            ----------
                                                                 $   1,764,000          $(47,610,000)         $(45,846,000)
                                                                   ===========           ===========           ===========
                Year ended February 3, 1996:
                  Federal                                          $(7,311,000)         $(13,271,000)         $(20,582,000)
                  State and city                                     1,641,000            (6,882,000)           (5,241,000)
                                                                    ----------           -----------           -----------
                                                                   $(5,670,000)         $(20,153,000)         $(25,823,000)
                                                                    ==========           ===========           ===========
                Year ended January 28, 1995:
                  Federal                                          $ 4,132,000           $ 5,308,000           $ 9,440,000
                  State and city                                     2,100,000             1,743,000             3,843,000
                                                                    ----------            ----------            ----------
                                                                   $ 6,232,000           $ 7,051,000           $13,283,000
                                                                    ==========           ============           ==========
</TABLE>

             The following is a  reconciliation  between the  statutory  federal
             income  tax rate and the  Company's  effective  rate for the  years
             ended February 1, 1997, February 3, 1996 and January 28, 1995:
<TABLE>
                  <S>                                                   <C>                  <C>                     <C>
                                                                         1997                 1996                   1995
                                                                         ----                 ----                   ----
                  Statutory federal income tax rate                     (35.0%)              (35.0%)                 35.0%
                  State income taxes, net of federal
                     income tax benefit                                  (5.4%)               (5.3%)                  6.8%
                  Jobs tax credits                                          -                 (0.6%)                 (1.6%)
                  Change in beginning of year balance in the valuation
                     allowance for deferred tax assets                    7.4%                   -                   (2.6%)
                  Other                                                   3.8%                 0.8%                  (1.6%)
                                                                         -----                -----                  -----
                                                                        (29.2%)              (40.1%)                 36.0%
                                                                         =====                =====                  =====
</TABLE>
                                       31
<PAGE>
                         J. BAKER, INC. AND SUBSIDIARIES
                    Notes to Consolidated Financial Statements

             The  tax  effects  of  temporary  differences  that  give  rise  to
             significant  portions of the  deferred  tax assets and deferred tax
             liabilities  at February 1, 1997 and February 3, 1996 are presented
             below:
<TABLE>
              <S>                                                                  <C>                  <C>
                                                                                        1997                1996
                                                                                        ----                ----
              Deferred tax assets:
                 Accounts receivable                                               $     550,000        $    550,000
                 Inventory                                                            32,692,000           1,500,000
                 Intangible assets                                                    11,506,000             (71,000)
                 Other assets                                                          1,227,000             516,000
                 Nondeductible accruals and reserves                                  12,476,000           9,154,000
                 Operating loss and credit carryforwards                              46,759,000          42,443,000
                                                                                     -----------         -----------
                     Total gross deferred tax assets                                 105,210,000          54,092,000
                     Less valuation allowance                                        (26,636,000)        (14,969,000)
                                                                                     -----------         -----------
                     Net deferred tax assets                                          78,574,000          39,123,000
                                                                                     -----------         -----------
              Deferred tax liabilities:
                 Property, plant and equipment                                        (5,811,000)        (13,970,000)
                 Intangible assets                                                    (6,426,000)         (6,426,000)
                 Other liabilities                                                    (2,590,000)         (2,590,000)
                                                                                     -----------         -----------  
                     Total gross deferred tax liabilities                            (14,827,000)        (22,986,000)
                                                                                     -----------         -----------
                     Net deferred tax asset                                         $ 63,747,000        $ 16,137,000
                                                                                     ===========         ===========
</TABLE>

            At February 1, 1997 and February 3, 1996, the net deferred tax asset
            consisted of the following:
<TABLE>
               <S>                                                                  <C>                 <C>
                                                                                         1997               1996
                                                                                         ----               ----
               Deferred tax asset - current                                         $ 37,548,000        $  9,198,000
               Deferred tax asset - noncurrent                                        26,199,000           6,939,000
                                                                                      ----------          ----------
                                                                                    $ 63,747,000        $ 16,137,000
                                                                                     ===========         ===========
</TABLE>


            The  valuation  allowance  for deferred tax assets as of February 3,
            1996  was  $14,969,000.   The  increase  in  valuation   reserve  of
            $11,667,000 is attributable to an increase in temporary  differences
            for which a reserve is required.

            At  February  1,  1997,   the   Company  has  net   operating   loss
            carryforwards ("NOLS") and general business credit carryforwards for
            federal income tax purposes of approximately  $97.0 million and $1.3
            million,  respectively,  which expire in years ended  January,  2002
            through  January,  2012.  Financial  Accounting  Standards  No. 109,
            "Accounting  for Income  Taxes" ("FAS 109"),  requires  that the tax
            benefit of such NOLS be  recorded as an asset to the extent that the
            Company  assesses  the  utilization  of such NOLS to be "more likely
            than not". The NOLS available for future  utilization were generated
            principally by restructuring and other  non-recurring  charges which
            are not expected to continue. The Company has determined, based upon
            the history of prior  operating  earnings in its ongoing  businesses
            and its  expectations  for the future,  that operating income of the
            Company will more likely than not be sufficient to utilize fully the
            $97.0 million of NOLS prior to their expiration in the year 2012.

            The Company has minimum tax credit  carryforwards  of  approximately
            $4.0  million  available to reduce  future  regular  federal  income
            taxes, if any, over an indefinite period.

(8)       Pension and Profit Sharing Plans
          --------------------------------
            The Company has a noncontributory  pension plan (the "Pension Plan")
            which  covers   substantially   all   non-union   employees  and  is
            administered by Trustees who are officers of the Company.

                                        32
<PAGE>
                       J. BAKER, INC. AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements

            The following  table sets forth the Pension  Plan's funded status at
            February 1, 1997 and February 3, 1996:
<TABLE>
               <S>                                                                 <C>                   <C>      
                                                                                       1997                  1996
               Actuarial present value of benefit obligations:                         ----                  ----
                   Vested                                                          $12,696,000           $11,420,000
                   Non-vested                                                        1,170,000             1,053,000
                                                                                    ----------           -----------
                         Total accumulated benefit obligations                     $13,866,000           $12,473,000
                                                                                    ==========            ==========

               Plan assets at fair value                                           $15,737,000           $12,137,000
               Actuarial present value of projected benefit obligations            (18,832,000)          (17,100,000)
                                                                                    ----------           -----------
               Deficiency of plan assets over projected benefit obligations         (3,095,000)           (4,963,000)

               Unrecognized prior service benefit                                     (449,000)             (494,000)
               Unrecognized net transitional liability                                 979,000             1,100,000
               Unrecognized net actuarial loss                                         520,000             2,612,000
                                                                                    ----------           -----------

               Accrued pension cost                                                $(2,045,000)          $(1,745,000)
                                                                                    ==========            ==========
</TABLE>


            In December 1993, the Board of Directors of the Company  established
            a Supplemental  Retirement plan (the "Supplemental Plan") to provide
            benefits  attributable to  compensation  in excess of $150,000,  but
            less than $254,064.  The following table sets forth the Supplemental
            Plan's funded status at February 1, 1997 and February 3, 1996:
<TABLE>
               <S>                                                                   <C>                   <C>
                                                                                        1997                  1996
                                                                                        ----                  ----
               Actuarial present value of benefit obligation:
                    Vested                                                           $ 251,000             $ 203,000
                    Non-vested                                                         110,000                89,000
                                                                                       -------              --------
                         Total accumulated benefit obligations                       $ 361,000             $ 292,000
                                                                                      ========              ========

               Plan assets at fair value                                             $       -             $       -
               Actuarial present value of projected benefit obligations               (700,000)             (829,000)
                                                                                      --------              --------
               Deficiency of plan assets over projected benefit obligations           (700,000)             (829,000)

               Unrecognized prior service cost                                         400,000               433,000
               Unrecognized net actuarial (gain) loss                                 (149,000)               80,000
                                                                                       -------               ------- 

               Accrued pension cost                                                  $(449,000)            $(316,000)
                                                                                      ========              ========
</TABLE>

            Assumptions  used to develop the plans'  funded status were discount
            rate  (7.5% in 1997,  7.25% in 1996) and  increase  in  compensation
            levels (4.5%).

            Plan  assets  of both the  Pension  Plan and the  Supplemental  Plan
            consist  primarily of common  stock,  U.S.  government  obligations,
            mutual funds and insurance contracts.

            Net pension cost for the years ended  February 1, 1997,  February 3,
            1996 and January 28, 1995 included the following components:
<TABLE>
                  <S>                                              <C>               <C>                <C>
                                                                       1997             1996               1995
                                                                       ----             ----               ----
                  Service cost - benefits earned
                      during the year                               $1,828,000       $1,260,000         $1,223,000
                  Interest cost on projected
                      benefit obligation                             1,420,000        1,199,000          1,056,000
                  Actual return on plan assets                      (2,657,000)      (1,528,000)           (66,000)
                  Net amortization and deferral                      1,734,000          655,000           (565,000)
                                                                     ---------        ---------          ---------

                      Net pension cost                              $2,325,000       $1,586,000         $1,648,000
                                                                     =========        =========          =========
</TABLE>
                                        33
<PAGE>
                        J. BAKER, INC. AND SUBSIDIARIES
                    Notes to Consolidated Financial Statements

            Assumptions used to develop the net periodic pension cost for fiscal
            1997 were discount rate (7.25%), expected long-term return on assets
            (9.0%) and increase in compensation levels (4.5%).

            In January 1992, the Company  implemented a qualified  401(k) profit
            sharing plan  available to full-time  employees  who meet the plan's
            eligibility requirements. Under the 401(k) plan, the Company matches
            25% (50% for the  year  ended  January  28,  1995) of the  qualified
            employee's contribution up to 3% of the employee's salary. The total
            cost  of  the  matching  contribution  was  $379,000,  $441,000  and
            $915,000 for the years ended February 1, 1997,  February 3, 1996 and
            January 28, 1995, respectively.

            The  Company  has  established  incentive  bonus  plans for  certain
            executives and employees.  The bonus  calculations  are based on the
            achievement of certain profit levels,  as defined in the plans.  For
            the years ended  February 1, 1997,  February 3, 1996 and January 28,
            1995, $145,500, $50,000 and $940,000, respectively, was provided for
            bonuses under the plans.

            The Company  does not provide  post-retirement  benefits  other than
            pensions as defined under SFAS #106.

(9)      Stock Options and Performance Share Awards
         ------------------------------------------
            The Company has options  outstanding  under the Amended and Restated
            1985 Stock Option Plan,  the 1992  Directors'  Stock Option Plan and
            the 1994  Equity  Incentive  Plan (the  "Stock  Option  Plans").  In
            addition,  the Company has granted options which are not part of any
            Stock Option Plan.

            The Amended and  Restated  1985 Stock  Option Plan  provided for the
            issuance  of  incentive  and  non-qualified  stock  options  to  key
            employees  at an  option  price  of not less  than  100% of the fair
            market  value of a share on the date of grant of the  option.  Under
            this plan,  there are no shares of common stock  available for grant
            at February 1, 1997 as no options could be granted  thereunder after
            June, 1995.

            In fiscal 1995, the Company  established  the 1994 Equity  Incentive
            Plan,  which  provides  for the  issuance of one  million  shares of
            common stock to officers and  employees in the form of stock options
            (both  incentive  options  and  non-qualified  options),  grants  of
            restricted  stock,  grants of  performance  shares and  unrestricted
            grants of stock. At February 1, 1997,  26,500 shares of common stock
            are reserved for grants of performance shares, and 368,091 shares of
            common stock remain available for all other types of grants.

            Options  granted  under the Amended and  Restated  1985 Stock Option
            Plan and the 1994 Equity  Incentive Plan become  exercisable  either
            ratably over four or more years or upon grant,  at the discretion of
            the Board of Directors, and expire ten years from the date of grant.

            The 1992  Directors'  Stock Option Plan  provides for the  automatic
            grant of an option to purchase 2,500 shares of the Company's  common
            stock upon a director's  initial  election to the Board of Directors
            and, in addition, at the close of business on the fifth business day
            following  the Company's  annual  meeting of  stockholders.  Options
            under  the  Directors'  Plan  are  granted  at a price  equal to the
            closing  price of the  Company's  common stock on the date of grant.
            They are  exercisable in full as of the date of grant and expire ten
            years  from the date of grant.  Under  this  plan,  there are 15,000
            shares of common stock available for grant at February 1, 1997.

            The Company applied  Accounting  Principles Board Opinion No. 25 and
            related   interpretations  in  accounting  for  its  stock  options.
            Accordingly,  no  compensation  cost has been  recognized  for stock
            options in the  Company's  results of  operations.  Had the  Company
            recorded a charge for the fair value of options  granted  consistent
            with SFAS No. 123, net loss and net loss per common share would have
            been increased by $940,000 and $0.07 in fiscal 1997 and $300,000 and
            $0.02 in  fiscal  1996,  respectively.  There is no  effect on fully
            diluted earnings per share.

                                      34
<PAGE>
                      J. BAKER, INC. AND SUBSIDIARIES
               Notes to Consolidated Financial Statements

            The fair value of each option  grant is estimated on the date of the
            grant  using  the  Black-Scholes  options  pricing  model,  with the
            following  weighted  average  assumptions  used for grants in fiscal
            1997 and fiscal 1996.
<TABLE>
                  <S>                                                          <C>               <C>
                                                                                 1997              1996
                                                                                 ----              ----

                  Risk-free interest rate                                         5.9%              6.2%
                  Expected option lives                                        6.8 years         7.1 years
                  Expected volatility                                            59.0%             59.2%
                  Expected dividend yield                                         0.8%              0.5%
</TABLE>

            The effect of  applying  SFAS No. 123 is not  representative  of the
            proforma  effect on net earnings in future years because it does not
            take into  consideration  proforma  compensation  expense related to
            grants made prior to fiscal 1996.

            Data with respect to stock options for fiscal years 1997, 1996 and 
            1995 is as follows:
<TABLE>
                <S>                                <C>            <C>        <C>           <C>        <C>          <C>
                                                             1997                    1996                     1995
                                                   ------------------------  ----------------------   ---------------------
                                                                  Weighted                 Weighted                Weighted
                                                                   Average                  Average                 Average
                                                                  Exercise                 Exercise                Exercise
                                                     Shares         Price      Shares        Price      Shares       Price
                                                    ---------     --------    --------     --------     ------     --------

                Outstanding at beginning of year    1,176,170       $15.30   1,091,395       $16.58     884,920      $15.42
                Granted                               731,262         8.70     338,000        12.88     336,025       19.21
                Exercised                             (13,749)        7.65     (32,000)        4.82     (48,000)       9.26
                Cancelled                            (821,253)       16.55    (221,225)       19.43     (81,550)      19.36
                                                    ---------                 --------                 --------
                Options outstanding at end of year  1,072,430         9.58   1,176,170        15.30   1,091,395       16.58
                                                    =========                =========                =========

                Options exercisable at end of year    516,027                  589,102                  453,945
                Weighted average fair-value of
                  options granted during the year      $ 4.94                    $8.08
</TABLE>

            Effective as of February 5, 1996, the Board of Directors offered all
            employee  participants  in the Stock Option Plans the opportunity to
            reprice to $9.00 per share any currently  outstanding  stock options
            with  exercise  prices in excess of $9.00 per share.  On February 5,
            1996, the fair market value of the Company's  common stock was $5.25
            per share.  Pursuant to the repricing program, any employee electing
            to reprice  outstanding  stock options was also required to accept a
            reduced number of options shares  commensurate with the reduction in
            price to $9.00 from the price of the original  grant.  Each repriced
            option  retained the vesting  schedule  associated with the original
            grant.  Holders of original  option grants  totaling  646,376 shares
            elected to reprice  such  options at $9.00 per share  resulting in a
            reduction of such options held to 342,962 shares, which is contained
            in the number of options granted in fiscal 1997.

            The  following  table  sets  forth a summary  of the  stock  options
            outstanding at February 1, 1997:
<TABLE>
                <S>                <C>           <C>                 <C>                <C>             <C>
                                              Options Outstanding                             Options Exercisable
                                   --------------------------------------------------   --------------------------------
                                                 Weighted Average
                                                    Remaining
                   Range of          Number         Years of         Weighted Average      Number       Weighted Average
                Exercise price     Outstanding   Contractual Life     Exercise Price     Exercisable     Exercise Price
                ---------------    -----------   ----------------    ----------------    -----------    ----------------
                $ 4.88 - $ 8.63      347,920           7.3                $ 7.35           135,320           $ 6.65
                $ 9.00 - $ 9.88      583,985           7.3                $ 9.15           270,782           $ 9.18
                $12.00 - $16.63       72,000           6.9                $13.41            55,575           $13.46
                $17.00 - $22.38       68,525           6.8                $20.53            54,350           $20.64
                                    --------                                               -------

                $ 4.88 - $22.38    1,072,430           7.3                $ 9.58           516,027           $10.18
                                   =========                                               =======
</TABLE>

                                       35
<PAGE>
                      J. BAKER, INC. AND SUBSIDIARIES
               Notes to Consolidated Financial Statements

            During fiscal 1997,  the Company  granted  Performance  Share Awards
            that  entitle  certain  officers to shares of the  Company's  common
            stock in fiscal  1999 if the  price of the  common  stock  attains a
            "Target  Price" (the average  closing price of the Company's  common
            stock for the fifteen  consecutive  trading  days prior to April 30,
            1998) between  $10.00 and $14.00.  If such Target Price is attained,
            the Company  will grant  between  61,750 and  123,500  shares of the
            Company's common stock, respectively, to the eligible officers.

(10)     Commitments and Contingent Liabilities
         --------------------------------------
         Leases
            The  Company  operates  mainly from leased  premises  under  license
            agreements  generally requiring payment of annual rentals contingent
            upon sales.  The Company leases its computers,  vehicles and certain
            of its offices and warehouse  facilities,  in addition to its retail
            stores.

            The Company remains liable under certain leases and lease guaranties
            for premises  previously  leased by the Company for the operation of
            Parade  of  Shoes  and  Fayva  shoe  stores  (the  "Excess  Property
            Leases").  The total  liability  under the Excess Property Leases is
            approximately  $61.1 million as of February 1, 1997. The Company has
            reduced   its  actual   liability   by   assigning   or   subleasing
            substantially  all of the  Excess  Property  Leases to  unaffiliated
            third parties.

            At February 1, 1997,  minimum  rental  commitments  under  operating
            leases are as follows:
<TABLE>
                  <S>                                   <C>                               <C>
                    Fiscal Year
                  ending January                        Net minimum rentals               Minimum sub-rentals
                  --------------                        -------------------               -------------------
                                                                           (in thousands)
                      1998                                    $ 43,709                          $  661
                      1999                                      37,239                             653
                      2000                                      28,100                             648
                      2001                                      20,935                             580
                      2002                                      16,014                             409
                      Thereafter                                36,504                               -
                                                               -------                           -----

                                                              $182,501                          $2,951
                                                               =======                           =====
</TABLE>

            Rent expense for the years ended February 1, 1997,  February 3, 1996
            and January 28, 1995 was as follows:
<TABLE>
                      <S>                                              <C>               <C>               <C>
                                                                          1997              1996              1995
                                                                          ----              ----              ----
                                                                                       (in thousands)
                      Minimum rentals                                  $ 49,167          $ 52,284          $ 53,189
                      Contingent rentals                                 83,084            93,289            90,275
                                                                        -------           -------           -------
                                                                        132,251           145,573           143,464
                      Less sublease rentals                                 317               336               409
                                                                        -------           -------           -------

                         Net rentals                                   $131,934          $145,237          $143,055
                                                                        =======           =======           =======
</TABLE>

         Other Commitments and Contingencies
            The Company has employment  agreements  with certain of its officers
            under which it is committed  to pay an  aggregate  of  approximately
            $1.1 million through April, 1998.

            During  fiscal  1996,  the  Company's  Board  of  Directors  adopted
            executive  severance  agreements which create certain liabilities in
            the event of the termination of the covered  executives within three
            years  following  either a change of control  of the  Company or the
            termination of certain key executives of the Company.  The aggregate
            commitment amount under these executive severance agreements, should
            all thirteen covered employees be terminated,  is approximately $2.2
            million.


                                       36
<PAGE>
                        J. BAKER, INC. AND SUBSIDIARIES
                    Notes to Consolidated Financial Statements

            At  February  1,  1997  and  February  3,  1996,   the  Company  was
            contingently  liable under letters of credit  totaling $11.2 million
            and $18.8 million, respectively. These letters of credit, which have
            terms of one month to one year, are used primarily to  collateralize
            the  Company's  obligations  to third  parties  for the  purchase of
            inventory. The fair value of these letters of credit is estimated to
            be the same as the  contract  values  based on the nature of the fee
            arrangements with the issuing banks. No material loss is anticipated
            due to the non-performance by counterparties to these arrangements.

            On November 10, 1993, a federal jury in  Minneapolis,  MN returned a
            verdict assessing royalties of $1,550,000, and additional damages of
            $1,500,000,  against  the  Company  in a  patent  infringement  suit
            brought by Susan  Maxwell  with  respect to a device used to connect
            pairs of shoes.  Certain  post  trial  motions  were  filed by Susan
            Maxwell  seeking  treble  damages,  attorney's  fees and  injunctive
            relief,  which motions were granted on March 10, 1995.  Judgment was
            entered for Maxwell. The Company appealed the judgment.  On June 11,
            1996,  the United  States  Court of Appeals for the Federal  Circuit
            reversed  the trial  court's  findings in part,  affirmed  the trial
            court's  findings in part and vacated the award to Maxwell of treble
            damages, attorney's fees and injunctive relief. Maxwell subsequently
            requested a rehearing in banc of the matter which request was denied
            by order of the Court dated August 28, 1996.  Maxwell petitioned the
            United  States  Supreme  Court for a writ of  certiorari to hear the
            case which  petition was denied on March 17, 1997. The case has been
            remanded  to  the  trial  court  for a  redetermination  of  damages
            consistent with the opinion of the appellate court.

            A  complaint  was also  filed by Susan  Maxwell  in  November,  1992
            against  Morse Shoe,  Inc.  ("Morse"),  a subsidiary of the Company,
            alleging  infringement  of the patent  referred to above.  The Morse
            trial was stayed  pending  the  outcome of the J. Baker  appeal.  In
            light of the  decision  of the  Supreme  Court and the remand to the
            trial  court,  it is not clear when a trial date will be set for the
            Morse case.

            Morse  has  filed a breach  of  contract  lawsuit  against  a former
            wholesale  customer.  There can be no assurance  of what amount,  if
            any, the Company will realize as a result of this lawsuit.

(11)     Stockholders' Equity
         --------------------
            The Board of  Directors  of the  Company  is  authorized  by vote or
            votes,  from time to time  adopted,  to provide for the  issuance of
            Preferred  Stock  in one or more  series  and to fix and  state  the
            voting powers, designations, preferences and relative participating,
            optional  or other  special  rights of the shares of each series and
            the qualifications, limitations and restrictions thereof.

            On December 15, 1994, the Board of Directors of the Company  adopted
            a Shareholder Rights Agreement (the "Rights Agreement")  designed to
            enhance the Company's ability to protect  shareholder  interests and
            to ensure that shareholders  receive fair treatment in the event any
            coercive  takeover  attempt of the  Company  is made in the  future.
            Pursuant to the Rights Agreement,  the Board of Directors declared a
            dividend  distribution  of one preferred  stock  purchase right (the
            "Right") for each  outstanding  share of common stock of the Company
            to  shareholders of record as of the close of business on January 6,
            1995.  Each right entitles the holder to purchase from the Company a
            unit  consisting  of one ten  thousandth  (1/10,000)  of a share  of
            Series A Junior Participating  Cumulative Preferred Stock, par value
            $1.00 per share,  at a cash exercise price of $70 per unit,  subject
            to  adjustment,  upon the  occurrence  of certain  events as are set
            forth in the Rights Agreement.  These events include the earliest to
            occur  of (i) the  acquisition  of 15% or  more  of the  outstanding
            shares of common  stock of the Company by any person or group,  (ii)
            the  commencement  of a tender or exchange  offer that would  result
            upon its consummation in a person or a group becoming the beneficial
            owner of 15% or more of the outstanding  common stock of the Company
            or (iii) the determination by the Board of Directors that any person
            is an  "Adverse  Person",  as defined in the Rights  Agreement.  The
            Rights are not exercisable  until or following the occurrence of one
            of the above  events and will expire on December  14,  2004,  unless
            previously  redeemed or  exchanged by the Company as provided in the
            Rights Agreement.


                                      37
<PAGE>
                       J. BAKER, INC. AND SUBSIDIARIES
                Notes to Consolidated Financial Statements

(12)     Principal Licensor
         ------------------
            Sales in  licensed  departments  operated  under  the  Ames  license
            agreement  accounted  for 10.5%,  9.4% and 9.5% of the Company's net
            sales in the years  ended  February  1, 1997,  February  3, 1996 and
            January 28, 1995, respectively. On a proforma basis, excluding sales
            generated by the Company's SCOA and Parade of Shoes divisions, sales
            in Ames  accounted  for  15.8% of the  Company's  sales for the year
            ended February 1, 1997.

(13)     Segment Information
         --------------------
            The  Company is a specialty  retailer  conducting  business  through
            retail  stores  in two  business  segments:  apparel  and  footwear.
            Information   about   operations  for  each  of  these  segments  is
            summarized as follows:
<TABLE>
            <S>                                          <C>                    <C>                    <C>
                                                                                 Year Ended
                                                         --------------------------------------------------------------
                                                         February 1, 1997       February 3, 1996       January 28, 1995
                                                         ----------------       ----------------       ----------------
                                                                                   (53 weeks)
                                                                                ($ in thousands)
            Apparel
                  Net sales                                     $293,775               $263,322                $224,759
                  Operating profit                                24,123                 24,814                  26,974
                  Identifiable assets                            113,117                104,923                  89,111
                  Depreciation and amortization                    7,501                  6,973                   4,130
                  Additions to property, equipment and
                      leasehold improvements                       6,665                 10,461                  11,570

            Footwear
                  Net sales                                     $603,717               $757,091                $818,220
                  Restructuring and other
                    non-recurring charges                       (122,309)               (69,300)                      -
                  Operating profit (loss)                       (144,744)               (51,768)                 44,993
                  Identifiable assets                            231,812                377,530                 456,552
                  Depreciation and amortization                   18,094                 20,524                  20,363
                  Additions to property, equipment and
                      leasehold improvements                       8,043                 13,271                  31,298

            Consolidated
                  Net sales                                     $897,492             $1,020,413              $1,042,979
                  Restructuring and other
                    non-recurring charges                       (122,309)               (69,300)                      -
                  Operating profit (loss) before general
                      corporate expense                         (120,621)               (26,954)                 71,967
                  General corporate expense                      (23,851)               (27,014)                (25,968)
                  Interest expense, net                          (12,802)               (10,457)                 (9,100)

            Earnings (loss) before income taxes                $(157,274)              $(64,425)               $ 36,899

            Identifiable assets                                 $344,929               $482,453                $545,663
            Corporate assets                                      37,592                 43,629                  32,955

                  Total assets                                  $382,521               $526,082                $578,618

            Depreciation and amortization                       $ 29,430               $ 32,428                $ 27,883

            Additions to property, equipment and
                  leasehold improvements                        $ 16,421               $ 28,062                $ 44,514
</TABLE>


                                       38
<PAGE>
                           J. BAKER, INC. AND SUBSIDIARIES
                    Notes to Consolidated Financial Statements

(14)     Selected Quarterly Financial Data (Unaudited)
         ---------------------------------------------
<TABLE>
         <S>                                             <C>          <C>          <C>          <C>            <C> 
                                                           First        Second       Third        Fourth
                                                           Quarter      Quarter      Quarter      Quarter         Total
                                                           -------      -------      -------      -------         -----
                                                                 (In thousands, except per share data)
         Year ended February 1, 1997
              Net sales                                  $ 195,530    $ 231,805    $ 222,764    $ 247,393       $ 897,492
              Gross profit                                  90,621      101,427       96,184       67,013         355,245
              Net earnings (loss)                        $     826    $   1,486    $   1,418    $(115,158)      $(111,428)
                                                          ========     ========     ========     ========        ========
              Earnings (loss) per common share:
                  Primary                                $     .06    $     .11    $     .10    $   (8.29)      $   (8.02)
                                                          ========     ========     ========     ========        ========
                  Fully diluted                          $     .06    $     .11    $     .10    $   (8.29)      $   (8.02)
                                                          ========     ========     ========     ========        ========

         Year ended February 3, 1996
              Net sales                                  $ 231,385    $ 272,520    $ 245,255      $271,253     $1,020,413
              Gross profit                                 103,532      120,202      104,600       112,012        440,346
              Net earnings (loss)                        $     638    $   1,397    $ (41,328)    $     691     $  (38,602)
                                                          ========     ========     ========      ========      =========
              Earnings (loss) per common share:
                  Primary                                $     .05    $     .10    $   (2.98)    $     .05     $    (2.79)
                                                          ========     ========     ========      ========      =========
                  Fully diluted                          $     .05    $     .10    $   (2.98)    $     .05     $    (2.79)
                                                          ========     ========     ========      ========      =========
</TABLE>


(15)     Advertising Costs

            Advertising  costs are charged to expense as  incurred.  The Company
            incurred advertising costs of $14.8 million, $20.5 million and $20.1
            million in the years ended  February  1, 1997,  February 3, 1996 and
            January 28, 1995, respectively.

(16)     Supplemental Schedules to Consolidated Statements of Cash Flows
<TABLE>
            <S>                                                          <C>               <C>                 <C> 
                                                                             1997              1996               1995
                                                                             ----              ----               ----

            Cash paid for interest                                       $12,670,073       $11,069,341         $ 8,765,653
            Cash paid for income taxes                                   $ 1,168,901       $ 2,039,089         $ 4,162,348
            Income taxes refunded                                        $(8,315,483)                -                   -
                                                                          ==========        ==========          ==========
            Non-cash investing activities:
            Notes receivable (see Notes 3 and 5)                         $    23,000       $    47,000         $    95,000 
                                                                          ==========        ==========          ==========
</TABLE>






                                       39

<PAGE>




CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
     AND FINANCIAL DISCLOSURE

   None.

                                  PART III

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The  information  appearing  in  the  Proxy  Statement  under  the  captions
"ELECTION OF DIRECTORS",  "Information About Board of Directors and Committees",
"Report of the  Compensation  Committee  of the Board of  Directors on Executive
Compensation",   "Executive   Compensation"   and   "Employment   and  Severance
Arrangements" is incorporated herein by this reference.

EXECUTIVE COMPENSATION

    The  information   appearing  in  the  Proxy  Statement  under  the  caption
"Executive Compensation", "Employment and Severance Arrangements",  "Information
About  Board of  Directors  and  Committees"  and  "Report  of the  Compensation
Committee of the Board of Directors on Executive  Compensation"  is incorporated
herein by this reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information appearing in the Proxy Statement under the caption "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" is incorporated herein by
this reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information  appearing in the Proxy Statement under the caption "Certain
Relationships  and  Related   Transactions"  is  incorporated   herein  by  this
reference.

                                PART IV

EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

    (a)  The following documents are filed as part of this report:

       1,2. The financial  statements,  notes thereto, and independent auditors'
            report listed in the Index to Consolidated  Financial Statements set
            forth in Item 8.

       3.   The Exhibits listed in the Exhibit Index.

    (b)  None.
















                                       40

<PAGE>





                                SIGNATURES


    Pursuant  to the  requirements  of  Section  13 or 15(d)  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.

                                            J. Baker, Inc.
                                            -------------               
                                            (Registrant)



By/s/Sherman N. Baker                       By/s/Alan I. Weinstein
   -------------------                        --------------------
     Sherman N. Baker                       Alan I. Weinstein
     Chairman of the Board                  President and
                                            Chief Executive Officer


By/s/Philip G. Rosenberg
  ----------------------
     Philip G. Rosenberg
     Executive Vice President
     and Principal Financial Officer



May 1, 1997


    Pursuant to the  requirements  of the Securities  Exchange Act of 1934, this
report has been signed by the following  persons on behalf of the registrant and
in the capacities and on the dates indicated:


/s/Sherman N. Baker                         /s/J. Christopher Clifford
--------------------                        -----------------------------
Sherman N. Baker, Director                  J. Christopher Clifford, Director



/s/Ervin Cruce                              /s/Douglas Kahn
--------------------                        ---------------------------
Ervin Cruce, Director                       Douglas Kahn, Director



/s/David Pulver                             /s/Melvin M. Rosenblatt
---------------------                       --------------------------
David Pulver, Director                      Melvin M. Rosenblatt, Director



/s/Nancy Ryan                               /s/Stanley Simon
--------------------                        --------------------------
Nancy Ryan, Director                        Stanley Simon, Director



/s/Alan I. Weinstein
------------------------
Alan I. Weinstein, Director


All as of May 1, 1997

                                      41

<PAGE>
















                            EXHIBITS

                           Filed with

                    Annual Report on Form 10-K

                               of

                           J. BAKER, INC.

                         555 Turnpike Street
                          Canton, MA  02021

                  For the Year Ended February 1, 1997



















                                  42

<PAGE>



                           EXHIBIT INDEX

<TABLE>
<S>                                                                                                            <C>
Exhibit                                                                                                        Page No.


2.   Plan of Acquisition, Reorganization, Arrangement, Liquidation of Succession

     (.01)  Asset Purchase Agreement dated as of March 5, 1997 by and between                                         *
            Shoe Corporation of America and JBI, Inc. (filed as Exhibit 2.1 to
            the Company's Form 8-K Report dated March 20, 1997).

     (.02)  Asset Purchase Agreement dated as of January 13, 1997 by and between                                      *
            Payless ShoeSource, Inc., JBI, Inc. and J. Baker, Inc. (filed as
            Exhibit 2.2 to the Company's Form 8-K Report dated March 20, 1997).


3.   Articles of Organization and By-Laws

     (.01)  Amended and Restated Articles of Organization of the Company,                                             *
            as filed with the Secretary of the Commonwealth of Massachusetts
            on September 26, 1990 (filed as Exhibit 3.01 to the Company's
            Form 10-K Report for the year ended February 2, 1991).

     (.02)  By-Laws of the Company, as amended by the Board of Directors                                              *
            on September 11, 1990 (filed as Exhibit 19.01 to the Company's
            Form 10-Q Report for the quarter ended November 3, 1990).


4.   Instruments Defining the Rights of Security Holders, Including Indentures

     (.01)  Senior Notes and Senior Subordinated Notes with Stock Purchase                                            *
            Warrants dated as of May 1, 1989 (filed as Exhibit 4.01 to the
            Company's Form 10-Q Report for the quarter ended July 29, 1989).

     (.02)  Amendment dated as of November 13, 1995 to Senior Subordinated                                            *
            Note Agreement dated May 1, 1989 (filed as Exhibit 4.02 to the
            Company's Form 10-Q Report for the quarter ended October 28, 1995).

     (.03)  Indenture dated as of January 15, 1992 by and between Morse Shoe,                                         *
            Inc. and State Street Bank and Trust Company as Trustee with
            respect to  Convertible  Subordinated  Debentures due 2002 (filed as
            Exhibit  4.12 to the  Company's  Form 10-K Report for the year ended
            January 30, 1993).

     (.04)  First Supplemental Indenture dated as of January 30, 1993 to                                              *
            the Indenture dated January 15, 1992 under which Convertible
            Subordinated Debentures Due 2002 were issued by Morse Shoe, Inc.
            (filed as Exhibit 4.01 to the Company's Form 10-Q Report for the
            quarter ended May 1, 1993).





*    Incorporated herein by reference
**   Included herein

                                  43

<PAGE>




Exhibit                                                                                                        Page No.


     (.05)  Indenture dated as of June 12, 1992 by and between J. Baker, Inc.                                         *
            and State Street Bank and Trust Company as Trustee with respect to
            7% Convertible Subordinated Notes due 2002 (filed as Exhibit 4.08 to
            the  Company's  Form 10-Q  Report for the  quarter  ended  August 1,
            1992).

     (.06)  Revolving Credit and Loan Agreement by and among JBI, Inc., J.                                            *
            Baker, Inc. and Fleet National Bank of Massachusetts, et al
            (formerly Shawmut Bank, N.A.), dated as of February 1, 1993
            (filed as Exhibit  4.03 to the  Company's  Form 10-K  Report for the
            year ended January 30, 1993).

     (.07)  Guarantee Agreement dated as of February 1, 1993, between J.                                              *
            Baker, Inc., Fleet National Bank of Massachusetts, et al, and
            subsidiaries of J. Baker, Inc. (filed as Exhibit 4.09 to the
            Company's Form 10-K Report for the year ended January 30, 1993).

     (.08)  Security Agreement dated as of February 1, 1993, between JBI,                                             *
            Inc., J. Baker, Inc., and Fleet National Bank of Massachusetts,
            et al (filed as Exhibit 4.10 to the  Company's  Form 10-K Report for
            the year ended January 30, 1993).

     (.09)  Stock Pledge Agreement dated as of February 1, 1993 by and                                                *
            between JBI, Inc., J. Baker, Inc., Fleet National Bank of
            Massachusetts, et al, and subsidiaries of J. Baker, Inc.
            (filed as Exhibit 4.11 to the Company's Form 10-K Report
            for the year ended January 30, 1993).

     (.10)  First Amendment and Waiver Agreement by and among JBI, Inc., J.                                           *
            Baker, Inc, and Fleet National Bank of Massachusetts, et al,
            dated  as of  November  19,  1993  (filed  as  Exhibit  4.01  to the
            Company's Form 10-Q Report for the quarter ended October 30, 1993).

     (.11)  First Amendment to Pledge Agreement by and among JBI, Inc., J.                                            *
            Baker, Inc. and Fleet National Bank of Massachusetts, et al,
            dated  as of  November  19,  1993  (filed  as  Exhibit  4.03  to the
            Company's Form 10-Q Report for the quarter ended October 30, 1993).

     (.12)  Second Amendment to Pledge Agreement by and among JBI, Inc., J.                                           *
            Baker, Inc. and Fleet National Bank of Massachusetts, et al,
            dated  as of  December  30,  1993  (filed  as  Exhibit  4.14  to the
            Company's Form 10-K Report for the year ended January 29, 1994).

     (.13)  Second Amendment Agreement to Revolving Credit and Loan Agreement                                         *
            by and among JBI, Inc, J. Baker, Inc. and Fleet National Bank of
            Massachusetts,  et al,  dated as of April 29, 1994 (filed as Exhibit
            4.01 to the  Company's  Form 10-Q Report for the quarter ended April
            30, 1994).




*    Incorporated herein by reference
**   Included herein

                                   44

<PAGE>




Exhibit                                                                                                        Page No.

     (.14)  Third Amendment Agreement to Revolving Credit and Loan Agreement                                          *
            by and among JBI, Inc., J. Baker, Inc., and Fleet National Bank
            of  Massachusetts,  et al,  dated as of  December  1, 1994 (filed as
            Exhibit 4.01 to the Company's Form 10-Q Report for the quarter ended
            October 29, 1994).

     (.15)  Fourth Amendment Agreement to Revolving Credit and Loan Agreement                                         *
            by and among JBI, Inc., J. Baker, Inc. and Fleet National Bank of
            Massachusetts,  et al,  dated as of March 6, 1995  (filed as Exhibit
            4.16 to the  Company's  Form 10-K Report for the year ended  January
            28, 1995).

     (.16)  Fifth Amendment Agreement to Revolving Credit and Loan Agreement                                          *
            by and among JBI, Inc., J. Baker, Inc. and Fleet National Bank
            of Massachusetts,  et al, dated as of May 19, 1995 (filed as Exhibit
            4.01 to the  Company's  Form 10-Q Report for the quarter ended April
            29, 1995).

     (.17)  Assumption Agreement between TCMB&T and Fleet National Bank                                               *
            of Massachusetts, et al, dated as of May 19, 1995 (filed as
            Exhibit 4.02 to the Company's Form 10-Q Report for the quarter
            ended April 29, 1995).

     (.18)  Second Amendment Agreement to Pledge Agreement among JBI, Inc.,                                           *
            J. Baker, Inc. and Fleet National Bank of Massachusetts, et al,
            dated as of May 19,  1995  (filed as Exhibit  4.03 to the  Company's
            Form 10-Q Report for the quarter ended April 29, 1995).

     (.19)  Sixth Amendment Agreement to Revolving Credit and Loan Agreement                                          *
            by and among JBI, Inc., J. Baker, Inc. and Fleet National Bank of
            Massachusetts,  et al,  dated as of  September  12,  1995  (filed as
            Exhibit 4.01 to the Company's Form 10-Q Report for the quarter ended
            July 29, 1995).

     (.20)  Seventh Amendment Agreement to Revolving Credit and Loan                                                  *
            Agreement by and among JBI, Inc., J. Baker, Inc. and Fleet
            National Bank of Massachusetts, et al, dated as of November 17, 1995
            (filed as Exhibit  4.01 to the  Company's  Form 10-Q  Report for the
            quarter ended October 28, 1995).

     (.21)  Shareholder Rights Agreement between J. Baker, Inc. and Fleet                                             *
            National Bank of Massachusetts, dated as of December 15, 1994
            (filed  as  Exhibit  4.01 to the  Company's  Form 8-K  Report  dated
            December 15, 1994).

     (.22)  Eighth Amendment to Revolving Credit and Loan Agreement by and among                                      *
            JBI, Inc., J. Baker, Inc. and Fleet National Bank, et al., dated as
            of June 21, 1996 (filed as Exhibit 4.01 to the Company's Form 10-Q
            Report for the quarter ended August 3, 1996).





*    Incorporated herein by reference
**   Included herein

                                45

<PAGE>



Exhibit                                                                                                        Page No.

     (.23)  Ninth Amendment to Revolving Credit and Loan Agreement by and among                                      **
            JBI, Inc., J. Baker, Inc. and Fleet National Bank, et al., dated as
            of December 31, 1996, attached.

     (.24)  Tenth Amendment to Revolving Credit and Loan Agreement by and among                                      **
            JBI, Inc., J. Baker, Inc. and Fleet National Bank, et al., dated as
            of February 14, 1997, attached.

     (.25)  Eleventh Amendment to Revolving Credit and Loan Agreement by and among                                   **
            JBI, Inc., J. Baker, Inc. and Fleet National Bank, et al., dated as of
            April 14, 1997, attached.

     (.26)  Waiver Agreement and Amendment to Senior Subordinated Note Agreement                                     **
            between JBI, Inc. and Massachusetts Mutual Life Insurance Company and
            MassMutual Participation Investors ("MassMutual") dated February 24,
            1997, attached.

     (.27)  Guaranty Agreement of certain subsidiaries of the Company in favor of                                    **
            MassMutual dated as of March 13, 1997, attached.

10.  Material Contracts

     (.01)  License Agreement between Ames Department Stores, Inc., et al and                                         *
            JBI Holding Company, Inc. (filed as Exhibit 10.01 to the Company's
            Form 10-K Report for the year ended January 30, 1988).

     (.02)  Agreement between JBI Holding Company, Inc. and JBI, Inc. re:                                             *
            Assignment of Ames License Agreement (filed as Exhibit 10.02 to
            the Company's Form 10-K Report for the year ended January 30,
            1988).

     (.03)  Amendment No. 1 dated April 29, 1989 to Agreement between Ames                                            *
            Department Stores, Inc. and JBI Holding Company, Inc. (filed as
            Exhibit  10.04 to the  Company's  Form 10-Q  Report for the  quarter
            ended April 29, 1989).

     (.04)  Amendment No. 2 dated December 18, 1992, to Agreement between                                             *
            Ames Department Stores, Inc. and JBI Holding Company, Inc. (filed
            as  Exhibit  10.04 to the  Company's  Form 10-K  Report for the year
            ended January 30, 1993).

     (.05)  Guaranty and Indemnity Agreement dated April 28, 1989 between J.                                          *
            Baker, Inc. and Ames Department Stores, Inc. (filed as Exhibit
            10.05 to the Company's  Form 10-Q Report for the quarter ended April
            29, 1989).

     (.06)  Plan of Reorganization of The Casual Male Corporation dated                                               *
            November 1, 1990 as revised November 20, 1990 (filed as Exhibit
            2.01 to the Company's Form 10-Q Report for the quarter ended
            November 3, 1990).




*    Incorporated herein by reference
**   Included herein

                                46

<PAGE>




Exhibit                                                                                                        Page No.

     (.07)  Executive Employment Agreement dated March 25, 1993 between                                               *
            Sherman N. Baker and J. Baker, Inc. (filed as Exhibit 10.01
            to the Company's Form 10-Q Report for the quarter ended
            July 31, 1993).

     (.08)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            Sherman N.Baker, dated March 31, 1995 (filed as Exhibit 4.10
            to the Company's Form 10-K Report for the year ended January
            28, 1995).

     (.09)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            Sherman N. Baker, dated March 31, 1996 (filed as Exhibit 10.09 to
            the Company's Form 10-K Report for the year ended February 3, 1996).

     (.10)  Third Amendment to Employment Agreement between J. Baker, Inc. and                                       **
            Sherman N. Baker dated as of March 31, 1997, attached.

     (.11)  Executive Employment Agreement between J. Baker, Inc. and Alan                                            *
            I. Weinstein, dated March 25, 1993 (filed as Exhibit 10.04 to the
            Company's Form 10-Q Report for the quarter ended July 31, 1993).

     (.12)  Amendment to Employment Agreement between J. Baker, Inc. and Alan                                         *
            I. Weinstein, dated April 27, 1994 (filed as Exhibit 10.01 to the
            Company's Form 10-Q Report for the quarter ended July 30, 1994).

     (.13)  Amendment to Employment Agreement between J. Baker, Inc. and Alan                                         *
            I. Weinstein, dated April 25, 1995 (filed as Exhibit 10.01 to the
            Company's Form 10-Q Report for the quarter ended April 29, 1995).

     (.14)  Amendment to Employment Agreement between J. Baker, Inc. and Alan                                         *
            I. Weinstein, dated March 7, 1996 (filed as Exhibit 10.13 to the
            Company's Form 10-K Report for the year ended February 3, 1996).

     (.15)  Amendment to Employment Agreement between J. Baker, Inc. and Alan                                         *
            I. Weinstein, dated April 5, 1996 (filed as Exhibit 10.14 to the
            Company's Form 10-K Report for the year ended February 3, 1996).

     (.16)  Performance Share Award granted to Alan I. Weinstein dated March 26,                                      *
            1996 (filed as Exhibit 10.04 to the Company's Form 10-Q Report for
            the quarter ended August 3, 1996).

     (.17)  Executive Employment Agreement between J. Baker, Inc. and Alan I.                                        **
            Weinstein dated April 1, 1997, attached.

     (.18)  Executive Employment Agreement between J. Baker, Inc. and Jerry                                           *
            M. Socol, dated March 25, 1993 (filed as Exhibit 10.11 to the
            Company's Form 10-K Report for the year ended January 29, 1994).

     (.19)  Amendment to Employment Agreement between J. Baker, Inc. and Jerry                                        *
            M. Socol, dated June 9, 1994 (filed as Exhibit 10.01 to the
            Company's Form 10-Q Report for the quarter ended July 29, 1995).



*    Incorporated herein by reference
**   Included herein

                                47

<PAGE>




Exhibit                                                                                                        Page No.

     (.20)  Amendment to Employment Agreement between J. Baker, Inc. and Jerry                                        *
            M. Socol, dated July 14, 1995 (filed as Exhibit 10.02 to the
            Company's Form 10-Q Report for the quarter ended July 29, 1995).

     (.21)  Amendment to Employment Agreement between J. Baker, Inc. and Jerry                                        *
            M. Socol, dated March 7, 1996 (filed as Exhibit 10.18 to the
            Company's Form 10-K Report for the year ended February 3, 1996).

     (.22)  Amendment to Employment Agreement between J. Baker, Inc. and Jerry                                        *
            M. Socol, dated April 5, 1996 (filed as Exhibit 10.19 to the
            Company's Form 10-K Report for the year ended February 3, 1996).

     (.23)  Performance Share Award granted to Jerry M. Socol dated March 26,                                         *
            1996 (filed as Exhibit 10.03 to the Company's Form 10-Q Report
            for the quarter ended August 3, 1996).

     (.24)  Termination Agreement between J. Baker, Inc. and Jerry M. Socol                                          **
            dated October, 1996, attached.

     (.25)  Executive Employment Agreement between J. Baker, Inc. and Larry I.                                        *
            Kelley, dated March 25, 1993 (filed as Exhibit 10.06 to the
            Company's Form 10-Q Report for the quarter ended July 31, 1993).

     (.26)  Amendment to Employment Agreement between J. Baker, Inc. and Larry                                        *
            I. Kelley, dated April 27, 1994 (filed as Exhibit 10.02 to the
            Company's Form 10-Q Report for the quarter ended July 30, 1994).

     (.27)  Amendment to Employment Agreement between J. Baker, Inc. and Larry                                        *
            I. Kelley, dated May 2, 1995 (filed as Exhibit 10.02 to the
            Company's Form 10-Q Report for the quarter ended April 29, 1995).

     (.28)  Amendment to Employment Agreement between J. Baker, Inc. and Larry                                        *
            I. Kelley, dated November 7, 1995 (filed as Exhibit 10.03 to the
            Company's Form 10-Q Report for the quarter ended October 28, 1995)

     (.29)  Amendment to Employment Agreement between J. Baker, Inc. and Larry                                        *
            I. Kelley, dated April 5, 1996 (filed as Exhibit 10.24 to the
            Company's Form 10-K Report for the year ended February 3, 1996).

     (.30)  Promissory Note of Larry I. Kelley dated June 3, 1991 (filed as                                           *
            Exhibit 10.33 to the Company's Form 10-K Report for the year ended
            February 1, 1992).

     (.31)  Promissory Note of Larry I. Kelley dated February 2, 1993 (filed                                          *
            as Exhibit 10.15 to the Company's Form 10-K Report for the year
            ended January 29, 1994).

     (.32)  Promissory Note of Larry I. Kelley dated April 30, 1993 (filed as                                         *
            Exhibit 10.16 to the Company's Form 10-K Report for the year ended
            January 29, 1994).




*    Incorporated herein by reference
**   Included herein

                                   48

<PAGE>




Exhibit                                                                                                        Page No.

     (.33)  Amendment to Employment Agreement between J. Baker, Inc. and Larry                                        *
            I. Kelley dated June 5, 1996 (filed as Exhibit 10.01 to the Company's
            Form 10-Q Report for the quarter ended August 3, 1996).

     (.34)  Promissory Note of Larry I. Kelley in favor of J. Baker, Inc. dated                                       *
            August 23, 1996 (filed as Exhibit 10.02 to the Company's Form 10-Q
            Report for the quarter ended August 3, 1996).

     (.35)  Performance Share Award granted to Larry I. Kelley dated June 5, 1996                                     *
            (filed as Exhibit 10.05 to the Company's Form 10-Q Report for the
            quarter ended August 3, 1996).

     (.36)  Executive Employment Agreement dated as of November 1, 1993                                               *
            between Stuart M. Needleman and J. Baker, Inc. (filed as Exhibit
            10.03 to the  Company's  Form  10-Q  Report  for the  quarter  ended
            October 30, 1993).

     (.37)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            Stuart M. Needleman, dated February 13, 1995 (filed as Exhibit
            10.24 to the  Company's  Form 10-K Report for the year ended January
            28, 1995).

     (.38)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            Stuart M. Needleman, dated November 10, 1995 (filed as Exhibit
            10.04 to the  Company's  Form  10-Q  Report  for the  quarter  ended
            October 28, 1995).

     (.39)  Amendment to Executive Employment Agreement between J. Baker, Inc.                                        *
            and Stuart M. Needleman dated April 5, 1996 (filed as Exhibit 10.01
            to the Company's Form 10-Q Report for the quarter ended May 3, 1996).

     (.40)  Performance Share Award granted to Stuart M. Needleman dated October                                      *
            18, 1996 (filed as Exhibit 10.02 to the Company's Form 10-Q Report
            for the quarter ended November 2, 1996).

     (.41)  Executive Employment Agreement dated as of November 19, 1993                                              *
            between Dennis B. Tishkoff and J. Baker, Inc. (filed as Exhibit
            10.04 to the  Company's  Form  10-Q  Report  for the  quarter  ended
            October 30, 1993).

     (.42)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            Dennis B. Tishkoff, dated February 8, 1995 (filed as Exhibit
            10.26 to the  Company's  Form 10-K Report for the year ended January
            28, 1995).

     (.43)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            Dennis B. Tishkoff, dated April 25, 1995 (filed as Exhibit
            10.03 to the Company's  Form 10-Q Report for the quarter ended April
            29, 1995).





*    Incorporated herein by reference
**   Included herein

                                 49

<PAGE>



Exhibit                                                                                                        Page No.

     (.44)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            Dennis B. Tishkoff, dated November 26, 1995 (filed as Exhibit
            10.05 to the  Company's  Form  10-Q  Report  for the  quarter  ended
            October 28, 1995).

     (.45)  Executive Employment Agreement between J. Baker, Inc. and James                                           *
            Lee, dated January 26, 1995 (filed as Exhibit 10.27 to the
            Company's Form 10-K Report for the year ended January 28, 1995).

     (.46)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            James D. Lee, dated November 6, 1995 (filed as Exhibit 10.02
            to the Company's Form 10-Q Report for the quarter ended
            October 28, 1995).

     (.47)  Forgiveness Loan made by James Lee in favor of Morse Shoe, Inc.,                                          *
            dated August 26, 1994 (filed as Exhibit 10.03 to the Company's
            Form 10-Q Report for the quarter ended July 29, 1995).

     (.48)  Promissory Note made by James Lee in favor of J. Baker, Inc.,                                             *
            dated May 19, 1995 (filed as Exhibit 10.04 to the Company's Form
            10-Q Report for the quarter ended July 29, 1995).

     (.49)  Performance Share Award granted to James Lee dated October 18, 1996                                       *
            (filed as Exhibit 10.01 to the Company's Form 10-Q Report for the
            quarter ended November 2, 1996).

     (.50)  Executive Employment Agreement between J. Baker, Inc. and David                                           *
            A. Levin, dated June 12, 1995 (filed as Exhibit 10.39 to
            the Company's Form 10-K Report for the year ended February 3, 1996).

     (.51)  Amendment to Employment Agreement between J. Baker, Inc. and                                              *
            David A. Levin, dated April 5, 1996 (filed as Exhibit 10.40 to
            the Company's Form 10-K Report for the year ended February 3, 1996).

     (.52)  Termination Agreement between J. Baker, Inc. and David A. Levin                                          **
            dated March 15, 1997, attached.

     (.53)  Severance Compensation Agreement between J. Baker, Inc. and                                               *
            Philip G. Rosenberg, dated November 1, 1995 (filed as Exhibit 10.41
            to the Company's Form 10-K Report for the year ended February 3, 1996).

     (.54)  Performance Share Award granted to Philip G. Rosenberg dated October                                      *
            18, 1996 (filed as Exhibit 10.03 to the Company's Form 10-Q Report
            for the quarter ended November 2, 1996).

     (.55)  Executive Employment Agreement between J. Baker, Inc. and Philip                                         **
            G. Rosenberg, dated April 1, 1997, attached.

     (.56)  J. Baker, Inc. Amended and Restated 1985 Stock Option Plan (filed                                         *
            as Exhibit 19.02 to the Company's Form 10-Q Report for the quarter
            ended August 1, 1992).



*    Incorporated herein by reference
**   Included herein

                                  50

<PAGE>



Exhibit                                                                                                        Page No.

     (.57)  J. Baker, Inc. 1994 Equity Incentive Plan dated as of March 29,                                           *
            1994 (filed as Exhibit 10.23 to the Company's Form 10-K Report
            for the year ended January 29, 1994).

     (.58)  J. Baker, Inc. 1992 Directors Stock Option Plan dated as of                                               *
            April 13, 1992 (filed as Exhibit 19.03 to the Company's Form
            10-Q Report for the quarter ended August 1, 1992).

     (.59)  Stock Purchase Agreement by and among J. Baker, Inc. and Tishkoff                                         *
            Enterprises, Inc. and certain stockholders of Tishkoff Enterprises, Inc.
            dated November 19, 1993 (filed as Exhibit 2.01 to the Company's Form
            10-Q Report for the quarter ended October 30, 1993).

     (.60)  Mortgage and Security Agreement dated as of December 30, 1992 by                                          *
            and between JBI Holding Company, Inc. and Ames Department Stores,
            Inc. (filed as Exhibit 10.22 to the Company's Form 10-K Report
            for the year ended January 30, 1993).

     (.61)  Promissory Note dated as of December 30, 1992 made by Ames                                                *
            Department Stores, Inc. in favor of JBI Holding Company, Inc.
            (filed as Exhibit  4.14 to the  Company's  Form 10-K  Report for the
            year ended January 30, 1993).

     (.62)  Agreement and Plan of Reorganization by and among J. Baker, Inc.,                                         *
            Morse Acquisition, Inc. and Morse Shoe, Inc. dated October 22,
            1992,  as amended by Letter  Amendments  dated  December 7, 1992 and
            December 10, 1992 (filed as Exhibits 2.01-2.03 to the Company's Form
            10-Q Report for the quarter ended October 31, 1992).

     (.63)  Agreement of Merger among J. Baker, Inc., JBAK Acquisition Corp.                                          *
            and Tishkoff Enterprises, Inc. dated December 3, 1993 (filed as
            Exhibit 10.30 to the  Company's  Form 10-K Report for the year ended
            January 29, 1994).

     (.64)  Agency Agreement by and between Gordon Brothers Partners, Inc.                                            *
            and Morse Shoe, Inc., dated September 22, 1995 (filed as Exhibit
            10.01 to the  Company's  Form  10-Q  Report  for the  quarter  ended
            October 28, 1995).

     (.66)  Mortgage, Assignment of Leases and Rents and Security Agreement from                                      *
            Morse Shoe, Inc. to Fleet National Bank dated as of June 21, 1996
            (filed as Exhibit  10.06 to the  Company's  Form 10-Q Report for the
            quarter ended August 3, 1996).

     (.66)  Mortgage, Assignment of Leases and Rents and Security Agreement from                                      *
            JBI, Inc. to Fleet National Bank dated as of June 21, 1996 (filed as
            Exhibit 10.07 to the Company's Form 10-Q Report for the quarter ended
            August 3, 1996).

     (.67)  Release and Discharge of Mortgage from Fleet National Bank as Agent                                      **
            with respect to the Canton, Massachusetts property dated December 27,
            1996, attached.


*    Incorporated herein by reference
**   Included herein

                                 51

<PAGE>



Exhibit                                                                                                        Page No.

     (.68)  Release of Mortgage from Fleet National Bank as Agent with                                               **
            respect to the Columbus, Ohio property dated February 27, 1997,
            attached.

     (.69)  Mortgage and Security Agreement by JBAK Canton Realty, Inc. to                                           **
            The Chase Manhattan Bank dated as of December 30, 1996, attached.


11.         Statement re:  Computation of Primary and Fully Diluted Earnings                                         **
            Per Share, attached.

12.         Statement re:  Computation of Earnings to Fixed Charges, attached.                                       **

21.         Subsidiaries of the Registrant, attached.                                                                **

23.         Consent of KPMG Peat Marwick, attached.                                                                  **

27.         Financial Data Schedule, attached.                                                                      ***


</TABLE>








*     Incorporated herein by reference
**    Included herein
***   This exhibit has been filed with the Securities and Exchange Commission as
      part of J. Baker,  Inc.'s  electronic  submission  of this Form 10-K under
      EDGAR filing requirements. It has not been included herein.

                                      52