UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                    FORM 10-Q
(Mark One)
              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended November 01, 1997

OR

                 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
              For the transition period from ....... to ..........

                         Commission file number 0-15934


                                JAY JACOBS, INC.
             (Exact name of registrant as specified in its charter)


                              Washington 91-0698077
                  (State or other jurisdiction of (IRS Employer
              incorporation or organization) Identification Number)


                  1530 Fifth Avenue, Seattle, Washington 98101
               (Address of Principal Executive Offices) (Zip code)

                         Registrant's telephone number,
                       including area code: (206) 622-5400

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

Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No __

Applicable only to corporate issuers :

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of December 15, 1997

                        (Common Stock, 8,157,601 shares.)

<PAGE>
                          PART I. FINANCIAL INFORMATION

                          Item 1. Financial Statements

                         JAY JACOBS, INC. AND SUBSIDIARY

                           Consolidated Balance Sheet
                          (Dollar amounts in thousands)
                                   (Unaudited)


                                                     November 01,   February 01,
                                                         1997           1997
Assets

Current assets:
  Cash and cash equivalents                            $    123     $    249
  Accounts receivable                                       677          540
  Inventories                                            13,355        7,935
  Refundable Income Taxes                                   415            0
  Prepaid expenses                                          568          276
  Total current assets                                   15,138        9,000

Property and equipment, net                               5,297        4,545
                                                       --------     --------
Total Assets                                           $ 19,683     $ 14,297
                                                       --------     --------

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                                     $  6,127       $4,735
  Accrued payroll                                             0          217
  Accrued reorganization expenses                         2,453        2,618
  Other accrued expenses                                    886
                                                                             753
  Short Term Bank Debt                                    8,384        3,177
  Total current liabilities                              17,717       11,633
                                                       --------     --------

Deferred rental credits                                     261          331

Federal Income Tax Refund Reserve                         1,980        1,955
Accrued reorganization expenses                             300          334
                                                       --------     --------

Shareholders' equity:
  Preferred stock:
    Authorized - 5,000,000 shares; Issued                  --           --
    and outstanding - none
  Common stock:
    Authorized - 20,000,000 shares; Issued               13,013       12,990
    and outstanding - 6,214,000 and 6,124,000
shares
Retained earnings                                       (13,588)     (12,946)
                                                           (575)          44
                                                       --------     --------
                                                       $ 19,683     $ 14,297
                                                       --------     --------


<PAGE>
                         JAY JACOBS, INC. AND SUBSIDIARY

                      Consolidated Statement of Operations
                    (In thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                    Three Months Ended        Nine Months Ended
                                  November 01, October 26, November 01, October 26,
                                     1997        1996         1997         1996

<S>                                 <C>         <C>          <C>          <C>
Net Sales                           15,238      13,479       44,361       43,776
Operating costs and expenses:
Cost of sales, buying and           11,131      10,883       33,094       34,579
occupancy costs
Selling, general and                 3,909       4,197       11,909       13,081
administrative expenses
Interest and other income, net         124          60          416          228
                                    ------      ------       ------       ------
Net operating expenses              15,164      15,140       45,419       47,888
                                    ------      ------       ------       ------
Income (loss) before                    74      (1,661)      (1,058)      (4,112)
reorganization
items and income taxes
Federal Income Tax Refund                0         400          400
Income tax provision (benefit)          30           0         (423)           0
Net income (loss)                       44      (1,261)        (635)      (3,712)
Earnings (loss) per share             0.01       (0.21)       (0.10)       (0.61)
Weighted average number of           6,181       6,124        6,143        6,093
shares outstanding
</TABLE>

<PAGE>
                         JAY JACOBS, INC. AND SUBSIDIARY

                      Consolidated Statement of Cash Flows
                                 (In thousands)
                                   (Unaudited)

                                                         Nine Months Ended
                                                       November 01,   ctober 26,
                                                          1997           1996

Cash flows from operating activities:
Net loss                                                 ($  635)       ($3,712)
Adjustments to reconcile net loss to net
  cash provided by (used in) operating
activities:
Depreciation and amortization                                860            968
Change in deferred rents                                     (70)          (446)
Change in assets and liabilities:
Accounts receivable                                         (552)           (86)
Inventories                                               (5,420)          (383)
Prepaid expenses and other                                  (292)           (25)
Accounts payable                                           1,392          3,029
Accrued payroll                                             (217)          (292)
Other accrued expenses                                      (140)           618
Accrued Restructuring Expenses                              (199)        (4,046)
                                                         -------        -------
Federal Income Tax Refund Reserve                             25          1,954
                                                         -------        -------
                                                          (5,248)        (2,421)

Cash flows from investing activities:

Net increase in property and equipment                      (108)        (1,058)

Cash flows from financing activities:
Net borrowing from line of credit                          5,207          2,781
Proceeds from options exercised                               23             71

Net change in cash and cash equivalents                     (126)          (627)
Cash and cash equivalents - beginning of                     249            705
period
                                                         -------        -------
Cash and cash equivalents - end of period                $   123        $    78
                                                         -------        -------


<PAGE>
                         JAY JACOBS, INC. AND SUBSIDIARY

              Notes to Unaudited Consolidated Financial Statements

Note 1. Financial Presentation:

The attached unaudited condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. As a result, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes that
the disclosures made are adequate to make the information not misleading and
that the information furnished reflects all material adjustments which are, in
the opinion of management, necessary to present fairly its results for the
interim periods reported and that all such adjustments are of normal recurring
nature. The consolidated financial statements should be read in conjunction with
the financial statements and related notes included in the Company's Form 10-K
filed with the Securities and Exchange Commission on May 16, 1997 and 10-K/A
dated June 17, 1997.

Note 2. Earnings (Loss) Per Share

Earnings (loss) per share is based on the weighted average number of common
shares outstanding during the periods as adjusted to take into account the
effect of outstanding options to purchase common stock unless the effect of
including such options is anti-dilutive. The weighted average number of common
shares and equivalents outstanding were 6,181,000 and 6,124,000 for the quarters
ended November 01, 1997 and October 26, 1996 respectively. The weighted average
number of common shares and equivalents outstanding were 6,143,000 and 6,093,000
for the 9 month periods ended November 01, 1997 and October 26, 1996,
respectively. The amount of common stock equivalents outstanding was computed
using the treasury stock method.

Note 3. Subsequent Events

During December, 1997, the Company sold preferred stock in a private placement
for $7,100,000, reported on Form 8-K, dated December 15, 1997. Series A
Preferred Stock (which pays a dividend at the rate of 5%, payable quarterly,
from the date of closing), was issued for $4,600,000 and Series B Preferred
Stock(which pays a dividend at the rate of 8%, payable quarterly 90 days after
the second anniversary of the closing) was issued for $2,500,000. The Series B
stock can be converted into 86.25% of the Company's common stock. The Company
received approximately $5,900,000 after fees and expenses of the transaction.
The fees and related expenses are as follows: investment group receiving the
preferred stock earned a fee in the amount of $355,000 and expenses up to
$40,000; break-up fee to a different investment group that the Company had
agreed to pay if a transaction was not consummated with them, in the amount of
$300,000 and expenses up to $75,000; investment banking fees of $275,000 and
$145,000 of professional expenses incurred by the Company.

Effective August 29, 1997, the Company entered into a loan and security
agreement with General Electric Capital Corporation ("GECC"), providing for
borrowing and letters of credit, the aggregate of which cannot exceed 60% of
eligible inventory and outstanding letters of credit, or $10 million. Letters of
credit are limited to a maximum of $5 million. A first and only lien is granted
to GECC on all the Company's assets (see "Liquidity and Capital Resources"). In
conjunction with the private placement outlined above, this agreement was
amended ("Second Amendment") to allow for the change in control as required by
the transaction.

The Company's Chapter XI Bankruptcy plan of reorganization, confirmed in
November, 1995, was modified on December 1, 1997, by the U.S. Bankruptcy Court,
to allow for $1,500,000 in cash and $1,000,000 in value of the Company's common
stock (1,889,764 shares) issued in full payment for the $2,500,000 payment that
was due creditors by January 1, 1998.


<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

General

All references herein to fiscal 1997 relate to the twelve months ended February
1, 1997. References to third quarter 1998 and 1997 relate to the three months
ended November 01, 1997 and October 26, 1996, respectively. References made to
1998 year-to-date and 1997 year-to-date relate to the first nine months of the
Company's fiscal year ending January 31, 1998 and February 1, 1997 respectively.

Forward-looking statements in this report are made pursuant tot he safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties related to the Company's operations. These
risks and uncertainties include, but are not limited to, competitive factors
(including the possibility of increased competition and price pressures) and the
Company's dependence on key personnel and significant suppliers.

Seasonality

The Company's business, like that of most retailers, is subject to seasonal
influences. A significant portion of the Company's net sales and profits are
realized during the Company's fourth fiscal quarter, which includes the holiday
selling season. Results of any quarter are not necessarily indicative of the
results that may be achieved for a full fiscal year. Quarterly results may
fluctuate materially depending upon, among other things, increases or decreases
in comparable store sales, adverse weather conditions, and shifts in timing of
certain holidays and promotions.

Results of Operations

The following table sets forth, for the periods indicated, certain consolidated
financial data as a percentage of net sales:

<TABLE>
<CAPTION>
                                                     Percentage of net sales
                                       Three Months Ended                  Nine Months Ended
                                    November,        October,        November,         October,
                                      1997            1996             1997             1996

<S>                                  <C>             <C>              <C>              <C>
Net sales                            100.0%          100.0%           100.0%           100.0%

Cost of sales, buying and             73.0            80.7             74.6             79.6
occupancy cost
Selling, general and                  25.7            31.1             26.8             29.9
administrative expenses
Interest expense                       0.8             0.4              0.9              0.5
Net operating expenses                99.5%          112.3%           102.4%           109.4%
Income (Loss) before                   0.5%          (12.3)%           (2.4)%           (9.4)%
income taxes
Federal Income Tax Refund              0.0             3.0              0.0              0.9
Income Tax Provision                   0.2             0.0             (1.0)             0.0
(benefit)
Net income (loss)                      0.3%           (9.3)%           (1.4)%           (8.5)%
</TABLE>


Quarter ended November 01, 1997 compared to quarter ended October 26, 1996

Net sales increased by $1,759,000 or 13 %, in the quarter ended November 01,
1997 as compared to the same period a year earlier. This increase was primarily
due to a comparable store sales increase of 29%. compared to a decline of 16 %
during the same quarter last year. During the third quarter the Company opened 1
store and closed

<PAGE>
2 stores for a total of 113 stores in operation at the end of the third quarter
1997. The Company operated 16 fewer stores at the beginning of the third quarter
of FY 1998 (114) than it did at the beginning of the third quarter of FY 1997
(130). Comparable store sales increased primarily as a result of the increased
acceptance by its customers of the new merchandise concept implemented in the
fall of 1995 and increased inventory which was procured with the new working
capital facility ( see "Liquidity and Capital Resources") .

Cost of sales, buying and occupancy costs decreased as a percentage of sales by
7.7%. This was primarily due to higher initial margins on inventory, than last
year, reduced promotional activity as compared to last year and greater leverage
on fixed occupancy costs as a result of the increase in comparable store sales.

Selling, general and administrative expenses decreased as a percentage of sales
by 5.4%, primarily as a result of cost control measures implemented over the
past twelve months and greater leverage on fixed expenses as a result of the
increase in comparable store sales during the quarter.

Interest expense as a percent of sales was 0.8% in the third quarter of fiscal
1998 compared to 0.4% of sales in the second quarter of fiscal 1997. This
resulted from increased short term borrowing to fund increased inventory during
the quarter.

The Company had a profit of $44,000 during the third quarter of FY 1998 or $0.01
per share compared to a loss of $1,261,000 in the third quarter of FY 1997 (
$0.21 per share). Improved comparable store sales, gross margins, and lower
operating expenses, accounted for the improvement in profit.

Nine Months Ended November 01, 1997 Compared to Nine months ended October 26,
1996

Net sales increased $585,000 or 1.3% in the nine months ended November 01, 1997
as compared to the same period ended October 26, 1996. This increase was
primarily due to improved comparable store sales. The company operated 16 fewer
stores than it did one year earlier. Comparable store sales increased 17%
compared to a decline of 7% during the same period last year. Comparable store
sales increased primarily as a result of the increased acceptance by its
customers of the new merchandise concept implemented in the fall of 1995 and
increased inventory which was procured with the new working capital facility (
see "Liquidity and Capital Resources")

Cost of sales, buying and occupancy costs decreased as a percentage of net sales
by 4.4%. This was primarily due to higher initial margins on inventory, than
last year, reduced promotional activity as compared to last year and greater
leverage on fixed occupancy costs as a result of the increase in comparable
store sales.

Selling, general and administrative expenses decreased as a percentage of sales
by 3.1%. primarily as a result of cost control measures implemented over the
past twelve months and greater leverage on fixed expenses as a result of the
increase in comparable store sales during the first nine months of 1998.

Interest expense as a percent of sales was 0.9% for the first nine months of
1998 compared to interest expense of 0.5% in the first nine months of fiscal
1997. This was a result of increased borrowings to fund additional inventory
during the period.

The company incurred a loss of $635,000 during the nine months of fiscal 1998,
compared to a loss of $3,712,000 during the nine months of fiscal 1997. The loss
has decreased significantly due to improved comparable sales, gross margins and
a decrease in expenses..

Liquidity and Capital Resources

General Electric Capital Corporation Loan and Security Agreement

Jay Jacobs replaced the LaSalle facility, entered into in December, 1995, with a
loan and security agreement with General Electric Capital Corporation ("GECC")
on August 29, 1997. The GECC Facility provides for borrowing and letters of
credit, the aggregate of which cannot exceed the sum of 60% of eligible
inventory (as defined)

<PAGE>
and outstanding letters of credit, or $ 10 million. Letters of credit are
limited to a maximum of $5 million. A first and only lien is granted to GECC on
all the Company's assets. The Company must maintain a scheduled minimum fixed
charge coverage ratio, and may not declare or pay dividends or other
distributions on account of any equity interest in the Company, except dividends
to be paid on Series A and Series B Preferred Stock ( see Note 3 "Subsequent
Events") until payment or satisfaction in full of liabilities under the GECC
Facility and termination of the financing agreement. Interest is charged at
GECC's index rate plus 3.5%. The Company is charged an annual fee of 0.5% of the
unused credit under this facility, normal audit fees, and a letter of credit fee
of 1.75% per annum on the aggregate undrawn face amount of letters of credit
outstanding, based on the original terms of the GECC agreement. As a result of
the private placement transaction outlined in Note 3 - Subsequent Events, the
interest charge is reduced to GECC's index rate plus 3%, the unused credit fee
is reduced to 0.375 %, and the letter of credit fee is reduced to 1.00% per
annum. The agreement has a term of three years and was signed on August 29,
1997. On October 23, 1997, the company amended ("First Amendment") it's
agreement with GECC to temporarily increase the Company's borrowing capacity for
seasonal purposes, by $500,000. This increase must be re-paid with the
completion of a Cash Equity Contribution (as defined), or by December 19, 1997,
whichever occurs first. Subsequent to the end of the third quarter, the GECC
facility was further amended by the Second Amendment, to allow for the
investment which occurred subsequent to the third quarter, and is described in
subsequent events .

As of the end of the third quarter of 1998 the Company had $8,384,000 of direct
borrowing and no outstanding letters of credit.

General

The Company's principal needs for liquidity are to finance the purchase of
merchandise inventories and fund its operations.

During the nine months ended November 1, 1997 the Company's primary source of
liquidity was from borrowings under its secured, revolving credit facility

Net cash used for operations for the first nine months of FY 1998 $5,248,000.
The use of cash resulted primarily from an increase in inventory ($5,420,000)
and the operating loss ($635,000). Property and equipment expenditures for the
nine months of FY 98 were $108,000. The expenditures during the nine months of
FY 1998 were minor in nature.

The Company had a working capital deficit of $2,579,000 at November 01, 1997
compared to a working capital deficit of, $2,786,000 at October 26, 1996. The
working capital deficit decreased $207,000 primarily due to additional trade
credit and a federal tax refund which were used to purchase additional
inventory.

Subsequent to the end of the quarter, the Company closed on a transaction with a
group of investors, for a recapitalizaton of the company (see Note - 3
Subsequent Events above). Effective December 3, 1997, the Company raised $
7,100,000 by the issuance and sale of preferred stock in the following manner:
Series A Preferred Stock, $ 4,600,000 and Series B Preferred Stock, $ 2,500,000.
The Series A Preferred Stock has a quarterly dividend payable at the rate of 5%
per annum. The series B Preferred Stock has a quarterly dividend at the rate of
8% per annum and is not payable until ninety days after the second anniversary
of the issuance of the Series A Preferred Stock and each quarter thereafter. The
dividend for both series of preferred stock will increase to the rate of 20% per
annum upon the first quarterly payment due subsequent to the fifth anniversary
of the issuance of the preferred stock. The Series B Preferred Stock is
equivalent to 86.25% of the Company's common stock, upon conversion. The Company
intends to use these funds for the modified payment to the Class 3 unsecured
creditors (described below), certain costs and expenses of the investment
transaction, opening new stores during the next fiscal year and working capital
for funding operations

Under the terms of the Company's Second Amended Plan of Reorganization (approved
by the Bankruptcy Court on November 16, 1995), the unsecured creditors received
a payment of 30% of the approved claims in January 1996. These creditors made an
election to receive either a second 30% payment in January, 1997, or a 15%
payment plus a

<PAGE>

note equal to 42% of the approved claim amount. The Company entered into
negotiations with the Post-confirmation Creditors Committee ( the "PCC") to
delay the January 1997 payment. On April 17, 1997, pursuant to an agreement in
principle between the PCC, and Jay Jacobs, founder and majority shareholder of
the Company (the "PCC Agreement"), the January 1997 payment to the PCC was
placed in abeyance. PCC members granted an initial moratorium, subject to
extension by the PCC until July 1, 1997, to resolve the 1997 payment. An
additional moratorium has been granted until January 1, 1998. As a result of the
PCC agreement the Company accepted the resignation of four of its six directors
and reduced the size of its Board of Directors to five, three of which were
chosen by the PCC members. The directors who resigned were Shelly Swerland,
Gilbert Scherer, David Taylor and William L. Lawrence, Jr. The reconstituted
board was comprised of Robert Bartlett, Principal of Bartlett Joseph Associates,
Paul Buxbaum, President of Buxbaum, Ginsberg & Associates Inc., Alan
Schlesinger, Chairman, CEO and President of Lamonts Apparel, Inc., and Mr.
Jacobs and Mr. Steffey. As of May 2, 1997, Mr. Schlesinger resigned from the
Board and was replaced by William Nandor.

Subsequent to the end of the quarter the Company arranged for a hearing with the
Bankruptcy court for the purpose of modifying the previously scheduled plan
payment. The proposed modification was to pay in lieu of the approximate $
2,500,000 cash payment, $ 1,500,000 in cash and $ 1,000,000 in value of the
Company's common stock, to be issued proratably to all holders of Class 3
unsecured allowed claims. The number of shares issued is based on the average
closing price of the Company's stock in the preceding 30 trading days prior to
closing of the investment transaction referenced above. Ballots were mailed to
all creditors who held allowed Class 3 claims. The deadline for balloting was
November 29, 1997. The voting resulted in acceptance of over 99% of those
voting. On December 1, 1997, the bankruptcy court approved the proposed
modification of the plan. The cash and stock were be mailed to creditors on
December 15, 1997. The source of the funds for this payment will be from the
proceeds of the sales of preferred stock referenced above.

During the next twelve months, the Company will be obligated to pay
approximately $238,000 to Allowed Priority Tax Claims.

At November 01, 1997 the Company had $123,000 in cash and cash equivalents. The
Company had approximately $313,000 of potential liquidity under terms of its
GECC Facility based on its borrowing base formula. On a going forward basis, the
Company's liquidity is dependent on a combination of cash flow from operations
and the sale of preferred stock which occurred subsequent to the end of the
quarter. In the opinion of management, the net proceeds of the private
placement, along with the GECC facility and cash flow from operations are
adequate to accomplish its plans for Fiscal Year ending January, 199. Depending
on the success of its business strategy the Company may continue to incur future
losses, which could negatively affect working capital, the extension of credit
by the Company's suppliers and the Company's ability to maintain compliance with
its debt covenants, and the ability to raise additional capital in the future.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2.  Changes in Securities

See 8 - K filed December 15, 1997

Item 3.  Defaults upon Senior Securities

None

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

<PAGE>

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8-K
(a)  Exhibits
  27. Financial Data Schedule
  10.1 GECC Loan and Security agreement
  10.2 First amendment to GECC Loan and Security agreement 10.3 Second amendment
  to GECC Loan and Security agreement

(b)  Reports on Form 8-K
      Form 8-K dated November 19, 1997, Item 5, Other Events



SIGNATURES

Pursuant to requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

                 JAY JACOBS, INC.


December 12, 1997

                 /s/ WILLIAM L. LAWRENCE, JR.

                 William L. Lawrence, Jr.
                 Senior Vice President, Chief Financial Officer and
                 Treasurer (Principal Financial and Accounting Officer)