<PAGE>
                                 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 August 2, 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 August 2, 1997

                       (Common Stock, 6,123,917 shares.)

                                     1

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                        PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                        JAY JACOBS, INC. AND SUBSIDIARY
                                       
                          Consolidated Balance Sheet
                         (Dollar amounts in thousands)
                                  (Unaudited)

                                                        August 2,    February 1,
                                                          1997          1997
                                                      -----------    ----------
Assets

Current assets:
  Cash and cash equivalents                             $     108      $    249
  Accounts receivable                                        1011           540
  Inventories                                               9,954         7,935
  Prepaid expenses                                            385           276
                                                      -----------    ----------
    Total current assets                                   11,458         9,000
                                                      -----------    ----------

Property and equipment, net                                 4,777         5,297
                                                      -----------    ----------
                                                        $  16,235      $ 14,297
                                                      -----------    ----------
                                                      -----------    ----------

Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                                      $   5,574      $  4,735
  Accrued payroll                                             131           217
  Accrued reorganization expenses                           2,600         2,618
  Other accrued expenses                                      930           886
   Short Term Bank Debt                                     5,112         3,177
                                                      -----------    ----------
  Total current liabilities                                14,347        11,633

Deferred rental credits                                       284           331
                                                      -----------    ----------

Federal Income Tax Refund Reserve                           1,980         1,955
Accrued reorganization expenses                               233           334
                                                      -----------    ----------

Shareholders' equity:
  Preferred stock:
    Authorized - 5,000,000 shares; Issued and
      outstanding - none                                        -            -
  Common stock:
    Authorized - 20,000,000 shares; Issued and
      outstanding - 6,124,000 and 6,124,000
      shares                                               12,992        12,990
  Retained earnings                                      (13,601)       (12,946)
                                                      -----------    ----------
                                                            (609)            44
                                                      -----------    ----------
                                                        $  16,235      $ 14,297
                                                      -----------    ----------


                            PART I  FINANCIAL INFORMATION

                                         2

<PAGE>

                                       
                                  
                        JAY JACOBS, INC. AND SUBSIDIARY
                                       
                     Consolidated Statement of Operations
                   (In thousands, except per share amounts)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                             Three Months ended          Six months ended
                                             August 2,   July 27,      August 2,    July 27,
                                               1997       1996           1997         1996
                                           ---------    --------       --------    ---------
<S>                                        <C>          <C>            <C>         <C>



Net sales                                    $15,657     $16,472        $29,123      $30,296
                                           ---------    --------       --------    ---------

Operating costs and expenses:
  Cost of sales, buying and
    occupancy costs                           11,410      12,308         21,963       23,696
  Selling, general and
    administrative expenses                    4,017       4,375          8,000        8,882
  Interest and other income, net                 165         102            292          168
                                           ---------    --------       --------    ---------
    Net operating expenses                    15,592      16,785         30,255       32,746
                                           ---------    --------       --------    ---------
Income (loss) before reorganization
  items and income taxes                          65        (313)        (1,132)      (2,450)

Reorganization Items                                        (340)

Income tax provision (benefit)                   (26)          0           (453)           0

Net income (loss)                                 39        (653)       $  (679)     $(2,450)
                                           ---------    --------       --------    ---------

Earnings (loss) per share                        .01     $ (0.11)        $(0.11)      $(0.40)
                                           ---------    --------       --------    ---------
Weighted average number of                    
shares outstanding                             6,124       6,095          6,124       6,078
                                           ---------    --------       --------    ---------
</TABLE>


                                                               3

<PAGE>



                                 PART I.  FINANCIAL INFORMATION
                                                                
                                JAY JACOBS, INC. AND SUBSIDIARY
                                                                
                              Consolidated Statement of Cash Flows
                                         (In thousands)
                                           (Unaudited)


                                                      Six months ended
                                                   August 2,      July 27,
                                                     1997           1996
                                                  ----------     ---------
Cash flows from operating activities:
Net loss                                            $  (679)      $(2,451)
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
    Depreciation and amortization                       574           625
    Change in deferred rents                            (47)         (377)
    Change in assets and liabilities:
      Accounts receivable                              (471)         (163)
      Inventories                                    (2,019)          663
      Prepaid expenses and other                       (109)          (68)
      Accounts payable                                  839         4,091
      Accrued payroll                                   (86)         (529)
      Other accrued expenses                             70           299
      Accrued Restructuring Expenses                   (119)       (3,877)
      Federal Income Tax Refund Reserve                  25             0
                                                  ----------     ---------
                                                      (2022)       (1,787)
                                                  ----------     ---------

Cash flows from investing activities:
Net increase in property and equipment                  (54)        (1029)
                                                  ----------     ---------

Cash flows from financing activities:
Net borrowing from line of credit                     1,935          2217
Proceeds from options exercised                           0            71

Net change in cash and cash equivalents                (141)         (528)
Cash and cash equivalents - beginning of period         249           705
                                                  ---------      --------
Cash and cash equivalents - end of period           $   108       $   177
                                                  ---------      --------



                                             4
<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 2, 1997.

NOTE 2. EARNINGS (LOSS) PER SHARE

Earnings  (loss) per share is based on the weighted average number of shares
outstanding  during the quarter 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  effect of the outstanding options  is
computed  using the treasury stock method. The weighted average number of
shares and equivilents outstading were 6,124,000 and 6,094,641 for the quarter
ended August 2, 1997 and July 26, 1996 respectively.  The weighted average
number  of  shares  and equivalents outstanding were 6,124,000 and 6,078,718
for the 6 month period ended August 2, 1997 and July 27, 1996, respectively.

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

GENERAL

All  references  herein  to fiscal 1997, 1996 and 1995  relate to the twelve
months  ended February 1, 1997, the twelve months ended January 27, 1996, and
the eleven months ended January  28, 1995. References to second quarter  1998
and 1997 relate to the six months ended August 2, 1997 and July 27, 1996,
respectively. The Company made the decision, during fiscal 1995,  to  change
its fiscal year to end on the last Saturday in January, as opposed  to the last
Saturday in February. This change was made to align the Company's  fiscal
calendar to the seasonal patterns that it experiences, as well  as to enhance
comparability of its fiscal quarter and year end results with similar retail
companies in its industry segment.


                                     5

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SEASONALITY

The  Company's  business  is  seasonal.   During fiscal year 1994 and earlier
fiscal  years,  fall and "back to school" shopping by the Company's customers,
generally  have  resulted  in  the  largest  sales in the second quarter
ending in late August. Sales also historically have been greater in the
holiday  season,  but  earnings  in  the  fourth quarter were adversely
affected  by  markdowns  of  unsold  holiday merchandise and generally lower
sales in January and February.

The  Company  changed  its  fiscal  year ending date as of the end of fiscal
1995  and  as a result the seasonal pattern mentioned in the prior  paragraph
changed.  The fourth quarter ending late  January generates the  largest sales
and earnings followed by its third quarter ending in late October.

Results of Operations

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


                                             Percentage of net sales
                              Three Months Ended July    Six Months Ended July
                                   1997     1996            1997     1996
                                --------- --------       --------- --------
Net sales                         100.0%   100.0%          100.0%   100.0%
Cost of sales, buying and
 occupancy costs                   72.9     74.7            75.4     78.2
Selling, general and
  administrative expenses          25.7     26.6            27.5     29.3
Reorganization Items                         2.1
Interest expense (income)           1.1       .6             1.0      0.6
                                 ------   ------          ------   ------
  Net loss                           .3%    (4.0)%          (3.9)%   (8.1)%


Quarter ended August 2, 1997 compared to quarter ended July 27, 1996

Net  sales  decreased  by $815,000 or 5.2%, in the quarter ended August 2, 
1997 as compared to the same period a year earlier.  This decrease was 
primarily due  to store closures, partially offset by a comparable store 
sales increase of  13.0%.   During the second quarter the Company closed 2 
stores leaving 114 stores in operation at the end of the second quarter 1997. 
 The Company operated 22 fewer stores at the beginning of  the second quarter 
of FY 1998 (116) than it did at the beginning of the second quarter of FY 
1997 (138). Comparable store sales increased primarily as a result of 
merchandising  and the acceptance by its customers of the new merchandise 
concept implemented in 1995.

Cost  of sales, buying and occupancy costs decreased as a percentage of sales 
by 3.9%. This was primarily due to lower costs allowing for a higher initial 
mark-up of inventory and a lower mark-down to sales.

Selling, general and administrative expenses decreased as a percentage of 
sales by .9%, primarily as a result of staff reductions and tighter cost 
control measures implemented during the year.

Interest expense as a percent of sales was 1.1% in the second quarter of 
fiscal  1998 compared  to 0.6% of sales in the second quarter of fiscal 1997. 
This resulted from increased short term borrowing during the quarter when 
compared with the prior year. 

                                   6

<PAGE>


The  Company  had  a  profit of  $39 thousand during the second quarter of  
FY 1998 or $0.01  per  share compared to a loss of  $653 thousand in the 
second quarter of FY 1997 ($0.11  per  share).  Improved comparable store 
sales, gross margins, and lower operating expenses, accounted  for the 
improvement in profit.

SIX MONTHS ENDED AUGUST 2, 1997 COMPARED TO SIX MONTHS ENDED JULY 27, 1996

      Net sales decreased 1.2 million or 3.9% in the six months ended Aug 2, 
1997 as compared to the same period ended July 27, 1996.  This decrease was 
primarily due to store closures.  The company operated  22 fewer stores than 
it did one year earlier. This was partially offset by an 10% comparable 
increase in store sales compared to a decline of 3% last year. Comparible 
store sales increased due to improved merchandising by the company.

      Cost of sales, buying and occupancy costs decreased as a percentage of 
net sales by 2.8%, due primarily to an improvement in cost of goods purchased 
by the company's merchants during the first six months of fiscal 1998.

      Selling, general and administrative expenses decreased as a percentage 
of sales by 1.9%.  This decrease was the result of expense reductions that 
have taken place during the last year.

      Interest expense as a percent of sales was 1.0% for the first half of 
1998 compared to interest expense of  0.6% in the first half of fiscal 1997. 
This was a result of increased borrowings to fund additional inventory at the 
end of the second quarter 1998.

      The company incurred a loss of  $679 thousand during the first half 
fiscal 1998, compared to a loss of $2.45 million during the first half of 
fiscal 1997.  The loss has decreased significantly due to improved comparable 
sales, gross margins and a decrease in corporate overhead expenses..

LIQUIDITY AND CAPITAL RESOURCES

THE LASALLE FACILITY

On  November  20, 1995, the Bankruptcy Court approved a financing agreement
on a revolving credit basis between the Company and LaSalle National
Bank  ("LaSalle"). The LaSalle Facility provides for borrowing and letters of
credit, the aggregate of which cannot exceed the lower of $10 million or 50%
of  inventory and outstanding letters of credit. Letters of credit are
limited to a maximum of $5 million.  A first and only lien is granted to
LaSalle on all Company assets (excluding capitalized leases and excluding
permitted liens up to $400,000).  The Company must maintain a scheduled minimum
tangible net worth and  may  not declare or pay dividends or other
distributions on account of any  equity interest in the Company until payment
or satisfaction in full of liabilities  under  the  LaSalle  Facility  and
termination of the financing agreement.  Interest  is  charged  at  LaSalle's
announced  prime rate. The Company  is  charged an annual fee of 1% of the
aggregate loan limit, normal audit  fees,  and a letter of credit fee of 1.25%
per annum on the aggregate undrawn  face  amount  of letters of credit
outstanding. The agreement has a three-year term and was signed on December 4,
1995.

As  of  the  end  of  the  second  quarter  of  1998  the Company had 
$5,112,000  of  direct  borrowing  and  no outstanding letters of credit.  On 
August 29, 1997, the company replaced the LaSalle Facility with an enhanced 
secured working capital facility with General Electric Capital  Services.  
This new facility provides a  $10 million revolving line of credit for 
borrowing and letters of credit. The new facility has a three year term and 
provides a formula based arrangement to allow credit advances against 
inventory.  It provides far signifcantly greater borrowing capacity which 
will be used principally to procure inventory.

GENERAL

                                     7

<PAGE>


The  Company's  principal  needs  for  liquidity  are to finance the purchase 
of  merchandise inventories, fund its operations and make payments under its 
Plan of Reorganization.

Net  cash  used for  operations for the first half of FY 1998 and FY 1997 was 
$2.0 and $1.8 million, respectively.  The use of cash during the first half 
of FY 1998 resulted primarily from an increase in inventory ($2.0 million) 
and the operating loss ($0.7 million), partially offset by an increase in 
accounts receivable ($.4 million).  The use of cash during the first half of 
FY 1997 resulted primarily from operating losses during the quarter and 
payments made under the Plan of Reorganization.  Payments  under  the Plan of 
Reorganization of $2,289,000 were made for  Allowed  Claims  in  late  
January 1996, subsequent to fiscal year end. Additional  payments  were  made 
 for  Allowed Priority Tax Claims, disputed claims  that  were  subsequently 
settled and other costs associated with the Plan of Reorganization in the 
aggregate amount of $1,588,000.

Property  and  equipment  expenditures  were  for first half  98 and first 
half 97 respectively  $140,000 and $1,029,000 respectively.  The expenditures 
during first half FY 1998 were minor in nature.  The expenditures during the 
first half of 1997 were a result  of  opening 15 stores and converting 5 
stores to new formats.  Future expenditures  on property and equipment will 
be limited to available working capital.

The  Company  had  a working capital deficit of $2,889,000 at August 2, 1997 
compared  to  a working capital deficit of $3,555,000 at July 27, 1996.  The 
working capital deficit decreased $667,000 primarily due to  addtional trade 
credit and a federal tax refund which were used to purchase additional 
inventory.

                                        8

<PAGE>


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 note equal to 42% of the approved 
claim amount.  The Company entered into negotiations with the 
Postconfirmation 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 October 1st.  The company is currently in 
negotiations to extend the moratorium.  As a result of the PCC agreement the 
Company accepted the resignation of four of its six directors and reduced to 
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.

During  the current fiscal  year ending January 31, 1998, the Company will  
be obligated  to  pay  approximately $201,000 to Allowed Priority Tax Claims.

At  August 2, 1997  the  Company  had  $108,000 in cash and cash equivalents. 
The Company  had approximately $154,000 of potential liquidity under  terms  
of its  LaSalle 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 management's ability to secure  additional 
financing.  There can be no assurance that commercial or corporate  finance 
will  be available, or if available, on terms acceptable to  the Company. If 
sufficient working capital cannot be secured in a timely fashion  or  results 
of  operations  do not continue, the Company may not be able to pay its 
obligations in a timely manner.

                                9

<PAGE>


                          PART II.  OTHER INFORMATION



Item 1.  Legal Proceedings

None

Item 2.  Changes in Securities

None

Item 3.  Defaults upon Senior Securities

None

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

None

Item 5.  Other Information




Item 6.  Exhibits and Reports on Form 8-K
(a)  Exhibits
  27. Fianancial Data Schedule
None.
(b)  Reports on Form 8-K


                                10

<PAGE>


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.


June 16, 1996

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


                                  11