<PAGE>   1


                                  PRESS RELEASE




                          JAY JACOBS, INC. ANNOUNCEMENT

FOR IMMEDIATE RELEASE                      FOR MORE INFORMATION CONTACT:
September 3, 1999                          CFO, William L. Lawrence, Jr.
                                           (206) 622-5400 (Ext. 217)
                                            Bankruptcy Counsel (206) 467-8429


         September 3, 1999 - SEATTLE, WA. Jay Jacobs, Inc. (OTC: JAYJ), the
Seattle-based specialty apparel chain retailer for men and women, announced
today it has filed (along with its subsidiary, J.J. Distribution Company) a
voluntary petition under Chapter 11 of the United States Bankruptcy Code (United
States Bankruptcy Court for the Western District of Washington at Seattle, the
Honorable Thomas T. Glover, Case No. 99-10130) to conduct an orderly liquidation
of its assets. In connection with the filing, the Company has sought authority
to conduct a storewide inventory liquidation, following which it currently is
contemplated that the leases for its 114 stores in 22 states will either be
rejected or assigned and store employees will be laid off.

         To assist the Company with the liquidation process, the Company has
negotiated financing with its principal, prepetition lender, FINOVA Capital
Corporation, to fund aspects of the orderly liquidation. The liquidation will be
overseen by William L. Lawrence, Jr., the Company's Chief Financial Officer, in
conjunction with a core liquidation team of corporate office employees. "The
decision to shut down our business was extremely difficult to make. The layoffs
of employees are a regrettable outcome of these events. We so hoped to keep
everyone gainfully employed. Until the very end, we were actively working with
various investors to achieve a successful reorganization. Unfortunately, a deal
could not be put together given the time constraints involved, the significant
financial pressures, and the situation with our lender. As a result, a Chapter
11 filing became the only viable option," Lawrence said.

         Faced with this recognition, on Friday, August 27, 1999, the Company
laid off 54 employees at its corporate headquarters and distribution center. The
Company has also requested that the Bankruptcy Court enter an order rejecting
the Company's employment agreement with Rex Loren Steffey, President and Chief
Executive Officer, whose services will not be required in a liquidation
scenario.


<PAGE>   2

         "It is sad to see the apparent end of this longstanding Seattle
institution. The Company worked very hard to negotiate a transaction with a new
investor, but a Chapter 11 filing ultimately was required due to lack of funds
and the lender's unwillingness to continue to fund operations. Faced with this
unfortunate situation, the Company will make every effort to shut down its
operations in a dignified and efficient manner assuming that an investor
transaction does not immediately materialize in the Chapter 11 case," said Mark
Charles Paben of Preston Gates & Ellis LLP (701 Fifth Avenue, Suite 5000,
Seattle, WA 98104), bankruptcy counsel for the Company. Paben was also lead
bankruptcy counsel to the Company in its previous Chapter 11 case filed in 1994.
Information about the Company's filing may be obtained by calling its bankruptcy
counsel at 206-467-8429.

         The Company was founded in 1941. Founder Jay Jacobs resigned as
Chairman of the Board in June 1997 and as a board member in November 1997. By
the late 1980s, the Company operated approximately 300 stores nationwide. In the
early 1990s, however, it suffered from increased competition and expansion
costs, leading to bankruptcy in May 1994. After closing numerous stores and
shifting focus, the Company emerged from Chapter 11 after confirmation of its
plan of reorganization the following year. In October 1995, the Company operated
153 stores. Since confirmation, however, the Company faced generally declining
sales, net store closures, and a shortage of capital. In December 1997, the
Bankruptcy Court approved a recapitalization as a modification to the 1995
reorganization plan, but liquidity problems escalated from October 1998 forward.

         Concerted efforts to develop viable alternatives for the Company
continued up to the time of the bankruptcy filing. "If there are any
opportunities to restructure the Company even after the filing, we will pursue
them," Lawrence said.

         ALL FORWARD LOOKING STATEMENTS MADE BY THE COMPANY INVOLVE MATERIAL
RISKS AND UNCERTAINTIES AND ARE SUBJECT TO CHANGE BASED ON FACTORS BEYOND THE
COMPANY'S CONTROL. ACCORDINGLY, THE COMPANY'S FUTURE PERFORMANCE AND FINANCIAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN ANY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DESCRIBED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
THE COMPANY DOES NOT UNDERTAKE TO PUBLICLY UPDATE OR REVISE ITS FORWARD-LOOKING
STATEMENTS EVEN IF EXPERIENCE OR FUTURE CHANGES MAKE IT CLEAR THAT ANY PROJECTED
RESULTS EXPRESSED OR IMPLIED THEREIN WILL NOT BE REALIZED.