<PAGE>

                      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 July 1, 2000

                                      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 0-23669

                              SHOE PAVILION, INC.
             (Exact name of Registrant as Specified in its Charter)

                      Delaware                                  94-3289691
     (State or Other Jurisdiction of Incorporation            (IRS Employer
                   or Organization)                    Identification Number)

             3200-F Regatta Boulevard, Richmond, California 94804
             (Address of principal executive offices)   (Zip Code)

                                (510) 970-9775
             (Registrant's telephone number, including area code)

  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]. No [_].

  Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

   As of August 7, 2000 the Registrant had 6,800,000 shares of Common Stock
                                 outstanding.
<PAGE>

                          FORWARD-LOOKING STATEMENTS

     This Quarterly Report on Form 10-Q contains certain "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act of
1995 which provides a "safe harbor" for these types of statements.  These
forward-looking statements are subject to risks and uncertainties that could
cause the Company's actual results to differ materially from management's
current expectations.  These factors include, without limitation, change in the
trend of same store sales, competitive pressures in the footwear industry,
changes in the level of consumer spending on or preferences in footwear
merchandise, the Company's ability to purchase attractive name brand merchandise
at desirable discounts and the availability of desirable store locations and
management's ability to negotiate acceptable lease terms and open new stores in
a timely manner.  Other risk factors are detailed in the Company's filings with
the Securities and Exchange Commission.  The Company assumes no obligation to
update forward-looking statements.

                              SHOE PAVILION, INC.
                              INDEX TO FORM 10-Q

                                    PART I
                             FINANCIAL INFORMATION

<TABLE>
<CAPTION>
Item 1 - Condensed Consolidated Financial Statements (Unaudited):                      Page
                                                                                       ----
<S>                                                                                    <C>
         Condensed Consolidated Balance Sheets........................................   3
         Condensed Consolidated Statements of Income..................................   4
         Condensed Consolidated Statements of Cash Flows..............................   5
         Notes to Condensed Consolidated Financial Statements.........................   6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of
          Operations.................................................................. 7-8
Item 3 - Quantitative and Qualitative Disclosures About Market Risk...................   8

                                    PART II
                               OTHER INFORMATION

Item 4 - Submission of Matters to a Vote of Security Holders..........................   9

Item 6 - Exhibits and Reports on Form 8-K.............................................   9
</TABLE>

                                       2
<PAGE>

                                    PART I
                             FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements.

  The following financial statements and related financial information are filed
as part of this report:

                              Shoe Pavilion, Inc.
                     Condensed Consolidated Balance Sheets
                                  (Unaudited)

<TABLE>
<CAPTION>
(In thousands, except share data)                                           July 1,            January 1,
                                                                              2000                  2000
<S>                                                                        <C>                <C>
               ASSETS

Current assets
    Cash                                                                   $   638               $   929
    Accounts receivable                                                        147                   578
    Inventories                                                             39,461                32,985
    Prepaid expenses and other                                                 916                   609
                                                                           -------               -------
            Total current assets                                            41,162                35,101

Property and equipment, net                                                  5,254                 5,540
Other assets                                                                   950                   971
                                                                           -------               -------
            Total assets                                                   $47,366               $41,612
                                                                           =======               =======

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Accounts payable                                                      $11,034               $11,139
     Accrued expenses                                                        2,122                 1,643
     Short-term borrowings                                                  12,186                 8,000
     Current portion of capital lease obligations                               14                    13
                                                                           -------               -------
            Total current liabilities                                       25,356                20,795

Deferred rent                                                                1,538                 1,712
Capital lease obligations, less current portion                                 54                    62
                                                                           -------               -------
            Total liabilities                                               26,948                22,569
                                                                           -------               -------

Stockholders' equity
      Preferred stock- $.001 par value; 1,000,000 shares authorized;
      no shares issued or outstanding                                            -                     -
      Common stock- $.001 par value: 15,000,000 shares authorized;
      6,800,000 shares issued and outstanding                                    7                     7
      Additional paid-in capital                                            13,967                13,967
      Retained earnings                                                      6,444                 5,069
                                                                           -------               -------
            Total stockholders' equity                                      20,418                19,043
                                                                           -------               -------
            Total liabilities and stockholders' equity                     $47,366               $41,612
                                                                           =======               =======
</TABLE>

See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                              Shoe Pavilion, Inc.
                  Condensed Consolidated Statements of Income
                                  (Unaudited)

(In thousands, except per share and operating data)

<TABLE>
<CAPTION>
                                                          Thirteen weeks ended     Twenty-six weeks ended

                                                            July 1,    July 3,        July 1,     July 3,
                                                              2000       1999           2000        1999
<S>                                                       <C>         <C>          <C>           <C>
Net sales                                                  $24,951    $17,190        $44,273     $31,443
Cost of sales and related occupancy expenses                16,400     11,167         29,635      20,763
                                                           -------    -------        -------     -------
         Gross profit                                        8,551      6,023         14,638      10,680
Selling, general and administrative expenses                 6,392      4,520         11,913       8,138
                                                           -------    -------        -------     -------
         Income from operations                              2,159      1,503          2,725       2,542
Interest expense                                               233        138            423         276
Other (income) expense                                          31         (1)            30          (5)
                                                           -------    -------        -------     -------
Income before taxes                                          1,895      1,366          2,272       2,271
Income tax provision                                           749        524            897         886
                                                           -------    -------        -------     -------
Net Income                                                 $ 1,146    $   842        $ 1,375     $ 1,385
                                                           =======    =======        =======     =======

Earnings per share:
Basic                                                      $  0.17    $  0.12        $  0.20     $  0.20
Diluted                                                    $  0.17    $  0.12        $  0.20     $  0.20

Weighted average shares outstanding:
Basic                                                        6,800      6,800          6,800       6,800
Diluted                                                      6,801      6,800          6,802       6,802

Stores Open at end of period                                                             112          76
</TABLE>

              See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                              Shoe Pavilion, Inc.
                Condensed Consolidated Statements of Cash Flows
                                  (Unaudited)

(In thousands)

<TABLE>
<CAPTION>
                                                                Twenty-Six Weeks Ended
                                                                July 1,         July 3,
                                                                 2000            1999
<S>                                                             <C>            <C>
Operating activities:
Net income                                                      $ 1,375        $  1,385
Adjustments to reconcile net income to net cash
  provided (used) by operating activities:
  Depreciation and amortization                                     693             549
  Loss on disposal of assets                                         40               -
  Deferred taxes                                                      -             (23)
  Effect of changes in:
     Accounts receivable                                            431               -
     Inventories                                                 (6,476)         (3,609)
     Prepaid expenses and other                                    (286)           (388)
     Accounts payable                                              (105)           2,960
     Accrued expenses                                               479            (432)
     Deferred rent                                                 (174)            296
                                                                -------        --------
        Net cash provided (used) by operating activities         (4,023)            738
                                                                -------        --------

Investing activity-
   Purchase of property and equipment, net                         (447)         (1,345)
                                                                -------        --------

Financing activities:
   Proceeds (payments) from (on) line of credit                   4,186            (407)
   Principal payments on capital leases                              (7)             (6)
                                                                -------        --------
        Net cash provided (used) by financing activities        4,179            (413)
                                                                -------        --------
Net decrease in cash                                               (291)         (1,020)
Cash, beginning of period                                           929           1,922
                                                                -------        --------
Cash, end of period                                             $   638        $    902
                                                                =======        ========
</TABLE>

           See notes to condensed consolidated financial statements.

                                       5
<PAGE>

                              Shoe Pavilion, Inc.

              Notes to Condensed Consolidated Financial Statements

1.  Basis of Presentation

General - The accompanying unaudited condensed consolidated financial statements
have been prepared from the records of Shoe Pavilion, Inc. (the "Company")
without audit, and in the opinion of management, include all adjustments
necessary to present fairly the financial position of the Company and the
results of its operations and its cash flows for the periods presented. The
balance sheet as of January 1, 2000 presented herein has been derived from the
audited financial statements of the Company as of January 1, 2000.

Accounting policies followed by the Company are described in Note 2 to the
audited consolidated financial statements for the year ended January 1, 2000.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted for purposes of the condensed consolidated
interim financial statements. The condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial
statements, including the notes thereto, for the year ended January 1, 2000 on
Form 10-K.

The results of operations for the thirteen-weeks and twenty-six weeks periods
presented herein are not necessarily indicative of the results to be expected
for the full year.


Comprehensive Income and net income are the same.

2.  New Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which defines
derivatives, requires that derivatives be carried at fair value and provides for
hedge accounting when certain conditions are met.  This statement is effective
for the Company beginning in the year 2001.  The Company believes adoption of
this statement will not have a material impact on its consolidated financial
statements.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) NO. 101, "Revenue Recognition in Financial Statements," which
provides the SEC staff's views on selected revenue recognition issues.  The
guidance in SAB 101 must be adopted during the Company's quarter ended December
30, 2000 and the effects, if any, are required to be recorded through a
retroactive, cumulative-effect adjustment as of the beginning of the fiscal
year, with a restatement of all prior interim quarters in the year.  Management
does not believe that the adoption of the provisions of SAB 101 will have a
material impact on the Company's income statement presentation, operating
results or financial position.

                                       6
<PAGE>

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

Overview

Shoe Pavilion is the largest independent off-price footwear retailer on the West
Coast that offers a broad selection of women's and men's designer label and name
brand merchandise. The Company operated 77 retail stores in California,
Washington and Oregon and 35 licensed shoe departments in Colorado, Illinois,
Iowa, Kansas, Missouri, Nebraska, Oklahoma and South Dakota as of July 1, 2000.

The Company operates and manages the 35 shoe departments pursuant to a licensing
agreement with Gordmans, Inc., a midwestern department store. The Company
entered into the Gordmans license agreement in July 1999 and began to operate
and manage the shoe departments shortly thereafter.

Results of Operations

     Net sales for the thirteen weeks ended July 1, 2000 increased 45.1% to
$25.0 million, from sales of $17.2 million in the comparable period last year.
Net sales for the twenty-six weeks ended July 1, 2000 increased 40.8% to $44.3
million, from sales of $31.4 million in the comparable period last year. The
increases in sales for the thirteen and twenty-six weeks ended July 1, 2000 are
principally attributable to new stores sales of $7.4 million and $13.3 million,
respectively. In addition, the Company's comparable store net sales increased
13.4% and 9.2% for the thirteen weeks and twenty-six weeks ended July 1, 2000,
respectively. Those increases were partially offset by stores closed.

     Gross profit for the thirteen weeks ended July 1, 2000 increased 42.0% to
$8.6 million from gross profit of $6.0 million for the same period last year.
Gross profit as a percent of sales decreased to 34.3% for the thirteen weeks
ended July 1, 2000 from 35.0%  for the same period last year. For the twenty-six
weeks ended July 1, 2000 gross profit increased 37.1% to $14.6 million, from
gross profit of $10.7 million for the comparable period last year.  Gross profit
as a percent of sales decreased to 33.1% for the twenty-six weeks ended July 1,
2000 from 34.0% for the comparable period last year. The increase in gross
margin dollars for the thirteen weeks and twenty-six weeks ended July 1, 2000 is
principally attributable to the increased sales during these periods.

     Selling, general and administrative expenses increased by $1.9 million or
41.4% for the thirteen weeks ended July 1, 2000 as compared with the same period
last year but decreased as a percentage of net sales to 25.6% from 26.3% for the
same period last year.  Selling, general and administrative expenses increased
by $3.8 million or 46.4% for the twenty-six weeks ended July 1, 2000 as compared
with the same period last year and  increased as a percentage of net sales to
26.9% from 25.9% for the same period last year. The increases in selling,
general and administrative expenses during the thirteen weeks and twenty-six
weeks ended July 1, 2000 are principally attributable to increased sales payroll
and related benefits, other selling costs, additional advertising and freight
out related to the increased sales during the quarter. In addition,
administrative expenses increased during the thirteen weeks and twenty-six weeks
ended July 1, 2000 as the result of additional staff to support the increased
sales and costs associated with the new information system.

     Interest expense increased $95,000 and $147,000 for the thirteen weeks and
twenty-six weeks ended July 1, 2000 as compared with the same periods in 1999.
These increases are principally attributable to higher average borrowings on the
Company's revolving line of credit to support increased inventory levels for new
stores and higher sales. In addition interest rates during the thirteen weeks
and twenty-six weeks ended July 1, 2000 increased compared to the same periods
in 1999.


                                       7
<PAGE>

Liquidity and Capital Resources

The Company has historically funded its cash requirements primarily through cash
flow from operations and borrowings under its credit facility. Net cash used by
operating activities during the twenty-six week period ended July 1, 2000
totaled $4.0 million and was primarily used to fund increased inventory levels.
Net cash, provided by financing activities, for the twenty-six-week period ended
July 1, 2000 totaled $4.2 million and was drawn down from the Company's line of
credit.

Capital expenditures for the twenty-six week period ended July 1, 2000 were
$447,000. These expenditures were principally related to the build-out of two
new stores and two leased departments, equipment for the Company's distribution
facility, the remodeling of two stores and new fixtures for three stores. The
Company's primary cash requirements have been related to capital expenditures
for new stores, including merchandise inventory for such stores and leasehold
improvements. During the remainder of the Company's fiscal year 2000, the
Company anticipates that cash will be used primarily for merchandise inventory
and capital expenditures.

The Company has a credit facility agreement with a commercial bank, which
includes a revolving line of credit for $20.0 million expiring on May 30, 2001.
As of July 1, 2000, the unused and available portion of the credit facility was
approximately $4.5 million.

New Accounting Standards

See Note 2 of the Notes to Condensed Consolidated Financial Statements for a
description of new accounting standards.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes from the information reported in the
Company's Form 10-K for the fiscal year ended January 1, 2000.

                                       8
<PAGE>

                                    PART II

                               OTHER INFORMATION



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

     In April 2000, the Company submitted to shareholders two matters both of
which were approved at the annual meeting held on May 17, 2000. The matters
were: (1) to elect four directors to serve on the board of directors until the
next annual meeting of stockholders and until their successors shall have been
elected; and (2) to ratify the selection of Deloitte & Touche LLP as independent
auditors for the Company.

     At the annual meeting, the following directors received the following
votes:
<TABLE>
<CAPTION>

                             FOR     WITHHELD
                          ---------  --------
     <S>                  <C>        <C>
     Dmitry Beinus        6,639,929    21,350
     Gary A. Schwartz     6,639,929    21,350
     David H. Folkman     6,639,929    21,350
     Peter G. Hanelt      6,639,929    21,350
</TABLE>

The shareholders ratified the selection of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending December 30, 2000 with
voting as follows: 6,653,979 For, 7,300 Against, and 138,721 No Vote.

On June 2, 2000, Gary A. Schwartz resigned as Chief Financial Officer of the
Company and as a member of the board of directors. On June 5, 2000, John D.
Hellmann was hired as Chief Financial Officer of the Company. No replacement for
Mr. Schwartz has been named to serve on the board of directors.

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

     (a)  Exhibits required to be filed by Item 601 of Regulation S-K:

          27.1 Financial Data Schedule

     (b)  Reports on Form 8-K filed during the quarter ended July 1, 2000:

          None.

                                       9
<PAGE>

                                  SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 11th day of August 2000.

                              SHOE PAVILION, INC., as Registrant


                              By /s/ Dmitry Beinus
                              -------------------------------------------
                              Dmitry Beinus
                              Chairman and Chief Executive Officer

                              By  /s/ John D. Hellmann
                              -------------------------------------------
                              John D. Hellmann
                              Vice President and Chief Financial Officer

                                       10
<PAGE>

                               INDEX TO EXHIBITS


Exhibit Number  Description
--------------  -----------

27.1            Financial Data Schedule