================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

     _X_  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934

          For the Quarterly Period Ended May 5, 2001

                                       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: 0-25716



                            FINLAY ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                               13-3492802
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)



         529 Fifth Avenue, New York, NY                       10017
    (Address of principal executive offices)                (zip code)

                                 (212) 808-2800
              (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 ___

As of June 15, 2001,  there were  10,372,806  shares of common stock,  par value
$.01 per share, of the Registrant outstanding.


<PAGE>


                             FINLAY ENTERPRISES, INC

                                    FORM 10-Q

                       QUARTERLY PERIOD ENDED MAY 5, 2001

                                      INDEX



<TABLE>
<CAPTION>
                                                                                       PAGE(S)
                                                                                       -------

<S>                                                                                      <C>
PART I - FINANCIAL INFORMATION

     Item 1.  Consolidated Financial Statements (Unaudited)

              Consolidated Statements of Operations for the thirteen weeks
              ended April 29, 2000 and May 5, 2001........................................1

              Consolidated Balance Sheets as of February 3, 2001 and May 5, 2001..........2

              Consolidated Statements of Changes in Stockholders' Equity for the year
              ended February 3, 2001 and thirteen weeks ended May 5, 2001.................3

              Consolidated Statements of Cash Flows for the thirteen weeks
              ended April 29, 2000 and May 5, 2001........................................4

              Notes to Consolidated Financial Statements..................................5

     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations..............................10

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk.................15


PART II - OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K...........................................16

SIGNATURES...............................................................................17
</TABLE>


<PAGE>


PART I - FINANCIAL INFORMATION
  Item 1. Consolidated Financial Statements



                            FINLAY ENTERPRISES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except share and per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                       Thirteen Weeks Ended
                                                                   -----------------------------

                                                                     April 29,         May 5,
                                                                       2000             2001
                                                                   ------------     ------------

<S>                                                                <C>              <C>
Sales ...........................................................  $    178,614     $    193,249
Cost of sales ...................................................        87,336           94,881
                                                                   ------------     ------------
    Gross margin ................................................        91,278           98,368
Selling, general and administrative expenses ....................        82,736           89,415
Depreciation and amortization ...................................         4,204            4,828
                                                                   ------------     ------------
    Income (loss) from operations ...............................         4,338            4,125
Interest expense, net ...........................................         6,897            6,738
                                                                   ------------     ------------
    Income (loss) before income taxes ...........................        (2,559)          (2,613)
Provision (benefit) for income taxes ............................          (787)            (894)
                                                                   ------------     ------------
    Net income (loss) ...........................................  $     (1,772)    $     (1,719)
                                                                   ============     ============

Net income (loss) per share applicable to common shares:
       Basic net income (loss) per share ........................  $      (0.17)    $      (0.17)
                                                                   ============     ============
       Diluted net income (loss) per share ......................  $      (0.17)    $      (0.17)
                                                                   ============     ============
Weighted average shares and share equivalents outstanding .......    10,419,705       10,290,386
                                                                   ============     ============
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       1
<PAGE>


                            FINLAY ENTERPRISES, INC.
                           CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)


<TABLE>
<CAPTION>
                                                                                                 (unaudited)
                                                                                  February 3,      May 5,
                                                                                     2001           2001
                                                                                  ----------     -----------
<S>                                                                                <C>            <C>
                                      ASSETS
Current assets
  Cash and cash equivalents ....................................................   $  31,662      $   3,095
  Accounts receivable - department stores ......................................      23,677         38,013
  Other receivables ............................................................      30,856         30,148
  Merchandise inventories ......................................................     326,511        328,855
  Prepaid expenses and other ...................................................       2,880          3,646
                                                                                   ---------      ---------
     Total current assets ......................................................     415,586        403,757
                                                                                   ---------      ---------
Fixed assets
  Equipment, fixtures and leasehold improvements ...............................     117,871        121,487
  Less - accumulated depreciation and amortization .............................      44,028         47,198
                                                                                   ---------      ---------
     Fixed assets, net .........................................................      73,843         74,289
                                                                                   ---------      ---------
Deferred charges and other assets ..............................................      22,161         23,407
Goodwill .......................................................................      94,799         93,861
                                                                                   ---------      ---------
     Total assets ..............................................................   $ 606,389      $ 595,314
                                                                                   =========      =========

                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Notes payable ................................................................   $    --        $  90,165
  Accounts payable - trade .....................................................     162,242         75,943
  Accrued liabilities:
     Accrued salaries and benefits .............................................      20,806         21,422
     Accrued miscellaneous taxes ...............................................       4,118          4,750
     Accrued interest ..........................................................       5,270            681
     Other .....................................................................      18,203         19,383
  Income taxes payable .........................................................      21,576         10,622
  Deferred income taxes ........................................................       3,097          3,199
                                                                                   ---------      ---------
     Total current liabilities .................................................     235,312        226,165
Long-term debt .................................................................     225,000        225,000
Other non-current liabilities ..................................................      11,737         12,110
                                                                                   ---------      ---------
     Total liabilities .........................................................     472,049        463,275
                                                                                   ---------      ---------
Stockholders' equity
  Common Stock, par value $.01 per share; authorized 25,000,000 shares;
     issued and outstanding 10,336,986 and 10,372,806 shares, respectively .....         104            105
  Additional paid-in capital ...................................................      77,332         78,573
  Retained earnings ............................................................      58,023         56,304
  Unamortized restricted stock compensation ....................................        --           (1,142)
  Accumulated other comprehensive income .......................................        --              183
  Less treasury stock, at cost .................................................      (1,119)        (1,984)
                                                                                   ---------      ---------
     Total stockholders' equity ................................................     134,340        132,039
                                                                                   ---------      ---------
     Total liabilities and stockholders' equity ................................   $ 606,389      $ 595,314
                                                                                   =========      =========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       2
<PAGE>


                            FINLAY ENTERPRISES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                        (in thousands, except share data)


<TABLE>
<CAPTION>
                                          Common Stock                          Unamortized    Accumulated
                                          ------------   Additional  Retained    Restricted       Other                   Total
                                      Number              Paid-in    Earnings      Stock      Comprehensive  Treasury  Stockholders'
                                     of shares   Amount   Capital    (Deficit)  Compensation     Income        Stock      Equity
                                     ---------   ------  ----------  ---------  ------------  -------------  --------  -------------

<S>                                 <C>           <C>     <C>        <C>            <C>           <C>         <C>        <C>
Balance, January 29, 2000 ......... 10,416,353    $104    $77,194    $ 31,502       $  --         $--         $  --      $ 108,800
  Net income (loss) ...............       --       --        --        26,521          --          --            --         26,521
  Exercise of stock options .......     12,633     --         138        --            --          --            --            138
  Purchase of treasury stock ......    (92,000)    --        --          --            --          --          (1,119)      (1,119)
                                    ----------    ----    -------    --------        ------       ---         -------    ---------
Balance, February 3, 2001 ......... 10,336,986     104     77,332      58,023          --          --          (1,119)     134,340
  Net income (loss) ...............       --       --        --        (1,719)         --          --            --         (1,719)
  Accumulated other comprehensive
     income .......................       --       --        --          --            --          183           --            183
  Exercise of stock options .......      2,400     --          23        --            --          --            --             23
  Issuance of restricted stock ....    100,000       1      1,218        --          (1,142)       --            --             77
  Purchase of treasury stock ......    (66,580)    --        --          --            --          --            (865)        (865)
                                    ----------    ----    -------    --------        ------       ---         -------    ---------
Balance, May 5, 2001
(unaudited) ....................... 10,372,806    $105    $78,573    $ 56,304       $(1,142)      $183        $(1,984)   $ 132,039
                                    ==========    ====    =======    ========        ======       ===         =======    =========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       3
<PAGE>


                            FINLAY ENTERPRISES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                                        Thirteen Weeks Ended
                                                                                     --------------------------
                                                                                     April 29,         May 5,
                                                                                       2000             2001
                                                                                     ---------        ---------
<S>                                                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss) ................................................................ $  (1,772)       $  (1,719)
  Adjustments to reconcile net income (loss) to net cash used in
     operating activities:
  Depreciation and amortization ....................................................     4,510            5,137
  Amortization of restricted stock compensation ....................................      --                 77
  Other, net .......................................................................       827              583
  Changes in operating assets and liabilities, net of effects from purchase of J.B .
     Rudolph assets (Note 6):
     Increase in accounts and other receivables ....................................   (26,850)         (13,669)
     Increase in merchandise inventories ...........................................   (24,579)          (2,344)
     Increase in prepaid expenses and other ........................................    (2,154)            (771)
     Decrease in accounts payable and accrued liabilities ..........................   (45,007)         (99,159)
                                                                                     ---------        ---------
        NET CASH USED IN OPERATING ACTIVITIES ......................................   (95,025)        (111,865)
                                                                                     ---------        ---------


CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of equipment, fixtures and leasehold improvements ......................    (3,833)          (3,857)
  Deferred charges and other, net ..................................................      (554)          (2,168)
  Proceeds from sale of Sonab assets ...............................................     6,792             --
  Payment for purchase of J.B. Rudolph assets ......................................   (20,605)            --
                                                                                     ---------        ---------
        NET CASH USED IN INVESTING ACTIVITIES ......................................   (18,200)          (6,025)
                                                                                     ---------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from revolving credit facility ..........................................   202,919          229,618
  Principal payments on revolving credit facility ..................................  (116,310)        (139,453)
  Purchase of treasury stock .......................................................      --               (865)
  Stock options exercised ..........................................................        45               23
                                                                                     ---------        ---------
        NET CASH PROVIDED FROM FINANCING ACTIVITIES ................................    86,654           89,323
                                                                                     ---------        ---------
        EFFECT OF EXCHANGE RATE CHANGES ON CASH ....................................      (575)            --
                                                                                     ---------        ---------
        DECREASE IN CASH AND CASH EQUIVALENTS ......................................   (27,146)         (28,567)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .....................................    35,107           31,662
                                                                                     ---------        ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ........................................... $   7,961        $   3,095
                                                                                     =========        =========

Supplemental disclosure of cash flow information:
  Interest paid .................................................................... $   1,227        $  11,018
  Income taxes paid ................................................................     2,663            8,864
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       4
<PAGE>


                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements of Finlay
Enterprises,  Inc.  (the  "Company" or the  "Registrant"),  and its wholly owned
subsidiary,  Finlay Fine Jewelry  Corporation and its wholly owned  subsidiaries
("Finlay  Jewelry"),  have been prepared in accordance  with generally  accepted
accounting principles for interim financial information.  References to "Finlay"
mean collectively, the Company and Finlay Jewelry. In the opinion of management,
the  accompanying   unaudited  consolidated  financial  statements  contain  all
adjustments necessary to present fairly the financial position of the Company as
of May 5, 2001,  and the results of  operations  and cash flows for the thirteen
weeks ended April 29, 2000 and May 5, 2001.  Due to the  seasonal  nature of the
business,  results for interim periods are not indicative of annual results. The
unaudited  consolidated  financial  statements  have  been  prepared  on a basis
consistent  with that of the audited  consolidated  financial  statements  as of
February 3, 2001 referred to below. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted  pursuant to the
rules  and   regulations  of  the  Securities  and  Exchange   Commission   (the
"Commission").

     These consolidated  financial statements should be read in conjunction with
the audited consolidated  financial statements and notes thereto included in the
Company's  annual report on Form 10-K for the fiscal year ended February 3, 2001
("Form 10-K") previously filed with the Commission.

     The  Company's  fiscal  year ends on the  Saturday  closest to January  31.
References  to 1998,  1999,  2000 and 2001  relate to the  fiscal  years  ending
January 30,  1999,  January  29,  2000,  February 3, 2001 and  February 2, 2002,
respectively.  Each of the fiscal years includes 52 weeks,  except 2000 includes
53 weeks.

     The Company  recorded a tax provision  based on an estimated  annual income
tax rate. In addition,  the Company has recognized an intraperiod tax benefit as
it has projected  that there will be a profit in the fourth  quarter and for the
fiscal year.

     Net income (loss) per share has been computed in accordance  with Statement
of Financial  Accounting Standards ("SFAS") No. 128, "Earnings per Share". Basic
and  diluted  net income  (loss) per share were  calculated  using the  weighted
average  number of shares  outstanding  during  each  period,  with  options  to
purchase Common Stock included in diluted net income (loss) per share, using the
treasury  stock method,  to the extent that such options were  dilutive.  As the
Company had a net loss for the  thirteen  weeks ended May 5, 2001,  the dilutive
stock options  outstanding are not considered in the calculation of dilutive net
income  (loss) per share due to their  anti-dilutive  effect.  As a result,  the
weighted  average  number  of  shares  outstanding  used for both the  basic and
dilutive net income (loss) per share calculations was the same.

     In 1998,  the  Company  adopted  SFAS  No.  130,  "Reporting  Comprehensive
Income". This Statement requires disclosure of comprehensive income,  defined as
the total of net income and all other  nonowner  changes in equity,  which under
generally  accepted  accounting   principles,   are  recorded  directly  to  the
stockholders'  equity section of the consolidated  balance sheet and, therefore,
bypass net  income.  In 2000,  there were no such  adjustments  and,  therefore,
comprehensive  income (loss) was the same as the Company's net income (loss). In
2001, the only non-owner change in equity related to the change in fair


                                       5
<PAGE>


                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION (continued)

value of the Company's outstanding gold forward contracts (Refer to Note 3). For
the thirteen weeks ended May 5, 2001, the comprehensive loss was $1.5 million.

NOTE 2 - DESCRIPTION OF BUSINESS

     The Company conducts business through its wholly owned  subsidiary,  Finlay
Jewelry.  Finlay is a retailer of fine jewelry  products and primarily  operates
leased fine jewelry  departments  in  department  stores  throughout  the United
States.  Over the past three fiscal years,  the fourth quarter  accounted for an
average of 42% of Finlay's  sales due to the  seasonality  of the retail jewelry
industry.  Approximately  47% of Finlay's sales in 2000 were from  operations in
The May  Department  Stores Company  ("May") and 22% in departments  operated in
store groups owned by Federated Department Stores ("Federated").

NOTE 3 - MERCHANDISE INVENTORIES

     Merchandise inventories consisted of the following:


<TABLE>
<CAPTION>
                                                                                 (unaudited)
                                                                   February 3,     May 5,
                                                                      2001          2001
                                                                   ----------    ----------
                                                                        (in thousands)
<S>                                                                 <C>           <C>
     Jewelry goods - rings, watches and other fine jewelry
         (specific identification basis) .......................... $332,693      $335,227
     Less:  Excess of specific identification cost over LIFO
         inventory value ..........................................    6,182         6,372
                                                                    --------      --------
                                                                    $326,511      $328,855
                                                                    ========      ========
</TABLE>


     The LIFO method had the effect of  increasing  the loss before income taxes
for the  thirteen  weeks  ended  April 29,  2000 and May 5, 2001 by $88,000  and
$191,000, respectively.  Finlay determines its LIFO inventory value by utilizing
selected  producer price indices published for jewelry and watches by the Bureau
of Labor Statistics.

     Approximately  $381,724,000 and $375,840,000 at February 3, 2001 and May 5,
2001,  respectively,  of merchandise  received on consignment  has been excluded
from  Merchandise  inventories and Accounts  payable-trade  in the  accompanying
Consolidated Balance Sheets.

     Finlay  Jewelry  is party  to an  amended  and  restated  gold  consignment
agreement  (the "Gold  Consignment  Agreement"),  which  expires on December 31,
2001.  The  Gold  Consignment   Agreement  enables  Finlay  Jewelry  to  receive
merchandise by providing gold, or otherwise  making payment,  to certain vendors
who supply Finlay Jewelry with merchandise on consignment. While the merchandise
involved  remains  consigned,  title  to the  gold  content  of the  merchandise
transfers  from the vendors to the gold  consignor.  Finlay  Jewelry can obtain,
pursuant to the Gold Consignment Agreement, up to the lesser of (i) 130,000 fine
troy  ounces or (ii)  $37.0  million  worth of gold,  subject  to a  formula  as
prescribed  by  the  Gold  Consignment  Agreement.   At  May  5,  2001,  amounts
outstanding  under the Gold  Consignment  Agreement  totaled  121,189  fine troy
ounces, valued at approximately $31.9 million. For


                                       6
<PAGE>


                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - MERCHANDISE INVENTORIES (continued)

financial statement purposes,  the consigned gold is not included in Merchandise
inventories  on the Company's  Consolidated  Balance Sheets and,  therefore,  no
related liability has been recorded.

     The cost to Finlay of gold merchandise sold on consignment in some cases is
not fixed until the sale is reported to the vendor or to the gold  consignor  in
the case of merchandise sold pursuant to the Gold Consignment Agreement.  Finlay
at times enters into futures contracts,  such as options or forwards, based upon
the  anticipated  sales of gold product,  to hedge against the risk arising from
those payment arrangements. At February 3, 2001 and May 5, 2001, the Company had
several open positions in futures  contracts for gold totaling 46,300 and 61,300
fine troy ounces, valued at $12.6 million and $16.6 million, respectively, which
expire during 2001.

     On February 4, 2001,  the Company  adopted  SFAS No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities". This Statement requires that all
derivative  instruments  be recorded in the balance  sheet as either an asset or
liability  measured at its fair value.  The Company has  designated the existing
derivative  instruments,  consisting  of gold  forward  contracts,  as cash flow
hedges. For derivative instruments designated as cash flow hedges, the effective
portion of the change in the fair value of the  derivative  is recorded in other
comprehensive  income,  a separate  component of  stockholders'  equity,  and is
reclassified into earnings when the offsetting effects of the hedged transaction
affects  earnings.  Upon adoption,  the fair value of the gold forward contracts
resulted in the  recognition of an asset of $24,000,  net of tax. At May 5, 2001
the fair value of the gold forward  contracts  resulted in the recognition of an
asset of  $183,000,  net of tax,  of which the entire  amount is  expected to be
reclassified into earnings during 2001.

     The Company has documented all  relationships  between hedging  instruments
and hedged items,  as well as its risk  management  objectives  and strategy for
undertaking various hedge transactions.  The Company also assesses,  both at the
hedge's inception and on an ongoing basis, whether the derivatives that are used
in hedging transactions are highly effective in offsetting changes in cash flows
of hedged items. The Company believes that the designated  hedges will be highly
effective and that the related hedge  accounting will not have a material impact
on the Company's results of operations.

NOTE 4 - LEASE AGREEMENTS

     Finlay conducts  substantially all of its operations as leased  departments
in department  stores.  All of these leases, as well as rentals for office space
and equipment,  are accounted for as operating  leases. A substantial  number of
such  operating  leases expire on various dates  through  2008.  All  references
herein to leased  departments refer to departments  operated pursuant to license
agreements or other arrangements with host department stores.

     Substantially  all of the department store leases provide that the title to
certain fixed assets of Finlay  transfers upon  termination  of the leases,  and
that Finlay will receive the  undepreciated  value of such fixed assets from the
host store in the event such transfers occur, although the depreciation schedule
provided  for in the lease may  differ  from that used for  financial  reporting
purposes.  The values of such fixed assets are recorded at the  inception of the
lease  arrangement and are reflected in the  accompanying  Consolidated  Balance
Sheets.

     In many cases,  Finlay is subject to limitations under its lease agreements
with host department stores which prohibit Finlay from operating departments for
other store groups within a certain geographical radius of the host store.


                                       7
<PAGE>


                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - LEASE AGREEMENTS (continued)

     The store leases  provide for the payment of fees based on sales,  plus, in
some instances,  installment payments for fixed assets. Lease expense,  included
in Selling, general and administrative expenses, is as follows:

                                      Thirteen Weeks Ended
                                    ------------------------
                                    April 29,         May 5,
                                      2000             2001
                                    ---------        -------
                                         (in thousands)
     Minimum fees ..............     $ 2,764         $ 1,932
     Contingent fees ...........      26,463          30,002
                                     -------         -------
       Total ...................     $29,227         $31,934
                                     =======         =======


NOTE 5 - SALE AND CLOSURE OF SONAB

     On January 3, 2000,  Societe  Nouvelle  d'Achat de  Bijouterie - S.O.N.A.B.
("Sonab"), the Company's European leased jewelry department subsidiary, sold the
majority  of its assets  for  approximately  $9.9  million.  To date,  Sonab has
received  $8.8  million  and the  balance  remains  subject  to  certain  escrow
arrangements among the parties.  After the sale, the buyer operated more than 80
locations  previously  included  in Sonab's  130-location  base in  France.  The
remaining departments were closed.

NOTE 6 - JAY B. RUDOLPH, INC. ACQUISITION

     On April 3, 2000, Finlay completed the acquisition of certain assets of Jay
B. Rudolph,  Inc. ("J.B.  Rudolph") for $20.6 million,  consisting  primarily of
inventory of approximately  $16.3 million and fixed assets of approximately $4.0
million.  By acquiring J.B.  Rudolph (the "J.B.  Rudolph  Acquisition"),  Finlay
added  57  departments  and  also  added  new  host  store   relationships  with
Bloomingdale's,  Dayton's,  and  Hudson's.  Finlay  financed  the  J.B.  Rudolph
Acquisition  with  borrowings  under Finlay's  revolving  credit  agreement with
General  Electric  Capital  Corporation  and  the  other  lenders  thereto  (the
"Revolving Credit Agreement").

     The  J.B.  Rudolph  Acquisition  was  accounted  for  as a  purchase,  and,
accordingly,  the operating results of the former J.B. Rudolph  departments have
been included in the Company's  consolidated financial statements since the date
of  acquisition.  The Company has recorded  goodwill of $1.7  million,  which is
being amortized over a period of ten years.


                                       8
<PAGE>


                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - STOCK REPURCHASE PROGRAM AND RESTRCTED STOCK

     On December 1, 2000, the Company  announced that its Board of Directors had
approved a stock repurchase  program to acquire up to $20 million of outstanding
Common  Stock.  Under  the  program,  the  Company,  from  time to time,  at the
discretion  of  management,  may  purchase  its Common  Stock on the open market
through  September 29, 2001.  The extent and timing of  repurchases  will depend
upon general business and market  conditions,  stock prices,  availability under
Finlay's  revolving credit facility and its cash position and requirements going
forward.  The repurchase program may be modified,  extended or terminated by the
Board of Directors at any time. In fiscal 2000, the Company  repurchased  92,000
shares at a cost of approximately $1,119,000. During the first quarter of fiscal
2001,  the Company  repurchased  an additional  66,580 shares for  approximately
$865,000.

     On February 4, 2001, an executive officer of the Company was issued 100,000
shares of Common Stock, subject to restrictions  ("Restricted Stock"),  pursuant
to a restricted stock agreement. The restricted stock becomes fully vested after
four years of continuous  employment  with the Company and is accounted for as a
component of stockholders'  equity.  Compensation  expense of approximately $1.2
million is being  amortized  over four years.  Amortization  for the quarter was
approximately $77,000.

NOTE 8 - SUBSEQUENT EVENT

     On February  8, 2001,  Federated  announced  its plans to close its Stern's
division of which Finlay  operated 23  departments.  During  March 2001,  Finlay
closed two  departments  and will close the remaining 21 departments  during the
second  quarter.  Finlay  intends to record a charge of  approximately  $900,000
related to the write off of fixed assets and employee severance.  Finlay expects
the closings to reduce sales in 2001 by an estimated $22.0 million.


                                       9
<PAGE>


PART I - FINANCIAL INFORMATION
  Item 2. Management's Discussion and Analysis of
            Financial Condition and Results of Operations

Results of Operations

     The following table sets forth  operating  results as a percentage of sales
for the periods indicated:

Statements of Operations Data
(unaudited)


                                                    Thirteen Weeks Ended
                                                    --------------------
                                                    April 29,    May 5,
                                                      2000        2001
                                                    ---------    ------
Sales .............................................   100.0%     100.0%
Cost of sales .....................................    48.9       49.1
                                                      -----      -----
    Gross margin ..................................    51.1       50.9
Selling, general and administrative expenses ......    46.3       46.3
Depreciation and amortization .....................     2.4        2.5
                                                      -----      -----
    Income (loss) from operations .................     2.4        2.1
Interest expense, net .............................     3.8        3.5
                                                      -----      -----
    Income (loss) before income taxes .............    (1.4)      (1.4)
Provision (benefit) for income taxes ..............    (0.4)      (0.5)
                                                      -----      -----
    Net income (loss) .............................    (1.0)%     (0.9)%
                                                      =====      =====


Thirteen  Weeks Ended May 5, 2001 Compared  with Thirteen  Weeks Ended April 29,
2000

     Sales.  Sales for the  thirteen  weeks  ended May 5, 2001  increased  $14.6
million,  or 8.2%,  over the comparable  period in 2000.  Comparable  department
sales (departments open for the same months during comparable periods) increased
2.3% primarily due to a shift in a Mother's Day promotional  event based on this
year's  retail  calendar.  Management  attributes  this nominal  increase in the
comparable  department  sales to a general  softening in the retail  environment
and, to a greater degree,  the jewelry  sector.  Sales from the operation of net
new  departments  contributed  $10.5  million,  primarily  relating  to the J.B.
Rudolph Acquisition and the net effect of new store openings and closings.

     With the  continuing  weak retail  environment,  the Company  continued  to
experience  a softer  than  expected  sales  trend in the month of May 2001.  In
addition, the second quarter will be negatively impacted by the earlier Mother's
Day.

     During  the  thirteen  weeks  ended  May  5,  2001,   Finlay  opened  eight
departments  and  closed  fifteen  departments.  Included  in the  openings  and
closings  were seven  departments  related to May's  acquisition  of stores from
Saks,  Inc.,  in which Finlay  operated all of the  departments.  The  remaining
openings and closings were all within existing store groups.

     Gross margin. Gross margin for the period increased by $7.1 million in 2001
compared to 2000 and as a percentage of sales,  gross margin  decreased by 0.2%,
primarily due to management's  continued efforts to increase market  penetration
and market  share  through  its  pricing  strategy  and an  increase in the LIFO
provision of $0.1 million.


                                       10
<PAGE>


     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses ("SG&A") increased $6.7 million, or 8.1%, due primarily
to payroll  expense and lease fees associated with the increase in the Company's
sales.  Positive  leveraging  of field  payroll and  administrative  expense was
offset by a planned  increase in  advertising  expenditures,  as a result of the
earlier  Mother's  Day. As a percentage of sales,  SG&A  remained  consistent at
46.3%.

     Depreciation and amortization.  Depreciation and amortization  increased by
$0.6 million,  reflecting an increase in capital  expenditures  and  capitalized
software  costs for the most  recent  twelve  months,  offset  by the  effect of
certain assets becoming fully depreciated.  The increase in fixed assets was due
to the addition of new departments and the renovation of existing departments.

     Interest expense, net. Interest expense decreased by $0.2 million primarily
due to a lower weighted average interest rate (8.3% for the 2001 period compared
to 8.6% for the  comparable  period in 2000)  offset  slightly by an increase in
average  borrowings  ($290.8  million for the period in 2001  compared to $287.3
million for the comparable period in 2000).

     Provision (benefit) for income taxes. The income tax provision for the 2001
and 2000 periods reflects an effective tax rate of 40.5%.

     Net income  (loss).  The net loss of $1.7  million  for the 2001 period was
$0.1  million  less  than the net loss in the  prior  period  as a result of the
factors discussed above.

Liquidity and Capital Resources

     Finlay's  primary capital  requirements are for funding working capital for
new departments and for working capital growth of existing departments and, to a
lesser extent,  capital  expenditures  for opening new  departments,  renovating
existing departments and information  technology  investments.  For the thirteen
weeks ended April 29, 2000 and May 5, 2001,  capital  expenditures  totaled $3.8
million (exclusive of the fixed assets acquired in the J.B. Rudolph Acquisition,
which totaled $4.0 million) and $3.9 million,  respectively.  For 2000,  capital
expenditures  totaled $14.1 million  (exclusive of the fixed assets  acquired in
the J.B.  Rudolph  Acquisition)  and for 2001 are estimated to be  approximately
$14.0 to $15.0 million.  Although capital  expenditures are limited by the terms
of the Revolving Credit Agreement, to date this limitation has not precluded the
Company from satisfying its capital expenditure requirements.

     Finlay's  operations  substantially  preclude  customer  receivables and in
recent years,  on average,  approximately  50% of Finlay's  merchandise has been
carried on consignment.  Accordingly, management believes that relatively modest
levels of working  capital are required in comparison  to many other  retailers.
The  Company's  working  capital  balance was $177.6  million at May 5, 2001,  a
decrease of $2.7 million from February 3, 2001. The decrease resulted  primarily
from  the  impact  of the  interim  net  loss,  exclusive  of  depreciation  and
amortization,  capital expenditures and additions to deferred charges.  Based on
the seasonal  nature of Finlay's  business,  working  capital  requirements  and
therefore  borrowings  under the Revolving  Credit  Agreement can be expected to
increase on an interim basis during the first three quarters of any given fiscal
year. See "--Seasonality".

     The seasonality of Finlay's business causes working capital requirements to
reach their  highest  level in the months of October,  November  and December in
anticipation of the year-end  holiday season.  Accordingly,  Finlay  experiences
seasonal cash needs as inventory  levels peak.  The Revolving  Credit  Agreement
provides Finlay with a line of credit of up to $275.0 million to finance working
capital needs,  which  includes a $50.0 million  acquisition  facility.  Amounts
outstanding  under the Revolving  Credit Agreement bear interest at a rate equal
to, at Finlay's option, (i) the Index Rate (as defined in the Revolving Credit


                                       11
<PAGE>


Agreement) plus a margin ranging from zero to 1.0% or (ii) adjusted LIBOR plus a
margin  ranging  from 1.0% to 2.0%,  in each  case  depending  on the  financial
performance of the Company.

     In each year, Finlay is required to reduce the outstanding revolving credit
balance and letter of credit  balance  under the Revolving  Credit  Agreement to
$50.0  million  or less  and  $20.0  million  or  less,  respectively,  for a 30
consecutive day period (the "Balance Reduction  Requirement").  Borrowings under
the Revolving Credit Agreement at May 5, 2001 were $90.2 million,  compared to a
zero  balance  at  February  3, 2001 and $86.6  million at April 29,  2000.  The
average  amounts  outstanding  under the Revolving  Credit  Agreement were $63.6
million and $65.8 million for the thirteen weeks ended April 29, 2000 and May 5,
2001, respectively.  The maximum amount outstanding for the thirteen weeks ended
May 5, 2001 was $97.3 million, at which point the unused excess availability was
$123.4 million, excluding the acquisition facility.

     On December 1, 2000, the Company  announced that its Board of Directors had
approved a stock repurchase  program to acquire up to $20 million of outstanding
Common  Stock.  Under the program,  the Company may,  from time to time,  at the
discretion of  management,  purchase its Common Stock on the open market through
September  29,  2001.  The extent and timing of  repurchases  will  depend  upon
general  business  and  market  conditions,  stock  prices,  availability  under
Finlay's  revolving credit facility and its cash position and requirements going
forward.

     On April 3, 2000 Finlay completed the acquisition of certain assets of J.B.
Rudolph for $20.6 million,  consisting  primarily of inventory and fixed assets.
During 2000, the J.B. Rudolph Acquisition required additional working capital to
increase the inventory  levels in anticipation  of the year-end  holiday season.
Inventory  purchases for the former J.B. Rudolph  departments are being financed
in  part  by  trade  payables  combined  with  the  utilization  of  consignment
inventory.  Finlay financed the J.B.  Rudolph  Acquisition with borrowings under
its Revolving Credit Agreement.

     Finlay's  long-term needs for external financing will depend on its rate of
growth,  the level of  internally  generated  funds and the  ability to continue
obtaining  substantial amounts of merchandise on advantageous  terms,  including
consignment  arrangements  with its  vendors.  For 2000,  Finlay  had an average
balance of  consignment  merchandise of $372.9  million from  approximately  300
vendors as compared to an average  balance of $321.7  million in 1999. As of May
5, 2001,  $375.8 million of consignment  merchandise  was on hand as compared to
$359.6 million at April 29, 2000.

     A substantial  amount of Finlay's operating cash flow has been used or will
be  required  to pay  interest,  directly  or  indirectly,  with  respect to the
Company's 9% Senior Debentures due May 1, 2008 (the "Senior Debentures"), Finlay
Jewelry's 8 3/8 Senior  Notes due May 1, 2008 (the  "Senior  Notes") and amounts
due under the  Revolving  Credit  Agreement,  including  the  payments  required
pursuant  to the  Balance  Reduction  Requirement.  As of May 5, 2001,  Finlay's
outstanding  borrowings  were $315.2  million,  which  included a $75.0  million
balance under the Senior  Debentures,  a $150.0 million balance under the Senior
Notes and a $90.2 million balance under the Revolving Credit Agreement.

     Finlay Jewelry is party to the Gold Consignment Agreement, which expires on
December 31, 2001.  The Gold  Consignment  Agreement  enables  Finlay Jewelry to
receive  merchandise by providing gold, or otherwise making payment,  to certain
vendors.  Finlay Jewelry can obtain, pursuant to the Gold Consignment Agreement,
up to the lesser of (i) 130,000 fine troy ounces or (ii) $37.0  million worth of
gold, subject to a formula as prescribed by the Gold Consignment  Agreement.  At
May 5, 2001,  amounts  outstanding under the Gold Consignment  Agreement totaled
121,189 fine troy ounces, valued at


                                       12
<PAGE>


approximately  $31.9  million.  The average  amount  outstanding  under the Gold
Consignment Agreement was $28.0 million in 2000.

     The  Company  is  in  the  process  of  implementing   several  information
technology   initiatives,   including  the  design  and  development  of  a  new
merchandising system and a point-of-sale system for Finlay's departments.  These
projects  will serve to support  future growth of the Company as well as provide
improved analysis and reporting capabilities and more timely sales and inventory
information to facilitate  merchandising  solutions.  These systems will provide
the foundation for future productivity and expense control  initiatives.  At May
5, 2001, a total of  approximately  $16.7 million has been expended for software
and  implementation  costs and is included in Deferred charges and other assets.
The Company expects these systems to be completed by mid-2001 and anticipates it
will spend an additional $3.0 to $6.0 million.

     From time to time, Finlay enters into futures contracts, such as options or
forwards,  based upon the  anticipated  sales of gold  product in order to hedge
against the risk  arising from its payment  arrangements.  Changes in the market
value of futures contracts are accounted for as an addition to or reduction from
the inventory  cost.  For the year ended  February 3, 2001,  the gain or loss on
open futures contracts was not material. At May 5, 2001, the Company had several
open positions in futures  contracts for gold totaling  61,300 fine troy ounces,
valued at $16.6  million,  which expire  during 2001.  There can be no assurance
that these hedging  techniques  will be successful or that hedging  transactions
will not  adversely  affect the  Company's  results of  operations  or financial
position.

     Finlay believes that, based upon current  operations,  anticipated  growth,
and availability under the Revolving Credit Agreement,  Finlay Jewelry will, for
the foreseeable future, be able to meet its debt service and anticipated working
capital  obligations,  and to make  distributions  to the Company  sufficient to
permit the Company to meet its debt service obligations and to pay certain other
expenses  as they come due.  No  assurances,  however,  can be given that Finlay
Jewelry's  current  level of operating  results will continue or improve or that
Finlay Jewelry's income from operations will continue to be sufficient to permit
Finlay Jewelry and the Company to meet their debt service and other obligations.
Currently,  Finlay Jewelry's  principal financing  arrangements  restrict annual
distributions  from Finlay  Jewelry to the Company to 0.25% of Finlay  Jewelry's
net sales for the  preceding  fiscal  year and also allow  distributions  to the
Company to enable it to make  interest  payments on the Senior  Debentures.  The
amounts required to satisfy the aggregate of Finlay  Jewelry's  interest expense
and required amortization payments totaled $1.2 million and $7.6 million for the
thirteen week periods ended April 29, 2000 and May 5, 2001,  respectively.  As a
result of the retail  calendar  closing date for the first quarter of 2001,  the
semiannual interest payment with respect to the Senior Debentures and the Senior
Notes was paid in the first  quarter of 2001,  whereas the first quarter of 2000
did not include the interest payments.

     On February  8, 2001,  Federated  announced  its plans to close its Stern's
division of which Finlay  operated 23  departments.  During  March 2001,  Finlay
closed two  departments  and will  close the  remaining  21 Stern's  departments
during  the  second  quarter  of 2001.  Finlay  intends  to  record a charge  of
approximately  $900,000  related to the write off of fixed  assets and  employee
severance.  Finlay  expects the closings to reduce sales in 2001 by an estimated
$22.0 million.



                                       13
<PAGE>

Seasonality


     Finlay's  business is highly  seasonal,  with a significant  portion of its
sales and income from  operations  generated  during the fourth  quarter of each
year, which includes the year-end holiday season.  The fourth quarter  accounted
for an average of 42% of Finlay's  sales and 78% of its income  from  operations
for 1998,  1999 and 2000.  Finlay has  typically  experienced  net losses in the
first three quarters of its fiscal year,  although the Company did achieve a net
profit in the second  quarter of 2000.  During these  periods,  working  capital
requirements   have  been  funded  by  borrowings  under  the  Revolving  Credit
Agreement.  Accordingly,  the results for any of the first three quarters of any
given fiscal year, taken individually or in the aggregate, are not indicative of
annual results.

Inflation

     The effect of  inflation  on Finlay's  results of  operations  has not been
material in the periods discussed.


                                       14
<PAGE>


Special Note Regarding Forward-Looking Statements

     This Quarterly  Report on Form 10-Q includes  "forward-looking  statements"
within the meaning of Section 27A of the  Securities Act of 1993 and Section 21E
of the  Securities  Exchange Act of 1934 (the  "Exchange  Act").  All statements
other  than   statements  of   historical   information   provided   herein  are
forward-looking  statements and may contain information about financial results,
economic  conditions,  trends  and  known  uncertainties.   The  forward-looking
statements  contained herein are subject to certain risks and uncertainties that
could cause actual results,  performances  or achievements to differ  materially
from those reflected in, or implied by, the forward-looking statements.  Factors
that might  cause such a  difference  include,  but are not  limited  to,  those
discussed under "Management's Discussion and Analysis of Financial Condition and
Results of  Operations",  as well as trends in the general economy in the United
States,  competition  in the retail  jewelry  business,  the  seasonality of the
retail jewelry business, the Company's ability to increase comparable department
sales and to open new  departments,  the  Company's  dependence  on certain host
store  relationships  due to the  concentration  of sales generated by such host
stores,  the  availability  to the Company of alternate  sources of  merchandise
supply in the case of an abrupt loss of any significant supplier,  the Company's
ability to continue to obtain substantial amounts of merchandise on consignment,
the Company's compliance with applicable  contractual  covenants,  the Company's
dependence  on  key  officers,   the  Company's   ability  to  integrate  future
acquisitions into its existing  business,  the Company's high degree of leverage
and the  availability  to the Company of financing and credit on favorable terms
and changes in  regulatory  requirements  which are  applicable to the Company's
business.  Other such factors include the ability of the Company to complete the
repurchases  contemplated  under its stock repurchase  program,  the adequacy of
Finlay's  working  capital to complete the  repurchases,  the  availability  and
liquidity of the Company's Common Stock,  and overall market  conditions for the
Company's Common Stock.

     Readers  are  cautioned  not to rely on these  forward-looking  statements,
which reflect management's analysis,  judgment, belief or expectation only as of
the date hereof.  The Company  undertakes no obligation to publicly revise these
forward-looking  statements to reflect events or circumstances  that arise after
the date hereof. In addition to the disclosure contained herein,  readers should
carefully  review any disclosure of risks and  uncertainties  contained in other
documents the Company  files or has filed from time to time with the  Commission
pursuant to the Exchange Act.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     The Company is exposed to market  risk  through  the  interest  rate on its
borrowings under the Revolving Credit  Agreement,  which has a variable interest
rate.  In seeking to minimize the risks from  interest  rate  fluctuations,  the
Company  manages   exposures   through  its  regular   operating  and  financing
activities.  In addition,  the majority of the  Company's  borrowings  are under
fixed rate  arrangements.  In  addition,  the  Company is exposed to market risk
related to changes in the price of gold, and selectively uses forward  contracts
to manage this risk. The Company enters into forward  contracts for the purchase
of gold to hedge the risk of gold price  fluctuations  for future  sales of gold
consignment  merchandise.  The Company does not enter into forward  contracts or
other financial  instruments for speculation or trading purposes.  The aggregate
amount of forward  contracts  was $16.6  million at May 5,  2001,  which  expire
during 2001.


                                       15
<PAGE>


PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

     A.   Exhibits

        2      Not applicable.

        3      Not applicable.

        4      Not applicable.

     10.1      Amended and Restated Gold Consignment Agreement dated as of March
               30, 2001 between Finlay Jewelry,  eFinlay,  Inc.  ("eFinlay") and
               Sovereign  Bank (as  successor  to  Fleet  National  Bank,  f/k/a
               BankBoston,  N.A.,  f/k/a The First  National Bank of Boston,  as
               successor  to  Rhode  Island   Hospital   Trust   National   Bank
               ("Sovereign  Bank")),  and the  other  parties  which  are or may
               become parties thereto.

     10.2      Amended and  Restated  Security  Agreement  dated as of March 30,
               2001 by and between Finlay  Jewelry,  eFinlay and Sovereign Bank,
               as agent.

     10.3      Amended and Restated  Intercreditor  Agreement  dated as of March
               30, 2001 between  Sovereign Bank, as agent,  and General Electric
               Capital Corporation, as agent, and acknowledged by Finlay Jewelry
               and eFinlay.

       11      Statement  re:  computation  of earnings per share (not  required
               because the relevant  computation can be clearly  determined from
               material contained in the financial statements).

       15      Not applicable.

       18      Not applicable.

       19      Not applicable.

       22      Not applicable.

       23      Not applicable.

       24      Not applicable.

       99      Not applicable.

     B.   Reports on Form 8-K

     None.


                                       16
<PAGE>


                                   SIGNATURES


     Pursuant to the  requirement  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.



Date: June 15, 2001                   FINLAY ENTERPRISES, INC.

                                      By: /s/ Bruce E. Zurlnick
                                          --------------------------------------
                                          Bruce E. Zurlnick
                                          Senior Vice President, Treasurer
                                          and Chief Financial Officer
                                          (As both a duly authorized officer of
                                          Registrant and as principal financial
                                          officer of Registrant)