--------------------------------------------------------------------------------




                       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 1, 1999

                                       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 11, 1999,  there were  10,410,353  shares of common stock,  par value
$.01 per share, of the Registrant outstanding.
<PAGE>

                             FINLAY ENTERPRISES, INC

                                    FORM 10-Q

                       QUARTERLY PERIOD ENDED MAY 1, 1999

                                      INDEX



                                                                        PAGE(S)
                                                                        -------
PART I - FINANCIAL INFORMATION

 Item 1. Consolidated Financial Statements (Unaudited)

         Consolidated Statements of Operations for the thirteen weeks
         ended May 2, 1998 and May 1, 1999.....................................1

         Consolidated Balance Sheets as of January 30, 1999 and May 1, 1999....2

         Consolidated Statements of Changes in Stockholders' Equity for the
         year ended January 30, 1999 and thirteen weeks ended May 1, 1999......3

         Consolidated Statements of Cash Flows for the thirteen weeks
         ended May 2, 1998 and May 1, 1999.....................................4

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

 Item 2. Management's Discussion and Analysis of
         Financial Condition and Results of Operations.........................9

 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

<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
                                                                                --------------------------------

                                                                                    May 2,             May 1,
                                                                                     1998               1999
                                                                                -------------      -------------

<S>                                                                             <C>                <C>
Sales....................................................................       $   160,992        $   168,379
Cost of sales............................................................            78,104             81,919
                                                                                -------------      -------------
    Gross margin.........................................................            82,888             86,460
Selling, general and administrative expenses.............................            76,948             79,904
Depreciation and amortization............................................             3,794              4,200
                                                                                -------------      -------------
    Income (loss) from operations........................................             2,146              2,356
Interest expense, net....................................................             9,006              7,006
                                                                                -------------      -------------
    Income (loss) before income taxes....................................            (6,860)            (4,650)
Provision (benefit) for income taxes.....................................            (2,658)            (1,562)
                                                                                -------------      -------------
    Net income (loss)....................................................       $    (4,202)       $    (3,088)
                                                                                =============      =============
Net income (loss) per share applicable to common shares:
    Basic net income (loss) per share....................................       $     (0.43)       $     (0.30)
                                                                                =============      =============
    Diluted net income (loss) per share..................................       $     (0.43)       $     (0.30)
                                                                                =============      =============
Weighted average shares and share equivalents outstanding................         9,720,979          10,406,738
                                                                                =============      =============
</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)
                                                                                      January 30,          May 1,
                                                                                         1999               1999
                                                                                     -------------     -------------
                                      ASSETS
Current assets
<S>                                                                                  <C>               <C>
  Cash and cash equivalents....................................................      $    17,328       $     3,851
  Accounts receivable - department stores......................................           19,147            38,072
  Other receivables............................................................           23,353            23,421
  Merchandise inventories......................................................          295,265           303,259
  Prepaid expenses and other...................................................            2,366             3,436
                                                                                     -------------     -------------
     Total current assets......................................................          357,459           372,039
                                                                                     -------------     -------------
Fixed assets
  Equipment, fixtures and leasehold improvements...............................          106,735           109,567
  Less - accumulated depreciation and amortization.............................           36,620            39,078
                                                                                     -------------     -------------
     Fixed assets, net.........................................................           70,115            70,489
                                                                                     -------------     -------------
Deferred charges and other assets..............................................           15,871            17,540
Goodwill.......................................................................          100,547            99,603
                                                                                     -------------     -------------
     Total assets..............................................................      $   543,992       $   559,671
                                                                                     =============     =============

                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Notes payable................................................................      $     -           $    79,285
  Accounts payable - trade.....................................................          160,434            93,096
  Accrued liabilities:
     Accrued salaries and benefits.............................................           15,760            14,437
     Accrued miscellaneous taxes...............................................            4,704             5,016
     Accrued insurance.........................................................              755             1,836
     Accrued interest..........................................................            5,135            10,162
     Accrued management transition and consulting..............................              676               561
     Other.....................................................................           15,409            16,203
  Income taxes payable.........................................................            5,076             8,598
  Deferred income taxes........................................................            2,173             2,180
                                                                                     -------------     -------------
     Total current liabilities.................................................          210,122           231,374
Long-term debt.................................................................          225,000           225,000
Other non-current liabilities..................................................            9,059             9,404
                                                                                     -------------     -------------
     Total liabilities.........................................................          444,181           465,778
                                                                                     -------------     -------------
Stockholders' equity
  Common Stock, par value $.01 per share; authorized 25,000,000 shares;
     issued and outstanding 10,403,353 and 10,410,353 shares, respectively.....              104               104
  Additional paid-in capital ..................................................           77,057            77,115
  Retained earnings (deficit)..................................................           27,439            24,351
  Foreign currency translation adjustment......................................           (4,789)           (7,677)
                                                                                     -------------     -------------
     Total stockholders' equity................................................           99,811            93,893
                                                                                     -------------     -------------
     Total liabilities and stockholders' equity................................      $   543,992       $   559,671
                                                                                     =============     =============
</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                     Note                   Foreign
                                  ------------------   Additional   Receivable   Retained     Currency      Total
                                     Number             Paid-in       from       Earnings    Translation Stockholders' Comprehensive
                                   of shares  Amount    Capital     Stock Sale  (Deficit)     Adjustment    Equity        Income
                                  ----------  ------   ----------   ----------- ----------  ------------ ------------- -------------
<S>              <C> <C>           <C>        <C>      <C>          <C>         <C>         <C>           <C>
Balance, January 31, 1998........  9,779,050  $  98    $  61,745    $  (1,001)  $  18,340   $   (6,843)   $   72,339
  Net income (loss)..............      -         -          -            -          9,099         -            9,099    $     9,099
  Foreign currency translation
     adjustment..................      -         -          -            -           -           2,054         2,054          2,054
                                                                                                                        ------------
  Comprehensive income (loss)....      -         -          -            -           -            -             -       $    11,153
  Issuance of Common Stock.......    567,310      6       13,753         -           -            -           13,759    ============
  Note receivable repayment......      -         -          -           1,001        -            -            1,001
  Exercise of stock options......     56,993     -         1,559         -           -            -            1,559
                                  ----------  ------   ----------   ----------- ----------  ------------ -------------
Balance, January 30, 1999........ 10,403,353    104       77,057         -         27,439       (4,789)       99,811
  Net income (loss)..............      -         -          -            -         (3,088)         -          (3,088)   $    (3,088)
  Foreign currency translation
     adjustment..................      -         -          -            -           -          (2,888)       (2,888)        (2,888)
                                                                                                                        ------------
  Comprehensive income (loss)....      -         -          -            -           -             -            -       $    (5,974)
  Exercise of stock options......      7,000     -            58         -           -             -              58    ============
                                  ----------  ------   ----------   ----------- ----------  ------------ -------------
Balance, May 1, 1999 (unaudited). 10,410,353  $ 104    $  77,115    $    -      $  24,351   $   (7,677)  $    93,893
                                  ==========  ======   ==========   =========== ==========  ============ =============
</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
                                                                                        -------------------------------
                                                                                            May 2,            May 1,
                                                                                             1998              1999
                                                                                        -------------     -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                     <C>                <C>
  Net income (loss)..............................................................       $    (4,202)       $   (3,088)
  Adjustments to reconcile net income (loss) to net cash used in
     operating activities:
  Depreciation and amortization..................................................             4,122             4,505
  Imputed interest on debentures.................................................             2,527             -
  Other, net.....................................................................                44               556
  Changes in operating assets and liabilities:
     Increase in accounts and other receivables..................................           (24,811)          (19,301)
     Increase in merchandise inventories.........................................           (20,023)           (9,962)
     Increase in prepaid expenses and other......................................            (2,638)           (1,110)
     Decrease in accounts payable and accrued liabilities........................           (80,068)          (58,124)
                                                                                        -------------     -------------
        NET CASH USED IN OPERATING ACTIVITIES....................................         (125,049)          (86,524)
                                                                                        -------------     -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of equipment, fixtures and leasehold improvements....................            (3,457)           (3,877)
  Deferred charges and other.....................................................              (769)           (2,281)
                                                                                        -------------     -------------
        NET CASH USED IN INVESTING ACTIVITIES....................................            (4,226)           (6,158)
                                                                                        -------------     -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from revolving credit facility........................................           208,417           185,976
  Principal payments on revolving credit facility................................          (208,417)         (106,691)
  Prepayment of Old Debentures...................................................           (39,027)            -
  Net proceeds from public offering of Common Stock..............................            13,759             -
  Proceeds from senior note offering.............................................           150,000             -
  Proceeds from senior debenture offering........................................            75,000             -
  Proceeds from repayment of note receivable.....................................             1,001             -
  Capitalized financing costs....................................................            (5,808)            -
  Stock options exercised and other, net.........................................             1,135                57
                                                                                        -------------     -------------
        NET CASH PROVIDED FROM FINANCING ACTIVITIES..............................           196,060            79,342
                                                                                        -------------     -------------
        EFFECT OF EXCHANGE RATE CHANGES ON CASH..................................                22              (137)
                                                                                        -------------     -------------
        INCREASE (DECREASE)  IN CASH AND CASH EQUIVALENTS........................            66,807           (13,477)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...................................            13,588            17,328
                                                                                        -------------     -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD.........................................       $    80,395       $     3,851
                                                                                        =============     =============

Supplemental disclosure of cash flow information:
  Interest paid..................................................................       $     9,568       $     1,674
  Income taxes paid..............................................................               914            (3,269)

</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 1, 1999,  and the results of  operations  and cash flows for the thirteen
weeks  ended  May 2, 1998 and May 1,  1999.  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
January 30, 1999 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 January 30, 1999
("Form 10-K") previously filed with the Commission.

     Finlay's fiscal year ends on the Saturday closest to January 31. References
to 1996, 1997, 1998 and 1999 relate to the fiscal years ending February 1, 1997,
January 31, 1998, January 30, 1999 and January 29, 2000,  respectively.  Each of
the fiscal years includes fifty-two weeks.

     Net  income  (loss)  per share has been  computed  in  accordance  with the
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.  The
following is an analysis of the differences between basic and diluted net income
(loss) per share:
<TABLE>
<CAPTION>

                                                                    Thirteen Weeks Ended
                                             -------------------------------------------------------------------
                                                      May 2, 1998                         May 1, 1999
                                             -------------------------------    --------------------------------
                                                 No. of             Per             No. of             Per
                                                 Shares            Share            Shares            Share
                                             ---------------    ------------    ---------------    -------------
      Weighted average shares
<S>                                              <C>            <C>                <C>             <C>
        outstanding....................          9,720,979      $    (0.43)        10,406,738      $     (0.30)
      Dilutive stock options...........            -                  -               -                   -
                                             ---------------    ------------    ---------------    -------------
      Weighted average shares
        and share equivalents..........          9,720,979      $    (0.43)        10,406,738      $     (0.30)
                                             ===============    ============    ===============    =============
</TABLE>

     In 1998,  Statement  of Position  No.  98-1,  "Accounting  for the Costs of
Computer  Software  Developed or Obtained for Internal Use" was issued. As such,
Finlay is required to capitalize  software  purchased  from third party software
vendors,  external  consulting costs incurred in the development and enhancement
of  management  information  systems  and  certain  internal  payroll  costs for
employees


                                       5
<PAGE>

                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION (continued)

directly  associated with the  development of software.  The Company has adopted
this statement in 1999, and does not expect it to have a material  impact on its
consolidated financial statements.

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  and  France.  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 industry.  Approximately 68% of Finlay's domestic sales in 1998 were from
operations in The May Department Stores Company ("May") and departments operated
in store groups owned by Federated  Departments  Stores, of which 47% represents
Finlay's domestic sales in May.

NOTE 3 - MERCHANDISE INVENTORIES

     Merchandise inventories consisted of the following:
<TABLE>
<CAPTION>
                                                                                                 (unaudited)
                                                                            January 30,             May 1,
                                                                               1999                  1999
                                                                          --------------         -------------
                                                                                       (in thousands)
   Jewelry goods - rings, watches and other fine jewelry
<S>                                                                       <C>                    <C>
       (specific identification basis)...............................     $     300,777          $    308,862
   Less:  Excess of specific identification cost over LIFO
       inventory value...............................................             5,512                 5,603
                                                                          --------------         -------------
                                                                          $     295,265          $    303,259
                                                                          ==============         =============
</TABLE>

     The LIFO method had the effect of  increasing  the loss before income taxes
for the thirteen weeks ended May 2, 1998 and May 1, 1999 by $93,000 and $92,000,
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  $283,793,000 and $305,015,000 at January 30, 1999 and May 1,
1999,  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 a  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 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) 95,000 fine troy ounces or (ii)  $32,000,000
worth of gold,  subject  to a  formula  as  prescribed  by the Gold  Consignment
Agreement.  At May 1,  1999,  amounts  outstanding  under  the Gold  Consignment
Agreement  totaled  91,202  fine  troy  ounces,  valued at  approximately  $26.1
million. For financial statement purposes, the consigned gold is


                                       6
<PAGE>


                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - MERCHANDISE INVENTORIES (continued)

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. Changes in the market value of futures contracts are
accounted for as an addition to or reduction from the inventory  cost. At May 2,
1998 and May 1, 1999, the gain/loss on open futures  contracts was not material.
The Company did not have any open  positions  in futures  contracts  for gold at
January 30, 1999 or May 1, 1999.

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. The department  operating
leases  expire on various  dates through 2003 and the office space and equipment
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.

     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:
<TABLE>
<CAPTION>

                                           Thirteen Weeks Ended
                                      --------------------------------
                                           May 2,            May 1,
                                           1998               1999
                                      -------------      -------------
                                              (in thousands)

<S>                                   <C>                <C>
      Minimum fees..............      $     4,568        $     4,163
      Contingent fees...........           21,398             23,433
                                      -------------      -------------
        Total...................      $    25,966        $    27,596
                                      =============      =============
</TABLE>



                                       7
<PAGE>

                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - 1998 TRANSACTIONS

     On April 24,  1998,  the Company  completed a public  offering of 1,800,000
shares of its Common Stock at a price of $27.50 per share (the "1998 Offering"),
of which 567,310 shares were sold by the Company and 1,232,690  shares were sold
by  certain  selling  stockholders.  Concurrently  with the 1998  Offering,  the
Company  and Finlay  Jewelry  completed  the public  offering  of $75.0  million
aggregate  principal amount of 9% Senior Debentures due May 1, 2008 (the "Senior
Debentures")  and $150.0  million  aggregate  principal  amount of 8-3/8% Senior
Notes due May 1, 2008 (the "Senior Notes"),  respectively. In addition, on April
24, 1998, Finlay's revolving credit agreement (the "Revolving Credit Agreement")
was amended to increase the line of credit  thereunder to $275.0  million and to
make certain other changes. On May 1, 1998, the Company prepaid all of the $39.0
million of accreted interest on the Company's 12% Senior Discount Debentures due
2005 (the "Old Debentures") as of such date.

     On May 26, 1998,  the net  proceeds to the Company from the 1998  Offering,
the sale of the Senior  Debentures,  together with other available  funds,  were
used to redeem the  Company's Old  Debentures,  including  associated  premiums.
Also, on May 26, 1998, Finlay Jewelry used the net proceeds from the sale of the
Senior Notes to redeem Finlay Jewelry's  10-5/8% Senior Notes due 2003 (the "Old
Notes"),  including associated premiums.  The above transactions,  excluding the
1998  Offering,  are  referred  to  herein  as the  "Refinancing".  The  Company
recorded,  in the second  quarter  of 1998,  a pre-tax  extraordinary  charge of
approximately $12.2 million,  including $7.1 million for redemption premiums and
$3.9 million to write off deferred  financing and debt discount costs associated
with the Old Debentures and the Old Notes.















                                       8
<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)
<TABLE>
<CAPTION>

                                                                     Thirteen Weeks Ended
                                                                 -----------------------------
                                                                    May 2,           May 1,
                                                                     1998             1999
                                                                 ------------     ------------
<S>                                                                  <C>              <C>
Sales......................................................          100.0%           100.0%
Cost of sales..............................................           48.5             48.7
                                                                 ------------     ------------
    Gross margin...........................................           51.5             51.3
Selling, general and administrative expenses...............           47.8             47.4
Depreciation and amortization..............................            2.4              2.5
                                                                 ------------     ------------
    Income (loss) from operations..........................            1.3              1.4
Interest expense, net......................................            5.6              4.2
                                                                 ------------     ------------
    Income (loss) before income taxes .....................           (4.3)            (2.8)
Provision (benefit) for income taxes.......................           (1.7)            (1.0)
                                                                 ------------     ------------
    Net income (loss)......................................           (2.6)%           (1.8)%
                                                                 ============     ============
</TABLE>

Thirteen Weeks Ended May 1, 1999 Compared with Thirteen Weeks Ended May 2, 1998

     Sales.  Sales for the  thirteen  weeks  ended May 1,  1999  increased  $7.4
million,  or 4.6%, over the comparable period in 1998.  Consolidated  comparable
department  sales  (departments  open  for the  same  months  during  comparable
periods) increased 6.8% and domestic comparable department sales increased 8.9%.
Management  attributes this increase in the comparable  department  sales to the
following  initiatives:   (i)  emphasizing  its  "Key  Item"  and  "Best  Value"
merchandising  programs,  which  provide  a  targeted  assortment  of  items  at
competitive prices; (ii) increasing focus on holiday and event-driven promotions
as well as host  store  marketing  programs;  (iii)  positioning  the  Company's
departments as a "destination  location" for fine jewelry;  and (iv)  continuing
project PRISM (Promptly Reduce  inefficiencies  and Sales  Multiply),  a program
designed to allow  Finlay's  sales  associates  more time for customer sales and
service.  Sales  decreased  by $3.6 million as a result of the net effect of new
store  openings  offset by store  closings,  particularly  relating to Dillard's
purchase  of the  Mercantile  Stores  and the  change to an  everyday  low price
strategy, as well as the timing of such department openings and closings.

     In the second quarter of 1998, Sonab began to experience lower sales trends
due to the  transition  from a promotional  pricing  strategy to an everyday low
price  strategy.  This  change  was made as a result  of Sonab  reassessing  its
pricing  policy  following  certain  local French court  decisions.  The adverse
impact of such change continued  through May 1, 1999 and is expected to continue
at least through the third quarter of 1999.

     During the thirteen  weeks ended May 1, 1999,  Finlay opened 23 departments
and closed 38  departments.  The openings were all within existing store groups.
The closings  included 14  departments


                                       9
<PAGE>

in  Crowley's  and  Steinbach  due to the  bankruptcy  of the host  store and 11
smaller  volume  departments  in  Monoprix  in  France,  with the  remaining  13
departments closed within existing store groups.

     Gross  margin.  Gross  margin for the  period  increased  by $3.6  million,
primarily as a result of the sales  increase.  As a percentage  of sales,  gross
margin  decreased  by 0.2%,  which is  primarily  attributed  to a  decrease  in
purchase  discounts  and a softening of margins in France.  The higher  purchase
discounts  in  1998  was a  result  of  the  temporary  excess  funds  from  the
Refinancing.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses ("SG&A") increased $3.0 million, or 3.8%, due primarily
to payroll  expense and lease fees associated with the increase in the Company's
domestic  sales and expenses  relating to the  Company's  year 2000  remediation
project, which totaled approximately $0.5 million. SG&A as a percentage of sales
decreased by 0.4% as a result of the leveraging of these expenses  offset by the
negative impact on SG&A as a result of the slowdown of sales in France.

     Depreciation and amortization.  Depreciation and amortization  increased by
$0.4 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  $2.0  million
reflecting  a lower  weighted  average  interest  rate (8.3% for the 1999 period
compared  to 10.1%  for the  comparable  period in 1998)  relating  to the lower
interest rates on the Senior  Debentures and the Senior Notes as compared to the
Old  Debentures and the Old Notes,  as well as a decrease in average  borrowings
($305.0  million  for the  period in 1999  compared  to $330.0  million  for the
comparable period in 1998).

     Provision (benefit) for income taxes. The income tax provision for the 1999
and 1998 periods reflects an effective tax rate of 40.5%.

     Net income  (loss).  The net loss of $3.1  million  for the 1999 period was
$1.1 million lower than the net loss of $4.2 million for the  comparable  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 May 2, 1998 and May 1,  1999,  capital  expenditures  totaled  $3.5
million and $3.9 million,  respectively.  For 1998, capital expenditures totaled
$14.9  million and for 1999 are  estimated to be  approximately  $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 49% of Finlay's domestic 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 $140.7 million at May 1,
1999, a decrease of $6.7 million  from January 30, 1999.  The decrease  resulted
primarily from the impact of the interim net loss exclusive of depreciation  and
amortization,  capital  expenditures,  an increase  in deferred


                                       10

<PAGE>

charges and the movement in the foreign exchange rate with France.  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.  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  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 1, 1999 were $79.3 million,  compared to a
zero balance at January 30, 1999 and May 2, 1998.  There were no  borrowings  at
May 2, 1998 due to the temporary  paydown of the Revolving  Credit Facility with
the excess funds from the Refinancing,  as a result of certain call requirements
on the Old Debentures and the Old Notes. The average amounts  outstanding  under
the  Revolving  Credit  Agreement  were $90.3  million and $80.0 million for the
thirteen  weeks  ended May 2, 1998 and May 1, 1999,  respectively.  The  maximum
amount outstanding for the thirteen weeks ended May 1, 1999 was $103.5 million.

     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 1998,  Finlay  had an average
balance of  consignment  merchandise of $268.5  million from  approximately  300
vendors as compared to an average  balance of $216.5  million in 1997. As of May
1, 1999,  $305.0 million of consignment  merchandise  was on hand as compared to
$283.8 million at January 30, 1999 and $245.9 million at May 2, 1998.

     A substantial  amount of Finlay's operating cash flow has been used or will
be required to pay interest  with respect to the Senior  Debentures,  the Senior
Notes and  amounts  due under the  Revolving  Credit  Agreement,  including  the
payments required pursuant to the Balance  Reduction  Requirement.  As of May 1,
1999,  Finlay's  outstanding  borrowings were $304.3  million,  which included a
$75.0 million  balance under the Senior  Debentures,  a $150.0  million  balance
under the Senior Notes and a $79.3 million  balance  under the Revolving  Credit
Facility.  On May 26, 1998, Finlay redeemed the outstanding  principal  amounts,
including associated  premiums,  of the Old Debentures and the Old Notes. Finlay
funded the  prepayment and the  redemptions  using the proceeds from the sale of
the Senior  Debentures,  the 1998  Offering  and the sale of the  Senior  Notes,
together with other  available  funds.  In connection with the redemption of the
Old Debentures and the Old Notes, the Company recorded, in the second quarter of
1998, a pre-tax  nonrecurring charge of approximately  $12.2 million,  including
$7.1  million for  redemption  premiums  and $3.9  million to write off deferred
financing and debt discount costs associated with the Old Debentures and the Old
Notes.



                                      11
<PAGE>

     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) 95,000 fine troy ounces or (ii) $32.0  million  worth of
gold, subject to a formula as prescribed by the Gold Consignment  Agreement.  At
May 1, 1999,  amounts  outstanding under the Gold Consignment  Agreement totaled
91,202 fine troy ounces,  valued at  approximately  $26.1  million.  The average
amount  outstanding  under the Gold  Consignment  Agreement was $15.6 million in
1998.

     During 1998, the Company began several information technology  initiatives,
including  the  design and  development  of a new  merchandising  system and the
upgrade of  point-of-sale  systems  and  related  hardware  in the  majority  of
Finlay's departments.  These projects will serve to support future growth of the
Company as well as provide improved analysis and reporting  capabilities and are
expected to be completed in mid-2000. The cost associated with these projects is
estimated  to be $11.0  million for  software and  implementation  costs,  to be
included in Deferred charges and other assets,  and  approximately  $3.0 million
for  hardware  and related  equipment,  to be  included  as a  component  of the
Company's capital  expenditures and reflected in Fixed assets. At May 1, 1999, a
total of  approximately  $5.1 million has been expended and included in Deferred
charges and other assets.

     Section 382 of the Internal  Revenue Code of 1986,  as amended (the "Code")
restricts  utilization  of net operating  loss ("NOLs")  carryforwards  after an
ownership   change   exceeding  50%.  As  a  result   certain   recapitalization
transactions  in 1993,  a change  in  ownership  of the  Company  exceeding  50%
occurred  within the  meaning of Section 382 of the Code.  Similar  restrictions
apply to other  carryforwards.  Consequently,  there is a material limitation on
the  Company's  annual  utilization  of its NOLs and other  carryforwards  which
requires  a  deferral  or  loss  of  the  utilization  of  such  NOLs  or  other
carryforwards.  The Company  had, at October  31, 1998 (the  Company's  tax year
end), a NOL for tax purposes of approximately  $11.5 million which is subject to
an annual limit of approximately $2.0 million per year.  However,  for financial
reporting purposes, no NOL exists as of January 30, 1999.

     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  January 30, 1999,  the gain or loss on
open  futures  contracts  was not  material.  The  Company did not have any open
positions in futures  contracts  for gold at January 30,  1999.  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 $9.6 million and $1.7 million for the
thirteen weeks ended May 2, 1998 and May 1, 1999,  respectively.


                                       12

<PAGE>

As a result of the closing  date for the first  quarter of 1999 under the retail
calendar,  the semiannual interest payment with respect to the Senior Debentures
and the Senior  Notes was not paid until the second  quarter,  whereas the first
quarter of 1998 included the interest payments.

Year 2000

     Many of  Finlay's  existing  computer  systems,  software  products,  other
systems using embedded chips  ("non-information  technology  systems") and third
party  systems,  accept  only two entries in the date field to  distinguish  the
year.  Beginning  in the year 2000,  these date  fields will need to accept four
digit entries, or properly handle two digit entries, to distinguish 21st century
dates from 20th century dates. As a result, Finlay's date critical functions may
be adversely  affected unless the computer systems and software products of both
Finlay and significant third parties are or become year 2000 compliant.

     A comprehensive  plan is being executed to ensure that all systems critical
to the operation of the Company are year 2000 compliant.  The plan is structured
into five primary phases: identification,  assessment,  remediation, testing and
implementation.  The Company has completed  the  identification  and  assessment
phases  of  all  critical   components  and  has  substantially   completed  the
remediation  phase.  The Company  expects  that the  testing and  implementation
phases  of  all  internal  systems,  including  its  non-information  technology
systems, will be completed by the end of August 1999.

     Finlay is using,  and will continue to use, a  combination  of internal and
external  resources  to execute  its year 2000  project  plan.  The  Company has
estimated   that  the  costs  related  to  its  year  2000  efforts  will  total
approximately  $4.0 million,  of which a total of approximately $2.4 million has
been spent  through May 1, 1999 ($1.9 million in fiscal 1998 and $0.5 million in
the first quarter of fiscal 1999).  Finlay will incur the balance of these costs
during 1999 and will fund such costs through operating cash flows.

     During 1998, the Company began formal  communications  with all of its host
stores,  vendors and other third parties in an effort to determine the extent to
which the  Company  may be  vulnerable  to the  failure of their  systems and to
obtain year 2000  compliance  certification.  To date, none of the third parties
that have responded have raised any year 2000 issues which the Company  believes
would have a material  adverse effect on Finlay.  The Company has continued this
communication process during 1999.

     Management expects that with the successful implementation of the year 2000
project,  the year 2000 issue will not pose  significant  operational  problems.
There can be no assurance,  however,  that Finlay's systems and software will be
rendered year 2000 compliant in a timely  manner,  or that Finlay will not incur
significant  unforeseen  additional  expenses  to ensure  such  compliance.  The
consequences of a disruption of the Company's operations,  whether caused by the
Company's internal systems or those of any significant third party, could have a
material  adverse  effect on the  Company's  financial  position  or  results of
operations.  The likely worst case  scenario  may be an inability to  distribute
merchandise to the Company's  departments  and to process its daily business for
some period of time.  The lost  revenues,  if any,  resulting  from a worst case
scenario  would depend on the time period in which the failure goes  uncorrected
and the difficulty to remediate such failure.

     Management  recognizes the  importance of developing a contingency  plan in
the event of a year 2000 failure, the development of which is in progress and is
expected to be completed by the end of the third quarter of 1999. The Company is
currently  gathering  data in an effort to assess the  potential  effects on the
Company's  mission  critical  functions of a failure of the Company's  year 2000
plan to be fully  effective  and, to the extent deemed  appropriate,  to address
such  effects.  In  addition,  progress  reports  on


                                       13

<PAGE>

the year 2000  project are  presented  regularly  to senior  management  and the
Company's Board of Directors.

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 82% of its income  from  operations
for 1996,  1997 and 1998.  Finlay has  typically  experienced  net losses in the
first three quarters of its fiscal year.  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.

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 to differ  materially  from those  reflected in 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 and France,  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  estimate of the cost to address year 2000  compliance  issues and the
impact  on the  Company's  operations  of a year  2000  failure,  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  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.

     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.



                                       14

<PAGE>

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     The Company is exposed to market risk  primarily  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, and as such, there was no material market risk exposure
to the Company's financial  position,  results of operations or cash flows as of
January 30, 1999 or May 1, 1999.

























                                       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     Not applicable.

         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.

         27     Financial Data Schedule.

         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 11, 1999                   FINLAY ENTERPRISES, INC.

                                      By: /s/ Barry D. Scheckner
                                          --------------------------------------
                                          Barry D. Scheckner, Senior Vice
                                          President and Chief Financial Officer
                                          (As both a duly authorized officer of
                                          Registrant and as principal financial
                                          officer of Registrant)


















                                       17