<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                  FORM 10-Q/A

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JULY 31, 1999
                         COMMISSION FILE NUMBER 0-19714

                                PERFUMANIA, INC.


                     STATE OF FLORIDA I.R.S. NO. 65-0026340

                              11701 N.W. 101ST ROAD
                              MIAMI, FLORIDA 33178

                        TELEPHONE NUMBER: (305) 889-1600


    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 TWELVE (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 NINETY (90) DAYS.



                        YES  [X]             NO  [ ]


                           COMMON STOCK $.01 PAR VALUE
                              OUTSTANDING SHARES AT
                            JULY 31, 1999 - 7,638,978





<PAGE>   2




                                TABLE OF CONTENTS

                                PERFUMANIA, INC.

                                     PART I
                              FINANCIAL INFORMATION





<TABLE>
<S>                                                                                                <C>
ITEM 1      FINANCIAL STATEMENTS

               Consolidated Balance Sheets......................................................    3

               Condensed Consolidated  Statements of Operations.................................    4

               Consolidated Statements of Cash Flows............................................    5

               Notes to Condensed Consolidated Financial Statements.............................    6


ITEM 2      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            CONSOLIDATED FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS...............................................................   12


ITEM 3      QUANTITATIVE AND QUALITATIVE DISCLOSURES
            ABOUT MARKET RISKS..................................................................   17

                                     PART II
                                OTHER INFORMATION

ITEM 1      LEGAL PROCEEDINGS...................................................................   17

ITEM 2      CHANGES IN SECURITIES AND USE OF PROCEEDS...........................................   17

ITEM 6      EXHIBITS AND REPORTS ON FORM 8-K....................................................   18

            SIGNATURES..........................................................................   19

</TABLE>


                                       2
<PAGE>   3


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                                PERFUMANIA, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                               July 31, 1999      January 30, 1999
                                                                                              ----------------    ----------------
                           ASSETS                                                                (unaudited)
<S>                                                                                           <C>                 <C>
Current assets:
  Cash and cash equivalents                                                                    $   1,344,882         $  1,745,603
  Trade receivables, less allowance for doubtful
     accounts of $734,954 and $704,954 as of July 31, 1999
      and January 30, 1999, respectively                                                           6,066,682            4,108,847
  Advances to suppliers                                                                            8,316,332            8,065,301
  Inventories, net of reserve of $2,858,284 and $4,163,251
      as of July 31, 1999 and January 30, 1999, respectively                                      62,974,342           53,880,132
  Prepaid expenses and other current assets                                                        1,996,456            1,417,187
                                                                                               -------------         ------------
     Total current assets                                                                         80,698,694           69,217,070
Property and equipment, net                                                                       23,073,219           23,180,462
Leased equipment under capital leases, net                                                         1,058,998            1,373,878
Other assets                                                                                       1,632,707            1,357,966
                                                                                               -------------         ------------
      Total assets                                                                             $ 106,463,618         $ 95,129,376
                                                                                               =============         ============
            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Bank line of credit and current portion of
     notes payable                                                                             $  37,783,279         $ 32,800,627
  Accounts payable - non affiliates                                                               15,844,533           14,329,013
  Accounts payable - affiliates                                                                   22,333,533           15,812,240
  Accrued expenses and other liabilities                                                           8,181,933            9,205,316
  Income taxes payable                                                                               368,263              485,098
  Current portion of obligations under capital leases                                                284,982              419,487
                                                                                               -------------         ------------
     Total current liabilities                                                                    84,796,523           73,051,781
Long-term portion of notes payable                                                                 1,397,439            2,370,684
Long-term portion of obligations under capital leases                                                508,542              562,552
Convertible notes payable                                                                          4,000,000                   --
Long-term severance payable                                                                          561,131            1,037,859
                                                                                               -------------         ------------
     Total liabilities                                                                            91,263,635           77,022,876
                                                                                               -------------         ------------
Commitments and contingencies                                                                             --                   --
Redeemable common equity                                                                             470,588              470,588

Stockholders' equity:
  Preferred stock, $.01 par value, 1,000,000 shares
   authorized, none issued                                                                                --                   --
  Common stock, $.01 par value, 25,000,000 shares
   authorized, 9,151,384 and 8,614,491 shares issued, at
   July 31, 1999 and January 30, 1999, respectively                                                   91,514               86,145
  Capital in excess of par                                                                        55,952,849           54,440,009
  Treasury stock, at cost, 1,512,406 shares at
     July 31, 1999 and January 30, 1999                                                           (5,413,002)          (5,413,002)
  Accumulated deficit                                                                            (35,338,103)         (30,935,097)
  Notes and interest receivable from shareholder and
     officers                                                                                       (563,863)            (542,143)
                                                                                               -------------         ------------
     Total stockholders' equity                                                                   14,729,395           17,635,912
                                                                                               ------------          ------------
     Total liabilities and stockholders' equity                                                $ 106,463,618         $ 95,129,376
                                                                                               =============         ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>   4

                                PERFUMANIA, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                               Thirteen              Thirteen          Twenty-six           Twenty-six
                                             Weeks Ended           Weeks Ended        Weeks Ended           Weeks Ended
                                            July 31, 1999         August 1, 1998      July 31, 1999        August 1, 1998
                                            -------------         --------------      --------------      ---------------
<S>                                         <C>                   <C>                 <C>                 <C>
Net sales                                    $ 45,952,514         $ 39,684,364         $ 85,353,478         $ 78,152,339
Cost of goods sold                             26,798,751           23,173,689           50,946,546           46,836,147
                                             ------------         ------------         ------------         ------------

Gross profit                                   19,153,763           16,510,675           34,406,932           31,316,192
                                             ------------         ------------         ------------         ------------

Operating expenses:
  Selling, general and administrative          16,296,549           15,522,774           32,927,454           30,860,322
  Depreciation and amortization                 1,149,275            1,094,215            2,314,427            2,176,473
                                             ------------         ------------         ------------         ------------
      Total operating expenses                 17,445,824           16,616,989           35,241,881           33,036,795
                                             ------------         ------------         ------------         ------------


Income (loss) from operations
  before other expense                          1,707,939             (106,314)            (834,949)          (1,720,603)
Other expenses, net                            (2,019,079)          (1,166,344)          (3,568,057)          (2,323,667)
                                             ------------         ------------         ------------         ------------
Income (loss)  before income taxes               (311,140)          (1,272,658)          (4,403,006)          (4,044,270)
Benefit  for income taxes                              --                   --                   --                   --
                                             ------------         ------------         ------------         ------------
Net income (loss)                            $   (311,140)        $ (1,272,658)        $ (4,403,006)        $ (4,044,270)
                                             ------------         ------------         ------------         ------------


Net income (loss) per common share:
Basic                                        $      (0.04)              $(0.20)              $(0.58)              $(0.62)
                                             ------------         ------------         ------------         ------------
Diluted                                      $      (0.04)              $(0.20)              $(0.58)              $(0.62)
                                             ------------         ------------         ------------         ------------


Weighted average number of common
  shares outstanding:
  Basic                                         7,629,043            6,519,440            7,614,410            6,519,440
  Diluted                                       7,629,043            6,519,440            7,614,410            6,519,440

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>   5


                                 PERFUMANIA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                 Twenty-six          Twenty-six
                                                                 Weeks Ended         Weeks Ended
                                                                July 31, 1999       August 1, 1998
                                                                -------------       --------------
<S>                                                             <C>                 <C>
Cash flows from operating activities:
 Net loss                                                       $(4,403,006)        $(4,044,270)
 Adjustments to reconcile net loss to net cash
   (used in)  provided by operating activities:
    Provision for doubtful accounts                                  30,000              60,000
    Depreciation and amortization                                 2,314,427           2,176,473
    Beneficial conversion feature of convertible
          notes payable                                           1,365,384                  --
    Change in operating assets and liabilities,
    (Increase) decrease in:
         Trade receivables                                       (1,987,835)           (880,842)
         Advance to suppliers                                      (251,031)         (1,127,424)
         Inventories                                             (9,094,210)          3,092,194
         Prepaid and other current assets                          (579,269)            443,280
         Tax refund receivable                                           --             807,489
         Other assets                                              (275,080)            169,825
    Increase (decrease) in:
         Accounts payable                                         8,036,813           4,630,219
         Other current liabilities                               (1,023,383)           (663,013)
         Income taxes payable                                      (116,835)           (137,556)
         Long term severance payable                               (476,728)                 --
                                                                -----------         -----------
         Total adjustments                                       (2,401,018)          8,570,645
                                                                -----------         -----------
         Net cash (used in) provided by operating                (6,460,753)          4,526,375
           activities                                           -----------         -----------

Cash flows from investing activities:
         Additions to property and equipment                     (1,812,939)         (5,204,301)
                                                                -----------         -----------
         Net cash used in investing activities                   (1,812,939)         (5,204,301)
                                                                -----------         -----------

  Cash flows from financing activities:
      Borrowings and repayments under loan payable                4,009,407           2,060,792
      Repayments and loans to related parties                            --              40,954
      Principal payments under capital lease obligations           (267,541)           (578,755)
      Net advances to shareholder and officers                      (21,720)           (150,000)
      Issuance of convertible notes payable                       4,000,000                  --
      Exercise of stock options                                     152,825                  --
      Purchase of treasury stock                                         --            (564,367)
                                                                -----------         -----------
         Net cash provided by financing activities                7,872,971             808,624
                                                                -----------         -----------
    (Decrease) increase in cash and cash equivalents               (400,721)            130,698
    Cash and cash equivalents at beginning of period              1,745,603           1,554,117
                                                                -----------         -----------
    Cash and cash equivalents at end of period                  $ 1,344,882         $ 1,684,815
                                                                ===========         ===========
</TABLE>




     See accompanying notes to condensed consolidated financial statements.



                                       5
<PAGE>   6
                                PERFUMANIA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1).  OPERATIONS AND BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of
Perfumania and subsidiaries (the "Company"). All material intercompany balances
and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Certain information and note disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although the Company believes that the disclosures made
are adequate to make the information presented not misleading. The financial
information presented herein, which is not necessarily indicative of results to
be expected for the current fiscal year, reflect all normal and recurring
adjustments which, in the opinion of management, are necessary for a fair
presentation of the interim unaudited condensed consolidated financial
statements. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended January 30, 1999 filed with the SEC on April 30, 1999.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
condensed consolidated financial statements, the Company incurred a net loss
during the twenty-six week period ended July 31, 1999 of approximately $4.4
million and has a working capital deficit of approximately $4.1 million as of
July 31, 1999. In addition, the Company was in violation of certain debt
covenants contained in its bank line of credit at January 30, 1999. On July
14, 1999, the Company obtained a waiver of default from the bank through
September 30, 1999 as of and for the year ended January 30, 1999.

Management's plan to improve the results of operations include decreasing the
number of store openings in 1999, closing a number of its non-profitable stores,
improving the effectiveness of its sales promotions practices, continuing to
improve the existing merchandise mix and to promote the private label bath, body
and cosmetic line, continuing to liquidate slow moving inventories and reducing
selling, general and administrative expenses.

In order to obtain additional funding, the Company made an initial public
offering of the common stock of perfumania.com, inc., a wholly-owned subsidiary
of the Company. The offering raised approximately $24.5 million. The net
proceeds of the offering will be used for working capital and other general
corporate purposes and also repayment of any outstanding indebtedness to the
Company as well as reduction of the outstanding balance in the Company's line of
credit (See Note 8).

Additionally, in April 1999 and July 1999, the Company issued a total of $4
million of convertible notes to a group of private investors (See Note 7) and
in July 1999 the Company obtained a $2.5 million short-term unsecured loan from
a wholesale customer.

Although management believes that its borrowing capacity under the current line
of credit facility, or from an alternative line of credit facility, projected
cash flows from operations, anticipated proceeds from the initial public
offering of perfumania.com, inc. and other short term borrowings will be
sufficient to support working capital needs, capital expenditures and debt
service for the next twelve months, there is no assurance, however, that the
Company will be able to improve its results of operations based on management's
plan or obtain such funding on a timely basis.

These factors among others may indicate that the Company will be unable to
continue as a going concern for a reasonable period of time. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



                                       6
<PAGE>   7


2)  STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                          NOTES AND
                                                                                                          INTEREST
                                                                                                         RECEIVABLE
                                                                                                            FROM
                               COMMON STOCK         CAPITAL IN     TREASURY    STOCK                     SHAREHOLDER
                          ----------------------      EXCESS      ------------------      ACCUMULATED        AND
                           SHARES         AMOUNT      OF PAR      SHARES      AMOUNT        DEFICIT       OFFICERS      TOTAL
                          -------         ------    ----------    ------      ------      -----------    -----------    -----
<S>                       <C>           <C>       <C>            <C>        <C>           <C>            <C>         <C>
Balance at January
  30, 1999                8,614,491     $ 86,145  $ 54,440,009   1,512,406  $(5,413,002)  $(30,935,097)   $(542,143) $ 17,635,912

Exercise of stock
  options                   301,600        3,016       149,809          --           --             --           --       152,825

Beneficial
  conversion feature
  of notes payable               --           --     1,365,384          --           --             --                  1,365,384


Net change in notes
  and interest
  receivable from
  shareholder and
  officer                        --           --            --          --           --             --      (21,720)      (21,720)

Issuance of common
  stock in private
  placement                 235,293        2,353        (2,353)         --           --             --           --            --

Net loss for the
  twenty -six weeks
  ended July 31,
  1999                           --           --            --          --           --     (4,403,006)          --    (4,403,006)

                         ----------     --------  ------------   ---------  -----------   ------------    ---------- ------------
Balance at July 31,
  1999                    9,151,384     $ 91,514  $ 55,952,849   1,512,406  $(5,413,002)  $(35,338,103)   $(563,863) $ 14,729,395
                         ==========     ========  ============   =========  ===========   ============    ========== ============
</TABLE>


3)  BANK LINE OF CREDIT

As of January 30, 1999, the Company was in violation of certain financial and
operating covenants and as a result of these violations, the Company was in
default under the line of credit agreement. As a result, the bank could demand
payment of the amounts outstanding under the line of credit agreement. Due to
these violations, the Company incurred the default rate of interest, prime plus
4% (12% at July 31, 1999) since December 1998. On July 14, 1999, the Company
obtained a waiver of default from the bank through September 30, 1999 as of and
for the year ended January 30, 1999. Future outstanding borrowings will bear
interest at the prime rate plus four percent. The bank agreed to less
restrictive covenants provided that certain events commence prior to September
30, 1999. One such event includes that perfumania.com, inc. (a wholly-owned
subsidiary) is to receive at least $10 million from a contemplated initial
public offering of its shares, of which at least $2 million is to be repaid to
the Company.




4)  BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per common share is computed by dividing income (loss)
available to common stockholders by the weighted average number of common share
includes the dilutive effect of those stock options where the average market
price of the common shares exceeds the option exercise prices for the respective
years, and the dilutive effect of those convertible notes which are convertible
into common stock.



                                       7
<PAGE>   8

5).  SEGMENT INFORMATION

The Company operates in two industry segments, specialty retail sale and
wholesale distribution of fragrances and related products. Financial information
for these segments is summarized in the following table.


<TABLE>
<CAPTION>
                                                    Thirteen Weeks       Thirteen Weeks        Twenty-six         Twenty-six
                                                        Ended                Ended             Weeks Ended       Weeks Ended
                                                    July 31, 1999        August 1, 1998       July 31, 1999     August 1, 1998
                                                    -------------        --------------       -------------     --------------
<S>                                                 <C>                  <C>                  <C>               <C>
Net sales to external customers
    Wholesale                                        $10,948,201         $ 10,234,862          $22,214,955         $23,702,792
    Retail                                            35,004,313           29,449,502           63,138,523          54,449,547
                                                     -----------         ------------          -----------         -----------
       Total net sales to external customers         $45,952,514         $ 39,684,364          $85,353,478         $78,152,339
                                                     -----------         ------------          -----------         -----------

Intersegment sales
     Wholesale                                       $ 4,771,477         $   (617,816)         $ 7,532,244         $13,866,670
                                                     -----------         ------------          -----------         -----------
       Total intersegment sales                      $ 4,771,477         $   (617,816)         $ 7,532,244         $13,866,670
                                                     -----------         ------------          -----------         -----------

Cost of goods sold
    Wholesale                                        $ 8,474,806         $  8,322,179          $17,547,550         $18,602,370
    Retail                                            18,323,945           14,851,510           33,398,996          28,233,777
                                                     -----------         ------------          -----------         -----------
       Total cost of goods sold                      $26,798,751         $ 23,173,689          $50,946,546         $46,836,147
                                                     -----------         ------------          -----------         -----------

Gross profit
     Wholesale                                       $ 2,473,395         $  1,912,683          $ 4,667,405         $ 5,100,422
     Retail                                           16,680,368           14,597,992           29,739,527          26,215,770
                                                     -----------         ------------          -----------         -----------
       Total gross profit                            $19,153,763         $ 16,510,675          $34,406,932         $31,316,192
                                                     -----------         ------------          -----------         -----------

Depreciation and amortization
     Retail                                          $ 1,149,275         $  1,094,215          $ 2,314,427         $ 2,176,473
                                                     -----------         ------------          -----------         -----------
       Total depreciation and
         amortization                                $ 1,149,275         $  1,094,215          $ 2,314,427         $ 2,176,473
                                                     -----------         ------------          -----------         -----------

Capital expenditures
      Retail                                         $   882,376         $  2,225,830          $ 1,812,939         $ 5,204,301
                                                     -----------         ------------          -----------         -----------
        Total capital expenditures                   $   882,376         $  2,225,830          $ 1,812,939         $ 5,204,301
                                                     -----------         ------------          -----------         -----------
</TABLE>


<TABLE>
<CAPTION>
                           July 31,             August 1,
                             1999                 1998
                          -----------         -----------
<S>                       <C>                 <C>
Inventory
   Wholesale              $ 9,075,491         $13,348,871
    Retail                 53,898,851          56,696,777
                          -----------         -----------
                          $62,974,342         $70,045,648
                          -----------         -----------

Number of  Stores                 281                 286
</TABLE>


An unaffiliated customer of the wholesale segment accounted for approximately
14% and 12% of the consolidated net sales for the twenty-six weeks ended July
31, 1999 and August 1, 1998, respectively, and 20% and 15% of the consolidated
net trade accounts receivable balance at July 31, 1999 and August 1, 1998,
respectively.


                                       8
<PAGE>   9

In the twenty-six week periods ending July 31, 1999 and August 1, 1998, the
wholesale segment included foreign sales of approximately $1.9 million and $1.8
million, respectively.


6)  STOCK SUBSCRIPTION


In March 1999, the Company entered into subscription agreements for the sale of
235,293 shares of the Company's common stock to a group of private investors at
a price of $8.50 per share. The proceeds of $2 million were received in January
1999 and the shares were issued in June 1999. The subscription agreements
require that the Company file the appropriate registration statements with the
Securities and Exchange Commission within six months from the date of the
agreement to permit the registered resale of the shares by the investors in open
market transactions. If on the effective date of the registration statement, the
market price is less than $8.50 per share, the Company is obligated to reimburse
the investor group the lesser of 1) the product of the difference between $8.50
and the closing bid price of the Company's common stock on the effective date of
the registration statement multiplied by the number of shares issued under the
agreements or 2) the product of $2.00 multiplied by the number of shares issued
under the Subscription Agreements. As of January 30, 1999, the potential
redeemable amount of $470,588 was recorded as redeemable common equity and the
remaining $1,529,412 was recorded as capital in excess of par value in the
accompanying balance sheet.


7)  CONVERTIBLE NOTES

In April 1999, the Company entered into a Securities Purchase Agreement and
issued an aggregate of $2 million worth of its Series A Convertible Notes, which
are convertible into common stock. The Notes contain a beneficial conversion
feature of approximately $385,000 which represents a non-cash interest charge
and is included in other expense for the twenty-six week period ending July 31,
1999. The agreement requires us to file a registration statement with the
Securities and Exchange Commission within forty-five days after the date of
issuance of the convertible notes. The conversion price is the lower of (A)
$4.35 per share, subject to adjustment and (B) the floating conversion price
determined by multiplying (1) the average closing bid price of the common stock
for the three trading days immediately preceding the date of determination, by
(2) 80%, subject to adjustment. The conversion price may be adjusted pursuant to
antidilution provisions in the convertible note. If the conversion price
decreases, the Company is obligated to issue additional shares of common stock.

In July 1999, the Company entered into a Securities Purchase Agreement and
issued an aggregate $2 million worth of its Series B Convertible Notes, which
are convertible into common stock. The Notes contain a beneficial conversion
feature of approximately $981,000 which represents a non-cash interest charge
and is included in other expense for the thirteen week period ending July 31,
1999. The agreement requires the Company to file a registration statement with
the Securities and Exchange Commission within forty-five days after the date of
issuance of the convertible notes. The Conversion Price is the lower of (A)
$3.40626 per share, subject to adjustment and (B) the floating conversion price
determined by multiplying (1) the average closing bid price of the common stock
for the three trading days immediately preceding the date of determination, by
(2) 80%, subject to adjustment. The conversion price may be adjusted pursuant to
antidilution provisions in the convertible note.


                                       9

<PAGE>   10


8)    PERFUMANIA.COM

In February 1999, the Company, through its wholly-owned subsidiary,
perfumania.com, inc. began operation of an Internet commerce site,
perfumania.com. The Company intends to capitalize on its name recognition and
cross marketing opportunities with its stores to become a top discount retailer
of fragrance and related products on the Internet. All orders placed with the
Internet site are shipped from the Company's existing distribution center in
Miami, Florida.

On September 28, 1999 perfumania.com, inc., a wholly-owned subsidiary of the
Company, made an initial public offering of its common stock representing
approximately 47% of the common stock outstanding following the offering.
perfumania.com, inc. offered 3,500,000 shares of its common stock, which
included 1,000,000 shares held by the Company. The offering raised approximately
$24.5 million. The net proceeds of the offering will be used for working capital
and other general corporate purposes and also repayment of any outstanding
indebtedness to the Company.


9)    CONTINGENCIES

In December of 1993, the patent holder and exclusive licensee in the U.S. of
Boucheron filed a complaint against the Company in the Southern District of New
York for infringing upon their exclusive right to sell the Boucheron bottle. The
plaintiff's theory is based on the fact that they have a valid patent for the
bottles and that Perfumania's sales of such bottles cannot in any way control by
resort to an infringement suit the resale of a patented article which he has
sold. The Company filed a motion to dismiss during February 1994. On March 20,
1995 the Court denied the Company's motion to dismiss and on April 14, 1995, the
Company filed its answer to the compliant. Discovery is in progress.

In the opinion of management and counsel, the ultimate outcome of the
aforementioned litigation will not have a material effect on the accompanying
financial statements.

During 1996 and 1997, the Company made sales to L. Luria & Son, Inc. ("Luria's")
in the amounts of $2,473,623 and $1,999,823, respectively. The Company wrote off
in 1997 receivables from Luria's in the approximate amount of $1,200,000. The
Company has been characterized as an insider, as defined by the United States
Bankruptcy Code, in the liquidating plan of reorganization filed on April 6,
1998 by Luria's in the United States Bankruptcy Court, Southern District of
Florida. In October 1998, the committee of unsecured creditors in Luria's
bankruptcy proceedings filed a complaint with the United States Bankruptcy
Court, Southern District of Florida to recover substantial funds from the
Company. The complaint alleged that Luria's made preference payments, as defined
by the Bankruptcy Court, to the Company and seeks recovery of said preference
payments, as well as disallowing any and all claims of the Company against
Luria's until full payment of the preference payments have been made. In July
1999, the Company agreed with the unsecured creditors to settle all claims held
by Luria's against the Company for the sum of $1.2 million, payable over the
next nine months according to a repayment schedule. This settlement is subject
to the approval of the Bankruptcy Court. The full amount of the settlement was
accrued for in the Company's financial statements as of July 31, 1999 and for
the year ending January 30, 1999.

The Company is also involved in various other legal proceedings in the ordinary
course of business.

Management cannot presently predict the outcome of these matters, although
management believes, upon the advice of legal counsel, that the Company would
have meritorious defenses and that the ultimate resolution of these matters
should not have a materially adverse effect on the Company's financial position
or result of operations.


                                       10

<PAGE>   11



10.      RECENT ACCOUNTING PRONOUNCEMENTS


In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). Among other provisions, SFAS No. 133
establishes accounting the reporting standards for derivative instruments and
for hedging activities. It also requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is effective
for financial statements for fiscal years beginning after June 15, 2000.
Management has not determined the effect, if any, of adopting SFAS No. 133.

11.      SUBSEQUENT EVENTS

On August 31, 1999, the Company entered into a stock purchase agreement with an
affiliated Company through common ownership. The agreement calls for the
transfer of 1,512,406 shares of the Company's treasury stock to this affiliated
company in consideration for a partial reduction of the Company's outstanding
trade indebtedness balance of approximately $4.5 million. The transfer price was
based on a per share price of $2.98, which approximates 90% of the closing price
on the Company's common stock for the previous 20 business days. Pursuant to
this agreement the parties entered into a registration rights agreement dated
August 31, 1999, which grants the affiliated company demand registration rights.
The Company recorded an extraordinary loss of approximately $314,000 which will
be taken to income in the third quarter of fiscal year 1999.




                                       11
<PAGE>   12


PART I.  FINANCIAL INFORMATION
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF
         OPERATIONS

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

         Perfumania does not provide forecasts of future financial performance.
Forward-looking statements in this Form 10-Q and other Company reports and press
releases are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, and, in connection therewith, the
Company wishes to caution readers that the following important factors, among
others, in some cases have affected and in the future could affect the Company's
actual results and could cause such results to differ materially from those
expressed in forward-looking statements made by or on behalf of the Company.

         Seasonality. The Company has historically experienced higher sales in
the third and fourth fiscal quarters than in the first and second fiscal
quarters. Significantly higher fourth fiscal quarter retail sales result from
increased purchases of fragrances as gift items during the Christmas holiday
season. The Company's quarterly results may also vary due to the timing of new
store openings, net sales contributed by new stores and fluctuations in
comparable sales of existing stores. A variety of factors affect the sales
levels of new and existing stores, including the retail sales environment and
the level of competition, the effect of marketing and promotional programs,
acceptance of new product introductions, adverse weather conditions and general
economic conditions.

         Lack of Long-Term Agreements With Suppliers. The Company's success
depends to a large degree on its ability to provide an extensive assortment of
brand name and designer fragrances. The Company has no long-term purchase
contracts or other contractual assurance of continued supply, pricing or access
to new products. While the Company believes it has good relationships with its
vendors, the inability to obtain merchandise from one or more key vendors on a
timely basis, or a material change in the Company's ability to obtain necessary
merchandise could have a material adverse effect on its results of operations.

         Dependence on Line of Credit. As discussed above, the Company
experiences significant seasonal fluctuations in its sales and operating
results, as is common with many specialty retailers. The Company utilizes its
line of credit to fund inventory purchases and to support new retail store
openings. Any future limitation on the Company's borrowing ability and access to
financing could limit the Company's ability to open new stores and to obtain
merchandise on satisfactory terms. The Company has violated certain debt
covenants contained in its bank line of credit agreement. On July 14, 1999, the
Company obtained a waiver of default from the bank through September 30, 1999 as
of and for the year ending January 30, 1999.

         Dependence on Key Personnel. Jerome Falic, the Company's President, is
primarily responsible for the Company's merchandise purchases, and has developed
strong, reliable relationships with suppliers, as well as customers of the
Wholesale division in the United States, Europe, Asia and South America. The
loss of service of either of his, or any of the Company's other current
executive officers could have a material adverse effect on the Company.

         Qualified Accountants' Report. In reporting on the Company's audited
consolidated financial statements as of January 30, 1999 and January 31, 1998
and for each of the three years in the period ended January 30, 1999, the report
of the Company's independent accountants contained an explanatory paragraph
indicating factors which create substantial doubt about the Company's ability to
continue as a going concern. Such factors include recurring net losses in fiscal
1998 and 1997 and the Company's default on its bank line of credit agreement as
a result of its violation of certain debt covenants, which has been waived by
the bank on July 14, 1999, through September 30, 1999 as of and for the year
ending January 30, 1999.

         Ability to Manage Growth. While the Company has grown significantly in
the past several years, there is no assurance that the Company will sustain the
growth in the number of retail stores and revenues that it has achieved
historically. The Company's growth is dependent, in large part, upon the
Company's ability to open and operate new retail stores on a profitable basis,
which in turn is subject to, among other


                                       12
<PAGE>   13

things, the Company's ability to secure suitable stores sites on satisfactory
terms, the Company's ability to hire, train and retain qualified management and
other personnel, the availability of adequate capital resources and the
successful integration of new stores into existing operations. There can be no
assurance that the Company's new stores will achieve sales and profitability
comparable to existing stores, or that the opening of new locations will not
cannibalize sales at existing locations.

         Litigation. As is often the case in the fragrance and cosmetics
business, some of the merchandise purchased by suppliers such as the Company may
have been manufactured by entities who are not the owners of the trademarks or
copyrights for the merchandise. If the Company were called upon or challenged by
the owner of a particular trademark or copyright to demonstrate that the
specific merchandise was produced and sold with the proper authority and the
Company were unable to do so, the Company could, among other things, be
restricted from reselling the particular merchandise or be subjected to other
liabilities, which could have an adverse effect on the Company's business and
results of operations.

         Year 2000 Readiness. The Year 2000 issue is the result of computer and
other business systems being written using two digits rather than four to
represent the year. Many of the time sensitive applications and business systems
of the Company and its business partners may recognize a date using "00" as the
year 1900 rather than the year 2000, which could result in system failure or
disruption of operations. Although the Year 2000 problem will impact the Company
and its business partners, a preliminary assessment of the Year 2000 exposure
has been made by the Company and, primarily because the Company's major
management information systems are in the process of being upgraded, the Company
believes it will be able to achieve Year 2000 readiness for its internal systems
by the fourth quarter of 1999. The Company believes that it will satisfactorily
resolve all significant Year 2000 problems and that the related costs will not
be material. However, estimates of Year 2000 related costs are based on numerous
assumptions, including the continued availability of certain resources, the
ability to acquire accurate information regarding third party suppliers, and the
ability to correct all relevant applications and the third party modification
plans. There is no guarantee that the estimates will be achieved and actual
costs could differ materially from those anticipated. Moreover, the failure of a
major vendor's systems to operate properly with respect to the Year 2000 problem
on a timely basis or a Year 2000 conversion that is incompatible with the
Company's systems could have a material adverse effect on the Company's
business, financial condition and results of operations.

         The Company is preparing contingency plans which will include the
identification of the most reasonably likely worst case scenarios. Currently,
the most reasonably likely sources of risk to the Company include (a) the
disruption of the Company's internal inventory management system, (b) the
inability of principal suppliers or logistics providers to be Year 2000-ready,
which could result in delays in product deliveries from such suppliers or
logistics providers and (c) failure of systems and necessary infrastructure such
as electricity supply. The Company is preparing plans to flow inventory around
an assumed period of disruption to the Company's stores, which could include
accelerating distribution of high volume merchandise, and critical products to
reduce the impact of significant failure.

         Other. The Company has been characterized as an insider in the
liquidating plan of reorganization filed on April 6, 1998 by L. Luria & Son,
Inc. ("Luria's") in the United States Bankruptcy Court, Southern District of
Florida. In October 1998, the committee of unsecured creditors in Luria's
bankruptcy proceedings filed a complaint with the United States Bankruptcy
Court, Southern District of Florida, to recover substantial funds from the
Company. The complaint alleges that Luria's made preference payments, as defined
by the Bankruptcy Court, to the Company and seeks recovery of said preference
payments, as well as disallowing any and all claims of the Company against
Luria's until full payment of the preference payments have been made. In July
1999, the Company agreed with the unsecured creditors to settle all claims held
by Luria's against the Company for the sum of $1.2 million, payable over the
next nine months according to a repayment schedule. This settlement is subject
to the approval of the Bankruptcy Court. The full amount of the settlement was
accrued for in the Company's financial statements as of July 31, 1999 and for
the year ending January 30, 1999.

         In December 1993, the patent holder and exclusive licensee in the U.S.
of Boucheron filed a complaint against us in the United States District Court
for the Southern District of New York alleging that the Company infringed upon
their exclusive right to sell the Boucheron bottle and is seeking $1.5 million
in damages. Their theory is that they have a valid patent for the bottles and
that our sales of such bottles infringes upon their patent rights. The Company
believes that a patentee cannot control by resort to an infringement suit the
resale of a patented article which it has sold. The Company filed a motion to
dismiss during February 1994. On March 20, 1995, the court denied our motion to
dismiss, and on April 14, 1995, the Company filed an answer to the complaint.
Discovery is in progress.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal capital requirements are to fund working capital needs,
new store additions and renovation of existing stores. For the first twenty-six
weeks of fiscal 1999, these capital requirements have generally been satisfied
by short term borrowings and issuance of convertible notes payable.


                                       13
<PAGE>   14

Net cash used in operating activities during the twenty-six weeks ended July 31,
1999 was approximately $6.5 million, principally as a result of the net change
in the Company's inventory, trade receivables and accounts payable, as well as
the net loss for the twenty-six week period. At July 31, 1999, approximately
$1.4 million of the Company's trade receivables were considered past due
compared to $1.1 million at January 30, 1999. Of the $6.1 million in trade
receivables due from unaffiliated customers, $1.2 million was due from one
customer which also accounted for 65% of the Company's wholesale sales during
the thirteen weeks ended July 31, 1999. The Company has not experienced any
write-offs of accounts receivable from this customer due to collectibility.

Net cash used in investing activities during the twenty-six weeks ended July 31,
1999 was $1.8 million compared to $5.2 million for the same period last year.
This primarily represents purchases of furniture, fixtures and equipment for new
store openings and the renovation of existing stores during the first three
quarters. The decrease in capital expenditures is due to less store openings in
fiscal 1999 compared with fiscal 1998.

Net cash provided by financing activities during the twenty-six weeks ended July
31, 1999 was approximately $7.9 million compared with approximately $0.8 million
for the same time period in the prior year. The increase was primarily the
result of the issuance of an aggregate of $4 million convertible notes (see Note
7), the issuance of a $2.5 million short-term note payable to a wholesale
customer as well as an increased use of the Company's line of credit during the
first twenty-six weeks of 1999.

The Company's $35 million line of credit contains covenants requiring the
maintenance of minimum tangible net worth and book value and the achievement of
specified levels of quarterly results of operations. The line of credit also
contains limitations on additional borrowings, capital expenditures, number of
new store openings and purchases of treasury stock and prohibits distribution of
dividends. As of January 30, 1999, the Company was in violation of some of the
above covenants and, as a result of these violations, was in default under the
line of credit agreement. As a result, the Company incurred the default rate of
interest, prime plus 4% (12.00% at July 31, 1999) beginning December 1998 and
the bank could demand repayment of the amounts outstanding under the line of
credit agreement. On July 14, 1999, the Company obtained a waiver of default
from the bank through September 30, 1999 and as of and for the year ended
January 30, 1999. Future outstanding borrowings will bear interest at the prime
rate plus four percent. The bank agreed to less restrictive covenants provided
that certain events commence prior to September 30, 1999. One such event
includes that perfumania.com, inc. (a wholly-owned subsidiary) is to receive at
least $10 million from a contemplated initial public offering of its shares, of
which at least $2 million is to be repaid to the Company. Management believes
that the conditions included in the waiver will be met by September 30, 1999,
however, there can be no assurance of this. Should the Company be unable to meet
these conditions, the Company may be required to repay outstanding amounts
(totaling approximately $33.1 million as of July 31, 1999) and obtain
alternative sources of financing. The Company could also be required to take
other actions to reduce the Company's reliance on working capital financing and
generate additional working capital, which could include delaying the opening of
new stores, reducing inventory purchases and/or reducing our wholesale and
retail selling prices to generate more cash. Any such actions, or the Company's
failure to obtain additional financing in an amount sufficient to support
current and planned levels of operation, could adversely affect the Company's
business and operating results.

In July 1999, we obtained a $2.5 million unsecured loan from a wholesale
customer bearing an interest rate of 2.4%. The loan is payable in full December
1999.

On August 31, 1999 the Company entered into a stock purchase agreement with an
affiliated Company through common ownership. The agreement calls for the
transfer of 1,512,406 shares of the Company's treasury stock to this affiliated
company in consideration for a partial reduction of the Company's outstanding
trade indebtedness balance of approximately $4.5 million. The transfer price
was based on a per share price of $2.98, which approximates 90% of the closing
price on the Company's common stock for the previous 20 business days. Pursuant
to this agreement the parties entered into a registration rights agreement
dated August 31, 1999, which grants the affiliated company demand registration
rights. The Company recorded an extraordinary loss of approximately $314,000
which will be taken to income in the third quarter of fiscal year 1999.

During the thirteen weeks ended July 31, 1999, the Company opened 2 stores and
closed 9 stores. At July 31, 1999, the Company operated 281 stores. The Company
currently plans to open 3 additional stores during the third and fourth quarters
of fiscal 1999.

RESULTS OF OPERATIONS

COMPARISON OF THE THIRTEEN WEEKS ENDED JULY 31, 1999 WITH THE THIRTEEN WEEKS
ENDED AUGUST 1, 1998.

Net sales increased from $39.7 million in the thirteen weeks ended August 1,
1998, to $46.0 million in the thirteen weeks ended July 31, 1999. Wholesale
sales increased 7.0% (from $10.2 million to $10.9 million) and retail sales
increased by 18.9% (from $29.4 million to $35.0 million). The increase in retail
sales was principally due to the increase in comparable retail stores sales.
Comparable store sales during the current period increased 12% when compared to
last year.


                                       14
<PAGE>   15

Gross profit increased 16.0% from $16.5 million in the thirteen weeks ended
August 1, 1998 (41.6% of net sales) to $19.2 million in the thirteen weeks ended
July 31, 1999 (41.7% of net sales) due to increases in gross profit for both the
wholesale and retail divisions.

Gross profit for the wholesale division increased from $1.9 million in the
thirteen weeks ended August 1, 1998 to $2.5 million in the thirteen weeks ended
July 31, 1999. As a percentage of net sales, gross profit for the wholesale
division increased from 18.7% in the thirteen weeks ended August 1, 1998 to
22.6% in the thirteen weeks ended July 31, 1999, primarily as a result of higher
margin sales.

Gross profit for the retail division increased to $16.7 million in the thirteen
weeks ended July 31, 1999 from $14.6 million in the thirteen weeks ended August
1, 1998 as a result of higher retail sales. As a percentage of net sales, gross
profit for the retail division decreased from 49.6% in the thirteen weeks ended
August 1, 1998 to 47.7% in the thirteen weeks ended July 31, 1999 primarily as a
result of increases of promotional sales of merchandise at lower margins during
the month of July 1999 as well as increases in the accrual for inventory
shrinkage compared with the same period last year.

Operating expenses, which include selling, general and administrative expenses
as well as depreciation, increased 4.9% from $16.6 million in the thirteen weeks
ended August 1, 1998 to $17.4 million in the thirteen weeks ended July 31, 1999.
As a percentage of net sales, operating expenses decreased from 41.9% during the
thirteen weeks ended August 1, 1998 to 37.9% during the thirteen weeks ended
July 31, 1999. Operating expenses as a percentage of net sales decreased due to
the impact of higher comparable retail store sales, the closure of
underperforming locations in 1998 and 1999 and the reversal of $700,000 of
accrued expenses for the Luria's litigation which was settled in July 1999.

Other expenses, which include interest expense, increased by 66.7% from $1.2
million for the thirteen weeks ended August 1, 1998 to $2.0 million for the
thirteen weeks ended July 31, 1999. The increase is principally due to the
beneficial conversion cost of approximately $981,000 associated with the
issuance of the convertible notes in July 1999 (See Note 7).

As a result of the foregoing, the Company had a net loss of $311,140, or $(0.04)
per diluted share, in the thirteen weeks ended July 31, 1999 compared to a net
loss of $1,272,658, or ($0.20) per diluted share, in the thirteen weeks ended
August 1, 1998.


COMPARISON OF THE TWENTY-SIX WEEKS ENDED JULY 31, 1999 WITH THE TWENTY-SIX WEEKS
ENDED AUGUST 1, 1998

Net sales increased 9.2% from $78.2 million in the twenty-six weeks ended August
1, 1998 to $85.4 million in the twenty-six weeks ended July 31, 1999. The
increase in net sales was due to a 16.0% increase in retail sales (from $54.4
million to $63.1 million), offset by a 6.3% decrease in wholesale sales (from
$23.7 million to $22.2 million).

The decrease in wholesale sales was primarily attributable to unusually large
wholesale sales which occurred in the first quarter of 1998. The increase in
retail sales was principally due to the increase in comparable retail store
sales. Comparable store sales during the twenty-six weeks ended July 31, 1999
increased 8% when compared to last year.

Gross profit increased 9.9% from $31.3 million in the twenty-six weeks ended
August 1, 1998 (40.1% of net sales) to $34.4 million in the twenty-six weeks
ended July 31, 1999 (40.3% of net sales) as a result of increases in both retail
and wholesale sales.

Gross profit for the wholesale division decreased 8.5% from $5.1 million in the
twenty-six weeks ended August 1, 1998 to $4.7 million in the twenty-six weeks
ended July 31, 1999. As a percentage of net sales, gross profit for the
wholesale division decreased from 21.5% in the twenty-six weeks ended August 1,
1998 to 21.0% in the twenty-six weeks ended July 31, 1999.

Gross profit for the retail division increased 13.4% from $26.2 million in the
twenty-six weeks ended August 1, 1998 to $29.7 million in the twenty-six weeks
ended July 31, 1999. The retail division's gross


                                       15
<PAGE>   16

margin decreased from 48.1% in the twenty-six weeks ended August 1, 1998 to
47.1% in the twenty-six weeks ended July 31, 1999 as a result of increases of
promotional sales of merchandise at lower margins during the month of July 1999
as well as increases in the accrual for inventory shrinkage compared with the
same period last year.

Operating expenses increased $2.2 million in the twenty-six weeks ended July 31,
1999 compared to the twenty-six weeks ended August 1, 1998. As a percentage of
net sales, operating expenses decreased from 42.3% during the twenty-six weeks
ended August 1, 1998 to 41.3% during the twenty-six weeks ended July 31, 1999.
Operating expenses as a percentage of net sales decreased due to the impact of
higher comparable retail store sales, the closure of underperforming locations
in 1998 and 1999 and the reversal of $700,000 of accrued expenses for the
Luria's litigation which was settled in July 1999.

Other expenses, which include interest expense, increased by 56.5% from $2.3
million for the twenty-six weeks ended August 1, 1998 to $3.6 million for the
twenty-six weeks ended July 31, 1999. The increase is principally due to the
beneficial conversion cost of approximately $1.1 million associated with the
issuance of the convertible notes in April 1999 and July 1999 (See Note 7).

During the twenty-six weeks ended July 31, 1999 the Company had a net loss of
$4,403,006 or $(0.58) per diluted share, compared to a net loss of $4,044,270 or
($0.62) per diluted share during the twenty-six weeks ended August 1, 1998.

RECENT ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). Among other provisions, SFAS No. 133
establishes accounting the reporting standards for derivative instruments and
for hedging activities. It also requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is effective
for financial statements for fiscal years beginning after June 15, 2000.
Management has not determined the effect, if any, of adopting SFAS No. 133.

YEAR 2000

The following critical application systems areas are the focus of the Company's
Y2K compliance efforts; (1) Merchandising, (2) Inventory Management and
Distribution, (3) Point-of-sales systems, (4) Human Resources and (5) Finance
and Accounting. The Merchandising and Finance and Accounting systems are
currently being upgraded utilizing vendor software certified as Y2K compliant.
The Inventory Management and Distribution systems as well as the Point-of-sales
and Human Resources systems will be upgraded in the third quarter of 1999. The
Company's hardware and communications network is currently being inventoried,
assessed, and where instances of non-compliance are noted, upgraded and tested.

The Company has established a budget totaling approximately $1.5 million for the
acquisition of computer hardware and software that will assist in the Year 2000
assessment and remediation activities. The Company expects to complete
substantially all of the Year 2000 assessment and remediation activities no
later than the fourth quarter of 1999. The Company's current systems may contain
undetected errors or defects with Year 2000 date functions that may result in
material costs. In addition, the Company utilizes third-party equipment,
software, including non-information technology systems, such as facilities and
distribution equipment that may not be Year 2000 compliant. Failure of
third-party equipment, software or content to operate properly with regard to
the Year 2000 issue could require the Company to incur unanticipated expenses to
remedy problems, which could have a material adverse effect on its business,
operating results and financial condition.

The Company is currently assessing whether third parties in its supply and
distribution chain are adequately addressing their Year 2000 compliance issues.
The Company has initiated formal communications with its significant suppliers
and service providers to determine the extent to which its systems may be
vulnerable if such suppliers and providers fail to address and correct their own
Year 2000 issues. The Company cannot guarantee that the systems of suppliers or
other companies on which the Company relies will be Year 2000 compliant.

The Company will track the Year 2000 compliance status of its material vendors
and suppliers via the Company's own internal vendor compliance effort. Year 2000
correspondence will be sent to critical vendors and suppliers during the second
and third quarters of 1999, with continued follow up for those who fail to
respond. All vendor responses will be evaluated to assess any possible risk to
or effect on the Company's operations. During the third quarter of 1999, the
Company expects to implement additional procedures for assessing the Year 2000
compliance status of its most critical vendors and will modify its contingency
plans accordingly.

The Company is in the process of preparing its contingency plans which will
include the identification of its most reasonably likely worst case scenarios.
Currently, the most reasonably likely sources of risk to the



                                       16
<PAGE>   17

Company include (1) the disruption of the Company's internal inventory
management system, (2) the inability of principal suppliers or logistics
providers to be Year 2000-ready, which could result in delays in product
deliveries from such suppliers or logistics providers and (3) failure of
hardware and software utilized by transportation vendors as a result of a
general failure of systems and necessary infrastructure such as electricity
supply. The Company is preparing plans to flow inventory around an assumed
period of disruption to the Company's stores, which could include accelerating
distribution of high volume merchandise and critical products to reduce the
impact of significant failure.

Based on its current assessment efforts, the Company does not believe that Year
2000 issues will have a material adverse effect on its financial condition or
results of operations. However, the Company's Year 2000 issues and any potential
business interruptions, costs, damages or losses related thereto, are dependent,
to a significant degree, upon the Year 2000 compliance of third parties, such as
government agencies, vendors and suppliers. Consequently, the Company is unable
to determine at this time whether Year 2000 failures will materially affect the
Company. The Company believes that its compliance efforts have and will reduce
the impact on the Company of any such failures.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

During the quarter ended July 31, 1999, there have been no material changes in
the information about the Company's market risks as of January 30, 1999 as set
forth in Item 7A of the 1999 Form 10-K.

PART II. OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS

For a discussion of the legal contingencies associated with the Luria's and
Boucheron cases, see Note 9 of the Notes to Condensed Consolidated Financial
Statements in Item 1 of Part I of this report.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

In July 1999, the Company entered into a Securities Purchase Agreement and
issued an aggregate of $2 million worth of our Series B Convertible Notes, which
are convertible into common stock. The agreement requires the Company to file a
registration statement with the Securities and Exchange Commission within
forty-five days after the date of issuance of the convertible notes. The
Conversion Price is the lower of (A) $3.40625 per share, subject to adjustment
and (B) the floating conversion price determined by multiplying (1) the average
closing bid price of the common stock for three trading days immediately
preceding the date of determination, by (2) 80% subject to adjustment. The
conversion price may be adjusted pursuant to an antidilution provision in the
agreement.

The Company has used the proceeds from the aforementioned issuance of
convertible notes payable, net of expenses incurred in the registration of such
shares as prescribed in the respective agreements, for working capital and
operating expenditures.


                                       17
<PAGE>   18


The following table provides information regarding the assumed conversion of the
Notes as of August 31, 1999.

<TABLE>
<CAPTION>
                                                                NO. OF SHARES
                                                                    TO BE            PROCEEDS
                      NAME                                       REGISTERED          RECEIVED
                      ----                                      -------------        --------
         <S>                                                    <C>               <C>
         S. Robert Productions, LLC                                78,688         $  200,000
         Cranshire Capital, L.P.                                  275,408            700,000
         EP Opportunity Fund, L.L.C.                              250,621            637,000
         The Dotcom Fund, L.L.C.                                  118,032            300,000
         EP.com Fund, L.L.C.                                       11,016             28,000
         EP Opportunity Fund International, LTD.                   13,770             35,000
         JJP Partnership                                           39,344            100,000
                                                                  -------         ----------
                  Total                                                           $2,000,000
                                                                                  ==========
</TABLE>



ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K


                  (a)      Exhibits

                           Index to Exhibits


<TABLE>
<CAPTION>
Exhibit
Number            Description of Exhibit
-------           ----------------------
<S>               <C>
27.1              Financial Data Schedule (1)
</TABLE>

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

(1)      Filed herewith.



                  (b)      The Company did not file any reports on Form 8-K
                           during the quarter ended July 31, 1999.





                                       18

<PAGE>   19


                                PERFUMANIA, INC.

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.





                                                  Perfumania, Inc.
                                          ---------------------------------
                                                  (Registrant)





Date:  October 7, 1999                By: /s/ ILIA LEKACH
                                          ---------------------------------
                                          Ilia Lekach
                                          Chairman of the Board and
                                          Chief Executive Officer
                                          (Principal Executive Officer)



                                     By:  /s/ DONOVAN CHIN
                                          ---------------------------------
                                          Donovan Chin
                                          Chief Financial Officer,
                                          Treasurer, and Secretary
                                          (Principal Financial and
                                          Accounting Officer)





                                       19